On 8 March 2023, the General Court granted Violetta Prigozhina's request to annul the restrictive measures imposed via Council Regulation (EU) 2022/260 implementing Regulation (EU) No 269/2014 ("the contested Regulation").
Ms. Prigozhina was placed on the list of designated persons on 23 February 2022, along with members of the government, banks, businesspersons, and Members of the State Duma, who are deemed to have supported Russia's aggression against Ukraine. As a result, she was made subject to a travel ban in the EU, an asset freeze, and a prohibition for EU persons to make any of her funds or economic resources available to her.
The reason given by the Council of the EU ("the Council") for Violetta Prigozhina's designation was her "association" with Yevgeny Prigozhin – the head of the Wagner Group. According to the Council, the association resulted from her family and economic ties with Prigozhin. In particular, the contested Regulation stated that Prigozhin's mother is the "owner of Concord Management and Consulting LLC, founded and owned until 2019 by her son" as well as "other companies with links to his son".
Following the adoption of the restrictive measures, Ms. Prigozhina ("the applicant") brought, on 21 April 2022, an action for annulment in Case T-212/22 based on Article 263 of the Treaty on the Functioning of the European Union ("TFEU"). The Court's judgment, delivered on 8 March 2023, is available here (currently only in French).
Arguments raised before the General Court
In her application for annulment, Ms. Prigozhina relied on five pleas in law, of which the second was eventually upheld by the General Court. Under the second plea, Ms. Prigozhina argued that the contested Regulation was premised on an insufficient factual basis and resulted in a manifest error of assessment. Specifically, Ms. Prigozhina's central argument (among others) was that the Council had incorrectly referred to her as owner of companies that were linked to her son, as she had not been the owner of Concord Management and Consulting LLC since 2017 and had not played any role within the entity. In addition, she had not held any ownership in any other companies linked to her son for at least the previous five years. As such, the contested Regulation lacked a sufficient factual basis for Ms. Prigozhina's listing.
In view of the foregoing, Ms. Prigozhina argued that the Council had committed a manifest error of assessment by including her in the list of persons responsible for Russia's aggression against Ukraine, as mere family ties cannot be sufficient to establish "association" with persons responsible.
The Council contested the arguments brought by the applicant, relying on a series of published articles that seemingly uncovered economic connections between Ms. Prigozhina and Yevgeny Prigozhin, and the fact that she was the owner of Concord Management and Consulting LLC. The Council also maintained that it rightly found that Ms. Prigozhina is "associated" with Prigozhin due to a combination of elements, relating both to a family link and a link through the companies that Ms. Prigozhina allegedly owned. The Council also attempted to justify its reasoning by referring to the risk that Mr. Prigozhin would be able to circumvent the sanctions imposed against him by the EU through the intermediary of Ms. Prigozhina, if the latter had not been listed.
General Court's findings of factual errors
The General Court first assessed the evidence provided by both parties on the issue of Ms. Prigozhina's ownership of the relevant companies. Based on the extracts of the Commercial Register, the Court concluded that Violetta Prigozhina had not been the owner of Concord Management and Consulting LLC since February 28, 2017 (para. 47 of the General Court's judgment). As such, the Court accepted the applicant's argument that the Council relied on an incorrect factual basis on this issue (para. 76 of the General Court's Decision).
"Association" must be established at the time of listing
The Court further assessed whether the errors of fact mentioned resulted in a manifest error of assessment. In order to do so, the Court observed that Ms. Prigozhina's "association" with Yevgeny Prigozhin was established by the Council based on her ownership of Concord Management and Consulting LLP and on her family link.
As regards Ms. Prigozhina's ownership of the companies linked to her son, the Court had already found that the Council failed to establish that Ms. Prigozhina still owned shares in the companies concerned on the date of adoption of the contested acts. Importantly, while the Council pointed out in that respect that Ms. Prigozhina was involved until at least 2017 in those companies, the Court stressed that such ownership must have existed at the time of adoption of the contested Regulation. According to the Court, this follows from the language of the relevant listing criterion in Regulation (EU) No 269/2014, which refers to persons "associated" with persons responsible for actions compromising the situation in Ukraine, clearly in the present tense. Similarly, the Court also pointed out that the contested Regulation listing the applicant stated that she "owns" businesses linked to her son, which implied that the association must be established at the time of adoption of the contested act.
Family link not sufficient for an "association" to be established
As the Council failed to prove that Ms. Prigozhina still owned the companies linked to her son at the date of adoption of the contested Regulation, the Court proceeded to analyze whether the family link in itself was sufficient to meet the criterion of "association".
The Court observed that while the concept of "association" is generally not defined in acts of the Council, it can generally be understood as referring to people who are bound by common interests (para. 93 of the General Court's judgement). In the case at hand, since the association between Ms. Prigozhina and her son had not been established through economic links or by the existence of common interests at the time of her listing, it followed that her designation was de facto based only on the family tie, which the Court concluded was not sufficient. As the Court stressed, restrictive measures cannot be applied to persons independent from their personal behavior and that doing so goes against the previously developed case-law of the Court (para. 95 of the General Court's Decision). As such, a family link with another designated person cannot by itself suffice to meet the criterion of "association" and justify restrictive measures. Additional factors, such as economic links with the sanctioned person, would be required.
Finally, the Court rejected the argument raised by the Council concerning the risk of circumvention, as the latter can only occur between "associated" persons, which was not the case (paras. 103-104 of the General Court's Decision).
On the basis of the findings summarized above, the Court upheld the second plea in law raised by the applicant and annulled the contested Regulation insofar as it concerns Violetta Prigozhina. The General Court's judgment could still be subject to an appeal to the Court of Justice, limited to points of law, which would have to be submitted by the Council within two months of the notification of the decision.
If upheld, the ruling could have a crucial impact on other cases of family members or other associates of Russian individuals who have been sanctioned by the EU, especially where the Council has relied more on family ties and less on evidence of other (economic) ties in order to target individuals claimed to be "associated" with persons responsible for Russia's aggression against Ukraine.
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