On 30 May 2017 the Grand Chamber of the European Court of Justice issued an important judgment in the Safa Nicu sanctions case which was the first case in which damages were awarded to an entity that was wrongly designated under an EU sanctions regime.

The EU sanctions against Iran were introduced in order to apply political pressure on the country to end proliferation-sensitive nuclear activities and the development of nuclear weapon delivery systems. Safa Nicu was designated on the list of companies involved in such activities.

In 2014 Safa Nicu successfully applied to the General court to have its listing annulled. The company made a claim for damages resulting from EU sanctions regime. The General Court issued an unprecedented judgement awarding 50,000 EUR for reputation damage to Safa Nuci, but dismissed the company’s full claim for 7.7m EUR in material damages.

Safa Nicu subsequently appealed the decision not to award material damages to the European Court of Justice and the Council of the EU cross-appealed the decision to award any damages at all to Safa Nicu.

The Grand Chamber dismissed both appeals.

The European Court of Justice confirmed that, in deciding whether to award damages in such a case, the Court would need to consider all the circumstances of a case. These included, but were not limited to, the gravity of the breach of EU law, the duration of the breach, the Council of the EU’s conduct and the effect of designating the company under the sanctions regime on third parties.

The European Court of Justice held that Council of the EU’s failure to provide solid evidence justifying keeping Safa Nicu on the sanctions list for a continuous period of three years constituted a ‘sufficiently serious breach’ of EU law to warrant an award of damages.

However, the Court also held that the material damages claim was rightly dismissed by the General Court as the company had failed to provide sufficient evidence showing the damage caused by the sanctions or the causal link between the imposition of sanctions and its losses.

Individuals and companies who find themselves wrongly designated under EU sanctions regimes will take a modicum of comfort from the judgment which confirms that, in principle, damages are available to them. However the judgment makes it clear that succeeding in such a claim will be difficult and any party who wishes to make a claim for damages must ensure that they are able to fully evidence the actual damage caused by the sanctions and also the causal link between their imposition and the harm suffered.

In recent years Gherson has successfully secured the annulment of sanctions imposed by the Council of the EU and continues to represent a number of individuals before the General Court in connection with on-going annulment applications and claims for damages.