The Court of Justice of the European Union (CJEU) has upheld and clarified the EU’s sanctions against Russia’s oil and gas industry – rejecting a challenge brought by the majority state-owned Russian oil group, Rosneft.


In response to Russia’s annexation of Ukraine, the EU introduced wide-ranging economic and financial sanctions against Russia. These sanctions included measures specifically targeting Russia’s oil and gas industry – including the following measures challenged by Rosneft:

  • a prohibition on the provision of financial assistance related to specific areas of Russia’s oil and gas industry; and
  • a prohibition on access to EU capital markets by certain Russian entities (including Rosneft), including trading in “transferable securities”.

Breaches of the EU sanctions regime carry potential criminal sanctions at a national level in each Member State, including the UK. Rosneft argued that the EU sanctions relating to Russia lacked legal certainty and, as a result, it would be unlawful for Member States to impose criminal penalties for specific breaches.

Rejecting Rosneft’s challenges

In its judgment, the CJEU strongly affirmed the EU sanctions regimes against Russia and rejected Rosneft’s challenges.

The CJEU confirmed that EU sanctions specifically targeting Russia’s oil and gas industry were a valid means of supporting the EU’s objective to put economic pressure on Russia following its illegal annexation of Ukraine. The CJEU confirmed that, whilst it does have jurisdiction to review compliance of EU sanctions measures with the relevant provisions of European treaties, the Council had a broad discretion to determine the appropriate sanctions measures to be put in place.

In particular, the CJEU rejected Rosneft’s argument that the restrictions under the EU sanctions against Russia were not sufficiently clear and precise for Member States to impose criminal penalties. Indeed, the CJEU considered that the restrictive measures, by their nature, had to be general in scope in order to fulfil the objective of putting economic pressure on Russia.

“Transferable securities”

The CJEU maintained this broad approach to interpretation in relation to the prohibition on trading in “transferable securities” of certain Russian entities, including Rosneft.

The CJEU held that trading in Global Depository Receipts fell within the “transferable securities” prohibition – even where these related to shares issued before the implementation date for these sanctions of 12 September 2014.

“Financial assistance”

The CJEU made an important clarification of the definition of “financial assistance” prohibited under the EU sanctions regimes.

Previously, the European Commission and the UK government had taken the position that “financial assistance” included payment processing services by third party intermediaries such as banks and other financial institutions.

The CJEU rejected this interpretation and confirmed that such payment processing services would not constitute a breach of the “financial assistance” prohibition.

The result of the decision is that the EU sanctions relating to Russia remain intact, and the CJEU has in effect validated the approach taken by the EU. This does not mean that future challenges on different facts will not succeed, but in this case the decision is a clear vindication of the Russian sanctions regime.