OJSC Rosneft Oil Co v HM Treasury & Others

The CJEU has recently heard a major challenge by Rosneft, the Russian oil and gas giant, to the legality of the EU’s sanctions against Russia. Before the Divisional Court ([2015] EWHC 248 (Admin)), Rosneft sought to argue that a number of EU regulations imposing increasingly stringent sanctions were unlawful.

Rosneft also sought to challenge the interpretation given to the sanctions affecting financial services. Rosneft argued that ‘financial assistance’ in the sanction regulations did not include the processing of a bank payment. Rosneft also sought to contend that the sanctions did not prohibit the issuing of Global Depositary Receipts (GDRs) in respect of shares of certain Russian entities issued before 12 September 2014. On the latter point, the FCA argued that the sanctions prohibited the issuing of GDRs in respect of all shares from 12 September 2014 onwards.

A Divisional Court in England and Wales (Beatson LJ and Green J) found that there was an arguable case that the measures were unlawful, and made a preliminary reference to the CJEU. They also referred the questions of interpretation in respect of the financial services sanctions. Whilst the Court expressed its agreement with the FCA’s view on the interpretation of the GDR provision, it held that it was preferable to refer the matter together with the other questions as to the lawfulness of the sanctions.

The CJEU gave judgment on the case on 28 March 2017 (Case C-72/15). The CJEU affirmed that it had jurisdiction to rule on the matter and upheld the lawfulness of the sanctions. On the GDR question, the CJEU preferred the FCA’s interpretation, namely that the sanctions prohibited the issuing of GDRs in respect of all shares. The CJEU also held that financial assistance did not include the processing of a payment. 

Sonia Tolaney QC represented the FCA.

The approved Judgment can be viewed here.