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The General Court has handed down an important judgment in Case T-731/15, Sergiy Klyuyev v Council (21 February 2017).

On 5 March 2014, the Council froze the funds and economic resources of persons identified as being responsible for the misappropriation of Ukrainian State funds. Mr Klyuyev, a prominent Ukrainian businessman and brother of the former head of the Presidential Administration of Ukraine, was one of these people. The General Court has now annulled the freezing of funds for Mr Klyuyev, for the period March 2017 onwards, on the basis that the Council had committed a manifest error of assessment in determining that there was a legitimate basis for listing him.

At §§254-256 the Court held as follows:

[T]he evidence the applicant relied on before the adoption of the March 2017 Acts, especially when taken together with the exculpatory evidence … was such as would raise legitimate doubts on the part of the Council that would justify it making further enquiries of the Ukrainian authorities.

Therefore, the Council should, having regard, first, to the deficiencies in the factual basis on which it relied, and, second, to the exculpatory evidence presented by the applicant, have investigated further and sought clarification from the Ukrainian authorities. …

It follows from the foregoing that the Council committed a manifest error of assessment in considering that it was not required to take into account the evidence produced by the applicant and the arguments developed by him or to make further enquiries of the Ukrainian authorities, despite the fact that that evidence and those arguments were such as to give rise to legitimate doubts regarding the reliability of the information provided. …

In its judgment, the General Court makes clear that the Council cannot simply rubber-stamp what it is told by third countries, as this would be inconsistent with the principle of good administration, and the obligation to respect fundamental rights under the EU Charter. In particular, the Council is required to undertake a careful and impartial examination of exculpatory evidence adduced by the applicant. The General Court concluded that this was not done in the present case.

Brian Kennelly QC and Jason Pobjoy acted for Mr Klyuyev. Brian and Jason have extensive expertise in challenging and advising on EU and international asset-freezing sanctions, and are recognised as leading sanctions lawyers in the EU. They are currently representing more than 25 individuals and entities in over a dozen challenges to asset-freezing regimes before the General Court of the EU and the Court of Justice. The majority of their recent cases have resulted in the de-listing of the sanctioned individuals: see, e.g., the recent judgment in relation Mr Ivanyuschenko (seehere). They recently prepared a detailed submission to the Government public consultation on the legal framework for sanctions post-Brexit: available here. In addition to sanctions challenges, they also have considerable experience in advising on sanctions compliance issues.

A copy of the judgment can be found here.