?? EU NEWSFLASH #PESC #SANCTIONS #RUSSIA #UKRAINE #CJEU #NSD ??

I?n? ?a? ?n?u?t?s?h?e?l?l?:? National authorities must comply with the Charter of Fundamental Rights when owners of securities frozen because of NSD listing apply for derogation.

??Today, the General Court handed down a judgment (T-494/22) in which it confirmed the sanctions adopted against the Russian central depository (NSD).

?? The case at hand : NSD is a central financial institution in Russia. It acts as a central securities depository and provides financial services. In June 2022, NSD was included on the lists of persons subject to sanctions adopted by the Council of the European Union. Its inclusion on those lists was based on the fact that NSD played an essential role in the operation of the Russian financial system and, consequently, that it provided material or financial support to the Russian Government.

?? The Court dismisses NSD's action on the following grounds :

1. NSD has not shown that the Council erred in classifying it as a systemically important financial undertaking which played an essential role in the functioning of the Russian financial system
2. NSD provides financial services of significant value both to the Russian Government and to the Russian Central Bank, thereby providing material or financial support of quantitative and qualitative importance enabling it to mobilise financial resources for the purpose of pursuing actions to destabilise Ukraine.
3. Although the restrictive measures imposed on NSD have resulted in the freezing of funds and economic resources of clients and owners of securities which are not subject to sanctions, NSD cannot rely on this circumstance and the property rights of those clients and owners of securities in support of an action for annulment which concerns it

?? Real input and scope of the judgment : in addition to confirming the validity of NSD's inclusion on the lists of persons subject to the restrictive measures, the General Court makes an interesting clarification concerning the clients and owners of securities who are indirectly affected by the sanctions imposed on NSD. The Court states that national authorities, which are responsible for implementing restrictive measures, must ensure that the interference with the property rights of the clients and owners concerned complies with certain conditions (set out in Article 52 of the Charter of Fundamental Rights). These persons also have remedies before the national courts to invoke any infringement of their property rights. It should be remembered in this context that most of the securities blocked are held by the central securities depositories Euroclear (Brussels) and Clearstream (Luxembourg). It will therefore be up to the competent authorities in each of these jurisdictions to take account of this case law in the context of the application procedures to obtain waiver from the freezing measures as well as in the disputes that the courts and tribunals will have to hear.