European Court to Back Rosneft Sanctions
Disgraced Belgian Justice Minister, Ex-Nato Official Takes Lead
In fifty-nine single-spaced pages, issued on May 31, Melchior Wathelet (lead image) has demonstrated that the European Union (EU) has descended into a lawless dictatorship, in which the executive power of the Union and its member officials have “broad discretion” to attack states, their corporations and citizens without reason. Wathelet is the Advocate-General of the Court of Justice of the European Union (CJEU), so he ought to know.
Wathelet has recommended that the CJEU dismiss the case brought by Russian state oil company Rosneft, challenging the legality of the EU sanctions imposed on July 31, 2014. Those sanctions include a ban on most financial transactions; share, bond and loan dealings; and oil production technology trade with Russia.
In practice, lawyers opposing the EU sanction regime say, Wathelet is prosecuting Rosneft, and the Russian government, on behalf of the EU for what Wathelet’s document calls, in its opening paragraph, “Russia’s actions destabilising the situation in Ukraine”.
“I [sic], like the United Kingdom, Estonian and French Governments, the [EU] Council and Commission, consider that such a restriction could be justified by reference to Article 99(1)(d) of the Partnership Agreement [of the EU and Russia of June 1994], which permits the European Union to take ‘any measures which it considers necessary for the protection of its essential security interests … in time of war or serious international tension constituting threat of war’” (par 148).
If the court judges endorse their Advocate General’s case for the legality of the sanctions imposed on Rosneft, it is certain similar challenges filed in the European court by Sberbank, VTB and Gazpromneft will also be dismissed. For background on the sanctions challenge cases from the Russian corporations pending in the CJEU, read this.
As an advocate-general, Wathelet, a Belgian Walloon, is an employee of the CJEU, which sits in the Grand Duchy of Luxembourg.
According to the EU founding treaty, Wathelet is supposed to be a “person whose independence is beyond doubt”. But his independence depends on the “common accord” of the EU member governments, so any one of them can veto his name, or block his reappointment. Wathelet’s term as one of the court’s advocates-general started in 2012, so he’s got two years left. Belgian appointees rotate with candidates from the other small EU member states, so the reappointment of Wachelet is unlikely, if as a 70-year old he doesn’t opt for retirement. He can’t go back to Belgian politics .
A politician of the right-wing Belgian party now called the Humanist Democratic Centre, Wathelet has been a Belgian defence minister and member of the NATO ministerial council. He was also a justice minister in Brussels; his term was interrupted by charges of improper prosecution and release of sex offenders, including the notorious Marc Dutroux.
Wathelet moved to the CJEU in Luxembourg. There he served, controversially, as a two-term judge. At the time Wathelet was the only CJEU judge whose unfitness to hold office was challenged by the European Parliament. In 2012 he was hired for the job of advocate-general.
Rosneft took its initial challenge to the lawfulness of the sanctions to the UK High Court in London in November 2014. The highest of the British courts, the Supreme Court , had already ruled in favour of the Iranian bank, Bank Mellat, against the UK and EU on the grounds that the penalty of sanctions was “irrational in its incidence and disproportionate to any contribution which it could rationally be expected to make to its objective.” See judgement and story here. Facing Rosneft’s challenge, a junior English judge decided it was safer to pass the buck to the court in Luxembourg. Read how he did that.
Weeks earlier, on September 18, 2014, three judges of the CJEU had ruled that sanctions were illegal if the EU or its members states failed to state reasons for their action, the evidence for which can be tested in court. Vagueness, secrecy, arbitrary exercise of government discretion were rejected in the case of sanctions against the Central Bank of Iran. For that story, click; for the full CJEU judgement, click again.
Wathelet ignores these cases. “In my opinion, there is in this case no breach of the duty to state reasons.” He argues instead that because “Rosneft is the largest Russian oil company and is 69.5% owned by the Russian State”, it is enough for the EU to strike at Rosneft for the purpose of “increasing the costs of Russia’s actions to undermine Ukraine’s territorial integrity, sovereignty and independence and … promoting a peaceful settlement of the crisis”.
The crux of Wathelet’s case is that no evidence of Russia’s actions towards Ukraine, or vice versa, is required to justify sanctions because “I [sic] consider that, in this particular sphere, which involves diplomacy and foreign and security policy, the Council must be allowed a broad discretion” (par. 105).
But Russian capital can be sanctioned if it moves in the other direction, and if Russian companies borrow from EU institutions, Wathelet claims. “I [sic] consider that it is possible to justify restrictions on the free movement of capital safeguarded by Article 52 of the Partnership Agreement by reference to overriding reasons in the public interest. Even though the Council does not allege any overriding reason in the public interest, I consider that it is possible to infer from the arguments which it bases on Article 99 of the Partnership Agreement that, in its view, a restriction on the free movement of capital would be justified on grounds of public policy and public security” (pars 153, 154).
But what security grounds were “inferred”, and what evidence for them did the EU lawyers provide the CJEU in the chamber hearing held on February 23, 2016?
“This is novice lawyering for a kangaroo court,” comments a London lawyer specializing in international litigation. “Take my word for it, the prosecutor is telling the judge -- the accused is guilty, because that’s the prosecution’s case. Proof of the prosecution’s case is what judges usually insist on, at least in civilized jurisdictions.”
Wachelet goes two steps further to set out for the court his reasons for judging the sanctions to be legal. The first is that the court, and thus the EU and its member governments, have the legal right to order sanctions without providing evidence at all. “If… the Council enjoys a broad discretion in the field of foreign and security policy, that must also apply whenever it concludes that there is serious international tension constituting a threat of war” (par 149).
“It must be remembered that, in adopting the restrictive measures at issue in the present case, the Council relied on the ‘unprovoked violation of Ukrainian sovereignty and territorial integrity by the Russian Federation’, the ‘downing of Malaysian Airlines Flight MH17 in Donetsk and the ‘illegal annexation of Crimea and Sevastopol’” (par 150).
Wathelet does not advise the court what evidence it should consider for the course of events which began in Kiev in February of 2014, when the Ukrainian president was ousted by force; or for the destruction of MH17 in July 2014, for which, to date, there has been no finding in any court or tribunal of perpetrator, culpability, or responsibility.
As for the constitutional status of Crimea, the rights of its citizens before the referendum of March 16, 2014, and after the accession to the Russian Federation on March 20, these points can be decided by “broad discretion”, according to the Belgian advocate-general; and issued in the form of press releases to which Wathelet provides these three footnotes:
Wathelet concludes: “I consider that the Council made no manifest error in its assessment of the seriousness of the international tension” (par 152). The key word in that sentence is “manifest”, and Wathelet means it literally, after he upheld the EU’s right to keep secret the records of its decision-making.
Rosneft has argued it is impossible to judge what error may (or may not) have been committed if done in secret, because the defence lawyers were denied access to the records of the EU ministers’ discussions, before the press releases were issued and the sanctions imposed. Wathelet has recommended the CJEU dismiss this claim because Rosneft’s requests for production of EU documents lacked “sufficient detail”, and “were accompanied by no explanation as to how the requested documents are relevant to the dispute and material to its outcome” (par 167).
The one document Rosneft uncovered -- which it presented to the court as evidence of economic warfare against Russia unrelated to the Ukrainian conflict -- was dismissed by Wathelet. “A single document, classified as a ‘working document’ and emanating from an institution other than the institution which adopted the act in question, cannot suffice to establish a misuse of power. This plea should therefore be rejected” (pars 182, 183).
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