Enforcement in EU
Enforcement in the EU
The enforcement of EU sanctions rests with each member state. Historically, EU members were not as active as their U.S. counterpart when it comes to enforcement actions. However, recently an upward trend is appearing, in particular, after the creation of the Office of Financial Sanctions Implementation (OFSI) in the U.K.
As of early 2020, it seems that unlike the United States (and recently the U.K.), there are no dedicated bodies in the European countries which investigate and issue fines for breach of sanctions. In European countries, the prosecutors are the ones investigating the potential sanction breaches and a judge would adjudicate the matter and could issue civil or criminal penalties. This is changing as more countries are giving authority to a dedicated body to deal with sanctions.
Here is a non-exhaustive list of bodies in charge of sanction implementation and monitoring in different European countries:
In Belgium, Federal Public Service Finance Treasury is in charge of financial sanctions as well as other topics.
- The Financial Sanctions Service Center of the Central Bank of Germany or Servicezentrum Finanzsanktionen der Deutschen Bundesbank is responsible for the implementation of financial sanctions in Germany.
- In Italy, the Financial Security Committee or Comitato di sicurezza finanziaria (CSF), which is part of the Department of the Treasury, handles the sanctions as well as subjects related to Anti-Money Laundering.
- In France, the Direction Générale du Trésor handles, among other things, matters related to EU and French sanctions.
- In Spain, La Subdirección General de Inspección y Control de Movimientos de Capitales, which is under the Ministry of Economy, deals with sanctions as well as Anti-Money Laundering and Counter-Terrorism financing measures.
- In the Netherlands, the Central Bank of Netherlands or de Nederlandsche Bank (DNB) is mainly in charge of sanctions-related matters.
- In the United Kingdom, the Office of Financial Sanctions Implementation (OFSI) helps to ensure that financial sanctions are properly understood, implemented, and enforced in the United Kingdom. (Please note that the UK since the beginning of 2021 has had an autonomous sanctions framework and it is not part of the EU anymore. The link to OFSI is only here for ease of reference to its website. )
Here are a few examples of cases brought following the violation (or alleged violation) of EU sanctions:
At the time when the UK was part of the EU, OFSI monetary penalty imposed on Standard Chartered bank in the amount of £20.47 million (Click here)
Investigation of French cement company Lafarge with respect to, among other things, its potential breach of Syrian sanctions (Click here)
Export Control breaches of Euroturbine NV and its Bahrain-based subsidiary Euroturbine SPC for unlicensed export to Iran (Click here)
Charges brought in Malta for potential breaches of sanctions against Libya (Click here)
At the time when the UK was part of the EU, OFSI £10,000 monetary penalty against Raphaels Bank for breach of EU sanctions against Egypt (Click here)
Interpretation in the EU
General courts of EU Member States are responsible for the interpretation of EU laws. The law related to sanctions in the EU is part of CFSP and therefore it is part of the EU law. Accordingly, the general courts of Member States have jurisdiction in interpreting those laws.
When the general courts of Member States are in doubt about the interpretation or validity of an EU law, they can ask the Court of Justice of the European Union (CJEU) for clarification. CJEU, via its preliminary ruling, would then interpret the EU instrument (Decision or Regulations in sanctions matters) in question. In doing so CJEU tries to ensure that the purpose of the instrument in question would be achieved. It also takes into consideration the overall spirit and scheme of the treaties.
However, it is worth mentioning here that the jurisdictions of CJEU in interpreting the EU instruments in the CFSP realm are not straightforward and clear.
While Article 24, paragraph 1 of the Treaty on European Union states:
The Union's competence in matters of common foreign and security policy shall cover all areas of foreign policy and all questions relating to the Union's security, including the progressive framing of a common defense policy that might lead to a common defense. The common foreign and security policy is subject to specific rules and procedures. It shall be defined and implemented by the European Council and the Council acting unanimously, except where the Treaties provide otherwise. The adoption of legislative acts shall be excluded. The common foreign and security policy shall be put into effect by the High Representative of the Union for Foreign Affairs and Security Policy and by Member States, in accordance with the Treaties. The specific role of the European Parliament and of the Commission in this area is defined by the Treaties. The Court of Justice of the European Union shall not have jurisdiction with respect to these provisions, with the exception of its jurisdiction to monitor compliance with Article 40 of this Treaty and to review the legality of certain decisions as provided for by the second paragraph of Article 275 of the Treaty on the Functioning of the European Union.
Article 275 of the Treaty on the Functioning of the European Union reads as follows:
The Court of Justice of the European Union shall not have jurisdiction with respect to the provisions relating to the common foreign and security policy nor with respect to acts adopted on the basis of those provisions.
However, the Court shall have jurisdiction to monitor compliance with Article 40 of the Treaty on European Union and to rule on proceedings, brought in accordance with the conditions laid down in the fourth paragraph of Article 263 of this Treaty, reviewing the legality of decisions providing for restrictive measures against natural or legal persons adopted by the Council on the basis of Chapter 2 of Title V of the Treaty on European Union.
Reading these two articles together one would understand that the jurisdiction of CJEU is quite limited in CFSP matters (sanction being one of them). The only instances where CJEU can opine is to review such matters would be questions regarding compliance with Article 40 of the Treaty on European Union, and the legality of decisions providing for restrictive measures against natural or legal persons adopted by the Council. CJEU in a 2016 opinion, delved into the jurisdiction question. In short, the Court stated that whether CJEU has jurisdiction or not depends on the nature of the restrictive measure. If it is of general application, CJEU has no jurisdiction; yet, if it is designed to address specific individuals then, CJEU has jurisdiction over the case under Article 275 of the Treaty on the Functioning of the European Union. For a detailed reasoning of the Court please refer to paragraphs 32 to 93 of the Court's opinion.