The EU can sanction Russian firms or oligarchs without any prior warning, judges have said, after a legal challenge that threatened to wreck the bloc's €25bn asset-seizure programme.
A Russian telecommunications firm, MegaFon, had claimed the EU Council should have warned it prior to its listing in February 2023, so that it could exercise its "right to be heard" to explain its case first.
But judges in the EU's General Court in Luxembourg said on Wednesday (15 January) that adopting such an approach would let Russian targets move their financial assets out of EU jurisdictions ahead of any final decision, making a mockery of asset-freeze measures.
"Such a derogation from the fundamental right to be heard during a procedure preceding the adoption of restrictive measures is justified by the need to ensure the effectiveness of the measures freezing funds," the verdict said.
"In order not to compromise its effectiveness, such a measure must, by its very nature, be able to benefit from a surprise effect and apply immediately," it added.
In a small irony, MegaFon did not have its assets seized by the EU.
It was placed on an EU grey-list, called "Annex IV" in Brussels jargon, which forbids European companies from selling it dual-use technology, which could help the Russian military to wage war on Ukraine.
But the EU has also imposed asset-freezes (and visa-bans) on more than 2,300 other Russian individuals and firms on a separate blacklist.
And the "surprise effect" has seen EU jurisdictions freeze €24.9bn of private-sector Russian assets in a programme which a MegaFon-case precedent could have put at risk.
General Court verdicts can be appealed at the European Court of Justice, its highest judicial body.
But MegaFon’s Italian lawyer, Massimo Moretto, didn’t answer when asked by EUobserver on Wednesday if an appeal would go ahead.
Meanwhile, MegaFon had also argued that the EU Council had not given enough reasons for its grey-listing and that its punishment was a form of "disproportionate and intolerable interference" by the EU.
But judges disagreed, saying the EU Council had shown MegaFon provided roaming services in the Russian-occupied regions of Crimea, Donetsk, and Luhansk in Ukraine, as well as installing infrastructure in the Russia-occupied Kharkiv region.
The EU Council had also shown MegaFon had close contractual relations with Russian armed forces, Wednesday's verdict said.
The grey-listing satisfied "an objective of fundamental public interest for the international community", the EU court said.
The MegaFon case is one of over 110 Russian legal challenges to the EU sanctions regime, including one by Alisher Usmanov, a blacklisted Russian billionaire who co-owns the grey-listed phone company.
But in the past three years, just nine Russian individuals have managed to get off the blacklist following court victories or lobbying campaigns.
Andrew Rettman is EUobserver's foreign editor, writing about foreign and security issues since 2005. He is Polish, but grew up in the UK, and lives in Brussels. He has also written for The Guardian, The Times of London, and Intelligence Online.
Andrew Rettman is EUobserver's foreign editor, writing about foreign and security issues since 2005. He is Polish, but grew up in the UK, and lives in Brussels. He has also written for The Guardian, The Times of London, and Intelligence Online.