The European Court of Justice (the EU’s highest court) will consider a request from the Svea Court of Appeal (Sweden) to interpret the provision of the European Sanctions Regulation that prohibits the satisfaction of claims by Russian companies under contracts disrupted by the sanctions regime. RBC has reviewed the text of the request. At the request of the Swedish court, a map of the case has been added to the EU court database.
What is the likely position of the EU court?
The EU court may split the claims and make different decisions on the return of the advance payment and interest on the advance payment. It is likely that the EU Court will recognise the claim for repayment of the advance as legitimate if it does not lead to the execution of a prohibited transaction (in this case, the supply of dual-use items). This conclusion is based on the proportionality of the sanctions and the objective of restoring the parties to the status quo prior to the transaction, comments Anna Zabrotskaya, Partner and Head of the dispute resolution practice at Nordic Star Law Offices.
According to Anna, the court may conclude that charging interest on returned advances creates an economic advantage for the Russian side, which is contrary to the objectives of the sanctions regime. “An analysis of precedents shows that such claims are often rejected by national EU courts. The decision of the EU Court of Justice will be an important indicator of the ability of the European legal system to strike a balance between the implementation of sanctions policy and the protection of the rights of the parties,” Anna emphasises.
The full version of the commentary is available on RBC.