Divisional Court rejects challenge to EU Russian Sanctions

27 Nov 2014

OJSC Rosneft Oil Company v. HM Treasury; the Secretary of State for Business, Innovation, and Skills; the Financial Conduct Authority

The Divisional Court today rejected an attempt to block the coming into force of UK laws criminalising the breach of EU sanctions against Russia. The Russian oil company, Rosneft, launched a last minute attempt to delay the measures, which come into force on Saturday 29 November 2014, arguing that the offences were insufficiently clear and in breach of the principle of legal certainty under the ECHR and the common law.

From this weekend it will be an imprisonable offence in the UK to breach the prohibition in Article 3a of EU Regulation 833/2014 on providing certain services, such as drilling and the supply of floating vessels, necessary for the exploration and production of oil in deep water and the Russian Arctic. Penalties are similarly imposed for providing services relating to shale oil projects in Russia.

In an urgent application for interim relief Rosneft argued that the UK’s legislation was unlawful because it depended on terms in the EU Regulation that were uncertain in scope. It argued that terms such as ‘deep water’ and ‘arctic’ were so vague that they violated common law and European human rights principles requiring criminal laws to have clarity and precision.

Gerry Facenna, representing the Government, defended the laws, arguing that there was no serious doubt about their legality and that delaying implementation would “undermine the co-ordinated international effort to make an effective response to Russia’s actions in Ukraine”.

Lord Justice Beatson and Mr Justice Simon accepted the Government’s arguments, holding that Rosneft did not come near the threshold for demonstrating that the relevant provisions were invalid, since the laws would have clear application in some cases. They reasoned that, whilst there may be doubt about whether a depth of 500 feet would constitute deep water, it was clear that 1000 metres would. They found that there was no risk to Rosneft of serious irreparable harm and took into account that a delay in implementation would inevitably undermine the effectiveness of the sanctions.

Having failed to obtain interim relief, Rosneft intends to continue its substantive challenge to the EU’s Russian sanctions and is seeking a reference to the CJEU. The Divisional Court ordered that there should be a rolled-up hearing early in the New Year.

Gerry Facenna is acting with Julianne Kerr Morrison for the Treasury and the Secretary of State for Business, Innovation and Skills.

Please click to view the full judgment in OJSC Rosneft Oil Company v. HM Treasury; the Secretary of State for Business, Innovation, and Skills; the Financial Conduct Authority