Millions of euros: that’s how much it could cost EU taxpayers for the carelessness of the officials in charge of sanctions against Russia. These are developments in a case that is regularly reported in the media (Le Figaro, Le Temps, France Info, etc.) and which we covered in an article published on 27 April 2025, ‘Sanctioning Individuals: the Risk of Injustice’. Unjustly penalised, Alexander Pumpyansky won his case before the EU court. He is now asking to be compensated by the EU itself, which has not implemented the judgement handed down by its own court! In other words, the Russian-Swiss businessman is seeking compensation for not having been removed from the lists of sanctioned persons (which prohibits him from travelling within the EU, working there, having a bank account there, etc.) despite the annulment of these sanctions by the judges in Luxembourg. This is one of the first examples of this type of legal action, but it is to be feared that there will be many more in the future.
Let us look at the context. In response to Russia’s invasion of Ukraine in February 2022, the EU introduced a series of sanctions targeting the Russian Central Bank, major companies and individuals. The aim of these sanctions is to weaken the Russian economy, making it more difficult to finance the war. While their effectiveness is open to debate (according to the IMF, Russian growth is expected to be -1.2% in 2022, +3.6% in 2023 and around 3.4% in 2024, although the final figure is not yet available), they certainly pose fundamental legal problems.
The freezing of the Central Bank of Russia’s assets (around USD 300 billion) and the seizure of the interest they generate contravene a major principle of international law, that of the immunity of foreign states, which is enshrined in the United Nations Convention on Jurisdictional Immunities of States (2004). This is a dangerous precedent, with potentially disastrous consequences in the medium and long term, because what country would want to invest its assets in European government bonds (German Bunds, French OTAs, etc.), term current accounts or physical gold reserves, if it had proof by example that these assets could be frozen and perhaps even confiscated one day? This could have a lasting impact on the attractiveness of the EU at a time when its economy is stagnating or even entering recession.
The problem is the same for the freezing of the assets of major Russian banks (Sberbank, VTB, Gazprombank, etc.) or the unilateral breaking of supply contracts with major Russian energy companies (Gazprom, Rosneft, Lukoil, etc.). When the war ends, these companies are likely to take their case to arbitration tribunals. They could invoke, not without justification, bilateral investment treaties (BITs) or the Energy Charter to challenge the violation of foreign investment protection (e.g. expropriation without compensation) and claim massive compensation. Even if these Russian appeals were to fail, there could be collateral effects, such as a perceived weakening of the legal certainty of energy contracts, a reputational risk for European companies in the eyes of third-party partners (e.g. Gulf or Asian countries), and negative diplomatic fallout, particularly in international trade forums.
In the case of individuals, sanctions seem even more problematic, as their framework is vague. While some of the legal criteria for designating an individual are clear and well-founded (anyone directly involved in military, political or administrative actions, such as senior Kremlin, Ministry of Defence or intelligence service officials), others are open to debate. Threatening sanctions against any major businessman accused of financing the war by paying tax is tantamount to extending sanctions to any contributor to the Russian budget, even if the tax he or she pays comes from an activity that has nothing to do with the Russian-Ukrainian conflict. So why choose one taxpayer over another? The risk of arbitrariness seems great…
Motivating sanctions against individuals (wives, adult children, etc.) on the basis of a close link with those responsible is even more questionable. This seems to be more in keeping with an ancient concept of hereditary guilt and tragic justice than with the modern concept of individual responsibility. We are no longer in the days when Eteocles and Polynices could be cursed simply because they were Oedipus’ children. Today, we no longer send the children of a bank robber to prison, even if they may have benefited from the money. However, that’s what happened to Alexander Pumpyansky – all things being equal, his father was not a bank robber but an industrialist.
Let us look at the details of the case. Initially appointed on the basis of the criterion of association with his father, in particular with regard to the board member/chairman positions that Alexander Pumpyansky held in Russian and European family companies, he resigned from his position and was able, at the end of legal proceedings, to have the sanctions against him cancelled in November 2023. However, he remained on the list of sanctioned persons and his assets remained frozen: it is this denial of justice that is the subject of the current compensation proceedings. The hearing is scheduled for mid-September, with judgment expected around November.
Alexander Pumpyansky was then put back on the list in March 2024 on the basis of new criteria, that of ‘close family member of a sanctioned person who benefits from it’. Alexander Pumpyansky again appealed to the EU court, which again ruled in his favour in April 2025 on the grounds that the EU Council had not provided any specific proof of profit. Despite this legal victory, the European officials who prepare the lists (which are then ratified by the Council) have kept the young businessman on them. Although he has been found not guilty, he is still under sanctions!
In this politico-judicial affair, we need to distinguish between two things that are almost equally absurd. The first is that, having won in 2023, Alexandre Pumpyanskiy should have been immediately removed from the list of sanctioned persons (before a political decision put him back on the list the following year), which was not the case. In short, the Council of the EU failed to implement the decision of its own Court of Justice. The second is that, despite two legal victories, the Council of the EU, at the time of the six-monthly renewal of the sanctions, decided each time to keep Alexandre Pumpyanskiy under sanctions. And there’s nothing to say that this will still be the case at the next renewal…
Regardless, the first case is a flagrant violation of a court decision, and the second is the result of the political mechanics of sanctions. Here it is the letter of the rule of law that is being flouted, there it is its spirit.
