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Russia's Rosneft disappointed by EU Court’s decision on sanctions against company

March 28, 13:10 UTC+3

The company says the sanctions force Rosneft to limit implementation of European projects

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©  AP Photo/Mikhail Metzel

LUXEMBOURG, March 28. /TASS/. Russia’s state-owned oil company Rosneft is disappointed by the decision of the European Court of Justice of General Jurisdiction, which declared the EU sanctions against the Russian company as justified, Rosneft said in a statement. The company considers this decision to be illegal, unreasonable and politicized, the company said.

"This decision proves that the rule of law in Europe is being replaced by the primacy of political situation. The court recognized the legality of the sanctions, despite the fact that during the process the European Union could not present the reasons for their introduction against the company."

"Rosneft continues to insist that it did not commit any unlawful actions in any jurisdiction where it does its business, including Ukraine and has nothing to do with the crisis in Ukraine," the statement said.

"Being an international public company, Rosneft has its shares listed on Russian and international exchange markets. Shareholders of Rosneft include dozens of thousands individuals, foreigners among them. Its largest shareholder after the Russian government is BP, which owns 19.75% of the company's shares. Since the end of last year, another 19.5% shares of the company belong to the international consortium, including Swiss oil trader Glencore and sovereign fund of Qatar. Therefore, almost a half of the company's shares belongs to international shareholders. Politically motivated sanctions do serious damage to them: sanctions interfere with efficient management’s work, by limiting Rosneft’s access to the financial markets and creating obstacles for implementation of the promising projects," the report said.

According to Rosneft, the sanctions also inflict economic damage on Rosneft's "European partners, which produce technical equipment, on European banks and investment funds, that were cooperating with Rosneft on credit agreements and were willing to invest in development of Russia's petroleum industry."

"Rosneft is a major energy supplier to the European Union and, consequently, a substantial segment of the company’s investment operations was focused on the implementation of projects in Europe. However, following the imposed sanctions this area of operations was substantially reduced," a source in the company said, adding that the move "had detrimental consequences for most European companies."

"The principle of pacta sunt servanda is an unshakable core of business ties in Europe and should not be violated due to here-and-now political profit. Rosneft observes the key principles of market relations and assumes that the sides are obliged to fulfill concluded contracts, which cannot be subjects of political pressure or blackmail. Sanctions create opportunities for the company’s European partners to renege on fulfillment of agreements," he said.

Decision not subject to appeal

The decision of the court in sanctions against Russian state-owned oil company Rosneft is final and not subject to appeal, Lode Van Den Hende, partner of Herbert Smith Freehills LLP, representing the interests of Rosneft told reporters.

"No we can’t. At least not here. There is no possibility to appeal any further," he said.

The lawyer also noted that the decision of the European Court of Justice creates a problem for the future judicial protection of companies from EU prohibitive measures.

The court seems to have agreed with the fact that a company that only partially belongs to the state can already become the target of sanctions directed against this state, he noted.

The lawyer said that his firm did not encounter this before, and it is not known what it will lead to. But it is clear that this decision significantly lowers the threshold for imposing sanctions, he said.

The lawyer stressed that when the EU sanctions against Rosneft were introduced in 2014, 20% of the company's shares belonged to BP, so European shareholders also suffered from this decision.

On Tuesday, the European Court of Justice of General Jurisdiction declared the EU sanctions against a number of Russian companies, including state-owned oil company Rosneft that were imposed in connection with the situation in Ukraine, justified.

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