EU sanctions against Russian-Emirati billionaire are being considered by the EU court in Luxembourg

Andrey Melnichenko - founder of Swiss-based chemical concern EuroChem and coal producer SUEK - was placed under EU sanctions in March 2022 as "an entrepreneur operating in a sector generating significant revenues for Russia". His wife Alexandra, a Croatian national, was listed as an "affiliated person" and "an immediate family member benefiting from him". The current hearing concerns the re-listing of the sanctions list from 2023.

Melnichenko's lawyers argue that the grounds for putting the family on the sanctions list are not only flawed, but also do not meet the goals of the EU sanctions policy aimed at stopping Russia's actions in Ukraine.

While the case formally focused on the legal intricacies and the question of whether the inclusion criteria were met, the defence took the opportunity to criticise the EU sanctions system more broadly. The lawyers questioned the effectiveness, consistency and fairness of the measures against Russian business representatives.

"There is no evidence that sanctions against individuals with no direct links to the Russian government actually influence Kremlin policy," the defence said. They also pointed out that the EU Council itself acknowledged: no single listing should be seen as a way to change Russia's behaviour - pressure should be built up through quantity. However, according to the defence, there is no logic in such a strategy.

"The election appears random and politically motivated, with no clear explanation as to why some individuals are included and others are not," the lawyers said.

They also warned that vague criteria and selective application of sanctions create legal and commercial uncertainty, undermining the EU internal market. Sanctions, they argued, distort competition and redistribute capital within the Union itself.

Impact on EU companies and markets

The sanctions affect not only personal assets and freedom of movement, but also businesses that are perceived to be linked to individuals on the sanctions list. According to Melnichenko's representatives, this creates market distortions and forces counterparties across Europe to sever relations with such companies, even in the absence of direct legal grounds.

"The result is an industry-wide intimidation effect," noted one advocate.

"Companies are excluded from supply chains and denied services simply on the basis of perception, with no legal process or opportunity for appeal. This opens the door to abuse, unfair competition and favouritism."

Critics of EU sanctions policy have long pointed to the lack of legal clarity regarding the indirect consequences of listing. It is still unclear whether such broad economic consequences are a deliberate part of the EU strategy or a side effect.

"Such ambiguity turns regulation into a weapon with which to eliminate competitors under the pretext of compliance with the law," the lawyer emphasised.

"It turns a geopolitical tool into a mechanism for domestic political games."

Wave of lawsuits against EU sanctions policy

The Melnichenko case comes amid a wave of lawsuits against EU sanctions filed by other Russian businessmen and their relatives. Over the past year, several prominent billionaires - including Mikhail Fridman, Pyotr Aven and Dmitry Pumpyanskiy - have had their sanctions annulled in EU courts. These precedents have raised questions about the quality of the evidence used by the EU Council and the legal validity of the entire sanctions policy.

The question remains whether pressure on businessmen can really change the Kremlin's course - especially as the war in Ukraine continues into its third year. Neither side is yet ready to give a clear answer.