ALERT: Judgement of the GCEU (First Chamber) of 13 September 2023

The judgement resolves a case in which the Russian businessman Viktor Filippovich Rashnikov appeals against the inclusion and maintenance of his name on the controversial lists. He seeks the annulment of Council Decision (CFSP) 2022/429, amending decision 2024/145.

The main contribution of this judgement is the debate about Article 2.1 (g) of decision 2014/145, as amended by Decision 2022/429. This article defines the concept of leading businessperson and the concept of “economic sector that constitutes a substantial source of revenue for the Government of the Russian Federation”.

A leading businessperson is an entrepreneur of special importance due to his / her professional situation, economic activities, influence on a company or many companies, or his / her role in them.

The substantial source of revenue is not a specific company, but a concrete economic sector, which is the case of the metallurgical sector. Although there are economic sectors in Russia that have a higher contribution to the overall budget of Russia, such as the energy sector, that does not mean that the source of revenue is not substantial. Substantial should be understood as a significant source and therefore not negligible.

Mr. Rashnikov is the main owner and Chairman of the Board of Directors of Magnitogorsk Iron & Steel Works (MMK), which is a leading company in the metallurgical sector (as it was stated by its CEO in an interview in 2022), and one of the main contributors in the Russian Federation. In 2021, MMK had a capitalisation of USD 9.3 billion and revenues of USD 8.5 billion.

Therefore, as the owner and chairman of the board of a company that makes a huge tax contribution, the claimant, according to the Court, falls into the category of leading businessperson.

As to whether the metallurgical sector is a substantial source of revenue, it has been demonstrated that in summer 2021 the Russian government became the holder of temporary export duties that significantly reduced the revenues of the companies of that sector, which led to an increase in state revenues. Specifically, the consequence of the incorporation of these duties represented an increase in revenue of 154 billion roubles in 2021 and an expected increase in revenue of 500 million of roubles between 2022 and 2024.

The General Court concludes that Mr. Rashnikov is a leading businessperson because he is the owner of a leading company in the metallurgical sector, a sector that provides a substantial source of revenue to the Government of the Russian Federation.



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