Professor Steve Peers, Royal Holloway University of London

Photo credit: Pierre Blaché, via Wikicommons

*This blog post builds on and updates research for the 5th edition of EU Justice and Home Affairs Law(OUP, 2023)

In late 2023, EU Member States and the European Parliament reached an agreement on a Directive designed to standardize criminal law related to violations of EU foreign policy sanctions. (Update: The Directive was formally adopted in April 2024 and subsequently published in the EU Official Journal). This agreement came shortly after the EU Council’s decision to broaden EU criminal law authority to encompass such sanctions. This post provides an update on a prior post that explored both the 2022 decision on competence and the initial Commission proposal for a Directive, which has now been broadly agreed upon.

The Decision Broadening Authority

The 2022 decision to expand EU authority marked the initial utilization of the EU’s ability to augment the categories of offenses subject to its harmonization powers. This is outlined in Article 83 of the Treaty on the Functioning of the European Union (TFEU). Previously, these offenses included: ‘terrorism, trafficking in human beings and sexual exploitation of women and children, illicit drug trafficking, illicit arms trafficking, money laundering, corruption, counterfeiting of means of payment, computer crime and organised crime’.

This authority extends not only to the ‘definition of criminal offences’ but also to the ‘sanctions’ associated with them. These sanctions include prison terms and other penalties within the framework of criminal law. However, these are considered ‘minimum rules,’ enabling Member States to implement more stringent measures within their own legal systems.

Since the Treaty of Lisbon came into effect in 2009, the EU has enacted Directives addressing most of the ten Eurocrimes, largely replacing pre-Lisbon EU laws. The exceptions are arms trafficking, corruption, and organized crime, though pre-Lisbon EU laws concerning the latter two do exist. A 2023 proposal seeks to update the law regarding corruption, and other EU firearm legislation exists, though it stops short of enacting criminal penalties for arms trafficking. However, the recently agreed-upon EU Directive on criminal law concerning EU foreign policy sanctions will encompass certain arms trafficking activities.

Legal Framework: EU Foreign Policy Sanctions

A body of EU law already governs this domain, drawing on the EU’s power to establish Decisions on foreign policy sanctions (and other foreign policy matters). This is based on Article 29 of the Treaty of European Union (TEU), in conjunction with Article 215 TFEU. Article 215 enables the mirroring of most of these foreign policy sanctions in standard EU law, typically in the form of Regulations.

While Article 215 stipulates qualified majority voting among Member States in the Council, unanimity is the de facto rule. This stems from the TEU’s foreign policy provisions, requiring unanimity (with minor exceptions) for adopting EU foreign policy measures that Article 215 legislation enacts. The Commission suggested eliminating this unanimity requirement a few years ago, but Member States did not agree (as this change would also require unanimous consent).

The EU has implemented numerous foreign policy sanctions and faced substantial litigation over the years. This litigation primarily consists of direct challenges to these sanctions’ legality by the affected individuals, companies, or even States in the EU General Court. Appeals against this court’s judgments can be made to the CJEU. National courts have also occasionally petitioned the CJEU regarding the interpretation or validity of sanctions decisions. While the CJEU generally lacks jurisdiction over EU foreign policy measures – a limitation the Court has been gradually circumventing – it maintains its regular jurisdiction over foreign policy sanctions as an exception to this exception, as stated in Article 275 TFEU).

Specifics of the Decision

It is crucial to note that the Decision expanding EU authority pertains solely to violations of EU foreign policy sanctions, not to breaches of purely national foreign policy sanctions. The recently agreed-upon Directive upholds this distinction, applying exclusively to EU sanctions.

However, both the authority and the Directive extend beyond breaches related to the Russian invasion of Ukraine, despite this invasion being the impetus for their creation. The Commission’s proposal for the Decision highlighted the EU’s forty active sanctions regimes, targeting not just nations but also ‘proliferation and use of chemical weapons, cyberattacks, human rights violations and terrorism’. (Further details are available on the Council website, particularly its sanctions map). Anti-terrorism sanctions have been in place for some time, prompting high-profile litigation in cases like those involving Mr Kadi or Hamas. Though relatively recent, human rights sanctions may intersect with other sanctions, as seen in the sanctions against Putin’s former allies, the Wagner Group, which address both human rights violations and other EU sanction measures.

The Decision’s preamble and the recently agreed-upon Directive clarify the broad range of sanctions covered. These encompass not just economic sanctions, like trade or financial restrictions, but also territorial entry bans (implemented by listing sanctioned individuals in the Schengen Information System) and arms embargoes. 

The Agreed-Upon Directive

Fundamental Rules

The Directive mirrors other Directives in this field, such as the Directive on harmonizing criminal law concerning terrorism, but also introduces new elements. It represents the EU’s first step towards establishing criminal law pertaining to EU foreign policy sanctions.

It’s important to emphasize that, as stated in the Decision’s preamble, the Directive won’t criminalize EU foreign policy sanctions violations for the first time in most Member States. Similar to issues like terrorism and drug trafficking, most national laws already classified these as offenses. However, the specifics of these national laws likely varied more before the EU’s involvement. The EU aims to harmonize these national laws to some extent. 

Member States have one year from the Directive’s formal adoption to implement it (update: the published Directive sets the deadline as 20 May 2025). This is longer than the Commission’s proposed six months but shorter than the typical two-year implementation period for Directives.  

As mentioned earlier, the Directive, like the Decision on competence, will apply broadly to all EU foreign policy sanctions, not just those against Russia.

Denmark maintains its opt-out of EU criminal law adopted post-Lisbon Treaty, while Ireland has opted in.

Defining Offenses

The Directive mandates that Member States criminalize nine categories of EU sanctions violations. These can be summarized as: providing funds to sanctioned individuals; failing to freeze assets of sanctioned individuals; facilitating the entry or transit of someone subject to an EU sanctions-related entry ban (essentially an immigration offense potentially overlapping with existing EU law on facilitating illegal entry and residence – itself subject to a recent replacement proposal); engaging in transactions with sanctioned entities; trading goods or services under EU sanctions; providing financial services despite EU sanctions; providing other services prohibited by sanctions; circumventing sanctions; or misusing exceptions within sanctions law.

Member States can choose (an option absent in the Commission’s proposal) to exempt violations involving sums below €10,000 from criminalization. However, in cases of multiple linked minor breaches, Member States must aggregate them to potentially reach the €10,000 threshold. (This threshold doesn’t apply to entry bans, as a financial threshold is not applicable).

Intentional breaches must be criminalized in all cases. ‘Serious negligence’ leading to a breach must also be criminalized concerning trade in arms or dual-use goods under sanction. The Commission had proposed criminalizing ‘serious negligence’ more broadly.

A novel clause, different from the Commission’s proposal, addresses the role of lawyers advising those accused of sanctions violations:

Nothing in paragraph 1 shall be understood as imposing an obligation on legal professionals to report information that they receive from, or obtain on, one of their clients, in the course of ascertaining the legal position of their client, or performing the task of defending or representing that client in, or concerning, judicial proceedings, including providing advice on instituting or avoiding such proceedings

An exemption exists for goods or services intended for individuals in need or humanitarian aid, although EU sanctions law generally includes exceptions for such situations.

Inchoate offenses, such as incitement and (in most cases) attempts, are criminalized, as are aiding and abetting.

Penalties

For most primary offenses (excluding inchoate offenses), Member States must implement a maximum penalty of at least five years. For most other primary offenses, a one-year maximum applies, contingent on a €100,000 threshold (which, again, can be met through a series of linked offenses). This financial threshold is waived in two instances: entry ban violations and trade in sanctioned arms or dual-use goods. Violations of entry bans carry a three-year maximum penalty.

More broadly, Member States must implement supplementary penalties for any of the offenses outlined in the Directive. These include fines, permit revocations, and, uniquely for EU criminal law, temporary bans on running for public office.

The Directive also addresses legal persons, who are subject to penalties like business closures or license revocations. This is a more extensive list than typically found in EU criminal law Directives. It specifies potential fine amounts, including basing them on annual turnover – a method previously employed in non-criminal EU law areas like competition law and the GDPR.

The Directive mandates stricter penalties in specific cases (e.g., organized crime, breaches of duty by public officials or professionals, obstruction of justice, or prior convictions). Conversely, it allows for mitigated penalties in other situations (e.g., when an offender provides information about their criminal associates).

Additional Provisions

As is standard in EU criminal law Directives, criminal jurisdiction applies to acts committed within a Member State’s territory, on a ship or aircraft bearing its flag, or by its nationals. Member States have the option to extend liability to habitual residents.

Unusually, the Directive includes rules on statutes of limitations, outlining time limits for prosecutions or sentence enforcement. In most cases, the statute of limitations is five years, with a potential derogation to a minimum of three years if specific actions can interrupt this period. Previously, EU law only regulated this aspect for fraud against the EU budget (though the agreed Directive on environmental crime includes limitation rules, and the proposal on violence against women would also address this).

Finally, the Directive connects with other EU legislation, such as laws on money laundering and confiscation (the latter is currently undergoing revision). A novel link exists with EU legislation on whistleblowers, requiring this law to protect those within companies or organizations who report sanctions breaches. Notably, there’s no proposed amendment to the European Arrest Warrant legislation, despite violations of EU foreign policy sanctions not being explicitly exempt from the dual criminality condition for extradition. However, prosecutions or sentences for sanctions breaches may fall under areas where dual criminality is waived (like terrorism or organized crime). Additionally, the harmonization Directive increases the likelihood of fulfilling the dual criminality condition (a possibility even under existing conditions due to the foreign policy sanctions measures themselves). 

Observations

Gauging the Directive’s potential impact is challenging for several reasons.

Firstly, it’s difficult to ascertain the Directive’s practical impact without a clearer understanding of the specific changes it will necessitate in national laws. As noted, while the Directive aims for harmonization, Member States already possess relevant criminal laws.

Secondly, the effectiveness of criminal law, much like non-criminal forms of conduct regulation, hinges on the availability of resources and expertise for investigation and prosecution. In this regard, the potential expansion of the European Public Prosecutor’s Office (EPPO) authority to include breaches of EU foreign policy sanctions was suggested by the German and French justice ministers. This would be significant but hasn’t been revisited since the Directive’s proposal. (Expanding EPPO’s purview requires unanimous agreement from Member States, though some have opted out of EPPO. The Commission’s proposal to extend its authority to include terrorism is still pending).

While the EU’s expanded authority might be perceived as a power grab, it’s important to note its exceptional nature. More than fourteen years after the Lisbon Treaty, this marks the sole instance of such authority expansion. In contrast, Member States haven’t yet approved an earlier proposal to broaden Eurocrimes to include hate speech and hate crimes. Neither have they agreed to the proposal to eliminate unanimous voting for certain foreign policy measures or in various other areas proposed by the Commission years ago.  

The Directive introduces several novel elements within the context of EU criminal law. These include: the specific rule concerning lawyers; the penalty of barring individuals from running for office (relevant due to the potential for politicians to violate sanctions); the detailed regulation of financial penalties, drawing inspiration from other (non-criminal) EU law areas; the inclusion of obstruction of justice; and the link with the whistleblowers law. This is only the second instance of the EU agreeing to regulate statutes of limitations (though the revised environmental crime directive, also containing similar provisions, was approved nearly simultaneously).

The stricter treatment of arms trade violations in breach of sanctions is noteworthy, given the EU’s historical reluctance to categorize this as a Eurocrime. This stricter stance is understandable in the context of foreign policy sanctions, as the arms trade directly contributes to the casualties that EU sanctions aim to prevent.

The EU’s response to the Russian invasion of Ukraine is evident in the expanded authority and the utilization of criminal law powers. This response also includes, in principle, the initiation of accession negotiations, the use of EU defense powers, and the unprecedented implementation of the temporary protection Directive. While the expanded authority and the enforcement of criminal law alone won’t stop the invasion – and the agreed Directive extends to other EU sanctions – they may contribute to the effective implementation of sanctions designed to counter the invasion. At a minimum, these actions send a clear political message: the EU is intensifying its enforcement efforts.