EU economic sanctions and international sport | In Principle

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EU economic sanctions and international sport

Clubs are withdrawing from Russian leagues and foreign players are terminating contracts with Russian clubs. This is not just a protest against the war, but a rational step in the face of EU economic sanctions. And possibly the biggest shocks are still to come.

The economic sanctions now being imposed by the European Union because of the Russian invasion of Ukraine are unprecedented in scale. They include restrictive measures consisting of freezing of funds and economic resources of listed individuals and organisations and a ban on making any such funds or resources available to them.

The list of minions and enablers of Russian dictator Vladimir Putin on whom the restrictive measures have been imposed includes numerous names connected to Russian sport. Understanding how the restrictive measures imposed by the EU work sheds light on the conduct of European athletes, clubs and sport federations, which are nervously cutting themselves off from Russian organisations, owners and sponsors.

The EU or any of its member states cannot simply nationalise the assets of disgraced Russian companies, oligarchs or dignitaries. Those assets are mostly beyond the reach of European law, in Russia or other third countries. Even when they are situated in the EU, a simple taking of such assets by the EU or a member state is not an option, because it would violate international law. According to one of its most fundamental principles, an alien’s property can only be taken by the state for public purposes and, as a matter of principle, upon prompt payment of adequate compensation.

Therefore, sanctions vividly described as “freezing” of assets of blacklisted entities actually involve something rather different. They essentially impose restrictions and obligations on the nationals of the state imposing them. A state imposing sanctions on a foreigner essentially obliges its own nationals (individuals or entities within its jurisdiction) not to take actions towards that foreigner which would allow him to use his assets, wherever they are located. The person to whom the sanctions are targeted thus becomes “toxic” for nationals of the sanctioning state. Those nationals cannot accept funds or other economic resources from such a person or make them available to him—under sanction of penalties that, according to EU law, must be sufficiently severe to be effective. The goal is to paralyse the activity of the sanctioned persons and prevent them from using their assets, but without the state actually taking the assets. The more relevant and important the sanctioning state and its nationals and institutions are for the sanctioned individual’s ability or freedom to use the assets, the more effective the measure.

Importantly, restrictive measures taint not only the blacklisted person but also all entities controlled or managed by or associated with that person. This is meant to ensure that the sanctioned persons cannot use assets not formally belonging to them but held by controlled, managed or associated entities, and that the person in question cannot receive or transfer and use funds or resources via such entities.

The current EU sanctions list includes for example Gennady Timchenko, chairman of Russia’s fabulously rich Kontinental Hockey League, which comprises not only European players but also several European clubs. This sheds a little light on the decision of two of those clubs, Dinamo Riga and Helsinki Jokerit, to withdraw from the league. Undoubtedly, the step was meant to protest Russia’s war against Ukraine. But it may also have been taken out of prudence, for the clubs not to fall foul of EU sanctions, if they are interpreted to apply not only to Timchenko himself but also to the whole KHL as an organisation managed by him. The “association” requirement used in these EU measures is flexible enough to create a real risk of the club being hit by sanctions if it did not distance itself. Jokerit’s situation is also complicated by the fact that the oligarch reportedly also owns the team’s home arena in Helsinki.

The decision of Polish footballer Grzegorz Krychowiak to terminate his contract with FC Krasnodar may have had a similar sanctions dimension, apart from a protest against the war. The club is owned by Sergey Galisky. Although he does not feature on the EU sanctions list, he was reportedly once blacklisted by the US. Krasnodar’s foreign players, who all terminated their contracts, may have been not only agitated by Krychowiak, as the Polish media portray it, but also motivated by the realisation that they could soon find themselves unable to accept payments from the club, and therefore it might be worth seeking a new employer.

Finally, it is possible that EU economic sanctions had a bearing on FIFA’s and UEFA’s decisions to suspend the Russian national team and Russian clubs from competing in international competitions. The Football Union of Russia was managed not long ago by Sergey Fursenko, a friend of Putin’s from St Petersburg, already sanctioned by the Americans and the Ukrainians, who enacted their own sanctions against several acolytes of the Russian dictator after Russia illegally annexed Crimea. Currently Fursenko is an executive at UEFA. If the EU decided to put him on the sanctions list, that could have significant legal consequences for the organisation and its member federations, including the Polish Football Association.

Ostracising the Russian national team and Russian clubs, initiated by the Polish federation, is therefore not only a welcome sign of protest and condemnation of Russian sport intertwined with dirty Putinist politics, but an act of prudence which may be necessary to convince the EU that international federations can be trusted to put their houses in order without government help. It may also be a sign of preparation in the event that Russian executives sitting in those federations are included on EU sanctions lists—which, if they are not removed from their posts (which may not be easy at all), would bring significant legal trouble to those international federations as such. In such case, the suspension of Russian teams from participation in international competitions may be just a prelude to major shocks to the international world of sports which are yet to occur.

Stanisław Drozd, adwokat, Sports Law practice, Wardyński & Partners