Factual and legal background

In view of the continuing deterioration of democracy, the rule of law and human rights in Venezuela, the EU adopted restrictive measures against that country. ^{Footnote 2} The measures were challenged by the Bolivarian Republic of Venezuela before the General Court of the European Union. This resulted in the 2019 judgment in Case T-65/18, ^{Footnote 3} where the General Court rejected the action on procedural grounds, as it held that Venezuela had not demonstrated that it was directly concerned by the measures within the meaning of the fourth paragraph of Article 263 TFEU. For the challenge to be admissible, Venezuela needed to demonstrate both that it was a ‘legal person’ and that it was ‘directly concerned’ by the contested measures, to the extent that these were a regulatory act not entailing implementing measures.

The General Court found that the challenged restrictive measures did not concern Venezuela directly, because they did not impose prohibitions on Venezuela, which was not a target mentioned in the Annex to the sanctions. At most, the contested measures only had indirect effects on that country: they ‘targeted’ Venezuela only insofar as they prohibited natural or legal persons of EU member states to provide goods and services to economic operators established in Venezuela.Footnote ⁴ This finding made it unnecessary to examine whether that country was a legal person for the purposes of Article 263 TFEU.

On appeal, Venezuela challenged the General Court’s decision. The Court raised of its own motion the question whether Venezuela was a legal person. The judgment hinged on that issue and, should the answer be in the affirmative, on whether Venezuela was directly concerned by the contested measures. On the legal personhood question, Venezuela argued that neither the wording of the fourth paragraph of Article 263 TFEU nor the objective or the context of that provision provide any indication – even indirectly – that would allow it to be excluded from the concept of ‘legal person’. ^{Footnote 5} The Council argued that a third state should not be regarded as a ‘legal person’ within the meaning of the fourth paragraph of Article 263 TFEU unless specific rights had been conferred on it within the EU legal order by way of an agreement concluded with the EU (which was not the case in this instance). Granting standing to Venezuela, the Council contended, would ‘unduly restrict the EU in the conduct of its policies and international relations’. ^{Footnote 6} The absence of reciprocity means that sovereign decisions of the EU could be challenged by a third state, but not the other way around. This would amount to conceding to third countries a way of solving international disputes which would be precluded to the EU. The Commission instead argued that if states voluntarily submit to the jurisdiction of the Court, a teleological interpretation of Article 263 TFEU does not prevent the Court from hearing such a case.

On the issue of direct concern, Venezuela argued that its not being listed in the Annex, or its not acting as economic operator, was irrelevant for the purpose of establishing that the contested measures directly affected it. It argued instead that, by prohibiting exports of certain items and services to Venezuela, the contested provisions had significant direct factual and legal effects against it. ^{Footnote 7} Venezuela also argued that the contested measures were regulatory acts not requiring implementing measures, and therefore individual concern was not a necessary condition to establish its standing. ^{Footnote 8} The Council, instead, argued that the General Court’s reasoning was correct.

The Opinion of the Advocate General

The Opinion of Advocate General Hogan considered whether the appellant was a legal person for the purposes of the fourth paragraph of Article 263 TFEU and, since it answered in the affirmative, whether it was directly concerned by the restrictive measures in question, which was also answered in the affirmative, in explicit disagreement with the General Court.

On the legal personhood of Venezuela, the Advocate General argued that international practice and the associated principles of comity entailed that sovereign states should be able to sue in the courts of other sovereign states. ^{Footnote 9} Comity is a judicial tool frequently used by US tribunals that promotes cooperation between domestic courts and third states. It directs courts or tribunals to engage in acts of restraint or recognition, which can include discretionary abstention in a case where it is foreseen that it could result in jurisdictional conflicts with other courts, recognising judgments of foreign courts or tribunals, or presuming that foreign laws or acts are valid. ^{Footnote 10} In the case of Sabbatino, the US Supreme Court held that comity also allows sovereign states to sue in the courts of the United States. ^{Footnote 11} Advocate General Hogan held that comity also applies in the EU and allows third states to bring challenges before EU courts. It thus requires EU courts to admit that third states have legal standing under Article 263 TFEU. ^{Footnote 12}

The European Court of Justice had incidentally considered whether a third country may bring an action under the fourth paragraph of Article 263 TFEU on previous occasions. ^{Footnote 13} The Court had interpreted broadly the notion of legal person for the purposes of that provision. Advocate General Hogan contended that the precedent of PKK and NKK v Council ^{Footnote 14} suggested that the requirement of being a legal person was indeed not even a necessary condition to establish standing. He further argued that, if Venezuela could establish that it was directly and individually concerned by an EU measure, it ‘must have access to the EU courts to protect its rights, irrespective of its legal qualification under national, international or perhaps indeed EU law’. ^{Footnote 15}

On the direct concern, the Advocate General voiced strong disagreement with the reasoning of the General Court, which he referred to as being ‘highly artificial and unduly formalistic’. ^{Footnote 16} First, Venezuela was directly included in the text of the restrictive measures because these prohibit the sale of equipment to ‘any legal person, entity, or body (…) in Venezuela’ (Articles 3, 6 and 7 of the contested measure), thus including ‘Venezuela’s government, public bodies, corporations or agencies, or any person or entity acting on their behalf or at their direction’. ^{Footnote 17} Second, the fact that ratione loci and ratione personae the restrictive measures only ‘apply’ on EU territory does not bear relevance for the issue of direct concern, as the sanctions clearly affect Venezuela’s legal situation. ^{Footnote 18} This finding is also true for restrictive measures of general application, imposing obligations on persons and entities defined in abstract. ^{Footnote 19}

Even though the restrictive measures challenged by Venezuela were ‘a regulatory act and [were] thus sufficient to show that [Venezuela was] directly concerned by that measure’, ^{Footnote 20} Advocate General Hogan concluded that ‘the inclusion of persons or entities subject to restrictive measures in a list results in the persons or entities being both directly and individually concerned by the measures’. ^{Footnote 21}

The judgment

The Grand Chamber raised of its own motion the question whether Venezuela was a ‘legal person’ within the meaning of the fourth paragraph of Article 263 TFEU. It considered that the concept of ‘legal person’ should have an autonomous meaning in EU law since the Treaty does not refer to national law. The Court referred to its previous case law, which included under the broad concept of ‘legal person’ local or regional entities, ^{Footnote 22} private and public entities, ^{Footnote 23} and ‘organisations without any legal personality under national law, EU law or international law’. ^{Footnote 24} Consistency and fairness required that if ‘an entity has an existence sufficient for it to be subject to restrictive measures (…) that entity also has an existence sufficient to contest those measures’. ^{Footnote 25} Similarly, a teleological reasoning militated in favour of the conclusion that effective judicial review, designed to ensure compliance with the rule of law, should be interpreted as allowing a third country to bring proceedings as a legal person on par with other natural or legal persons. ^{Footnote 26} The Court added that the lack of reciprocity could not call into question that finding. ^{Footnote 27}

The Grand Chamber also found that Venezuela was directly concerned by the contested measures. First, while it is true that the contested measures were formally addressed to EU operators,Footnote ²⁸ the fact that those operators were prohibited from carrying out certain transactions with Venezuela also implied that Venezuela was prohibited from carrying out those transactions with EU operators. ^{Footnote 29} The contested provisions were immediately and automatically applicable. ^{Footnote 30} Second, the wording of the contested provisions left no discretion to the addressees responsible for implementing them. ^{Footnote 31} The sanctions constituted a regulatory act not requiring implementing measures because they are non-legislative acts of general scope. ^{Footnote 32} Hence, individual concern is not necessary under the last sentence of the fourth paragraph of Article 263 TFEU and Venezuela did have standing to challenge the measures. For these reasons, the action brought by Venezuela was admissible and the Court referred the case back to the General Court for judgment on the merits.

Evolution of the EU legal order: from autonomy to openness

The decision in Venezuela is a statement of principle on the role of the EU in international relations. ^{Footnote 33} It is an affirmation of distinctiveness, and therefore in line with the case law on the autonomy of the EU legal order. Previous cases show the Court’s protectionist approach towards the EU constitutional sphere: the ‘new legal order’ recognised in Van Gend en Loos defined autonomy in a negative fashion: ‘EU law is not public international law’. ^{Footnote 34} The EU legal system was later ‘shielded’ from international law. A legal manifestation of the principle of autonomy was articulated by the Court in the condition that a decision-making body outside the EU legal system ‘must not have the effect of binding the EU and its institutions, in the exercise of their internal powers, to a particular interpretation of the rules of EU law’. ^{Footnote 35} For example, in Opinion 1/17, the Court clarified that the Union (or a member state when implementing EU law) must not be in a position ‘to amend or withdraw legislation because of an assessment made by a tribunal standing outside the EU judicial system’. ^{Footnote 36} Similarly, as established in Kadi, the commitment to respect EU law, and in particular fundamental rights, will take precedence even over international law obligations of member states. ^{Footnote 37} The Court also limited the direct effect of international agreements in the EU legal order, by subjecting it to strict conditions. ^{Footnote 38}

Yet, autonomy can also be shaped ‘in a positive fashion’: the EU legal order has a number of distinctive features that reveal its ‘capacity to operate as a self-sufficient system of norms’. ^{Footnote 39} The very existence of the EU Charter of Fundamental Rights (and the room for an autonomous interpretation under Article 52(3) of the Charter ^{Footnote 40} ), as well as other characteristics outlined in Opinion 2/13, is evidence of this ‘positive’ autonomy.Footnote ⁴¹

While some decisions cushioned the EU legal order from actual or potential ‘interference’ from international law (defining autonomy ‘in a negative fashion’), Venezuela tolerates acts which amount to external interference but do not adversely affect the autonomy of EU law.Footnote ⁴² This judgment clarifies that the EU constitutional order is not afraid to be put to the test, even when the legal challenge comes from a state which is not a liberal democracy and could thus be regarded as a political rival. ^{Footnote 43} The attitude may differ – defensive in previous cases, bolder in Venezuela – but the result is the same: a statement of the autonomy whereby the EU can carry out confidently and even assertively its foreign affairs, while fully respecting the core values of a Union based on the rule of law and respect for fundamental rights. One could thus read the judgment as suggesting that accepting challenges strengthens the EU foreign policy. This position contrasts with the Council’s contention that allowing Venezuela to challenge sanctions would weaken the EU position in international relations, and shows confidence in the EU judicial system instead.

In allowing a third country to challenge EU law before EU courts, the Court of Justice of the European Union not only rejects a requirement of reciprocity, it also requires no form of quid pro quo from the international legal order for the protection of third countries’ interests, self-reliantly taking on a challenging task. Yet, the Court does not go a step too far. First, the decision is a statement of principle because the innovative step is a procedural rather than a substantive one. The decision on the substance is referred back to the General Court. Second, the judgment does not put Venezuela on a par with member states (which are privileged applicants under Article 263 TFEU) or with other third countries on which the member states have decided to confer certain privileges. ^{Footnote 44}

The influence of public international law on EU foreign affairs

The Opinion and the Judgment in Venezuela invite reflections on the influence of public international law on EU foreign affairs. In Venezuela, both the Advocate General and the Grand Chamber refer to concepts of public international law, underlying that those can influence how the EU’s external action, including the Common Foreign and Security Policy, is to be conducted. There are three concepts among the legal issues in Venezuela that can be examined from an international law perspective: the doctrine of state immunity; comity; and the principle of reciprocity.

The application of the doctrine of state immunity was raised by the Council and the European Commission, and was considered in Advocate General Hogan’s Opinion. The Council argued that Venezuela had the right not to submit to the jurisdiction of the European Court of Justice unless it had consented to it. ^{Footnote 45} This argument is related to the international law doctrine of state immunity, according to which a sovereign state cannot be subjected to the proceedings of a foreign court unless it has consented to it. ^{Footnote 46} The European Commission’s position was more nuanced. It made a distinction between acts carried out by the state in a private capacity (acta jure gestionis) and acts carried out in the exercise of state sovereignty (acta jure imperii), arguing that a state cannot be subjected to the jurisdiction of another state in relation to acts carried out in a sovereign capacity. ^{Footnote 47} This is in line with the understanding of state immunity found in public international law. ^{Footnote 48} However, as rightly pointed out by Advocate General Hogan, none of these arguments could be successful. The doctrine of state immunity aims at ensuring that a state cannot be sued before the courts of another sovereign state without its consent (légitimation passive). ^{Footnote 49} This doctrine does not limit the legal standing of Venezuela to bring an action against the Council before EU courts (légitimation active). ^{Footnote 50} A state has the right to bring proceedings before the courts and tribunals of another state. ^{Footnote 51}

It is not the first time that the doctrine of state immunity has been invoked before the European Court of Justice. ^{Footnote 52} In Rina, the Court refused to extend state immunity to private undertakings even if they performed tasks entrusted by states. In Mahamdia, the Court affirmed that employment contracts concluded by the embassy of Algeria in Germany were not covered by state immunity, which did not extend to acts performed jure gestionis. ^{Footnote 53} From these rulings, it has been contended that the case law of the European Court of Justice tends to narrow down the scope of state immunity. ^{Footnote 54} Venezuela v Council does not add to that line of reasoning, as the Court correctly does not make any comment on immunity, but it is interesting to see how this principle is used by the different parties to the proceedings.

Principles of international comity are used by Advocate General Hogan to interpret the notion of ‘legal person’ under Article 263, fourth paragraph, TFEU. ^{Footnote 55} Advocate General Hogan argued that, in accordance with ‘principles of international comity’, the notion of ‘legal person’ should be interpreted as including third states that challenge EU measures in their sovereign capacity as international legal persons. ^{Footnote 56} Although the Court did not rule on this point, it deserves some attention, as it is unclear whether comity can really be considered a doctrine in public international law and, if so, whether it should have any weight on the Court’s reasoning.

Comity presents opportunities for EU external action but it also raises some questions. Comity might constitute an interesting tool with which the EU could conduct its foreign relations, as it could positively shape EU relations with the outside world. ^{Footnote 57} By allowing third states to bring suits before EU courts, comity would enhance dialogue and create a cooperative environment between domestic courts and third states. For this reason, comity could contribute to some of the EU’s objectives in its external relations. It could develop relations and build partnerships with third countries and international organisations. ^{Footnote 58} It could also promote ‘an international system based on multilateral cooperation and good global governance’. ^{Footnote 59} Additionally, by promoting dialogue between domestic and foreign courts, comity could also solve some of the conflicts raised by the proliferation of international courts and tribunals. ^{Footnote 60}

However, the reasoning of Advocate General Hogan on comity raises several questions. First, comity seems to be, for the time being, a domestic law doctrine. ^{Footnote 61} It is mainly used by the US Supreme Court to recognise foreign law and foreign judgments, and to allow foreign states to bring suits as plaintiffs before domestic courts. It is also used to limit the reach of American law and the jurisdiction of American courts over foreign sovereign defendants. ^{Footnote 62} Yet, Advocate General Hogan did not elaborate on how this US doctrine had been integrated in the EU legal order. Second, reliance on principles of comity to admit the possibility for third states to bring challenges before the Court of Justice of the European Union could also raise reciprocity concerns, as foreign courts might not be as cooperative with EU member states and the EU itself.

Reciprocity concerns were precisely mentioned by the Council in Venezuela and briefly examined by the Court in its judgment. Reciprocity is considered a basic principle of international law, since there is no overarching legal authority enforcing the law of nations. ^{Footnote 63} Reciprocity is also an important concept governing relations between the EU and third countries. An important body of case law in this regard concerns the review of legality of EU acts in light of World Trade Organisation agreements. In Portugal v Council, the Court denied the possibility of reviewing EU acts against World Trade Organisation agreements based on lack of reciprocity, as some contracting parties did not consider such agreements to be among the rules in light of which the legality of domestic law could be reviewed. ^{Footnote 64} Reciprocity was also used by Advocate General Bot in Opinion 1/17 to justify the lawfulness of the Investor-State Dispute Settlement mechanism established in the Comprehensive Economic and Trade Agreement. He affirmed that reciprocity was ‘one of the guiding principles of the EU’s external relations’. ^{Footnote 65} He further argued that the EU could not base its relations with third states on mutual trust and that, when negotiating an agreement with a third state, the EU needed to ensure that reciprocity would apply. ^{Footnote 66} Reciprocity is therefore a concept that is frequently relied upon in EU external relations law, and the reasoning of the Council is in line with that case law.

However, the Court rejected the idea that reciprocity concerns should dictate the Court’s conclusions in Venezuela, by affirming that respect for the rule of law should prevail over any reciprocity concerns. ^{Footnote 67} This is justified in light of the legal background of the judgment in Venezuela and its differences from the above-mentioned case law. First, Portugal v Council and Opinion 1/17 deal with the Common Commercial Policy, whereas Venezuela concerns restrictive measures. Reciprocity, the case law appears to say, is a relevant consideration in the former area, not in the latter. This seems in line with the Court’s belief that some fields of external action (such as trade and investment) are ‘based on reciprocal and mutually advantageous arrangements’, ^{Footnote 68} whereas others (such as the protection of fundamental rights ^{Footnote 69} ) are not. Second, the previous cases concerned access to courts by individuals and companies, not by a state. The lack of reciprocity in the Venezuela scenario would simply entail that, if Venezuela adopted sanctions against the EU, member states would not be allowed to challenge those measures in Venezuela’s courts. ^{Footnote 70} Other economic operators, such as EU companies, might still be able to do so, and this would presumably be a question of Venezuelan procedural law. In other words, the absence of reciprocity is unlikely to have a serious economic impact on EU economic operators. Third, both in Portugal v Council and in Opinion 1/17, the reciprocity argument was raised with regard to an international agreement concluded between the EU and third states. By contrast, there is no such international agreement in Venezuela. Instead, the case concerns a unilateral act of the EU. This means that the reciprocity argument in Venezuela has a purely hypothetical nature. Venezuela has not imposed any restrictive measures on the EU, so whether the EU or its member states could bring actions before Venezuelan courts is a much more remote question than, say, the (lack of) reciprocity afforded by a state who is an EU contracting partner and with whom there is already an agreement in place. The Court did not elaborate on these arguments and simply stated that the obligation to preserve the rule of law should prevail over any reciprocity concerns. The decision not to require reciprocity in this case is, therefore, a conscious choice to underline the importance of EU values, notably the rule of law and the principle of effective judicial protection.

Procedural law and judicial protection in the context of EU sanctions