EU Court Says Ban on Brokering Services Applies Even If Goods Never Entered EU
The EU Court of Justice on Sept. 10 said the restriction on providing brokering services in relation to military equipment to parties in or for use in Russia applies even when the goods were never imported into an EU member state, according to an unofficial translation. The court said if this weren't the case, then the "prohibition could easily be circumvented" by shipping equipment on a route that didn't pass through EU territory.
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The court added that a member state can automatically seize the full amount received for the provision of the barred brokering services.
The dispute arose from a transaction in which Romanian aeronautics firm Neves 77 Solutions acted as an intermediary between Ukrainian company SFTE Spetstechnoexport and an Indian company. In January 2019, Neves contracted with SFTE to transfer ownership rights of 32 radio systems. Neves bought the goods from a Portuguese company, and 20 of the radio systems were made in Russia. All the systems eventually made their way to the Indian company.
The Romanian export control agency told Neves the radio systems fell under a list of controlled military products, requiring licenses for export. Neves argued that the radio systems didn't have military applications and that the restriction on the provision of brokering services didn't apply because the systems hadn't been sold in Russia but rather were delivered to India. The agency rejected this claim and confiscated the proceeds from the transaction. The resulting case, initially filed in a Romanian court, was referred to the EU Court of Justice.
The court said the law "must be interpreted as meaning that the prohibition on providing brokering services set out in that provision is applicable even where the military equipment which is the subject of the brokering transaction concerned has never been imported into the territory of a Member State." The decision added that the full confiscation of the proceeds "appears to be necessary in order to genuinely and effectively deter economic operators from infringing the prohibition on providing brokerage services in relation to military equipment."