Skip to content Background of the Case
The dispute arose in Italy and was referred to the CJEU by the Consiglio di Stato (Italy’s Council of State).
The Minister of Culture awarded a public tender to Scudieri International. Two of the three members of the administrative board of that company were Russian nationals. One of those members was also the sole administrator of Sielna SpA, the parent company of Scudieri International, incorporated under Italian Law.
Legal background
Article 5k of the EU Regulation 833/2014 provides the EU sanctions framework introduced in response to Russia’s actions in Ukraine. The provision restricts the award of public contracts to certain Russian entities or to companies acting on their behalf or under their direction.
Issue
Does the presence of Russian nationals on a company’s board automatically trigger a prohibition on awarding that company a public contract under EU sanctions law?
Ruling
The CJEU ruled that the mere nationality of board members is insufficient to bring a company within the scope of the sanctions prohibition.
Instead, contracting authorities must assess whether:
- The individuals in question exercise effective control over the company; and
- There is a real and demonstrable risk that public funds could directly or indirectly benefit a sanctioned person or entity (in this case, Russia).
The Court emphasized that sanctions must be applied based on substantive influence and control, not assumptions tied solely to citizenship.
Impact
Companies based in the EU can apply for public tenders even when their administrative board include persons with the nationality of a country from a sanctioned country. Nonetheless, the company should ensure that this person does not represent a risk of a breach to the sanction.
For more information and assistance about similar issues, please visit our Global Mobility service page and feel free to contact us.