Provisional text

delivered on 26 June 2025 (1)

Case C‑313/24

Opera Laboratori Fiorentini SpA

Ministero della Cultura,

Gallerie degli Uffizi,

joined party:

Scudieri International Srl

(Request for a preliminary ruling from the Consiglio di Stato (Council of State, Italy))

( Reference for a preliminary ruling – Common foreign and security policy (CFSP) – Restrictive measures taken in view of Russia’s actions destabilising the situation in Ukraine – Regulation (EU) No 833/2014 – Article 5k(1)(c) – Prohibition on awarding and continuing the performance of public contracts to or with Russian nationals and entities or bodies established in Russia – Concept of acting ‘on behalf or at the direction of’ an ‘entity’ – De facto control – Circumstances requiring further examination by the contracting authority – Assessment based on all relevant legal and factual circumstances )

The present request for a preliminary ruling concerns the interpretation of Article 5k(1)(c) of Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, (2) as amended by Regulation (EU) 2022/576. (3)

The request has been made in proceedings between Opera Laboratori Fiorentini SpA and several Italian public and private entities concerning the award of a 10-year public contract worth EUR 8.89 million for running indoor bar and restaurant services at the Pitti Palace and Boboli Gardens, which form part of the Uffizi Gallery museum complex in Florence (Italy) (‘the contract at issue’).

Opera Laboratori Fiorentini, which ranked second in the public procurement procedure, challenged the decision to award the contract to Scudieri International Srl in an action brought before the Tribunale amministrativo regionale per la Toscana (Regional Administrative Court, Tuscany, Italy), arguing that the award is contrary to the prohibition laid down in Article 5k(1)(c) of Regulation No 833/2014 on the ground that two out of the three directors of Scudieri International are Russian nationals, and one is also the chairman of the board of directors and chief executive officer of that company, as well as the sole director of Sielna SpA (‘the parent company’), a company that holds 90% of the shares in Scudieri International.

I.Legal framework

Article 5k(1) of Regulation No 833/2014, as it was worded at the time relevant to the present case, provides that it is prohibited to award or continue the execution of any public or concession contract falling within the scope of the relevant public procurement directives, to or with:

(a)‘(a) a Russian national, or a natural or legal person, entity or body established in Russia;

(b)a legal person, entity or body whose proprietary rights are directly or indirectly owned for more than 50% by an entity referred to in point (a) of this paragraph; or

(c)a natural or legal person, entity or body acting on behalf or at the direction of an entity referred to in point (a) or (b) of this paragraph,

including, where they account for more than 10% of the contract value, subcontractors, suppliers or entities whose capacities are being relied on within the meaning of the public procurement Directives.’

Article 12 of Regulation No 833/2014 provides as follows:

‘It shall be prohibited to participate, knowingly and intentionally, in activities the object or effect of which is to circumvent prohibitions in this Regulation. ’

II.The dispute in the main proceedings and the question referred for a preliminary ruling

Following the open electronic public procedure held by the contracting authority, the Ministero della Cultura (Ministry of Culture, Italy), in partnership with the Uffizi Gallery, awarded Scudieri International the contract at issue by decision of 25 November 2022 after it obtained the highest score of the four tenderers.

Opera Laboratori Fiorentini received the second-highest score and challenged the legality of that decision before the Tribunale amministrativo regionale per la Toscana (Regional Administrative Court, Tuscany), arguing, inter alia, that the award of the contract at issue infringes the prohibitions laid down in Article 5k(1) of Regulation No 833/2014 on the ground that two of the three directors of Scudieri International are Russian nationals, one being that company’s chairman of the board of directors and the chief executive officer, as well as the sole director of the parent company, which holds 90% of the shares in Scudieri International.

By judgment of 25 May 2023, that court dismissed Opera Laboratori Fiorentini’s action.

Opera Laboratori Fiorentini lodged an appeal against the judgment of the Tribunale amministrativo regionale per la Toscana (Regional Administrative Court, Tuscany) before the Consiglio di Stato (Council of State, Italy), which is the referring court, contesting the decision and resubmitting its original pleas in law.

The referring court considers that the proceedings before it require an answer as to whether Scudieri International should have been excluded from the public procurement procedure, since Article 5k(1)(c) of Regulation No 833/2014 should be interpreted as prohibiting the award of contracts to economic operators acting ‘on behalf or at the direction of’ a Russian national and, in the present case, the successful tenderer is acting ‘at the direction of’ a Russian ‘entity’, namely the members of the board of directors, one of whom is the chairman of the board of directors, the chief executive officer and the sole director of the parent company.

That court seeks clarification on the interpretation of Article 5k(1)(c) of Regulation No 833/2014 since, in its view, there is room for doubt as to whether the wording ‘on behalf or at the direction of’ is material only if it relates to an ‘entity’ other than a natural person who is a Russian national, or if the term ‘entity’ is to be construed as covering the entire range of persons referred to in the preceding points (a) and (b) of Article 5k(1).

In those circumstances, the Consiglio di Stato (Council of State) decided to stay the proceedings and to refer the following question to the Court of Justice for a preliminary ruling:

‘Must Article 5k[(1)](c) of Regulation [No 833/2014], introduced by Regulation [2022/576], concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine, in so far as it prohibits the award and continued execution of public contracts and concessions to or with “a natural or legal person, entity or body acting on behalf or at the direction of an entity referred to in point (a) or (b) of this paragraph, including, where they account for more than 10% of the contract value, subcontractors, suppliers or entities whose capacities are being relied on within the meaning of the public procurement Directives”, be interpreted as meaning that the prohibition applies to a company incorporated under Italian law with [its] registered office in Italy, owned by an Italian company and with shareholders who are natural persons and who are not Russian nationals, but of which two of the three members of the board of directors are Russian nationals and one of whom, the chairman and chief executive officer, is also the sole director of the parent company which holds a 90% stake in that company?’

Written observations have been submitted by Opera Laboratori Fiorentini, Scudieri International and the Austrian, Italian and Netherlands Governments, as well as the European Commission. Those parties, apart from the Austrian and Netherlands Governments, presented oral argument at the hearing on 5 March 2025.

III.Assessment

By its question referred for a preliminary ruling, the referring court asks, in essence, whether Article 5k(1)(c) of Regulation No 833/2014, in so far as it prohibits the award or continued execution of any public contract or concession contract to or with ‘a natural or legal person, entity or body acting on behalf or at the direction of an entity referred to in point (a) or (b)’ thereof, must be interpreted as meaning that that prohibition applies where a public contract is awarded to a company incorporated under Italian law of which two of the three members of its board of directors are Russian nationals, where one of whom is the chairman of the board of directors and the chief executive officer of that company, as well as the sole director of a parent company that holds 90% of the shares in the successful tenderer.

Article 5k(1) of Regulation No 833/2014 prohibits the award or continued execution of any public contract or concession contract falling within the scope of the EU public procurement directives where there is a connection between a tenderer and Russia. That prohibition applies in three types of situations, set out in points (a) to (c) of that paragraph, each of which defines a category of legal subjects to whom the prohibition applies. Point (c), in particular, covers natural or legal persons, entities or bodies that are ‘acting on behalf or at the direction of an entity referred to in point (a) or (b) of this paragraph’.

According to settled case-law, in the interpretation of a provision of EU law, it is necessary to consider not only its wording but also the context in which it occurs and the objectives pursued by the rules of which it is part. (4)

In the present case, the concept of ‘on behalf or at the direction of an entity’ within the meaning of Article 5k(1)(c) of Regulation No 833/2014 is not defined by the EU legislature, and nor does that provision make any express reference to the law of the Member States for the purpose of determining its meaning and scope. That concept must, therefore, be given an autonomous and uniform interpretation. (5)

A.Textual interpretation

The question referred by the national court calls for the Court of Justice to define, in essence, whether, for the purposes of Article 5k(1)(c) of Regulation No 833/2014, the specific governance and ownership structure at hand gives rise to a relationship of agency or control sufficient to support a finding that the successful tenderer is ‘acting on behalf or at the direction of’ another legal subject. More specifically, it articulates the question whether such a situation may amount to an agency or proxy arrangement extending beyond ordinary corporate ownership, thereby bringing it within the scope of the prohibition.

First, I should note that a comparison of the different language versions of Article 5k(1)(c) of Regulation No 833/2014 reveals that the wording in some equates to acting ‘on behalf of’, (6) while in others it is to acting ‘in the name of’. (7) In addition, the concept of direction is present in some language versions, (8) whereas in others it is expressed as ‘according to’ or ‘under the instructions of’. (9) It is pertinent to note that, while this distinction may seem to be of limited significance, it is clear that the concept of ‘direction’ refers to the provision of general guidance, whereas the term ‘instructions’ denotes a more precise and detailed form of control.

The comparison of the various language versions of Article 5k(1)(c) of Regulation No 833/2014, in particular in the terms used to describe the relationship of ‘acting on behalf or at the direction of’, thus shows a certain degree of linguistic divergence, with some versions referring to actions ‘in the name of’ or ‘under the instructions of’.

Second, as regards the term ‘entity’ within the meaning of Article 5k(1)(c) of Regulation No 833/2014, it should be noted that, in certain language versions of the European Union’s legal texts, it is used specifically to denote legal persons. (10) If that interpretation were to prevail, then the reference in Article 5k(1)(c) to an ‘entity … referred to in point (a) or (b)’ would, by implication, exclude the natural persons – namely Russian nationals – referred to in point (a) thereof. As a result, the prohibition laid down in that provision would not apply to companies acting on behalf or at the direction of Russian nationals, thereby narrowing the scope of the restriction in a way that could potentially undermine its effectiveness (effet utile). Nevertheless, in other EU language versions, the term ‘entity’ is used more broadly and can conceptually encompass both natural and legal persons. (11)

Given the divergences in how the terms are understood or applied across different language versions, a literal interpretation of Article 5k(1)(c) of Regulation No 833/2014 is inconclusive. Consequently, I will undertake a contextual interpretation of that provision, since the regulation itself does not provide any definition of what qualifies as ‘acting on behalf or at the direction of’ a legal subject or of the term ‘entity referred to in point (a) or (b)’ thereof.

B.Contextual interpretation

In the internal structure of Article 5k(1) of Regulation No 833/2014, point (c) appears after points (a) and (b), both of which lay down specific prohibitions on participation in public procurement procedures by Russian legal subjects or those owned by them.

Article 5k(1)(a) of Regulation No 833/2014 explicitly prohibits the award or continued execution of a public or concession contract to or with a Russian national, or a natural or legal person, entity or body established in Russia, so that they may not be successful tenderers.

Article 5k(1)(b) of Regulation No 833/2014 extends the prohibition to cover a legal person, entity or body whose proprietary rights are directly or indirectly owned for more than 50% by an entity referred to in point (a) of that paragraph. Clearly, point (b) aims to prevent the circumvention of the measure referred to in point (a) by prohibiting the use of entities established outside Russia that are, in fact, owned by a legal subject covered by the prohibition set out in point (a) thereof. Viewed in that context, it would be contrary to the objective of the provision to interpret the term ‘entity’ in point (b) as excluding natural persons. Such an interpretation would create an unjustifiable loophole, allowing Russian nationals to evade the prohibition by holding controlling shares in foreign entities, thereby undermining the effectiveness (effet utile) of the restrictive measure.

Similarly, the objective of Article 5k(1)(c) of Regulation No 833/2014 is to prevent the circumvention of points (a) and (b) in situations where a natural or legal person, entity or body is not covered directly by the prohibitions laid down in those two points.

The sequence of points (a) to (c) of Article 5k(1) of Regulation No 833/2014 suggests a graduated structure: point (a) sets out a direct prohibition; point (b) extends that prohibition to entities subject to indirect control via majority ownership; and point (c) operates as a residual or ‘catch-all’ clause designed to prevent circumvention through other legal or factual arrangements where de facto control is exercised by the legal subjects listed in point (a) or (b) of that paragraph. The contextual placement of point (c) thus indicates its supplementary and protective role, that is, to close potential gaps and reinforce the effectiveness of the prohibitions laid down in points (a) and (b) of Article 5k(1) of that regulation. Therefore, point (c) of Article 5k(1) requires a broader interpretation than points (a) and (b) alone suggest, so as to catch evasive arrangements which, while not formally falling within those two points, achieve the same prohibited outcomes, namely enabling the award or continued execution of public contracts to or with natural or legal persons, entities or bodies that are, in essence, controlled by legal subjects covered by the first two points, even though they may not formally satisfy the criteria set out therein.

More specifically, as regards the wording ‘entity … referred to in point (a) or (b)’, it should be noted that, by extending the prohibitions to tenderers whose proprietary rights are more than 50% owned, directly or indirectly, by an ‘entity … referred to in point (a)’, point (b) of Article 5k(1) ensures that the prohibitions are not limited to formally identified operators, but also cover those with significant economic and legal ties to them. This supports the interpretation that the term ‘entity’ within the meaning of Article 5k(1)(c) of Regulation No 833/2014 should be understood functionally and broadly, rather than narrowly, so as to preserve the effectiveness (effet utile) of that prohibition.

In that respect, it is important to note that point (a) of Article 5k(1) of Regulation No 833/2014 expressly refers to both natural persons (‘Russian nationals’) and legal persons, entities or bodies established in Russia. Point (b), in turn, covers legal subjects owned by entities referred to in point (a), thereby inheriting the same range of legal subjects. Accordingly, the reference, in point (c), to an ‘entity … referred to in point (a) or (b)’ must be understood as encompassing all the legal subjects covered in points (a) and (b), including natural persons, legal persons, entities and bodies. To read ‘entity’ in point (c) narrowly as excluding natural persons would introduce an artificial limitation not grounded in the structure or logic of the provision.

30.If Article 5k(1)(c) of Regulation No 833/2014 were to be interpreted as referring solely to an entity established in Russia, in the narrow sense used in point (a) in fine, the ‘catch-all’ objective of point (c) would be undermined. Such a reading would exclude cases in which a public contract is awarded to an entity effectively controlled by Russian nationals, residents, legal persons, entities or bodies, but where there is no majority ownership – thereby enabling circumvention of the objectives of the prohibitions set out in Article 5k(1) through indirect arrangements. It follows that point (c) of that paragraph is intended specifically to close such loopholes and prevent circumvention of the prohibitions laid down in points (a) and (b) thereof.

31.As to the expression ‘on behalf or at the direction of’, I would argue that point (c) of Article 5k(1) of Regulation No 833/2014 does not require majority ownership or formal control by an entity referred to in point (a) or (b). Instead, point (c) covers a broader set of relationships based on functional or factual influence (‘de facto control’). Corporate structure becomes highly relevant in that regard: while the board of directors is generally entrusted with setting the strategic direction of the company and exercising high-level management functions, the chief executive officer may be vested with operational control over daily activities. At the same time, the shareholders – in certain corporate structures – retain the power to shape or override corporate policy. Accordingly, the determination of whether a legal subject is ‘acting on behalf or at the direction of’ another within the meaning of Article 5k(1)(c) requires an examination of the actual distribution of influence and decision-making authority within the group, rather than a formalistic reliance on job titles or corporate form.

32.In that respect, it should be observed that a company governance framework across Member States may differ in structure, but it typically involves three core bodies: shareholders, a supervisory or advisory body (such as a council or supervisory board), and a management board, with distinct roles assigned to each of them. The shareholders’ assembly generally constitutes the sovereign body of the company, responsible for key structural decisions such as appointing and dismissing directors, approving annual accounts and amending the company’s statutes. In jurisdictions with a two-tier system, a supervisory board provides oversight and strategic direction, while a management board is responsible for day-to-day operations and implementing company policy. In unitary board systems, these functions are combined within a single board of directors. In both systems, executive officers, including chief executive officers, may be entrusted with delegated powers to manage daily operations and represent the company externally. (12)

33.It follows that even in the absence of majority ownership or formal legal control, a company can still come within the scope of Article 5k(1)(c) of Regulation No 833/2014 if it acts functionally, operationally or economically as a proxy for, or in accordance with, the instructions or directions of a Russian national, or natural or legal person, entity or body as referred to in point (a) or (b) of that Article 5k(1). In other words, point (c) must be interpreted as encompassing situations where a natural or legal person, entity or body has a substantive connection – including through shared control, economic dependence or functional subordination – with legal subjects listed under point (a) or (b). Thus, where a subsidiary or other related undertaking acts on behalf or at the direction of such a legal subject, even in the absence of formal majority ownership, it may fall within the scope of the prohibition. This interpretation is consistent with the anti-circumvention purpose of Article 5k(1)(c) of Regulation No 833/2014, which aims to prevent indirect or de facto evasion of the core restrictions.

34.Therefore, I take the view that Article 5k(1)(c) encompasses arrangements beyond formal majority ownership or control. In order to ensure the effectiveness (effet utile) of that regulation, that provision should be interpreted as encompassing conduct that shows that a legal person, entity or body is acting under the de facto control of an entity referred to in point (a) or (b), even in the absence of formal ownership or legal control.

35.As to reading the expression ‘entity … referred to in point (a) or (b)’ in conjunction with other parts of Regulation No 833/2014, it should be observed that that regulation makes reference to legal persons, entities or bodies, while sometimes distinguishing natural persons from legal persons. (13) However, the absence of an explicit mention to natural or legal persons or bodies in the expression ‘entity … referred to in point (a) or (b)’ in Article 5k(1)(c) of Regulation No 833/2014 does not exclude those legal subjects from its scope. For the purposes of that provision, interpreting the term ‘entity’ to include natural and legal persons as well as bodies ensures that the prohibitions cannot be circumvented through the use of persons who, although not formal legal entities themselves, functionally act on behalf or at the direction of those entities covered under Article 5k(1)(a) or (b) of Regulation No 833/2014 – irrespective of whether those directions originate from natural or legal persons. In that respect, both the operator and the source of direction may be a natural or legal person or a body, reflecting the structure of the provision, which deliberately encompasses a broad range of legal subjects by referring to ‘natural or legal person, entity or body’. Therefore, for the purposes of Article 5k(1)(c) of Regulation No 833/2014, a restrictive reading that excludes natural persons from the scope of the term ‘entity’ would compromise the effectiveness (effet utile) of that provision.

36.This broader reading is supported by recital 4 of Regulation 2022/576, which makes clear that the amendments aim to prohibit ‘the award and continued execution of public contracts and concessions with Russian nationals and entities or bodies established in Russia’. Similar wording is found in recital 6 of Decision (CFSP) 2022/578, (14) adopted on the same day, which emphasises the same expansive policy objective. These contextual elements confirm that point (c) of Article 5k(1) of Regulation No 833/2014 was intended to catch arrangements which, while not formally covered by point (a) or (b) of Article 5k(1), achieve the same prohibited outcomes through substantive corporate control or beneficial ownership.

37.In addition, when Article 5k(1)(c) of that regulation is read in conjunction with other instruments in the field of restrictive measures, the interpretation of the wording ‘acting on behalf or at the direction of’ supports the view that it encompasses a range of relationships broader than merely those limited to formal ownership or corporate control.

38.In its judgment in HTTS v Council, (15) for example, the Court of Justice stated that, in the context of Regulation (EU) No 961/2010, (16) the concepts of ‘being controlled or owned’ and ‘acting at the direction or on behalf of’ are placed on an equal footing in the structure of Article 16(2) of that regulation. In so doing, the Court adopted a broad view of the scope of the prohibition in question – which applied to a company being controlled or owned by a person or a legal entity – by including the concept of acting on behalf or at the direction of that person or entity, despite not being explicitly laid down in the provision in question. In my view, such an interpretation aims to ensure the effectiveness (effet utile) of the restrictive measures provided for by the regulation, without strict adherence to the definition used in national law for the qualification of directors.

39.An interpretation guided by the principle of effectiveness (effet utile), such as the one suggested in point 34 of the present Opinion, requires an analysis of a number of factors, including the identity of those who actually control the successful tenderer. When inferring de facto control, authorities should take into account different factual circumstances, such as the presence of minority shareholdings, personal links between directors or beneficial owners and patterns of coordination in business activity. (17) This aligns with the anti-circumvention objective of restrictive measures, as also reflected in Article 12 of Regulation No 833/2014, which prohibits participation in activities intended to circumvent restrictive measures. (18)

40.In conclusion, the contextual interpretation of Article 5k(1)(c) of Regulation No 833/2014 confirms that its primary objective is to prevent the circumvention of the prohibitions laid down in points (a) and (b) of that Article 5k(1). Read in the light of Article 12 of that regulation, which expressly prohibits participating, knowingly and intentionally, in activities of circumvention, Article 5k(1)(c) thereof must be understood as a necessary safeguard to ensure the coherence and effectiveness (effet utile) of the restrictive measures (19) in the face of complex ownership or organisational structures. That conclusion is supported, in my view, by a teleological interpretation of the latter provision.

42.Regulation No 833/2014, as part of the European Union’s restrictive measures regime, (20) is intended to respond to Russia’s actions destabilising Ukraine by imposing effective and enforceable prohibitions – particularly in sensitive areas like public procurement. (21) While Article 5k(1) of that regulation seeks to exclude Russian influence in EU public contracts, its underlying objective is to prevent Russia-linked entities from benefiting economically from Member States’ public procurement procedures. This aligns with the broader sanctions objective: to reduce the financial resources available to the Russian State or its economy, especially in the context of geopolitical tensions. By excluding such entities from procurement opportunities, the European Union not only curtails influence but also cuts off potential revenue streams that could support the Russian economy or military efforts.

43.A narrow interpretation of Article 5k(1)(c) of Regulation No 833/2014 would undermine those objectives by enabling entities to structure transactions in a manner that formally falls outside the scope of points (a) and (b) of Article 5k(1), while in essence achieving the very outcome those provisions seek to prevent. In that respect, while it is true that restrictive measures must be interpreted narrowly due to their restrictions on fundamental rights, (22) that does not preclude a broader interpretation of specific terms of a provision where such an interpretation is necessary in order to prevent the circumvention of the prohibitions set out in preceding points and safeguard their effectiveness (effet utile). (23)

44.Such a broad interpretation of Article 5k(1)(c) of Regulation No 833/2014 is not called into question by the recent judgment in Jemerak, (24) in which the Court adopted a narrow reading of Article 5n(2)(b) of that regulation concerning the prohibition on the direct or indirect provision of legal advisory services, specifically in the context of the formal role of notarial authentication. By contrast, Article 5k(1)(c) thereof is an anti-circumvention safeguard aimed at catching arrangements which, while not expressly covered by point (a) or (b) of Article 5k(1), nevertheless undermine the effectiveness (effet utile) of the prohibitions laid down therein. As such, it warrants a broad interpretation, consistent with its distinct context and objective. Given the divergence in the objectives of the two provisions – one prohibiting legal advisory services, the other prohibiting participation in public procurement – a broader interpretation of Article 5k(1)(c) of Regulation No 833/2014 is not inconsistent with that judgment, but rather highlights the sector-specific approach of that regulation and the specific role of the provision in that regulation.

45.That being said, Article 5k(1)(c) of Regulation No 833/2014 is not intended to impose a general or automatic exclusion solely on the basis of the Russian nationality of company directors. Rather, its objective is to catch functionally equivalent situations where operators, irrespective of their formal incorporation or declared independence, are in practice operating on behalf or at the direction of legal subjects targeted under points (a) and (b) of paragraph 1 of that article, that is to say, Russian nationals or entities established in Russia or owned by Russian nationals. Since the expression ‘on behalf or at the direction of’ within the meaning of point (c) of Article 5k(1) covers situations where a legal subject is acting under the de facto control of third parties, it requires an analysis of a number of factors, including the identity of those who actually control the tenderer. Such a determination requires a case-by-case assessment of both legal and factual circumstances in order to establish the precise nature and substance of the relevant connections.

46.Furthermore, although a central objective of Regulation No 833/2014 is to avoid the risk of contributing to Russian war measures, Article 5k(1)(c) thereof cannot be interpreted as limiting its scope only to situations where a material contribution to those measures is likely or proven. Since that provision aims to prevent circumvention of the prohibitions laid down in points (a) and (b) of Article 5k(1), and does so by targeting arrangements involving a legal subject acting ‘on behalf or at the direction of’ those covered by those prohibitions, Article 5k(1)(c) of that regulation thereby adopts a preventive approach, which seeks to exclude from public procurement not only persons, entities or bodies formally owned or controlled by Russian actors, but also those that, in practice, operate under the control of persons, entities or bodies connected to Russia. While a demonstrable risk of funds being used to support Russia’s military aggression may serve as compelling evidence of such a connection, it is not a constitutive element of the legal test under Article 5k(1)(c) of Regulation No 833/2014. That provision thus operates independently of the actual end-use of the funds, reflecting that regulation’s purpose of safeguarding the effectiveness (effet utile) of EU restrictive measures.

48.The key issue under Article 5k(1)(c) of Regulation No 833/2014 is not solely the formal legal source of authority, but rather whether the substantive effect of the arrangement is that the company is acting on behalf or at the direction of a Russian national, or natural or legal person, entity or body referred to in Article 5k(1)(a) or (b). Even where they may not possess formal ownership stakes, Russian nationals in key management positions may be entrusted with executing strategic decisions that align with the interests of the Russian Government or persons that fall under EU restrictive measures. This possibility is explicitly contemplated in Article 5k(1)(c), which broadens the scope of the exclusion from public procurement to also encompass persons, entities or bodies that act on behalf or at the direction of the legal subjects referred to in Article 5k(1)(a) and (b). For that purpose, a formalistic approach would be insufficient, given that the provision’s objective is to prevent the circumvention of prohibitions imposed under those points. The application of Article 5k(1)(c) therefore requires a factual analysis that goes beyond corporate formality.

49.That said, it is important to note that Article 5k(1)(c) of Regulation No 833/2014 is not intended to impose a general or automatic exclusion based on the Russian nationality of a director of a company. Rather, its objective is to catch functionally equivalent situations where operators, irrespective of their formal incorporation or declared independence, are de facto operating on behalf or at the direction of legal subjects targeted under points (a) and (b) of Article 5k(1), that is to say, Russian nationals or entities established in Russia or owned by Russian nationals. Since the expression ‘on behalf or at the direction of’ within the meaning of point (c) of Article 5k(1) covers situations where a legal subject is acting under the de facto control of third parties, it requires an analysis of a number of factors, including the identity of those who actually control the tenderer. Such a determination requires a case-by-case assessment of both legal and factual circumstances in order to establish the precise nature and substance of the relevant connections.

It follows that the individual assessment carried out for the purposes of applying Article 5k(1)(c) of Regulation No 833/2014 should entail a nuanced, fact-specific analysis of each case to determine whether the entity at issue is effectively acting under the control of a legal subject covered by point (a) or (b) of Article 5k(1). That assessment should follow a risk-based approach, meaning that national authorities should rely on a system of indicators or triggers to identify companies that may require further assessment.

As I have stated above, (28) the concept of ‘acting on behalf or at the direction of’ aims to address indirect and de facto control. It follows that the nationality of a director may be relevant in assessing whether he or she is acting as a proxy, but it must be considered alongside other factual circumstances, such as the director’s links to Russian nationals, or natural or legal persons, entities or bodies established in Russia, the role played within the company, and the company’s overall structure, which it is for the national court to verify. In that respect, the relevance of nationality as a criterion is reinforced by the fact that Article 5k(1)(c) of Regulation No 833/2014 refers explicitly to entities covered by point (a), which includes natural persons who are Russian nationals. Since point (c) is intended to prevent circumvention of the prohibitions set out in points (a) and (b), the director’s Russian nationality is not merely incidental – it is a potentially significant indicator that the company may be acting on behalf or at the direction of a person subject to the core restrictions of Article 5k(1) of Regulation No 833/2014. However, from the criteria set out in Article 5k(1)(c) of Regulation No 833/2014, it follows that if the directors of the tenderer are Russian nationals and the company is de facto controlled by a Russian entity, then the company may well be acting ‘on behalf or at the direction of’ that entity. Conversely, the relevance of a director’s nationality under Article 5k(1)(c) of Regulation No 833/2014 should be limited to scenarios in which the director holds powers beyond those associated with day-to-day management. Specifically, if the director is merely responsible for the operational aspects of the company and acts under the general direction of the shareholders, without exercising strategic decision-making authority or control over the company’s broader objectives, then his or her nationality should not trigger further assessment. In such cases, the director’s role is more akin to that of a middle manager, and the company’s actions should not automatically be considered as being exercised ‘on behalf or at the direction of’ a Russian national, or a natural or legal person, entity or body as referred to in point (a) or (b) of that Article 5k(1). Thus, the focus should be on whether the director possesses substantial control or decision-making authority and whether his or her actions extend to influencing the company’s overall direction – factors that could justify the application of restrictive measures. This distinction ensures that Regulation No 833/2014 targets individuals in positions of genuine influence.

In that respect, it is true that, as suggested by the Italian Government and the Commission, under Italian law a non-partner director typically represents the company and acts on behalf of its shareholders. However, EU restrictive measures operate according to their own autonomous legal framework and objective, which is to ensure that sanctioned entities or persons cannot circumvent prohibitions through indirect or de facto control. Indeed, as follows from the Commission’s Opinion of 17 October 2019, (29) the concept of ‘acting on behalf of’ in EU restrictive measures law is not limited to formal legal representation or agency in the narrow sense under national law. Rather, it is a substantive concept that includes any situation where a natural or legal person, entity or body acts to serve the interests of, or is under the instructions of, a person, entity or body referred to in Article 5k(1)(a) or (b) of Regulation No 833/2014. This can include factual influence, coordinated behaviour, or roles that functionally align with the interests or strategic directions of Russian nationals, or natural or legal persons, entities or bodies established in Russia. Therefore, under Italian law, relying solely on the formal role of a non-partner director is insufficient to rule out the possibility that such a natural or legal person, entity or body may, in essence, be acting ‘on behalf or at the direction of’ a legal subject covered by Article 5k(1)(a) or (b) of Regulation No 833/2014.

It follows that the nationality of a director, while not in itself determinative, may trigger, when considered in combination with his or her role, ownership links and governance responsibilities, a duty of enhanced scrutiny by national authorities under Article 5k(1)(c) of Regulation No 833/2014. In the present case, the fact that two of the three members of the board of directors of Scudieri International are Russian nationals, and one is also the chairman of the board and chief executive officer of that company, as well as the sole director of the parent company, could warrant further scrutiny by the national contracting authorities. In particular, the nationality of the directors, in combination with their roles and ownership structure, could be considered a risk factor that the entity may be controlled by Russian entities or nationals, even if the company itself is not directly under the control of a Russian legal subject.

More specifically, in the present case, it is established that, first, two of the three board members of Scudieri International are Russian nationals; second, one of the Russian nationals serves as both chairman of the board and chief executive officer of Scudieri International, which may indicate a high level of day-to-day operational and strategic control going beyond mere formal or nominal involvement; and, third, the same individual is also the sole director of the parent company, which owns 90% of the shares in Scudieri International, thereby indicating a vertical structure of control where the same person exercises effective power over both the parent company and its subsidiary. Those factors suggest an overlap in executive control which, together with the significant link between the parent company and the subsidiary, may raise legitimate concerns that Scudieri International may be acting ‘on behalf or at the direction of’ a person, entity or body referred to in Article 5k(1)(a) or (b) of Regulation No 833/2014. Therefore, there is a plausible risk that Scudieri International may be used as a vehicle for another ultimate beneficial owner who does fall within the scope of Article 5k(1)(c) of that regulation. Where there is such a constellation of facts – a point also emphasised by Opera Laboratori Fiorentini in its written submissions and at the hearing before the Court –, the national authorities may be under an obligation to assess whether a tenderer is covered by the prohibition laid down in Article 5k(1)(c) of Regulation No 833/2014 due to nationality, control, direction, or ownership links. However, it is for the referring court to determine whether such an assessment is necessary.

In particular, when the corporate structure is complex and multi-layered, the authorities may need to have recourse to the ‘ultimate beneficial owner test’. Even though Article 5k(1) of Regulation No 833/2014 does not mention the ultimate beneficial owner, other EU legal acts (30) consistently use that test to identify hidden control or beneficial ownership structures. A contextual and teleological interpretation of Article 5k(1)(c) of Regulation No 833/2014 should enable contracting authorities to determine whether an ultimate beneficial owner exercises de facto control, especially where the ultimate beneficial owner is a Russian national, or a natural or legal person, entity or body established in Russia. Accordingly, the presence of an ultimate beneficial owner with such characteristics may trigger the contracting authorities’ obligation to conduct enhanced due diligence in order to determine whether the tenderer is in reality acting on behalf or at the direction of a person, entity or body referred to in Article 5k(1)(a) or (b) of Regulation No 833/2014. In the present case, in the action brought by Opera Laboratori Fiorentini against the contracting authorities’ decision to award Scudieri International the contract at issue, it is for the referring court to take account of all of those circumstances.

IV.Conclusion

In the light of the foregoing considerations, I propose that the Court should answer the question referred by the Consiglio di Stato (Council of State, Italy) as follows:

Article 5k(1)(c) of Council Regulation (EU) No 833/2014 of 31 July 2014 concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine

must be interpreted as meaning, in so far as it prohibits the award or continued execution of any public contract or concession contract to or with a ‘natural or legal person, entity or body acting on behalf or at the direction of an entity referred to in point (a) or (b)’ thereof, that that prohibition does not apply automatically to a situation in which a public contract is awarded to a company of a Member State, of which two out of three members of the board of directors are Russian nationals, one of whom serves as chairman and chief executive officer of that company and is also the sole director of its parent company, which holds 90% of its share capital and is likewise incorporated under the law of a Member State, where neither of those companies is directly or indirectly owned by Russian nationals or entities referred to in Article 5k(1)(a) or (b) of Regulation No 833/2014.

However, those factual circumstances, in particular the nationality and the roles of key corporate officers, as well as the substantive links between the tenderer and its parent company, may serve as relevant indicators requiring further scrutiny by the contracting authority. Such elements may trigger a duty to assess whether the tenderer is acting, in essence, ‘on behalf or at the direction of’ an entity covered by Article 5k(1)(a) or (b) of that regulation, including through de facto control by persons, entities or bodies connected to Russia. That assessment should take into account all relevant legal and factual circumstances, including the role and influence of the ultimate beneficial owner.

—

Original language: English.

—

Council Regulation of 31 July 2014 (OJ 2014 L 229, p. 1).

—

Council Regulation of 8 April 2022 amending Regulation No 833/2014 (OJ 2022 L 111, p. 1).

—

Judgment of 10 September 2014, Ben Alaya (C‑491/13, EU:C:2014:2187, paragraph 22 and the case-law cited).

—

See judgment of 22 June 2021, Latvijas Republikas Saeima (Penalty points) (C‑439/19, EU:C:2021:504, paragraph 81 and the case-law cited).

—

In Danish (på vegne af), Dutch (namens of), Finnish (yhteisön puolesta), French (pour le compte [de]), Italian (per conto … di) and Spanish (por cuenta … de). Even though the Polish (w imieniu) and Romanian (în numele) expressions literally mean ‘in the name of’, they are used with the connotation of ‘on behalf of’ in their respective languages.

—

In Estonian (üksuse nimel), German (im Namen), Greek (εξ ονόματος), Hungarian (nevében), Latvian (vārdā), Portuguese (em nome) and Slovak (v mene).

—

In the Estonian- (või juhtimisel), Finnish- (johdolla), Hungarian- (irányítása szerint), Italian- (sotto la direzione), Latvian- (norādēm), Polish- (pod kierunkiem), Portuguese- (sob a direção) and Spanish-language (bajo la dirección) versions, the notion of ‘under the direction’ prevails.

—

In the Danish- (efter anvisning fra), Dutch- (aanwijzing van), French- (selon les instructions), German- (auf Anweisung), Romanian- (în conformitate cu instrucțiunile) and Slovak-language (na základe pokynov) versions, the concept of acting ‘according to instructions’ is expressed. The Greek-language version (κατ’ εντολή) is closer to the concept of acting ‘under the orders of’.

—

In some EU languages, the term is associated with legal persons and sometimes even conceptually excludes natural persons, such as in Danish (enhed), German (Organisation), Hungarian (szervezet), Latvian (vienība) and Romanian (entitate). In Estonian (üksus), the term used for ‘entity’ does not encompass natural persons (isik). The Finnish term (yhteisö) can refer to a group of natural persons who have a common goal or who are related to each other, or to legal persons, but not to natural persons as individuals. In Portuguese, the term (entidade) describes solely legal persons.

—

The notion of ‘entity’ in English, French (entité), Greek (οντότητα), Italian (entità), Polish (podmiot) and Slovak (subjekt) conceptually includes both legal and natural persons, although it is used mostly to describe legal persons.

—

See, by analogy, judgment of 12 July 2018, The Goldman Sachs Group v Commission (T‑419/14, EU:T:2018:445, paragraphs 91 and 112). While making an assessment of decisive influence for the purposes of EU competition law under Article 101 TFEU, the General Court emphasises that the shareholders’ power to appoint the members of a company’s board of directors is recognised as a key indicator of control, and bases itself on that structure to scrutinise a parent company’s potential to influence its subsidiary’s conduct. Thus, the governance framework provides the legal and factual basis for assessing control and influence, making it directly relevant in determining parent company liability under the EU competition rules.

—

See, for example, Article 10 of Regulation No 833/2014.

—

Council Decision of 8 April 2022 amending Decision 2014/512/CFSP concerning restrictive measures in view of Russia’s actions destabilising the situation in Ukraine (OJ 2022 L 111, p. 70).

—

Judgment of 10 September 2019 (C‑123/18 P, EU:C:2019:694, paragraph 79).

—

Council Regulation of 25 October 2010 on restrictive measures against Iran and repealing Regulation (EC) No 423/2007 (OJ 2010 L 281, p. 1).

—

See Commission Opinion of 17 October 2019 on Article 5(1) of Council Regulation (EU) No 833/2014 (C(2019) 7476 final), in which the Commission also considered it appropriate to analyse ownership and control structures.

—

See also Directive (EU) 2024/1226 of the European Parliament and of the Council of 24 April 2024 on the definition of criminal offences and penalties for the violation of Union restrictive measures and amending Directive (EU) 2018/1673 (OJ L, 2024/1226), which lays down minimum rules concerning the definition of criminal offences and penalties for the infringement of EU restrictive measures. Under Article 3(1)(h) of that directive, Member States are to ensure that circumvention of an EU restrictive measure constitutes a criminal offence.

—

See, to that effect, judgment of 28 March 2017, Rosneft (C‑72/15, EU:C:2017:236, paragraph 132).

—

Decision 2022/578 and Regulation 2022/576 were both part of the fifth set of restrictive measures adopted by the European Union against Russia, the objective of which was to contribute to increasing economic pressure on the Kremlin and to undermine its ability to finance the invasion of Ukraine by introducing broader measures so as to heighten the impact on the Russian economy.

—

See recital 6 of Decision 2022/578, which links the gravity of the situation to the introduction of further restrictive measures with regard to public procurement. As argued, in essence, by Opera Laboratori Fiorentini at the hearing before the Court, the EU legislature, as reflected in that recital 6, intends to expand the reach of the procurement prohibition in order to prevent indirect participation by sanctioned Russian interests. Article 5k(1)(c) of Regulation No 833/2014 should therefore be understood as a functional and anti-circumvention provision, in line with the evolving threat assessment.

—

As stated by the Italian Government, Article 5k(1) of Regulation No 833/2014 constitutes a restriction on the freedom to conduct a business under Article 16 of the Charter of Fundamental Rights of the European Union. However, it should be recalled that the Court has consistently held that this right inter alia is not not absolute and may be restricted in the public interest, particularly for the purpose of achieving legitimate objectives of general interest recognised by the European Union (see judgments of 21 December 2021, Bank Melli Iran

, C‑124/20, EU:C:2021:1035, paragraph 80, and of 28 March 2017, Rosneft, C‑72/15, EU:C:2017:236, paragraph 148).

—

See, to that effect, judgments of 21 December 2011, Afrasiabi and Others (C‑72/11, EU:C:2011:874, paragraphs 39, 40 and 47), and of 11 November 2021, Bank Sepah (C‑340/20, EU:C:2021:903, paragraph 45 and 56), and Opinion of Advocate General Bot in Afrasiabi and Others (C‑72/11, EU:C:2011:737, point 77).

—

Judgment of 5 September 2024 (C‑109/23, EU:C:2024:681, paragraph 47).

—

Judgment of 28 March 2017, Rosneft (C‑72/15, EU:C:2017:236, paragraph 132).

—

See points 39 and 47 above.

—

See also Commission consolidated FAQs on the implementation of Council Regulation No 833/2014 and Council Regulation No 269/2014, 2022, particularly in the ‘Frequently asked questions on public procurement sanctions against Russia’ document (Consolidated version of the FAQs on sanctions against Russia and Belarus; link verified on 7 May 2025). That guidance explains that the determination of whether an entity acts ‘on behalf or at the direction of’ another for the purposes of Article 5k(1)(c) of Regulation No 833/2014 requires a comprehensive factual assessment. See, in that regard, the answer to question 11.

—

See point 46 above.

—

Commission Opinion of 17.10.2019 on Article 5(1) of [Regulation No 833/2014] (C(2019) 7476 final).

—

See, by way of analogy, Article 13(1) and (2) of Directive (EU) 2015/849 of the European Parliament and of the Council of 20 May 2015 on the prevention of the use of the financial system for the purposes of money laundering or terrorist financing, amending Regulation (EU) No 648/2012 of the European Parliament and of the Council, and repealing Directive 2005/60/EC of the European Parliament and of the Council and Commission Directive 2006/70/EC (OJ 2015 L 141, p. 73), as amended by Directive (EU) 2018/843 of the European Parliament and of the Council of 30 May 2018 (OJ 2018 L 156, p. 43).