EU Sanctions: The Judiciary Is Catching Up
When it comes to EU sanctions (against Russia), the EU sanctions packages take centre stage. But it is recent case law that is redefining the interpretation of asset freezes and the interpretation of ownership and control — while an Advocate General’s opinion raises new questions for sanctions-related arbitral proceedings. With 20 EU sanctions packages against Russia adopted and a 21st on the horizon, the judiciary is now catching up.
This blog post examines recent rulings by the Court of Justice of the European Union (CJEU) and a non-binding opinion by Advocate General Biondi, and their practical implications for stakeholders navigating the EU sanctions regime.
Substance-Over-Form Approach to Asset Freeze (C-483/23, C-428/24 & C-476/24)
EU asset freeze sanctions directly target designated persons and entities. But their reach does not stop there. All funds and economic resources “belonging to, owned, held or controlled by” designated persons (including e.g. entities) must be frozen as well. As the European Commission has clarified in its FAQs, where a designated person is deemed to own or control a non-listed entity, it is presumed that any funds or economic resources made available to that entity would ultimately benefit the designated person. While, as per the European Commission FAQs, this presumption is rebuttable, the respective burden lies with the respective entity.
In Case C-483/23 (T Trust) and Joined Cases C-428/24 & C-476/24 (FZ AR / SX), the CJEU has now given further binding judicial authority to this approach. The CJEU interpreted the asset freeze concepts of “belonging to” and “control” under the Russia sanctions (Council Regulation (EU) 269/2014) broadly as encompassing all forms of power or influence over assets, including in the absence of any legal link between the designated person and those assets. The rulings concern trust structures, which by their (legal) nature separate legal ownership from beneficial ownership, making the assessment of ownership and control way more complex. The CJEU clarified that the formal configuration of a trust (such as the identity of the trustee or the terms of the trust deed) is not decisive for the question of whether assets must be frozen. What matters is whether the designated person, be it the settlor or a beneficiary, retains power to use, benefit from, or dispose of the assets, or to influence the trustee’s decisions in respect of them.
The CJEU further clarified that formal arrangements such as removing a person as beneficiary, inserting sanctions-compliance clauses, or relying on the discretionary nature of trusts cannot defeat asset freeze measures where de facto influence persists. According to the CJEU, such influence may be inferred from the surrounding circumstances, including the relationships between the designated person and the trustee or protector, the use of complex trust structures, the allocation of trust assets primarily for the designated person’s benefit, and the designated person’s prerogatives under the governing law of the trust (such as powers to revoke the trust, appoint or remove trustees, or give binding instructions). For businesses encountering trust structures in an ownership or control chain, these rulings demand heightened due diligence that looks beyond formal legal documentation to assess the reality of who benefits from, and exercises influence over, the trust assets.
50% Shareholding Sufficient to Presume Ownership or Control (C-84/24)
As set out above, asset freeze measures also extend to entities that are not directly listed but considered as “owned” or “controlled” by a designated person. While the Council’s Best Practices previously referred to “more than 50%” as the relevant ownership threshold, the Russia sanctions regime was amended in October 2025 to define “owning” as the possession of 50% or more of a legal person’s proprietary rights. In Case C-84/24, the CJEU has now independently confirmed this lower threshold in the context of the Belarus sanctions (Regulation (EC) 765/2006), where no such definition existed in the regulation itself.
As the European Commission’s asset freeze FAQs already provide, where ownership or control is established, it is presumed that this extends to the entity’s assets. The CJEU has now confirmed this judicially: where a designated person holds a 50% stake, it must be presumed that the person owns or controls the entity and its funds. This with the rationale that a 50% shareholding is in principle sufficient to dictate or block key corporate decisions.
However, the CJEU held that the presumption must remain rebuttable. As a consequence, Member States must ensure that non-listed entities have access to effective procedures to challenge the asset freeze before competent authorities, and to have it effectively lifted where they demonstrate that their funds are not in fact held or controlled by the designated person.
Arbitral Awards Not Immune from the No Claims Clause (AG Opinion, C-802/24)
Questions on the intersection of arbitration and economic sanctions have recently gained attention, including in relation to the so-called No Claims Clause (which is e.g. included in the EU Russia and Belarus sanctions). The clause, inter alia, prohibits the satisfaction of claims in connection with contracts or transactions affected by EU sanctions, where such claims are made by Russian persons or persons acting on their behalf. For example, a Russian supplier whose contract cannot be performed due to EU product restrictions cannot obtain compensation or repayment from its EU counterpart.
While the final judgment has not been rendered yet, Advocate General Biondi’s recent opinion in Case C-802/24 suggests that the No Claims Clause forms part of EU public policy. If the CJEU follows this reasoning, the consequences would be significant: a national court reviewing an arbitral award would be required to verify that the arbitral tribunal accurately applied the No Claims Clause, and to set the award aside (due to a breach of EU public policy) where it did not.
As regards the material scope of the No Claims Clause, the Advocate General takes the view that a claim for repayment of an advance payment (including interest) for goods never supplied on account of EU sanctions falls within the scope of claims that must not be satisfied. In the underlying case, a Russian buyer had paid in advance for goods that could not be exported due to EU product restrictions and had subsequently sought repayment through arbitration. The Advocate General concluded that even this type of restitutionary claim is caught by the No Claims Clause.
At the same time, the Advocate General draws an important distinction: sanctions-related claims remain arbitrable. Parties are free to submit such disputes to arbitration. However, an arbitral award that satisfies a claim in breach of the No Claims Clause would not withstand judicial review.
The CJEU’s judgment is expected later this year.
Conclusion
These rulings and the Advocate General’s opinion share a common thread: formal legal structures cannot place assets or claims beyond the reach of EU sanctions where substance points in a different direction. Trust arrangements do not shield assets from freezing where de facto influence persists. A 50% shareholding is now judicially confirmed as sufficient to trigger a presumption of ownership or control. And the No Claims Clause, if confirmed as EU public policy, would require national courts to scrutinise arbitral awards and set them aside where necessary. For businesses and financial institutions, the message is clear: due diligence must look beyond formal documentation to the reality of who (factually) holds power and who benefits.
Our EU sanctions team continues to monitor sanctions developments and is happy to support. Please reach out if you would like to discuss any of the topics discussed in this blog.
