The assets of a company not included on the list of persons and entities subject to EU sanctions may be frozen if that company is controlled by a person who is themselves subject to European sanctions, ruled the Court of Justice of the European Union (CJEU) in a judgment handed down on Thursday 12 March (case C-84/24).
In Lithuania, EM SYSTEM is challenging the freezing of its assets by two Lithuanian banks on the grounds that 50% of its capital is held by a Belarusian national, who himself has been on the EU’s list of sanctioned natural persons (Regulation 765/2006) since the end of 2020.
In its judgment, the Court of Justice states that the freezing of funds under Regulation 765/2006 also covers the funds and economic resources of a company not included on the list of sanctioned persons and entities, provided that these funds are owned, held or controlled by a person, entity or body included on this list. In its view, such an interpretation is necessary to achieve the objective of the restrictive measures.
The concepts of company ‘ownership’ and ‘control’ must be interpreted broadly, says the European court, to ensure that sanctions are applied to the widest possible range of persons, groups and entities, avoid circumvention and guarantee the element of surprise.
Therefore, it is necessary to rely on clear criteria and certain rebuttable presumptions relating to the internal decision-making structure of the legal persons, entities or bodies concerned. According to the Court, a 50% shareholding in a company should be presumed to allow control of that company, as well as its funds and economic resources.
The Court asks Member States to establish a procedure enabling legal persons, entities and bodies in the same situation as EM SYSTEM, as well as persons sanctioned by the EU, to challenge an asset freeze and, where appropriate, to have it lifted.
See the judgment of the Court of Justice: https://aeur.eu/f/l5m (Original version in French by Mathieu Bion)