CJEU strengthens safeguards for non-listed companies facing asset freezes

Authorities must substantiate the grounds for freezing assets

Non-listed companies can challenge asset freeze

A non-listed company may find its funds frozen because they are considered to be owned, held or controlled by a sanctioned person, potentially without knowing the evidence underlying that assessment. The CJEU’s recent judgment clarifies what authorities must establish and how businesses can challenge an asset freeze.

Key takeaways:

• An authority must support an adverse ownership or control determination with objective and sufficiently solid evidence.
• Control may be informal or proved circumstantially. Control presumptions must be rebuttable in practice.
• Challenging a freeze and seeking transaction authorisation serve different purposes.
• Companies must be able to contest the evidence through participation and effective judicial review.

Authorities must assess whether a freeze applies

Inter Rao Lietuva, decided by the Court of Justice of the European Union (CJEU) on 3 September 2026, clarifies the evidentiary safeguards protecting non-listed companies affected by asset freezes. National authorities must establish the relevant asset relationship on the basis of objective and sufficiently solid evidence and substantiate their grounds when challenged. Read together with EM System of 12 March 2026, the judgment confirms that affected companies must have an effective route to contest the freeze itself and rebut a control presumption.

Article 2(1) of Council Regulation 269/2014 freezes assets directly where its conditions are met. The freezing obligation does not depend on a prior national implementing decision. National implementing measures, including lists identifying affected non-listed companies, may clarify its application. They implement the Council’s sanction without creating an additional designation.

The authority must verify whether assets belong to or are owned, held or controlled by, a designated person. A general association is insufficient. The task does not require reconsidering sanctions policy or identifying a separate threat to national security posed by the company. Affected companies must be able to challenge the freeze before national authorities and, if necessary, competent national courts and secure its lifting if the alleged holding or control is disproved.

Control requires evidence

The CJEU explains that control can arise through the actual capacity to influence decisions, directly or indirectly, without share ownership or formal ties. Proof of a particular payment instruction is unnecessary. Specific, precise and consistent circumstantial evidence can suffice if objective, sufficiently solid and assessed collectively in context.

The evidence must connect the designated person to the company and its assets. General propositions about Russia’s political system were insufficient. State ownership and a parent’s influence over its subsidiary could be relevant, but did not dispense with the need to substantiate the designated individual’s influence through the corporate chain.

Under the Belarus rules considered in EM System, a listed person’s 50% shareholding gave rise to a presumption that the company’s bank account funds were owned, held or controlled by that person. The Court further noted that control may also exist below the 50% threshold where the shareholder is able to exercise dominant influence. However, the presumption could be rebutted by reference to the company’s governance, constitutional documents and practical operation.

Companies seeking to rebut a presumption must address the evidence relied upon. Courts may consider both the company’s ability to provide evidence of independence and the authority’s evidential difficulties.

The CJEU confirms that, where the authority’s assessment is challenged, the national authority must substantiate the grounds for finding that assets are owned, held or controlled by a designated person.

(cf. CJEU, Inter Rao Lietuva, C‑147/25)

Regulation 269/2014 now contains express ownership and control criteria. As both judgments concern earlier wording, they do not determine how the amended ownership definition affects rebuttal.

A determination and a release licence serve different purposes

The company’s request should distinguish between:

• Determination or declaratory proceedings, which address whether identified assets are subject to the freeze at all, including whether assets have been successfully shielded from the former control of a sanctioned person.
• Release-authorisation proceedings, which proceed on the basis that the freeze applies and ask whether a specific transaction may nevertheless be authorised under an EU exception.

EM System requires an effective route to challenge applicability. A licence for a particular transaction does not necessarily resolve that issue and demonstrating that a payment would not benefit the designated person does not itself remove the freeze. National law supplies the competent authority and procedure, subject to effective judicial protection.

In Austria, the Sanctions Act 2024 (SanktG) assigns responsibility for granting release authorisations to the Financial Market Authority (FMA) in relation to assets held or administered by financial-market participants or constituting claims against them, as well as for supervising their sanctions compliance. Other release authorisations generally fall to the Minister of Finance, subject to specific statutory allocations. Authorisation applications require a formal administrative decision.

Release authorisation presupposes that the assets are subject to a freeze. The competent authority must therefore examine whether the freezing conditions are met, including the relevant ownership or control relationship, as a preliminary issue in release-authorisation proceedings. Under the AVG, it must investigate the relevant facts, allow the affected company an opportunity to respond to the evidence and give reasons for its decision.

Beyond release-authorisation proceedings, the authority may also need to determine whether the freeze applies where the company has a concrete legal interest in a binding declaration. The SanktG’s explanatory materials envisage this subsidiary remedy where adequate protection is otherwise unavailable. This approach is reinforced by the CJEU’s requirement in EM System for an effective route to challenge a freeze. Authorisation of a particular payment may leave the underlying freezing obligation unresolved.

Companies must be able to contest the evidence

The CJEU accepts that an initial measure may precede a hearing where surprise is necessary. However, reasons must follow promptly. A subsequent decision requires prior notification and an opportunity to be heard where assets remain frozen under an earlier decision that remains in force and the relevant effectiveness or circumvention risk has ceased.

The company’s observations must be considered. Courts must examine procedural compliance and whether the factual grounds are substantiated, rather than merely plausible. Review for manifest errors of assessment remains permissible where appropriate, without revisiting sanctions policy.

What this means

• Specify whether the company disputes the applicability of the freeze, seeks transaction authorisation or needs both, in dealings with the authority and its bank.
• Identify the competent authority and determine whether both a bank restriction and an independent administrative order require challenge.
• Provide evidence of actual governance and operational independence, addressing voting arrangements, board powers, decision-making practices and the specific control mechanism alleged.
• Request the authority’s factual and legal grounds and respond directly to the evidence relied upon. Banks should explain the basis on which they have frozen a non-listed customer’s funds.