Facts
On 17.12.2020, the Council of the European Union placed a citizen of Belarus A on the list of natural persons subject to European Union sanctions against Belarus, as set out in Annex I to Council Regulation (EC) No 765/2006 of 18.5.2006 concerning restrictive measures in view of the situation in Belarus and the participation of Belarus in Russia's aggression against Ukraine (OJ L 134, p. 1), as amended by Council Implementing Regulation (EU) 2020/2129, of 17.12.2020 implementing Article 8a(1) of Regulation (EC) No No 765/2006 concerning restrictive measures against Belarus (OJ L 426I, p. 1). On the following day, 2 Lithuanian banks froze the assets of the Lithuanian company (hereinafter: E), arguing that 50 % of the shares in this company belong to A. Then E brought an action in the Lithuanian court to avert the freezing of its assets, claiming that it is an independent legal entity and so cannot be presumed that the asset frost measurement imposed on 1 of its shareholders should include its funds. In the course of the proceedings, the Lithuanian ultimate Court asked for a preliminary ruling on the anticipation of freezing funds of a company not included in the list in which the individual listed in Annex I to that Regulation holds 50 % of its shares.
TS Position
Freezing of company funds
In accordance with Article 1(1)(b) of Regulation No 765/2006, the word ‘Funds‘for the purposes of that Regulation, means financial assets and benefits of any kind, including, inter alia, ‘deposits to financial institutions or another entities, balances on accounts, debts and debt obligations’. The TS so considers that the assets deposited in the company's bank accounts may constitute ‘funds’ within the meaning of Article 2(1) of Regulation No 765/2006. The wording of this provision shows that ‘all funds and economical resources held, held or controlled by the natural or legal persons, entities and bodies referred to in Annex I shall be frozenIt’s okay. ” The Court found that Article 2(1) of Regulation No 765/2006 itself does not supply that the holding, actual ownership or control of funds and economical resources must necessarily be of a direct nature in specified a way as to exclude situations in which specified holding is, actual ownership or control would be carried out indirectly, in peculiar through a legal person, entity or body or chain of legal persons, entities or bodies and that the second must be included in the list set out in Annex I to Regulation No 765/2006.
On the contrary, it can be concluded from the wording of this provision that It concerns various legal relations between the person, entity or body listed in Annex I to Regulation No 765/2006 and the funds and economical resources concerned, from the most complete legal relation that is the ownership relation to situations in which the person, entity or body may exercise effective control over those funds and resources, whether straight or indirectly. Consequently, the TS concluded that it follows from the linguistic explanation of Article 2(1) of Regulation No 765/2006 that the freezing of funds under that provision includes besides funds and economical resources of a company not included in that list, if these funds and economical resources are held, effectively owned or controlled by a natural or legal person, entity or body listed therein.
The restrictive measures, specified as the freezing of funds and economical resources provided for in Article 2(1) of that Regulation, are intended to increasing force on the Lukashenko government and forcing it to change its behaviour, therefore, the listing of the persons in question was gradually extended to persons and entities benefiting from or supporting the Belarusian regime, as well as entities owned or controlled by those persons or entities. In order to accomplish the nonsubjective pursued by the restrictive measures provided for in Regulation No 765/2006, it is essential to guarantee both the surprise effect and the velocity at which these measures are imposed, so that it is not possible to easy exploit the gaps that would deprive these measures of their effectiveness (effet utile).
Holding and control
Regulation No 765/2006 does not specify the terms ‘possession” and “control‘by a legal person, entity or body within the meaning of Article 2(1) of Regulation No 765/2006. The Court found that in order to accomplish the nonsubjective pursued by the restrictive measures provided for in Regulation No 765/2006, it is essential wide interpretation the terms ‘holding’ and ‘controls’ by a legal person, entity or body within the meaning of Article 2(1) of Regulation No 765/2006. These measures should apply as far as possible the widest scope of persons, groups or entities to prevent them from being circumvented. Moreover, both the surprise effect and the velocity at which these measures are applied. However, in the event of a hold in the implementation of restrictive measures, there is simply a hazard that the assets of the individual afraid will disappear. It is so highly crucial to guarantee that all entities liable for implementing Regulation No 765/2006 could decide as shortly as possible to frost funds and economical resourcesreferred to. To this end, it is essential to trust on clear criteriaand, as the Advocate General pointed out in point 79 of the opinion, certain presumptions concerning the interior decision-making structure of possibly affected legal persons.
The Court held that Article 2(1) and (2) of Regulation No 765/2006 must be interpreted as meaning that the assets deposited in the company’s bank accounts which are not included in the list set out in Annex I to that Regulation but whose 50 % of the shares are held by the individual on that list should be considered as funds held or controlled by that individual and should so be frozen within the meaning of that provision.
Right to protection
The Court held that Union law must be interpreted as meaning that a company not included in the list set out in Annex I to Regulation No 765/2006 whose funds have been frozen by private operators pursuant to Article 2(1) of Regulation No 765/2006, since specified funds are presumed to be in possession or under the control of a individual on that list, should, in order to guarantee its right to effective judicial protection, be able to challenge, within the framework of the complaints before national authorities and, where appropriate, proceedings before competent national courtsthe freezing of its funds and the abrogation thereof, where it demonstrates that those funds are not actually held or controlled by the individual on that list.
Comment
This explanation of the Court falls within the scope of EU sanctions against Belarus, the effectiveness of which is to hit the financial interests of persons listed in Annex I of Regulation No 765/2006. It follows from this judgement that the freezing of funds pursuant to Article 2(1) of Regulation No 765/2006 is not limited to funds and economical resources belonging to the persons, entities or bodies listed in Annex I thereto. Therefore, the expression ‘funds and economical resources owned, held or controlled’ within the meaning of that provision should be interpreted as including funds of a legal person, entity or body which are not themselves included in the list set out in Annex I to that Regulation if that legal person, entity or body is owned or controlled by the person, entity or body listed therein. Consequently, ‘funds and economical resources’ of a natural individual who should be frozen, as that individual has been listed on the list of natural persons subject to European Union sanctions against Belarus, besides includes assets of a company in which that individual holds 50 % of the shares. The TS rightly considered that it should be presumed that holding a 50 % stake in the company enabled that shareholder not only to control the company but besides its funds and economical resources.
The TS pointed out that, if it demonstrates that these funds are not actually held or controlled by a individual on that list, it is entitled to effective judicial protection as part of a complaint to revoke the decision to frost funds both before administrative authorities and before courts.
Judgment of the TS of 12.3.2026, EM System, C-84/24
