In a decision dated 3 September 2026, the Court of Justice of the European Union in Case C-147/25, Inter Rao Lietuva (ECLI:EU:C:2026:691), rendered a judgment on the freezing of assets belonging to a company that was not itself included in an EU sanctions list.
The judgment addresses the evidence required to establish that a listed person controls a company and, in particular, the relevance of the Council document entitled “EU Best Practices for the Effective Implementation of Restrictive Measures.” The case documents are available through the Curia database.
According to the Court, the mere existence of a connection with a listed person is insufficient to justify an asset freeze. It must be established on an objectively substantiated and sufficiently solid factual basis that the relevant funds or economic resources are owned, possessed, held or controlled by a listed person.
Factual Background
Inter Rao Lietuva operated in Lithuania as an electricity importer and independent electricity supplier.
On 28 April 2022, Lithuania’s Financial Crime Investigation Service, or FNTT, included the company in a national list of natural and legal persons connected with persons subject to international sanctions. The list initially stated that Inter Rao Lietuva’s funds had been frozen because of its connections with a listed individual identified as G. H.
On 25 May 2022, the FNTT amended the list. It removed the information concerning G. H. and instead stated that Inter Rao Lietuva had connections with the President of the Russian Federation, who was subject to restrictive measures. The authority also announced that the company’s shares were frozen. On 1 June 2022, the FNTT ordered the freezing of its immovable property.
Inter Rao Lietuva applied to be removed from the list. The FNTT rejected those applications in decisions dated 27 May and 23 June 2022.
The authority based its assessment in part on the company’s ownership structure. Rao Nordic Oy, a Finnish company, held 51% of Inter Rao Lietuva’s share capital. Rao Nordic was wholly owned by the Russian company Inter Rao UES. The shareholders of that Russian company included Rosneftgaz, with 26.37%, Inter Rao Capital Group, with 29.56%, and FGC UES, with 8.57%.
The FNTT concluded that the principal shareholders of the Russian company were indirectly owned by the Russian Federation. On that basis, it identified a connection between Inter Rao Lietuva and the Russian President. In reaching this conclusion, the authority relied on Council Document No. 8519/18, entitled “EU Best Practices for the Effective Implementation of Restrictive Measures.”
Inter Rao Lietuva brought proceedings seeking the annulment of the FNTT’s decisions and its removal from the national list. After the Regional Administrative Court in Vilnius dismissed the action, the company appealed to the Supreme Administrative Court of Lithuania. That court referred questions to the CJEU concerning the right to be heard, the scope of judicial review and the standard of proof required to establish control.
National Lists as Implementation Measures
Article 2(1) of Regulation (EU) No. 269/2014 does not apply exclusively to assets directly owned by persons included in Annex I. It also requires the freezing of funds and economic resources that are possessed, held or controlled by listed persons.
The Regulation is directly applicable and does not generally require national implementing measures. Member States may nevertheless draw up national lists identifying persons and entities whose assets are frozen because those assets are owned, possessed, held or controlled by someone listed in Annex I.
According to the CJEU, inclusion in such a national list does not constitute a new national sanction or an additional restrictive measure. It implements the asset freeze already required by EU law.
However, the existence of a general “connection” between a company and a listed person is insufficient. The competent authority must establish that the relevant assets are owned or possessed by the listed person or are held or controlled by that person.
The Right to Be Heard
When an entity is included in a national list for the first time, it may generally be heard only after its assets have been frozen. The CJEU referred to the need for a surprise effect: prior notification could compromise the measure’s immediate effectiveness or facilitate its circumvention.
The reasons for the listing must nevertheless be communicated as soon as possible after the measure has been adopted. The affected entity must be able to defend its rights and seek effective judicial protection.
The position is different where the entity’s assets have already been frozen under an earlier decision that remains in force and there is no longer a risk that the measure will be circumvented. A subsequent decision must then, as a general rule, be preceded by notification and an opportunity to be heard.
Scope of Judicial Review
The national court must review the reasons given for the measure, the accuracy of the underlying facts, compliance with national procedural rules and the absence of any misuse of powers. Where appropriate, it must also examine whether the authority made a manifest error in its assessment of the facts.
Judicial review cannot be confined to considering whether the authority’s reasons are theoretically plausible. The court must determine whether at least one reason capable of supporting the measure has actually been established.
The national court is not, however, required to reconsider whether the company itself presents a threat to national security or whether an asset freeze is necessary in response to such a threat.
The Council determines whether a person or entity satisfies the criteria for inclusion in the EU sanctions lists. When implementing the resulting restrictive measures, national authorities examine only whether the assets of an unlisted company are owned, possessed, held or controlled by a person who is already listed.
The Relevance of the EU Best Practices
The CJEU referred to the “EU Best Practices for the Effective Implementation of Restrictive Measures,” originally adopted by the Council on 8 December 2003 and most recently updated on 3 July 2024. The Court focused on paragraphs 62 to 67 of the current version.
Paragraph 63 provides, in essence, that a legal person is considered to be owned by a listed person where that person directly or indirectly holds 50% or more of the proprietary rights or has a majority interest in it.
Paragraph 64 identifies criteria for determining whether a legal person is controlled by another person or entity. These include situations in which the other person has the power to use assets, conduct the company’s business or influence its decisions.
Where one of those situations exists, paragraph 65 provides for a presumption of control unless the contrary can be established. Paragraph 67 contains further examples of circumstances that may indicate that a listed person exercises control over a legal person or entity.
The CJEU expressly recognised that national courts may take these criteria into account when assessing whether control exists. At the same time, it placed clear limits on their legal relevance: the Best Practices are only indicative, and the criteria they contain are not exhaustive.
The Best Practices therefore do not constitute an independent legal basis for freezing assets. Nor do their criteria replace the assessment required under Article 2(1) of Regulation No. 269/2014. The decisive question remains whether the listed person is able to exercise concrete and effective influence over the company’s decisions.
Conversely, their indicative and non-exhaustive character means that control does not have to be established exclusively by reference to the circumstances listed in the Best Practices. The competent authority may rely on other evidence, including evidence of indirect or informal control that is not recorded in contracts, public instruments or shareholder registers.
Evidence of Direct, Indirect or Informal Control
Control may be established through direct evidence or a body of sufficiently concrete, precise and consistent evidence. The available evidence must be assessed as a whole and in its factual context.
The allegedly “autocratic and oligarchic” nature of the Russian political system was not, by itself, sufficient to establish that the Russian President controlled Inter Rao Lietuva. According to the Court, that circumstance could form part of the context in which the evidence was assessed, but it could not replace proof of an actual ability to influence the company’s decisions.
The national court could take into account as objective evidence the fact that a Russian state-owned company directly or indirectly held part of Inter Rao Lietuva’s capital. However, it would also have to be established on an objective and sufficiently solid basis that the Russian President was actually able to influence Inter Rao Lietuva’s decisions, either directly or through that Russian company or the companies controlling it.
The national court may consider the difficulties encountered by the authority in obtaining objective evidence or information. It may also consider the extent to which Inter Rao Lietuva is able to produce evidence of its operational independence.
Nevertheless, the burden of substantiating the reasons for the asset freeze remains with the authority that imposed the measure. The affected company cannot be required to prove the negative proposition that the reasons invoked against it are unfounded.
The CJEU did not determine whether the evidence in the case was sufficient to establish control over Inter Rao Lietuva. That factual assessment remains for the Supreme Administrative Court of Lithuania.
Related Article on kdb.legal
The requirements governing a sufficiently solid factual basis and effective judicial protection in EU sanctions proceedings are also discussed in Judicial Review of EU Sanctions Before the General Court: Alfa-Bank v Council. The proceedings discussed in that article remain pending and concern the direct challenge of EU measures.
