Introduction
In a decision dated 15 October 2026, the Court of Justice of the European Union, Fifth Chamber, in Case C‑842/24, DNO Yemen (ECLI:EU:C:2026:868), rendered a judgment on whether payment of an arbitral award to Yemeni public entities could indirectly make funds available to persons subject to EU restrictive measures. The proceedings concerned Article 2(2) of Regulation (EU) No 1352/2014 and an application in France to set aside an ICC award on international public-policy grounds due to Indirect Access to Arbitral-Award Payments.
The Court held that payment to an unlisted public entity may fall within the prohibition where listed persons are actually capable of obtaining the funds. A hypothetical possibility is insufficient: objective factual indications must establish a sufficiently high probability that the funds will reach or benefit listed persons.
Factual Background
Before the escalation of the conflict in Yemen, the Yemeni Ministry of Oil and Minerals and the Yemen Oil and Gas Corporation, or YOGC, entered into agreements with DNO Yemen AS, Petrolin Trading Limited, Moe Oil & Gas Yemen Limited and Dove Energy Limited concerning the exploitation and sharing of oil and gas production. The agreements contained an arbitration clause.
In January 2015, the companies withdrew from the agreements. The Ministry and YOGC commenced arbitration under the auspices of the International Chamber of Commerce, disputing the effectiveness of that withdrawal and claiming damages. On 15 July 2019, an arbitral tribunal seated in Paris ordered DNO, Petrolin and Moe to pay damages to the Ministry and YOGC.
The award was rendered against the background of the conflict between Yemen’s internationally recognised government and the Houthi movement. The Houthis had taken control of the capital, Sanaa, while the recognised government operated temporarily from Aden. Parallel governmental structures emerged, and both sides claimed authority over institutions including the Ministry and YOGC.
DNO, Petrolin and Moe applied to the Paris Court of Appeal to set aside the award. They argued that its recognition or enforcement would contravene international public policy because it created a risk that funds would indirectly be made available to persons listed under Regulation No 1352/2014.
The Paris Court of Appeal dismissed the application on 5 October 2021. It found that the evidence did not establish that the Ministry or YOGC acted in the name of, under the control of, or on the instructions of listed persons, or intended to use the funds for their benefit.
The evidence included a 2015 letter from the recognised government instructing foreign oil companies to disregard appointments and directions issued by the Houthis. It also included references to a Houthi minister on YOGC’s website and a news report concerning a YOGC meeting attended by the Houthi prime minister. The Court of Appeal considered the latter evidence insufficient to establish Houthi control over YOGC.
In separate Norwegian enforcement proceedings, the award was declared enforceable. On 4 December 2023, DNO paid the net amount due solely to the Ministry. YOGC had previously informed DNO that it had assigned its claims under the award to the Ministry and would not seek amounts already paid to it.
The French cassation proceedings nevertheless continued. The Cour de cassation referred three questions to the CJEU concerning competing influence over an unlisted entity, the possible presumption of control and the evidentiary threshold for applying the sanctions prohibition.
Legal Considerations
Article 2(2) of Regulation No 1352/2014 provides that funds or economic resources may not be made available, “directly or indirectly, to or for the benefit of” the persons, entities or bodies listed in Annex I.
The Court interpreted that prohibition broadly. Recognition and enforcement of an arbitral award can constitute the making available of funds where it enables listed persons to obtain actual power of disposal over the sums awarded.
Control or formal legal and financial links are relevant but are not indispensable. An indirect making available may also occur where listed persons can obtain funds intended for an unlisted recipient through practical means available to them.
In Yemen, the Houthis had established governmental structures parallel to those of the recognised government. They claimed control over the Ministry and YOGC, used institutional infrastructure in Sanaa and appeared capable of issuing directions to foreign oil companies. The national court therefore had to examine whether listed persons connected with those structures could obtain the award funds, including by presenting themselves as authorised recipients.
The mere assertion of control does not establish that ability. Nor does Yemen’s generally uncertain political situation suffice. The assessment must instead rest on objective facts connected with the means by which listed persons could obtain the funds.
The probability of that risk must be sufficiently high to justify applying the prohibition. The national court must consider all the circumstances, including measures taken by the recognised government or YOGC to prevent diversion of the funds.
The Advocate General’s Opinion and the Court’s Response
Advocate General Maciej Szpunar delivered his Opinion on 19 March 2026 (ECLI:EU:C:2026:233). He proposed answers addressing the three questions and separately examined the evidentiary standards applicable to economic operators, EU listing decisions and national proceedings for setting aside an arbitral award.
Indirect Availability Despite the Absence of Control
The Advocate General considered ownership or control sufficient to support an inference of indirect availability, but not a necessary condition. In his view, a payment to an entity subject to competing influence could fall within Article 2(2) if the funds could be transferred to listed persons or if those persons could exercise power of disposal over them.
The Court followed this approach. It expressly relied on the Advocate General’s observation that acting in the name of, under the control of or on the instructions of a listed person comprises relevant circumstances rather than an exhaustive test.
The Court formulated the test in somewhat more concrete terms: the listed persons must actually possess the means to obtain the funds. A mere claim to control the recipient does not suffice.
The “Reasoned Risk” Standard
The Advocate General proposed that a “reasoned risk” that listed persons would benefit from the funds should trigger the prohibition. He distinguished this threshold from the relatively low degree of certainty required when an economic operator decides in good faith whether to withhold funds, and from the more demanding evidentiary standard governing a Council decision to list a person.
For annulment proceedings, he placed the standard between those two levels. He nevertheless regarded a reasoned risk, supported by concrete, precise and consistent indications, as sufficient.
The Court accepted that the prohibition is preventive and does not require proof that funds have already reached listed persons. It did not, however, adopt the Advocate General’s formulation without qualification.
The Court required objective factual indications showing that the listed persons can obtain the funds and that the probability of this occurring is sufficiently high. It also emphasised proportionality: sanctions could not be applied solely because the Houthis claimed authority over YOGC, particularly where that approach could deprive the recognised government of resources or be used against institutions that had no actual connection to the Houthis.
The Court therefore followed the preventive logic of the Opinion but stated a more structured threshold. A risk must be factually substantiated, sufficiently probable and assessed together with any effective countermeasures.
Presumption of Control and Burden of Proof
The Advocate General rejected a presumption that listed persons control an unlisted public entity merely because they exercise influence competing with that of the recognised government. The Court agreed.
Their approaches differed more clearly on the burden of proof. The Advocate General proposed that, once all the evidence available to the national court indicated a reasoned risk, the unlisted recipient should be required to prove to the requisite legal standard that the risk did not exist. He considered that reversal necessary because the relevant internal information would generally be accessible to the recipient rather than to the party challenging the award.
The Court did not accept a full reversal of the burden of proof. The party alleging a breach of Article 2(2) must first substantiate its case through sufficiently concrete, precise and consistent indications showing a non-negligible probability that the risk will materialise.
Once that prima facie threshold is met, the recipients may be required to produce evidence capable of excluding the risk to the requisite legal standard. The Court expressly stated that this adjustment must not become a reversal of the burden of proof or require the recipient to prove the complete absence of any conceivable risk.
The national court may request clarification and documents from the parties and may consult relevant material published by the United Nations or the European Union or obtain information from competent authorities.
The recognised government’s non-cooperation with the Houthis is relevant but not decisive. The government and the public entity must identify concrete measures capable of preventing listed persons or their agents from obtaining the funds, including by falsely presenting themselves as persons authorised to receive them.
Accordingly, the Court followed the Advocate General in rejecting a general presumption of control and in requiring the recipient to answer a properly substantiated prima facie case. It departed from the Opinion by preserving the challenger’s ultimate burden and expressly rejecting a complete reversal of that burden.
Related KDB.legal Coverage
A related but distinct sanctions-enforcement issue is discussed in Enforcement Measures on Frozen Libyan Assets Require Prior Administrative Authorisation. That decision concerned enforcement against assets already subject to EU freezing measures, whereas DNO Yemen concerned whether payment to an unlisted recipient could indirectly benefit listed persons.
KDB.legal Koch Boës advises clients on all aspects of sanctions law and represents in proceedings for the recognition and enforcement of arbitral awards as well as set-aside proceedings.
