Background
Inter Rao Lietuva AB operated in Lithuania as an independent electricity importer and supplier. In April 2022, Lithuania’s Financial Crime Investigation Department, known as the FNTT, placed the company on a national list of persons linked to targets of EU sanctions and froze its assets. The FNTT initially cited links to a sanctioned individual and later cited links to the President of the Russian Federation. Its decisions relied principally on Inter Rao Lietuva’s ownership chain through Finnish and Russian companies, including entities said to be indirectly owned by the Russian Federation.
Inter Rao Lietuva sought removal from the list, but the FNTT rejected its applications. After a Lithuanian administrative court dismissed the company’s challenge, the Supreme Administrative Court of Lithuania referred questions to the CJEU concerning the right to be heard, the required scope of judicial review, and the evidence needed to establish that an unlisted company’s assets are owned, held, or controlled by a person listed under EU sanctions.
The Court’s Holding
The CJEU held that EU law permits a Member State to place an unlisted legal person on a national asset-freeze list before allowing it to challenge the measure, where the surprise and immediate effect of the initial freeze are needed to prevent circumvention. Such a national listing implements the EU freeze rather than imposing a separate sanction. It is lawful, however, only if the targeted assets belong to, or are owned, held, or controlled by an EU-listed person or entity; a mere “link” to a listed person is insufficient. If assets are already frozen under an earlier decision and no circumvention risk remains, a later decision generally must be preceded by notice and an opportunity to be heard.
The Court also held that effective judicial protection does not require a national court to reconsider whether the unlisted company itself threatens national security. The court may review the measure by examining its reasons, the accuracy and substantiation of the supporting facts, any manifest assessment error, compliance with procedural rules, and misuse of powers. National authorities merely implement the Council’s sanctions by determining ownership, holding, or control; they do not independently decide whether sanctions are necessary for national security.
Informal or indirect control may be proved through a sufficiently specific, precise, and consistent body of indicia, assessed together and in context. But the evidence must be objective and sufficiently solid and must show that the listed person can specifically and actually influence the company’s decisions. General assertions that Russia is autocratic and oligarchic cannot by themselves prove that its President controls a particular company, although political conditions and evidence concerning control over state-owned energy enterprises may form part of the factual context.
Key Takeaways
- An unlisted company’s assets may be frozen without a pre-listing hearing when immediate action is necessary, but only because the assets belong to, or are owned, held, or controlled by an EU-listed person or entity.
- A business relationship or other undefined “link” with a sanctioned person does not by itself satisfy Article 2(1) of Regulation No 269/2014.
- Informal control may be established circumstantially, but the authority bears the burden of presenting objective and sufficiently solid evidence of specific, actual influence over the company.
Why It Matters
The judgment clarifies the boundary between implementing an EU asset freeze and creating an additional national sanction. Member States may identify and publicize unlisted entities whose assets fall within an existing EU freeze, but they cannot freeze an entity merely because it has some association with a listed person.
The ruling also supplies an evidentiary framework for difficult cases involving opaque corporate structures and alleged informal governmental control. Courts may consider contextual and circumstantial evidence, including state ownership and influence over strategic sectors, while still requiring proof tied to the particular company rather than relying on broad assumptions about a country’s political system.