Control in EU sanctions: when is there sufficient evidence to justify inclusion on a national sanctions list and the freezing of assets?

An EU Member State is obliged to freeze the assets of an undertaking where a sanctioned person or entity exercises control over that undertaking and may adopt national implementing measures to that end. The control in question must be substantiated by objective and sufficiently robust evidence. The form of government of a state, even if it is autocratic or oligarchic, is not sufficient in itself. This follows from the judgment in Inter Rao Lietuva (Case C-147/25) of the Court of Justice of 3 September 2026.

What were the facts in Inter Rao Lietuva?

Inter Rao Lietuva operated in Lithuania as an importer and supplier of electricity. The Lithuanian authorities froze its assets after it had been included on a national list of natural and legal persons with links to sanctioned individuals. The decision was based, amongst other things, on the indirect ownership and control structure: Inter Rao Lietuva was indirectly owned by Inter Rao, a company incorporated under Russian law whose main shareholders were companies indirectly held by the Russian government. Inter Rao Lietuva challenged the freeze.

The Supreme Administrative Court of Lithuania asked the EU Court of Justice, amongst other things, (i) whether the entity concerned must be heard prior to its initial inclusion on the national list, (ii) what standard of scrutiny the national court was required to apply to the measure, and (iii) what evidence is required to establish control by a sanctioned person.

Must the authority hear the person or entity in advance?

The Court ruled that the inclusion of a legal person on a national list by a competent national authority does not constitute an additional national sanction, but rather the implementation of EU law. Since prior notification or a prior hearing could jeopardise the effectiveness of a freezing measure, the Court considers it inappropriate for the authority to hear the person or entity in advance. However, it is important that the reasons for imposing a freezing measure are communicated to the sanctioned person or entity as soon as possible after the fact, so that they can effectively challenge the measure before a court.

What standard of review must the national court apply?

The national court must ascertain whether the measure is based on a sufficiently solid factual basis and verify the facts on which the statement of reasons is based. When reviewing a national measure implementing EU sanctions, the court is not required to assess for itself whether there is a threat to national security.

If the measure is based on control exercised by a sanctioned person, the national authority must demonstrate that control on the basis of objective and sufficiently solid evidence. This can be done by direct evidence or by a sufficiently specific, precise and coherent set of indications. The authorities may also consider de facto, informal influence, but that influence must likewise be substantiated by objective and sufficiently robust evidence.

What evidence is required to demonstrate control: does political influence automatically equate to control?

The Court makes it clear that the nature of a government regime is, in itself, insufficient evidence that a particular political leader actually exercises control over an entity. The general assertion that the Russian regime is autocratic and oligarchic does not, therefore, automatically prove that the Russian President can direct the decision-making of a specific entity.

The referring court, in this case the Lithuanian administrative court, may, however, take into account specific information regarding the reality and effectiveness of informal influence, provided that such information meets the required standard of proof. The judgment therefore does not rule out informal control, but requires evidence of control over the entity in question, not merely a general inference drawn from the political context.

This ruling is striking when compared with the well-known ruling of the Court of Appeal of England and Wales in Mints v PJSC National Bank Trust, where the concept of control was interpreted broadly within the context of UK sanctions legislation. The Court of Appeal considered that the operation of the UK regulations might mean that, given the way in which the Russian state and economy are organised, President Putin could, in a sense, exercise control over every Russian company. The Court of Justice of the European Union clearly distances itself from this view in Inter Rao Lietuva, by requiring objective and sufficiently robust evidence for such a form of control.

What does this mean in practice?

First and foremost, the judgment clarifies the conditions under which a national authority may include a legal person on a national list on the grounds of ownership or control. It is not in dispute that such a national implementing measure is permissible, but the national authority must be able to substantiate that a relevant link with the sanctioned person actually exists.

For entities with complex ownership or control structures, it is particularly important that indirect links do not automatically equate to control by a sanctioned person. The mere fact that a company is indirectly owned by a Russian company, that the Russian state plays a role in the ownership structure, or that the company operates within the Russian economic and political system, is in itself insufficient to infer that a specific sanctioned person exercises control over that company. Authorities must gather and substantiate concrete evidence of such control. For entities wishing to challenge a measure, the reasoning, the underlying facts and the manner in which the authority links those facts to the alleged control are therefore key points to consider.

In the context of doing business with entities in which a sanctioned person appears anywhere within the ownership or control structure, the name is merely the starting point of the investigation. A screening hit, an indirect ownership link, or a general indication regarding the political context does not in itself prove that that person exercises control over the specific entity. However, it may be an important indication that should be taken into account when assessing control.

It is important to take into account (specific) circumstances which indicate that this person actually and effectively exercises control or a dominant influence over this entity. In order to assess or determine control, the actual ownership and control structure must be carefully examined, and control rights and decision-making procedures must be investigated. A distinction must always be made between facts, assumptions and missing data, and the quality and consistency of the information must be assessed. The outcome of the investigation must be based on objective and sufficiently robust evidence which, taken together and viewed in its context, justifies the conclusion that the legal person in question does in fact meet one of the criteria for control within the meaning of Article 2(1) of Regulation (EU) No 269/2014.

Finally, this ruling is also relevant in the context of the proposed modernisation of the Dutch sanctions regime through the International Sanctions Measures Act. The bill provides, by means of an amendment to the Trade Register Act 2007, for the possibility of making entries in certain public registers regarding relationships with sanctioned persons or organisations, for example where there is ownership or control. To date, this power to make such entries is set out in the 2014 Sanctions Regulation on the Territorial Integrity of Ukraine. Inter Rao Lietuva emphasises that, when establishing such a relationship, the transition from an indirect link to actual control must be carefully substantiated. A political, economic or legal connection is not, in itself, sufficient for this purpose: there must be concrete, objective and sufficiently robust evidence demonstrating control over the company in question.