The European Court of Justice confirms that trust structures cannot shield sanctioned assets

On 21 May 2026, the First Chamber of the European Court of Justice (ECJ) handed down two judgments relating to three sanctions-related cases. These decisions will be of interest to UK firms with branches or subsidiaries incorporated in EU member states, or which are otherwise required to comply with EU sanctions. 

The first judgment relates to Case C‑483/23, where the Italian Financial Security Committee froze the assets of four Italian companies on the basis that those assets were, pursuant to Article 2 of EU Regulation 269/2014, "indirectly attributable" to an individual listed on the Annex I sanctions list (Designated Person). The companies were ultimately owned through a Bermuda parent company, which was itself held in an irrevocable trust governed by Bermudian law. The settlor of that trust was listed as an EU Designated Person. The settlor had been formally excluded from the group of trust beneficiaries shortly before his listing. The companies argued that this formal exclusion meant the assets could not be attributed to him.

The second judgment related to cases C‑428/24 and C‑476/24, where the assets of an Italian company and a superyacht, valued at approximately EUR 530 million, were held through trust structures whose beneficiary was an EU Designated Person. In both cases, the trust instrument contained a "compliance clause" expressly prohibiting the trustee from making any distribution to a listed person. The companies argued that because the beneficiary was legally prevented from receiving anything from the trust during the period of her listing, the assets could not be regarded as "belonging to" or "controlled by" her.

In both judgments the ECJ held that the terms "belonging to" and "control" respectively extend to de facto power over, and the ability to influence decisions concerning, assets, even in the absence of any legal or ownership link between the Designated Person and those assets.

The decisions reaffirm the position taken by the English Court in LLC EuroChem North-West-2 & Anor v Société Générale S.A. & Ors [2025] EWHC 1938 (Comm) in its interpretation of the EU sanctions, where it was held that the banks were prohibited from making payment under on-demand bonds, including pursuant to EU Regulation 269/2014. The English Court held that it had to apply a purposive approach to interpreting EU sanctions instruments, emphasising that the concepts of “ownership” and “control” are to be given an autonomous and broad meaning. In applying such an approach, the English Court held that a beneficiary under a discretionary trust is the owner of the trust assets (or alternatively, the person to whom the assets belong or is their holder), for the purpose of Article 2 of EU Regulation 269/2014, even if that is not the case as a matter of English or Bermudian law (see our previous blog post here).

Taken together, the ECJ's rulings will be of interest to financial institutions considering the asset freeze provisions of EU Regulation 269/2014 (and the UK equivalent: Regulations 10-15 of the Russia (Sanctions) (EU Exit) Regulations 2019). The decisions confirm that the sanctions framework under Regulation 269/2014 applies beyond the terms of the trust deed, requiring consideration of what it is possible to achieve through a trust structure (rather than what the terms of the particular structure in question may provide for). Legal arrangements, whether an exclusion of the settlor from beneficiary status or a compliance clause in a trust deed, will not insulate trust assets from a freezing measure. Both the English courts and ECJ will continue to apply a purposive approach to interpretation of the relevant EU legislation and, in particular, as to what constitutes "ownership" or "control". 

For further information, please see our Private Wealth and Trust Disputes blog post.