Sanctions against Russia, restrictive measures may also affect the trust
For the EU Court possible freezing of assets as part of measures taken after the invasion of Ukraine
Key points
Restrictive measures taken by the EU against Russia for the aggression against Ukraine can also concernthe freezing of assets held by a trust. This was clarified by the European Court of Justice in a judgment filed yesterday concerning a series of cases (C-483/23, C-428/24, C-476/24). In the first, four companies are controlled by a Bermuda company, which in turn is held by a trust governed by Bermuda law and whose trustee is a Swiss company. The settlor of the trust was removed from the list of beneficiaries before being sanctioned in 2022. However, the Italian authorities froze the companies and their assets, believing that they were substantially traceable to it.
In Joined Cases C-428/24 and C-476/24, the first case concerned an Italian company, a member of an international group, indirectly held by a trust also established in Bermuda. The initial beneficial owner later replaced by his wife had both been sanctioned in 2022. In the second case, a yacht, moored in Italia, belongs to the company, controlled by a trust of which the wife is the sole beneficiary.
In both cases, despite the fact that the clauses of the trusts excluded any transfer in favour of sanctioned persons and any form of control by them, the Italian authorities froze the company and the yacht, considering that they remained in practice traceable to the beneficiary of the trust.
The appeal to the Tar
The companies concerned challenged the decisions before the TAR, arguing that the persons subject to the sanctions had no power of disposal or control over the management of the frozen assets. The Tar, in turn, called on the Court of Justice to clarify whether, in the light of the Union's restrictive measures, the notions of 'ownership' and 'control' of funds and economic resources can be extended to the settlor or beneficiaries of a trust, even where the trustees do not have the possibility of disposing of the assets.
European Intervention
The European courts emphasise first of all that the notions of "membership" and "control" must be interpreted so broadly as to be able to encompass any form of power or influence exercised over those assets, even in the absence of a direct legal link with them.
