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Implementation of European Union law in the domestic legal system: by the order of 12 February 2025, the extended chamber of judges of the Supreme Administrative Court of Lithuania (the Court) suspended the case and decided to refer questions to the Court of Justice of the European Union (CJEU) in order to provide clarity on how national courts should interpret and apply EU law in cases involving EU sanctions and national security concerns.

The case concerns a dispute between AB Inter Rao Lietuva (the Company) and the Financial Crimes Investigation Service (FNTT), as the Company was included on a list of persons sanctioned by the EU and the freezing of its assets for the period from 28 April 2022 to 21 July 2022. On the basis of EU Council Acts, the FNTT argued that the Company is linked to EU-sanctioned persons due to its shareholding structure. Initially, the FNTT referred to the Company's association with Igor Sechin, but this was later removed after the FNTT concluded that the Company is controlled by Vladimir Putin, President of the Russian Federation. The Company disputed this association and submitted requests to the FNTT to be removed from the list, but the FNTT refused to comply with the requests. Disagreeing with the FNTT, the Company submitted a complaint to an administrative court.

In the context of the Charter of Fundamental Rights of the EU (the Charter), the case raised questions of interpretation of EU law in relation to the requirements of EU law for national administrative procedure, the intensity of judicial review in the context of national security, and the standard of proof in sanction cases.

First of all, the Court noted that the FNTT had listed the Company and frozen its assets without adopting any administrative act. In accordance with the Charter, the right to good administration at EU and national level requires a public administration body to adopt an administrative act to justify the relevant action. In this respect, the Court noted that, when imposing sanctions at EU level, the Council of the EU also includes persons in the lists of sanctioned persons, thus allowing the possibility to defend oneself against the inclusion in question after the adoption of the decision. It is clear that in order for a national measure such as the one at issue in the present case not to lose its effectiveness, it is necessary that such a measure be adopted unexpectedly and be applied without delay, since otherwise there is a risk that the person against whom the restrictions are imposed may take action to avoid the freezing of assets. Therefore, according to the assessment of the Court, it should be considered whether, by analogy with the acts adopted by the Council of the EU, the inclusion of the Company in the list could also be recognised as a proper administrative decision, with the Company's right of defense being ensured already after the adoption of such a decision in the context of the applications for removal from the list.

Hence, the first question referred to the CJEU for a preliminary ruling is whether in the context of Article 41 of the Charter a national measure is permissible whereby a person is placed on a list of persons whose assets are frozen because of his association with persons subject to sanctions, and where the possibility of objecting to such a measure before the competent authority is provided for only after such a person has been so placed.

The second question referred to the CJEU seeks to clarify the scope of the national court's judicial review of the decision in the light of the overriding interest of the Member States in safeguarding national security. FNTT took action against the Company in order to safeguard Lithuania's national security and to prevent any direct or indirect influence of the Russian Federation in the energy sector in which the Company operated. Thus, the circumstances of the case were objectively relevant in relation to the sector of the Company's activity and the fact that the political powers of the Russian Federation were exploiting the energy sector for purposes contrary to the national security interests of the EU and the Member States. In this context, the Court noted that the requirement of safeguarding the national security of a Member State presupposes political and evaluative decisions which are exclusively for the State authorities, and that the assessment of the question of political expediency does not fall within the jurisdiction of administrative courts. Consequently, a national administrative court cannot modify preventive measures to implement a threat to national security.

In this context, the Court questioned the extent to which the national court should then assess the legality of the sanctions imposed on individuals in order to carry out a full and complete judicial review of their legality. The Court asked the CJEU whether, in the context of Article 47 of the Charter, the requirement of a comprehensive judicial review would be satisfied by a review of the lawfulness of the freezing of a person's assets in the context of EU sanctions, in relation to the examination of whether the procedural rules have been complied with or the duty to state reasons has been complied with, of the accuracy of the facts, of any manifest errors in the assessment of those facts and of the absence of any misuse of powers.

Finally, the third question referred to the CJEU for a preliminary ruling seeks to clarify the standard of proof of a person's links to the persons sanctioned in proceedings before a national court. In this respect, the Court noted that the standard of proof required by EU law requires that the assessment of a person's association with the persons sanctioned must be made on the basis of objective and sufficiently weighty evidence from which a reasonable conclusion can be drawn as to the existence of a relevant association. However, having assessed the factual and legal circumstances of the dispute, in particular with regard to the country with whose entities the Company's control link was established (the Russian Federation), the Court doubted whether, in cases concerning the imposition of EU sanctions on the basis of links with the Russian Federation authorities, this standard of proof can be used to assess the reality of a person's control in a proper and effective manner.

The Court noted that there was no direct evidence in the case to substantiate the Company's specific link with the President of the Russian Federation, Vladimir Putin. However, in a state of an autocratic and oligarchic character as the Russian Federation, real and effective control by the political authorities (in particular by Vladimir Putin) may be exercised not only by legal means, through the shareholders or the controlling interest (more than 50 %) in a legal person, but also by methods which may ensure real and effective, but informal, control of the legal person concerned and the operation of the legal person in a way which favors the political authority. The Court noted that such control by the political authority may be manifested in ways that may not be objectively verifiable or provable by direct evidence in the main proceedings. It was therefore questioned whether Vladimir Putin could not in such a case be recognised as exercising effective control over companies in the Russian Federation in which he himself does not hold any managerial or equivalent position, but whose control could be recognised solely by virtue of the power of authority.

The Court questioned whether these circumstances concerning the reality and effectiveness of the control of a person should be assessed in the course of the proceedings before the national court, in particular in view of the fact that it is not possible to prove such circumstances in principle by objective and sufficiently strong evidence collected in the case, due to the informal and conspiratorial nature of the control exercised by the relevant authorities of the Russian Federation, without adopting any formal acts implementing such control or acquiring a controlling interest in a legal person in order to challenge the relevant link before the courts of the Member States, thus undermining the effectiveness of EU sanctions.

The Court has therefore referred a third question for a preliminary ruling in the context of Article 47 of the Charter, which seeks to ascertain whether, when a person's links with representatives of the political authorities of the Russian Federation are established before a national court, circumstances relating to the reality and effectiveness of the control exercised by the political authorities of the Russian Federation over legal persons operating in that State, which may not be capable of being proved by the objective and sufficiently weighty evidence in the case, and which may be regarded as being exercised by the representatives of the political authorities of the Russian Federation in question in exercising control over the person by virtue of the political power of the authorities in that State, are to be assessed.

Administrative Case No. eA-330-821/2025

This is an unofficial translation of the order and it does not bind neither the Supreme Administrative Court of Lithuania, nor the Court of Justice of the European Union.