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Judicial Review of Russian Asset Freezes in the European Union


Introduction

 

The freezing of Russian sovereign assets following the Russian invasion of Ukraine in 2022 has generated unprecedented legal and constitutional questions within the EU.[1] While much of the international legal debate has focused on issues of sovereign immunity and countermeasures under international law,[2] the internal dimension of EU law, and in particular the role of judicial review exercised by the Court of Justice of the European Union (CJEU), is of equal importance. Beyond the judicial review of the freezing decisions, the annulment claims against the Council’s decision to use proceeds generated by frozen Russian assets brings this dimension into sharp focus.[3] The annulment claim raises fundamental and novel questions concerning the limits of EU competence, the transformation of restrictive measures but also the evolving role of the CJEU in reviewing sanctions adopted under the Common Foreign and Security Policy (CFSP).

 

Legal Background of the Asset Freezes and the Role of the CJEU

 

The restrictive measures aimed at immobilizing both the sovereign assets of the Central Bank of Russia (CBR) and Russian private assets were adopted as countermeasures in response to internationally wrongful acts, in accordance with the Articles on the Responsibility of States for Internationally Wrongful Acts.[4]  These autonomous restrictive measures are adopted by the Council within the framework of the CFSP based on a dual legal framework combining Article 29 TEU and Article 215 TFEU. Asset freezes, as traditionally understood in EU law, consist of the immobilization of funds and economic resources without affecting ownership. This distinction has been central to the acceptance of such measures both within EU law and in light of international legal principles. The freezing of assets belonging to the CBR therefore initially fell squarely within established sanctions practice, which—consistent with ARSIWA—aims to exert temporary pressure in order to induce compliance with international obligations, while preserving the legal title of the targeted state or entity.

Although this situation has already raised questions regarding sovereign immunity, the legal landscape has undergone further evolution in recent years as a result of two major decisions. On the one hand, in its decisions last year, the Council froze the CBR’s assets on a permanent basis, rather than subjecting them to the usual six-month renewal period with unanimous approval (Freezing Regulation).[5] The unique novelty of the Freezing Regulation lies in the shift of the underlying legal basis. Instead of CFSP, the Freezing Regulation relies on economic grounds enshrined – in the exceptional – Article 122 (1) TFEU which in turn allowed it to be adopted by qualified majority against the votes of Slovakia and Hungary. As a result, continuous six-month renewals are no longer necessary from this point forward which could also make the use of these assets less problematic.

On the other hand, an earlier decision of the Council allowed the use of extraordinary profits generated by frozen assets, particularly those held through financial intermediaries such as Euroclear, in order to finance support for Ukraine.[6] Even though, under Article 24 TEU, CFSP decisions require unanimity in the European Council or in the Council, the decision on the use of extraordinary profits generated by frozen assets was not adopted in accordance with the unanimity requirement. Instead, the Council Regulation relies on Article 215 TFEU, which allows restrictive measures to be adopted by qualified majority, provided that they are based on a unanimous CFSP decision. In this way, however, restrictive measures have been used to indirectly support military actions. Therefore, the question arises whether the EU may combine different legal bases and instruments to achieve an outcome that would not be permitted under any single Treaty provision.

These developments represent a qualitative shift, raising the question whether the EU has moved beyond mere immobilization of sovereign assets toward a form of indirect economic appropriation. In connection with this, it also poses the question of institutional balance along with the allocation of powers between EU institutions regarding the CFSP competence.

Furthermore, the question of judicial review is central to this transformation. Although CFSP measures were historically considered to lie largely outside the jurisdiction of the CJEU,[7] its jurisprudence has progressively expanded the scope of such review. In its landmark judgement of Kadi and Al Barakaat International Foundation v Commission, the CJEU asserted that all EU acts, including those implementing international sanctions, must comply with fundamental rights as protected within the EU legal order.[8] In this way, the CJEU’s judicial review of the restrictive measures in the CFSP serves to safeguard the autonomy of EU law.

 

The Legal Challenges of the Freezing Regulation

 

The Freezing Regulation has been challenged both by individuals (CBR)[9] and Member State (Hungary)[10] in annulment procedures based on Article 263 TFEU.

The challenges can be grouped into three main lines of argument. The first argument concerns the question of sovereign immunity, as reaffirmed by the ICJ in its judgment in Jurisdictional Immunities of the State (Germany v Italy: Greece intervening).[11] Based on the ICJ judgement, one of the contested issues here is whether the immunity extends to non-judicial measures such as sanctions. A further related question is how the use of the proceeds of the frozen assets can be qualified under sovereign immunity. However, since the CJEU would only annul EU acts if a “manifest error of assessment” occurs, it is unlikely that such a threshold would be met given the contested scope of sovereign immunity. The second argument relates to the fundamental right to property under Article 17 (1) of the Charter of Fundamental Rights (Charter). While the CJEU has previously considered asset freezes against central banks proportionate in light of legitimate security objectives, the question of the use of the proceeds of the frozen assets that  may alter the legal character of the underlying measure remains open. The traditional understanding of asset freezes as temporary and reversible measures is challenged by the use of profits generated by those assets. Even though principal remains formally untouched, the extraction and redistribution of financial gains may qualify as a   economic exploitation and thus reveals doctrinal tension between freezing and appropriation. Further question, however, is weather the CBR as foreign entity that performs sovereign function could qualify for protection under the Charter.

The third line of argument raises questions concerning the institutional and decision-making processes within the EU legal order, in particular whether the restrictive measure in question circumvents the ordinary legislative procedures and therefore distorts the allocation of powers between the EU institutions. Accordingly, it is argued that, by relying on – the exceptional – Article 122 (1) TFEU (economic stabilization and economic policy) and qualified majority voting, the Council circumvented Article 215 TFEU, which requires a prior unanimous CFSP decision. It challenges the combined used of legal basis to avoid unanimous decision-making of CFSP and thus the Treaties do not authorize the transformation of asset freezes into mechanisms of financial redistribution.

In addition to the principle of conferral, Article 40 (2) TEU establishes a principle of non-encroachment, intended to safeguard the intergovernmental nature of the CFSP from interference by other EU competences, including economic policy. The primary objective of the measure in question is decisive in determining whether it falls within the scope of the CFSP or of economic policy and, consequently, which decision-making procedure is applicable. In ascertaining that objective, regard must be had to the legal basis of the prior freezing decisions, as well as to the overall context and circumstances surrounding the adoption of the measure. These factors, however, provide a weaker basis for relying on Article 122(1) TFEU in this case, as they do little to justify circumventing the ordinary legislative procedures or to reconcile the measure with the specific requirements and limitations established under the Treaties, thereby raising questions about the proper allocation of competences and the preservation of the EU’s institutional balance.

 

Conclusion

 

The litigation surrounding the use of proceeds from frozen Russian assets marks a pivotal moment not only in public international law but also in the development of EU law. The case also highlights the increasing role of the CJEU as an arbiter responsible for safeguarding the institutional balance and the allocation of competences within the EU legal order as well as the constraints of the Treaties even when extraordinary measures are adopted. The annulment challenges surrounding the transformation of asset freezes from temporary restrictive measures into instruments capable of generating and redistributing financial resources raises complex questions concerning competence, legal basis, and institutional balance even when extraordinary measures are adopted. While Articles 122 (1) and 215 TFEU have been invoked to justify these measures, their combined use exposes the limits of the EU’s authority under the Treaties and challenges traditional procedural safeguards, particularly within the CFSP. The annulment claims thus serve as both a test of the EU’s legal resilience and a reflection on the evolving role of the CJEU in navigating the complex interplay between effectiveness, legality, and institutional equilibrium.


[1] Decision 2014/512/CFSP, OJ L 229, 31.7.2014.; and Regulation (EU) No 833/2014, OJ L 229, 31.7.2014.

[2] For example, van der Horst, Ron: “Illegal, Unless: Freezing the Assets of Russia’s Central Bank.” European Journal of International Law 34, no. 4 (2023): 1021–1032.

[3] Hungary v Council of the European Union (action for annulment concerning the use of proceeds from frozen Russian assets to finance aid to Ukraine, pending before the General Court, lodged July 2025). See, https://www.courthousenews.com/hungary-clashes-with-eu-after-being-shut-out-on-ukraine-arms-funding/?utm_source=chatgpt.com (accessed March 23, 2026).

[5] See, Regulation (EU) 2025/2600, OJ L 2025/2600, 13.12.2025.

[6] Council Regulation (EU) 2024/1469, OJ L 2024/1469, 22.5.2024.

[7] See Article 24 TEU and Article 275 TFEU. The narrow exceptions are monitoring compliance with EU competences (Article 40 TEU) and reviewing the legality of restrictive measures against natural or legal persons.

[8] Case C-402/05 P and C-415/05 P, Kadi and Al Barakaat International Foundation v Commission, EU:C:2008:461.

[11] Germany v Italy (Jurisdictional Immunities), ICJ Reports 2012, p. 99.

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