The case was referred to the CJEU by the Regional Administrative Court of Lazio, Italy and examines whether such assets placed into a trust can still be considered "owned, held, or controlled" by the settlor and therefore subject to freezing measures.

The Opinion follows on from, and is largely compatible with the recent jurisprudence in this area in the English High Court in EuroChem v Société Générale  which we previously issued a blog about here.

Key insights of the AG Opinion:

• Substance over form: The Opinion emphasises that the legal structure of a trust does not necessarily sever the settlor's ties to the assets. Ownership and control must be assessed based on the trust's terms and the settlor's retained powers, such as the ability to revoke the trust, appoint trustees, or influence beneficiaries.
• Trusts and circumvention risks: The AG noted that trusts can be used “relatively easily” to avoid the freezing of economic resources and funds, which has been acknowledged by the European Commission, in its Russia sanctions guidance, as potentially entailing circumvention. More broadly, the Opinion aligns with the EU's broader policy goal of preventing Russia sanctions evasion. It underscores the need to take a systematic and purposive approach and to look beyond formal legal arrangements to the underlying factual circumstances of each trust, including the reality of control, ensuring that sanctions are not circumvented through what can be complex legal structures.
• Offshore trusts: The trust in question, governed by Bermuda law, was perceived as being flexible in nature, a feature often promoted to ensure products are appropriately tailored for family offices, but with the consequence being here that the settlor had not appropriately severed ties to the assets for the purposes of the ownership and control test in sanctions law. Despite amendments to exclude the settlor as a beneficiary, the AG noted that the settlor retained significant powers, such as being able to appoint trustees and protectors, which could indicate continued control over the assets. In a nod towards offshore trusts however, the AG did state that trusts for these purposes should be reviewed and assessed through the lens of the governing or “proper” law, not the trusts law where the trust undertook business, in Italy.
• Practical challenges: While the approach is consistent with EU sanctions policy objectives, it raises challenges for firms and institutions engaging in due diligence with trusts. Without clear regulatory guidance, parties are likely to adopt overly cautious stances, increasing the risk of over-compliance and litigation.

For more details, read the full case analysis here.