FRANCE Trends and Developments Contributed by: William Julié, Amélie Beauchemin and Camille Gosson, WJ Avocats
be frozen when those structures are linked to per - sons subject to EU sanctions. In both judgments, the Court rejected a formalistic approach to trust struc - tures and held that the existence of a trust does not, in itself, preclude the freezing of assets held through it. Rather than focusing on the formal allocation of rights between settlor, trustee and beneficiary, it made clear that the decisive question is not who holds legal title over the assets under the law governing the trust or the trust deed but who has the power, in prac - tice, to use, benefit from, or dispose of the assets or have influence over them. Ownership and control may therefore be inferred from factual circumstances sur - rounding the trust arrangement, several of which were identified by the Court as relevant indicators. To reach this conclusion, the Court first recalled that Article 2 (1) of Regulation No 269/2014 encompasses a plurality of legal relationships between the person or entity listed in Annex I to that Regulation and the funds and economic resources concerned. The provi - sion extends beyond situations of formal ownership and covers all circumstances in which the person or entity exercises de facto power over the funds and resources or benefits from them. In doing so, the Court followed the reasoning adopted by the Advo - cate General in his Advisory Opinion delivered on 10 July 2025 in Case C-483/23 ( T Trust ). In that sense, the notion of “belonging to” encom - passes both situations in which power over the funds and economic resources can be legally attested, and those in which the person or entity holds de facto power. Likewise, the concept of “controlled by” extends to situations in which a person is able to influ - ence the choices of another person, irrespective of the existence of a legal link. It should be noted that the Court failed to provide a definition and to delineate the contours of the notions of “power” and “influence”, thereby raising concerns regarding legal certainty. The Court grounded this “substance over form” approach in two imperatives: the requirement to limit transactions involving frozen assets, and the objective of protecting Ukraine’s territorial integrity, sovereignty and independence by preventing any circumvention of restrictive measures.
Consistent with this approach, the Court held that the referring court must undertake a holistic assessment of the trust arrangement. While the law governing the trust may be relevant, it cannot be determinative. Rather, it must consider the broader factual reality, particularly given that trust deeds and their amend - ments are not subject to publicity requirements and may be modified, making the true nature of the legal relationship difficult to identify from the deed alone. The Court subsequently identified a series of factu - al indicia capable of demonstrating that a settlor or beneficiary retains the power to use, benefit from or dispose of the funds and economic resources held in the trust, or to have influence over them or over the decisions made by the trustee in respect of them. Such circumstances include: • the nature of the relationship between the settlor or beneficiary and other persons involved in the trust, particularly those linked by professional or personal ties; and • whether assets are allocated to activities of which the settlor or beneficiary are the sole or principal recipients or beneficiaries. Indications that assets belong to or are controlled by the beneficiary or the settlor may also be inferred from the use of unnecessarily complex structures, such as: • the settlor or beneficiary holding the majority of the trustee’s capital or voting rights or the right to appoint or remove the majority of the members of its governing body, or the right to exercise a decisive influence over the trustee by virtue of an agreement between them; • entities being set up or changing their identity shortly before or after the adoption of restrictive measures; and • where companies are contributed to the trust, situations in which the trustee is not the director of those companies but merely the holder of their capital. Ultimately, the Court concluded that assets held in a trust may be regarded as “belonging to” or being “controlled by” the settlor or beneficiary where they hold “power enabling him, her or it to use, benefit
155 CHAMBERS.COM
Powered by FlippingBook