EU Trends and Developments Contributed by: Nathalie Colin, Maria-Clara Van den Bossche, Florence Frühling and Kevin Xhebexhia, Freshfields LLP
The recitals to the 18th sanctions package clarify that compliance with EU sanctions forms part of the EU’s public policy, requiring domestic courts to raise a public policy objection ex officio. The practical signifi - cance of this qualification is considerable: under the New York Convention, public policy constitutes one of the few grounds on which recognition and enforce - ment of an arbitral award may be refused, and the only ground domestic courts may raise ex officio. As a result, any arbitral award conflicting with EU sanctions will be refused recognition and enforcement across the EU, irrespective of its merits or the parties’ proce - dural conduct, and regardless of any conflicting deci - sion from an arbitral tribunal or non-EU jurisdiction. The 20th package ( 23 April 2026 ) The 20th sanctions package addresses two remaining gaps: costs awards against sanctioned claimants, and the ability of EU companies to seek relief against Rus - sian proceedings asserting extraterritorial jurisdiction. It introduces a target exception to asset freeze, allow - ing competent authorities to release frozen funds to satisfy an arbitral costs award. This is permitted where the arbitration has been initiated by the sanctioned party after its designation, and the award favours a non-sanctioned respondent. Recoverable amounts are limited to tribunal fees, institution fees, and rea- sonable legal costs, excluding principal amounts, damages, or interest. In practice, respondents should identify whether the sanctioned claimant holds frozen assets within the EU and be prepared to act swiftly once a favourable award is rendered. The package also establishes a mechanism enabling EU companies to seek protection before EU member state courts by requesting orders that (i) uphold exclu - sive jurisdiction or arbitration agreements; and (ii) pro - hibit or terminate proceedings before Russian courts (ie, ASIs), with courts empowered to impose financial penalties for non-compliance, payable directly to the affected party. A landmark 2023 decision of the Berlin Higher Regional Court had already demonstrated that Section 1032 of the German Code of Civil Procedure can be deployed in an extraterritorial context, though German courts did not go beyond the declaratory stage. The 20th package takes this approach further. However, a key question remains as to whether finan -
cial penalties could be enforced against frozen assets, which would require an additional exception to the asset freeze. Judicial challenges and enforcement constraints arising from EU sanctions Claims over frozen Russian assets Following Russia’s invasion of Ukraine, the EU and its partner countries froze approximately USD300 bil - lion in Russian reserves. Within the EU, approximately EUR165 billion has been immobilised across Belgium, Cyprus, France, Germany and Sweden. Within the EU, the 18th sanctions package not only prohibits EU member states from recognising or enforcing judgments awarding damages in connection with the freezing of Russian assets, but also affirma - tively obliges them to actively resist any recognition or enforcement efforts by raising all available defences. In parallel, the freeze of Russian assets has given rise to a broader wave of litigation: • First, individual investors – including reportedly some non-sanctioned individuals – have filed investment treaty claims against EU member states over frozen assets, raising fundamental questions about the property rights of people who have not been individually designated under EU sanc - tions. This exposure has created significant fric - tion regarding the continued existence of bilateral investment treaties (BITs) between EU member states and Russia, which provide the legal basis for such claims. On 17 December 2025, six European organisations filed a complaint against France, Germany, Sweden and Austria demanding termina - tion of their BITs with Russia, noting that the CJEU ruled as far back as 2009 that several such treaties were incompatible with EU law. • Second, on 27 February 2026, the Central Bank of Russia (CBR) filed an appeal before the General Court challenging the EU Council regulation impos - ing an indefinite freeze on its assets. The Council was ordered to submit its position by the end of May 2026. The case is pending.
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