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Freezing of the funds of the sanctioned companies: The Supreme Administrative Court of Lithuania (SACL) has referred a case to the Court of Justice of the European Union (CJEU) to clarify whether a sanctioned company may use its frozen funds to pay for legal services rendered prior to its inclusion on the EU sanctions list.

The case concerns a dispute over the possible application of an exemption to the EU prohibition on the use of the frozen funds—specifically, whether the payment for the legal services rendered to the Inter RAO Lietuva prior to its listing as a sanctioned entity associated with Russia’s military aggression against Ukraine may fall under the permitted exemptions from the use of frozen funds.

SACL emphasized that the relevant EU law exemption is intended to safeguard essential legal needs arising after the listing, in order to prevent disproportionate consequences such as the denial of the access to justice. However, the payment for services rendered before listing, and the applicable criteria for such payments fall under different provisions that the national authority did not apply in this case.

The case also raised questions about the nature and scope of the legal services to which exemptions may apply. In this regard, it was emphasized that the EU regulations and the CJEU case law support a narrow interpretation of the concept of the legal services. Moreover, the national authorities must evaluate the legitimacy of the requested expenditure and determine whether any connection between the applicant and the sanctioned company may give rise to potential misuse of the exemption.

In this particular case, the request to use the frozen funds concerned expenses for services such as participation in shareholders’ meetings and legal advice on banking, taxation, operational restrictions, sanctions and related matters. Consequently, the question before the SACL is whether these expenses, by their nature, qualify as legal services eligible for the exemption from the prohibition on using frozen funds under the EU law.

As these circumstances gave rise to doubts, the SACL decided to refer four preliminary questions to the CJEU. These questions seek to clarify: (1) in which cases the exemption from the prohibition on the use of the frozen funds for the payment of legal services provided to a sanctioned company should apply; (2) the criteria for applying such an exemption; and (3) how those criteria differ when the legal services were provided after the inclusion in the sanctions list.

The administrative proceedings have been suspended pending the preliminary ruling of the Court of Justice of the European Union.

Administrative Case No. eA-247-463/2025