German Court Upholds Freeze on €1 Million Linked to Sanctioned Individual
Case No. 21/2026
Funds Frozen Under So-Called Russia Sanctions Remain Blocked Even After Insolvency Proceedings Are Opened Against Account Holder
The plaintiff, acting in his capacity as insolvency administrator, is seeking the release of funds frozen by the defendant bank and belonging to the debtor. In a ruling published today, the Higher Regional Court of Frankfurt am Main (OLG) held that assets controlled by an individual listed in Annex I of the EU Regulation—and thus subject to freezing—remain blocked even if insolvency proceedings are initiated against the controlled debtor.
The plaintiff serves as the insolvency administrator for the debtor, a company incorporated under the laws of the Isle of Man. The debtor held accounts with the defendant bank, containing a balance of nearly €1 million. When the plaintiff requested the release of these funds, the bank refused, arguing that the assets were frozen under the EU Regulation on restrictive measures targeting individuals listed in Annex I (the so-called Russia sanctions; see explanatory notes below).
The Regional Court had dismissed the plaintiff's claim for payout. The appeal before the 17th Civil Senate of the Higher Regional Court was likewise unsuccessful. The Senate upheld the lower court's decision, confirming that the plaintiff had no valid claim to the funds.
The court ruled that the bank deposits had been rightfully frozen in accordance with the EU Regulation, which mandates the freezing of assets owned, held, or controlled—directly or indirectly—by a listed individual. Although the debtor itself is not named in Annex I, the court found sufficient evidence that a listed person exercises de facto control over it. The evidence suggests that this individual retains the ability to exert dominant influence over the debtor without holding formal authority. The debtor's complex corporate and trust structures appear designed to shield transferred assets from sanctions. This conclusion is supported, among other things, by provisions in the articles of association of a trust linked to the debtor. While the trust is no longer explicitly associated with another listed individual—who was removed from the EU sanctions list during the appeal proceedings—it remains under the de facto control of a relative who is still listed. This relative possesses the means to exert dominant influence, as evidenced by an unnecessarily convoluted corporate structure and the abrupt resignation of key officials and beneficiaries just before the listing, apparently to protect the trust's assets from restrictive measures and circumvent sanctions.
The court further held that the initiation of insolvency proceedings against the debtor did not terminate the listed individual's control over the funds. Insolvency is merely a factual circumstance that does not, under sanctions law, constitute a loss of control. The EU Regulation does not provide for its interpretation to be supplemented by national laws.
The ruling is not yet final. The plaintiff may still file a non-admission complaint to seek leave for an appeal to the Federal Court of Justice (BGH).
Higher Regional Court of Frankfurt am Main, Judgment of April 1, 2026, Case No. 17 U 20/25(Preceding judgment: Regional Court of Frankfurt am Main, April 14, 2025, Case No. 3-03 O 12/24)
The full decision will shortly be available at www.rv.hessenrecht.hessen.de.
Explanatory Notes:
Council Regulation (EU) No 269/2014 of March 17, 2014concerning restrictive measures in view of actions undermining or threatening the territorial integrity, sovereignty, and independence of Ukraine
Article 2
All funds and economic resources belonging to, owned, held, or controlled by the natural or legal persons, entities, or bodies listed in Annex I shall be frozen.
(...)
Article 3
(1) Annex I includes:
a) natural persons responsible for actions or policies that undermine or threaten the territorial integrity, sovereignty, and independence of Ukraine, or its stability or security; those who support or implement such actions or policies; or those who obstruct the work of international organizations in Ukraine;
Council Implementing Regulation (EU) 2023/1765 of 13 September 2023 implementing Regulation (EU) No 269/2014 concerning restrictive measures in response to actions undermining or threatening Ukraine's territorial integrity, sovereignty, and independence
This Implementing Regulation updates the list of persons set out in Annex I.
