On 15 October 2026, the Court of Justice of the European Union (CJEU) ruled in Case C-842/24 (DNO Yemen AS v Petrolin Trading Limited and Others) that assets can be made indirectly available to a sanctioned person even where the recipient has no legal or financial link to them. The test is whether there is a sufficiently significant risk that a sanctioned person may actually obtain assets made available to a non-sanctioned entity.
The judgement shapes how firms, counterparties and courts assess payments to entities that may be exposed to sanctioned persons, and it clarifies who must prove what when that exposure is disputed.
To provide some context on the case itself, the dispute has its origins in Yemen’s upstream oil and gas sector. In 2015, DNO withdrew from oil and gas production-sharing agreements with YOGC, a company wholly owned by the Yemeni State. Control of YOGC is contested: both the legitimate Yemeni Government and the Houthi Movement claim it, and Houthi-linked persons are targeted by the EU’s restrictive measures concerning Yemen under Regulation (EU) No 1352/2014. Article 2(2) of that Regulation prohibits making funds or economic resources available, directly or indirectly, to or for the benefit of the listed persons.
An arbitration award made in Paris on 15 July 2019 ordered DNO and two co-respondents to pay damages at roughly US$30 million to the Yemeni Ministry of Oil and Minerals and to YOGC. DNO resisted, arguing that paying YOGC could result in funds being made available to sanctioned Houthi persons.
The dispute was fought on several fronts to which it then reached the Cour de cassation, which on 27 November 2024 stayed the proceedings and referred three questions to the CJEU, concerning in essence the precise scope of the prohibition on indirectly making funds available and the standard of proof to be met.
The evidence before the national court shows how fine the line was: It concerned the Houthi movement’s claim of control over YOGC, the name of a Houthi minister appearing on YOGC’s official website, the website’s use of the .ye domain name used by the Houthi movement, and the reported attendance of the then Houthi Prime Minister at a YOGC meeting. In March 2026, Advocate General Szpunar advised that YOGC could enforce the award only if it could show there was no reasonable risk that the funds would benefit the Houthis.
The Court’s answer proceeds in several steps. It first held that enforcing an arbitral award can count as making funds available, where doing so enables a sanctioned person to obtain the power to dispose of the sums awarded.
It then confirmed that assets can be made indirectly available even where there is no legal or financial link between the beneficiary and the sanctioned person. What matters is whether a sanctioned person actually has the means to obtain assets made available to a non-sanctioned entity. In this case, the Court noted signs that persons mandated by the Houthis could present themselves as authorised to receive funds intended for YOGC.
A merely hypothetical risk is not enough, but a sufficiently significant one is. That risk must be apparent from objective material evidence, and the assessment must also take account of circumstances that could prevent the sanctioned person from obtaining the assets.
Finally, the Court addressed the burden of proof, which can shift. Control cannot be presumed merely because a sanctioned person claims it. However, where there is prima facie evidence of a risk that a sanctioned person may obtain the funds, it falls to the beneficiary of the payment to rule out that risk. National courts may also gather information and order evidence to be produced in order to make that assessment.
Read against that background, the significance of the judgment lies in what it declines to do. The referring court had recalled earlier case law under which a payment can indirectly make funds available where there are legal or financial links between the beneficiary and the designated persons. The Court does not treat such links as a precondition. Nor, however, does it adopt a presumption of control, and the published case summary indicates that it also addressed whether the absence of cooperation between the legitimate government and the targeted persons matters. The result is a risk-based test: the question is neither whether the recipient is controlled by a sanctioned person nor whether a sanctioned person merely claims it is, but whether, on the evidence, there is a sufficiently significant risk that the funds will reach them.
For sanctions compliance, the ruling shifts the analysis away from ownership and control structures alone and towards a practical question: who can in fact obtain the money? The absence of any legal or financial connection to a sanctioned person does not, on its own, remove the risk of indirect availability, so firms making or facilitating payments to entities of contested control need to look beyond formal links.
Because the risk must rest on objective material evidence, a clear record of what was reviewed, and why a risk was or was not considered significant, carries real weight. That record should also capture any circumstances that could prevent a sanctioned person from obtaining the assets. Where prima facie evidence of a risk exists, the beneficiary may need to show that the risk is excluded, and national courts may order evidence to be produced, so payment decisions in contested-control situations should be made on the footing that they may later be scrutinised in detail.
Case C-842/24 confirms that sanctions exposure can arise even without a legal or financial link to a sanctioned person. The decisive question is whether there is a sufficiently significant, objectively evidenced risk that a sanctioned person may actually obtain the assets, and the Court also sets out how the burden of proof operates when that risk is shown.
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The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided.
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