Ruling [CJEU] ¦ Paying a Non-Listed State Entity Can Breach the Yemen Sanctions, but Only on Evidence of a Real Risk

DNO Yemen: when paying a state entity can make funds available to the Houthis

In a judgment of 15 October 2026 in Case C-842/24 DNO Yemen, the Court of Justice of the European Union clarified how far the prohibition on making funds “indirectly” available to sanctioned persons reaches when the recipient is a public entity that is not itself listed. Paying a Yemeni state oil company to enforce an arbitration award can breach the Yemen sanctions regime if listed members of the Houthi Movement, who claim control over that company without lawfully exercising it, are actually in a position to obtain the money. The prohibition applies only where objective evidence shows a sufficiently significant risk that listed persons will benefit. There is no presumption that the Houthis control the entities they claim, and the party invoking the sanctions bears the burden of proof, which national courts may ease but not reverse.

An arbitration award caught between two governments

Before the conflict, Yemen’s Ministry of Oil and Minerals and the state-owned Yemen Oil & Gas Corporation (YOGC) had entered into oil and gas production-sharing agreements with several foreign companies. In 2014 and 2015 the Houthi Movement took Sana’a and set up governance structures parallel to those of the internationally recognised government, which moved to Aden. The foreign companies withdrew from the agreements in January 2015. The Ministry and YOGC started ICC arbitration, and an award delivered in Paris in July 2019 ordered three of the companies to pay damages.

The companies sought annulment before the Paris Court of Appeal. They argued that enforcement would breach international public policy because the money could reach persons listed under Regulation (EU) No 1352/2014, which implements UN Security Council Resolution 2140 (2014) and lists persons belonging to or associated with the Houthi Movement. The Paris court dismissed the action in 2021. It found no evidence that the Ministry, as representative of the legitimate government, acted under Houthi control or instructions, and held that a YOGC website mentioning a Houthi minister and a news report about a Houthi-run meeting did not show that the movement controlled the company. It also relied on a 2015 letter in which the legitimate government’s Prime Minister told foreign oil companies to ignore Houthi instructions and to pay nothing due to the state until told when and where.

Bastian Schwind-Wagner _Follow

"This is one of the clearest statements so far that indirect making available goes beyond ownership and control. A payment to a recognised government body can still breach an EU asset freeze if a listed armed group running parallel structures is able to intercept the money, and a debtor may raise that point even against an arbitral award.

Equally important is what the Court refuses to do. A sanctioned group claiming control over an institution does not taint every payment to it, and nobody can be asked to prove that no risk exists. For banks and payers dealing with conflict-affected states, the answer is a documented, evidence-based assessment of who can actually reach the funds and which safeguards stand in their way."

Enforcement in Norway and the reference from Paris

While the French proceedings continued, the award was enforced in Norway. After losing at every instance up to the Norwegian Supreme Court, one of the companies paid the net amount in December 2023 to the Ministry alone, YOGC having assigned its rights under the award to the Ministry. The Oslo District Court had found that, after the award, the company received payment requests not only from the legitimate government but also from actors supporting the Houthi Movement.

Seised of the appeal against the Paris judgment, the French Court of Cassation asked three questions. Can funds paid to an unlisted public entity be “indirectly” made available to listed persons who exercise an influence over that entity competing with that of the legitimate government? Does such competing influence create a presumption of control, can it be rebutted, and does it matter that the legitimate government does not cooperate with the listed persons? And is a merely reasonable risk that listed persons may ultimately benefit enough to trigger the prohibition where the evidence cannot show who holds decisive influence?

The Court of Justice reformulated the first question. The companies no longer disputed that the evidence was insufficient to show Houthi control of YOGC. Their complaint was that the Paris court had not checked whether payment to YOGC risked benefiting listed persons who had no power to control or instruct the company at all.

A claim of control can be enough if the money is within reach

Article 2(2) of Regulation 1352/2014 prohibits making funds or economic resources available, “directly or indirectly”, to or for the benefit of listed persons. The Court repeated that both “directly or indirectly” and “made available” are read broadly, covering any act necessary for a listed person effectively to obtain the power to dispose of funds, so that the asset freeze cannot be circumvented. Recognising and enforcing an arbitration award falls within that concept where it would put listed persons in a position to dispose of the sums awarded.

Paying an unlisted beneficiary is in principle not a direct making available. It can be an indirect one where the beneficiary acts on behalf, under the control or on the instructions of a listed person and intends to use the funds for that person (Afrasiabi), or where the funds can be passed on to a listed person or that person can dispose of them through legal or financial links (SH). Those situations serve as examples and do not exhaust the concept, so their absence does not rule out an indirect making available. The Council’s sanctions guidelines say the same: indirect making available can include payments to persons not owned or controlled by listed entities.

The Yemen measures are preventive, and on the facts the Court could not exclude that listed members of the Houthi Movement could obtain funds intended for YOGC even without controlling it. The movement runs parallel structures in Sana’a, takes measures reserved to the legitimate government, claims control of the Ministry and YOGC, uses YOGC’s official website and appears able to issue instructions to foreign oil companies and to have sums intended for the state passed to itself. Persons mandated by the movement could present themselves as authorised to receive the funds. What decides the matter is whether listed persons are actually in a position to obtain the money, and that is for the national court to verify.

The risk must be real and evidenced, not hypothetical

Taking the third question before the second, the Court held that a listed person need not be the direct recipient: a risk that they will benefit is sufficient. That risk has to be more than hypothetical, though, and the uncertain political situation in Yemen cannot by itself support conjecture about how far listed persons reach into unlisted entities.

Three considerations led there. Asset freezes must rest on a sufficiently solid factual basis, as the case law from Kadi to Timchenko requires. Measures taken by national authorities and courts to implement sanctions must remain proportionate. And annulling the award would hit not only YOGC but also the legitimate government – its owner and co-beneficiary of the damages – which is recognised and supported by the Security Council, is not listed, is in conflict with the Houthis and receives assistance from the World Bank and the IMF.

Applying the prohibition simply because the Houthis claim control of a public entity could be disproportionate and even counterproductive. Given the situation in Yemen, it would catch a large number of public entities with no actual connection to the movement, and the Houthis could exploit it for propaganda or to deprive the legitimate government of resources. The prohibition therefore applies only where objective material evidence about the means listed persons have to obtain the funds shows a risk whose probability is sufficiently significant to justify a preventive measure. The assessment covers all the circumstances, including anything that would impede listed persons, such as measures taken by the legitimate government against diversion.

No presumption of control, and a burden of proof that can shift only so far

On the second question, the Court recalled that control does not require legal ties or shareholdings, and that a dominant influence, for instance through powers of appointment, can suffice. Where an unlisted entity acts on behalf, under the control or on the instructions of a listed person and intends to use the asset for that person, an indirect making available may be presumed. A listed group that merely claims control over a public entity, in competition with a legitimate government, is in a different position and is not presumed to control it. The national court has to assess all the evidence without general presumptions, and that evidence must form a sufficiently specific, precise and consistent set of indicia.

Under French law, the party seeking annulment of an arbitration award bears the full burden of proving a manifest breach of international public policy. National courts must ensure the full effectiveness of the sanctions regulation in civil proceedings too, and the Court accepted that this may justify adjusting that burden. Evidence of how listed persons might reach funds is not normally available to an outsider, and it is especially hard to obtain in a country at civil war. Where all the evidence prima facie indicates a risk of breach, the beneficiaries of the payment can be required to produce evidence excluding it, as the Court had already held for the Iran regime in Bank Melli Iran.

That adjustment stops short of a reversal. The party alleging the breach must first produce indicia showing, prima facie, a non-negligible likelihood that the risk will materialise, and the beneficiaries cannot be asked to prove a negative. Where serious doubts remain, the national court should, within its procedural rules and respecting the right to be heard, ask the parties for clarification or documents, and it may rely on UN and EU publications or request information from national or EU authorities.

The legitimate government’s refusal to cooperate with the Houthis is relevant evidence, but on its own it does not exclude the risk. The question is whether the government and the public entity have taken specific measures that actually prevent listed persons, or persons claiming to act for them, from having the funds passed on by presenting themselves to the payer as authorised to receive them.

What it means for sanctions compliance

Although the case arose from an arbitration dispute, it bears directly on payment screening. Indirect making available reaches beyond ownership and control. A payment to an unlisted, even state-owned, counterparty can breach an EU asset freeze where a listed group operating parallel structures is in a position to intercept it. Rival authorities, contested state bodies and competing payment instructions are the signals to watch for.

The Court also rejects a blanket approach. A listed group’s claim to control an institution in a fragmented state does not taint every payment to that institution. Firms and their advisers need objective evidence about who can actually reach the money, and they should weigh the safeguards on the recipient side, such as instructions from the recognised government, designated accounts and checks on who is entitled to receive. Automatic blocking is as wrong as relying on the formal identity of the payee; what the ruling asks for is a documented, case-specific circumvention risk assessment.

For litigation and enforcement, the ruling confirms that EU sanctions bind private proceedings, including the recognition and enforcement of arbitral awards. Debtors who invoke the asset freeze to resist payment must bring concrete indicia, and creditors who face such indicia must be ready to show how the funds will be kept away from listed persons. Banks processing payments under awards or judgments involving conflict-affected states should expect the same questions and keep the evidence that answers them.

Dive deeper

• CURIA ¦ Case C-842/24 DNO Yemen, Judgment of the Court (Fifth Chamber) of 15 October 2026 ¦ Link