EU Sanctions Loopholes: How Courts and Member State Vetoes Are Undermining Western Restrictions

The two mechanisms are different. Their effect is increasingly similar.

The courts are testing the foundations

Gutseriev and Shautsou are not being removed because the EU has concluded that its earlier political assessment was wrong. Their designations were annulled by the General Court of the European Union because the Council failed to provide sufficient legal evidence to justify keeping them on the Belarusian list.

That distinction matters.

EU sanctions may be foreign-policy instruments, but they are still administrative decisions subject to judicial review. The Council therefore has to defend individual designations with concrete, contemporary and objective evidence. Intelligence assessments, media reporting and executive summaries may be sufficient to inform a political decision, but they do not automatically become court-proof evidence when a well-funded legal team challenges a listing.

This creates an increasingly uncomfortable asymmetry.

The Council can act quickly when a political crisis demands sanctions. Challenging a designation, however, gives the target access to a legal process in which the evidentiary burden becomes central. When the Council cannot demonstrate that its case meets the court's standard, delisting is not a matter of political discretion. It is the consequence of the judgment.

For the EU, that turns the Court of Justice system into something more consequential than a final legal check on sanctions. It becomes one of the principal mechanisms through which the durability of the sanctions regime is determined.

That problem is particularly acute for individuals who can afford sophisticated legal representation and pursue challenges over several years.

Gutseriev illustrates the limits of a delisting

The October decision also shows why the EU's sanctions architecture cannot be understood as a single blacklist.

Gutseriev is being removed from the Belarusian regime, where he had been sanctioned over alleged links to human rights abuses and support for Alexander Lukashenko. Yet he remains under the EU's separate Russian sanctions regime, where he was designated on July 23, 2026 over actions considered to undermine Ukraine's territorial integrity.

His asset freezes, travel restrictions and financial restrictions therefore do not disappear.

Shautsou's position is fundamentally different. He was sanctioned only under the Belarusian framework. Once the Council complies with the court ruling, his EU sanctions disappear altogether, restoring his ability to access assets, conduct financial transactions and travel within the Schengen area.

The distinction is legally straightforward but politically revealing. A successful court challenge does not necessarily defeat the EU's entire sanctions policy against an individual. It can, however, expose weaknesses in the particular legal route used to impose restrictions.

That creates an incentive to challenge designations regime by regime.

The political escape route is different

The more disruptive precedent came on September 22, when the EU removed Russian oligarchs Alisher Usmanov and Mikhail Fridman from its Russian sanctions list.

That was not a judicial correction. It was a political bargain.

France, Luxembourg and Slovakia used the unanimity requirement governing the renewal of the sanctions regime to condition the continuation of the broader package on the removal of Usmanov and Fridman. The eventual compromise extended sanctions against roughly 3,000 individuals and entities for 36 months, until September 22, 2029, instead of the usual six-month review cycle.

The political logic was stark.

France wanted Usmanov's removal as part of an effort linked to Azerbaijan's pardon of a French citizen convicted of espionage in Baku. Luxembourg sought Fridman's removal while facing the prospect of a $16bn international arbitration case concerning frozen assets.

For the governments involved, these were immediate national interests. For the wider sanctions regime, however, the bargain established a new precedent: the collective lifespan of European sanctions could be exchanged for the removal of particularly prominent targets.

The 36-month extension makes the precedent more consequential. Member states now have a longer collective sanctions horizon, but they have also demonstrated that unanimity can be used to negotiate individual exceptions to secure national objectives.

That changes the political value of a veto.

A government does not necessarily have to oppose sanctions as a whole. It can seek a specific concession and use the threat to block the wider package as leverage.

Sanctions are no longer moving as one Western bloc

The consequences are already visible beyond Brussels.

Usmanov and Fridman remain subject to sanctions imposed by the US, UK, Canada, Switzerland, Japan and Australia. Lithuania and Estonia have also maintained restrictions against them through national measures, despite their removal from the EU-level list.

This creates a growing patchwork in what was supposed to function as a coordinated Western financial blockade.

An EU delisting does not necessarily mean that an individual is free from restrictions across Europe. A national government can retain its own measures within the limits of its sovereign powers. Lithuania and Estonia have demonstrated how frontline states can preserve restrictions even when the common EU framework moves in another direction.

For businesses, banks and lawyers, that fragmentation is more than a diplomatic curiosity. It changes the practical geography of sanctions.

The same individual may be unrestricted under one European framework, sanctioned under another, and subject to additional national measures elsewhere. A financial institution operating across jurisdictions must therefore distinguish between EU-wide restrictions and national ones rather than treating the European sanctions regime as a single system.

That is precisely the kind of complexity that weakens the clarity and deterrent effect of sanctions.

A new market for legal and political leverage

The emerging system also changes the incentives for the people being sanctioned.

There are now two identifiable routes out.

One runs through the courts. A target can challenge the evidentiary basis of a designation and force the Council to defend the intelligence and reasoning behind it against the standards of EU administrative law.

The other runs through politics. A target with sufficiently important diplomatic, financial or strategic connections can become relevant to a member state's national interests, creating an incentive for a capital to seek an exemption as part of a wider negotiation.

International arbitration adds another layer. Friedman's $16bn case against Luxembourg demonstrated how frozen assets can generate legal exposure for governments themselves. The sanctions decision is no longer only about imposing costs on the sanctioned individual; it can create potential costs for the state maintaining the restrictions.

Corporate law firms have every reason to study both mechanisms.

The significance of the recent cases is not that every sanctioned individual can replicate them. Most cannot. It is that the EU has demonstrated that its sanctions can be challenged through two institutions that operate according to different rules: courts applying evidentiary standards and national governments exercising political leverage inside a unanimous decision-making system.

That combination creates a structural escape hatch.

Can the Council make sanctions durable?

The problem for Brussels is therefore not simply whether individual names remain on a list. It is whether the institutional machinery behind the list can survive prolonged legal and political pressure.

The Council can respond to judicial defeats by improving how intelligence is collected, verified and converted into evidence capable of surviving litigation. The cases involving Gutseriev and Shautsou show the cost of failing to do so.

But stronger evidence alone would not solve the political problem.

As long as sanctions renewals depend on unanimity, member states retain the ability to attach national demands to collective foreign policy. The September compromise showed that even a very large sanctions package can become part of a negotiation over individual names.

The EU has therefore moved into an uncomfortable phase. Its sanctions policy was built as an instrument of collective political pressure, but its long-term survival increasingly depends on legal processes and bargaining mechanisms that were not designed to operate like a unified coercive system.

The distinction between Gutseriev and Shautsou is a reminder of the legal side of that problem. The Usmanov and Fridman deal shows the political side.