A Primer on the Russian Central Bank’s Legal Challenge to the Permanent Freezing of its Assets

On March 3, 2026, the Central Bank of Russia (CBR) announced that it has recently filed an action for annulment under Article 263 TFEU challenging Council Regulation (EU) 2025/2600 before the General Court of the EU. This regulation (hereinafter: the Freezing Regulation), which the EU Council adopted at its summit in December, prolongs the freeze on the CBR’s European assets indefinitely. The assets will now only be released once Russia ceases its aggression against Ukraine and provides reparation (see Article 6(1) Freezing Regulation). Thus, the regulation effectively removes the six months renewal-period otherwise applicable to the restrictive measures against Russia for the asset freeze. Apparently, these new conditions prompted the CBR to finally make good on its repeated threats to take the EU to court over the measures targeting its assets. Drawing on the relevant CJEU case law, this post provides a first assessment of the case with a focus on the EU Charter of Fundamental Rights (CFREU). It concludes that the CBR’s action for annulment, while admissible, will likely fail on the merits.

Grounds for annulment and admissibility

The press release on the action for annulment contains a detailed description of the legal submissions on which the CBR’s challenge to the legality of the Freezing Regulation is based. A closer look reveals three main grounds for annulment on which the CBR relies:

  1. Violations of “basic and inalienable rights” under EU law, including the right to property
  2. Violations of public international law, namely the immunity due to foreign central banks and their assets
  3. Violations of the applicable legislative procedure because the regulation was not adopted unanimously, as allegedly required by Article 215 TFEU

Each of these grounds falls squarely within the categories of possible grounds for annulment set out in Article 263(1), (4) TFEU. Moreover, while the CBR constitutes an organ of the Russian Federation whose actions are attributable to the state (see PCA Case No. 2016-14, Oschadbank v. Russian Federation, Award, paras. 259-61), this does not mean that it cannot lodge an action for annulment. The Grand Chamber of the ECJ already decided in 2021 that foreign states qualify as “legal persons” under Article 263(4) TFEU, regardless of whether they are acting in a sovereign or in a private capacity (ECJ, Venezuela v. Council, Case C-872/19 P, paras. 23-53). Thus, the case is likely to proceed to the merits.

Ground No. 1: Violations of fundamental rights

The fundamental right to property, enshrined in Article 17(1) CFREU, is an obvious basis for a challenge against the Freezing Regulation. However, to invoke this right, the CBR would first need to qualify as a holder of fundamental rights under the CFREU. Notably, this is not the first case that raises the question whether the central bank of a non-EU member state enjoys the protection of the Charter. In a 2014 judgment concerning an action for annulment filed by the Central Bank of Iran against a freeze imposed on its assets, the General Court found the CFREU to be applicable. To reach this conclusion, the court relied on three arguments: (1) the broad wording of the fundamental rights under the CFREU (“everyone”, “every person”) contains no indication that governmental entities of foreign states are not protected; (2) foreign states are not bound by the CFREU, meaning that granting them fundamental rights protection would not conflict with the role of states as guarantors – as opposed to beneficiaries – of the CFREU; and (3) the limitation of human rights protection to “non-governmental organisations” that is enshrined in Article 34 ECHR is a procedural provisions, not a substantive one, and therefore not covered by Article 52(3) CFREU, which requires that the fundamental rights of the Charter be interpreted in accordance with the corresponding ECHR rights (CJEU, Central Bank of Iran v. Council, Case T-262/12, paras. 65-73). The General Court confirmed this broad understanding of the CFREU in a later judgment, and the ECJ rubberstamped it on appeal.

A recent decision of the ECtHR, however, calls this jurisprudence into question. In in the Slovenia v. Croatia case, decided in 2020, the ECtHR’s Grand Chamber held that the limitation to “non-governmental organisations” does not only apply to individual applications under Article 34 ECHR, but also to inter-state cases filed under Article 33 ECHR (ECtHR, Slovenia v. Croatia, App. No. 54155/16, paras. 60-70). Thus, the ECtHR confirmed that Article 34’s “non-governmental organisation”-criterion is not purely procedural in nature; rather, possesses a substantive dimension and is related to the question of rights-holdership. Although the independence that central banks typically enjoy would support classifying them as “non-governmental organisations” under Article 34, they are still unlikely to qualify for human rights protection under the ECHR. Unlike commercial banks, central banks perform sovereign functions and participate in the exercise of governmental powers. Under the ECtHR’s longstanding jurisprudence on Article 34, this will likely render them ineligible for the protection offered by the Convention (see Ioannidis, Beyond Immunities: Sanctions and the Fundamental Rights of Central Banks, MPEPIL Research Paper Series 2024-23, p. 12).

Whether these developments will prompt the General Court to reconsider its position on the scope of rights-holdership under the CFREU remains to be seen. After all, two of the three pillars on which the court based its decision to extend fundamental rights protection to Iran’s central bank in 2014 are still standing. But even if the court should stick to this approach, the CBR’s argument based on the fundamental right to property would still be likely to fail. In the Iran case, the General Court found that the freezing of central bank assets constitutes a proportionate measure to pursue legitimate security objectives. When the Freezing Regulation was adopted, the CBR’s assets had already been frozen for nearly four years. It is hard to see how the mere removal of the six months renewal-requirement changes the equation so fundamentally that the freeze now amounts to a fundamental rights violation.

Ground No. 2: Violations of public international law

In addition to the fundamental right to property, the CBR relies on the rules of state immunity, which the ICJ confirmed to be part of customary international law in its landmark Jurisdictional Immunities (Germany v. Italy) case. However, that judgment did not address the question of whether state immunity extends to legislative and executive measures affecting a foreign state’s enjoyment of its property, or whether it is confined to judicial actions. Ever since the CBR’s assets were initially frozen shortly after the invasion of Ukraine, this question has been subject to controversial discussions. Some, such as Tom Ruys and Anton Moiseienko, have advocated for a narrow understanding of state immunity. Others – including CJEU Advocate General Juliane Kokott – argue that the broader principle of sovereign equality, from which state immunity derives, provides no basis for distinguishing between judicial and non-judicial measures in its application. Only the latter position would conclude that there is any conflict between the Freezing Regulation and state immunity.

The ECJ has repeatedly recognized that customary international law can produce direct effects within the EU legal order (see Kornobis-Romanowska, 8 Wroclaw Review of Law, Administration & Economics 2018, 405, 420-23). However, citing the lack of precision immanent to unwritten customary rules, the court also found that its own power to review EU secondary law for compliance with customary international law is limited. Consequently, secondary legal acts will only be struck down if the enacting EU institutions made a “manifest error of assessment” regarding the content of the relevant customary rules (ECJ, ATAA v. Secretary of State for Energy and Climate Change, Case C-366/10, para. 110).

By applying this standard, the General Court could easily avoid taking a position on the scope of state immunity. The court would only need to rule that, given the ongoing controversy regarding the applicability of state immunity to non-judicial measures, the Council did not commit a manifest error of assessment when determining that it could indefinitely freeze the CBR’s assets without violating its immunity.

Ground No. 3: Violations of the applicable procedure

Lastly, we will take a brief look at the CBR’s plea regarding the applicable voting procedure. The argument here is essentially that, by adopting the regulation with a qualified majority under Article 122(1) TFEU, the Council bypassed the sanctions competence under Article 215 TFEU, which requires a previous – unanimously adopted – CFSP decision to be activated. This argument, which reflects Hungary’s position on the adoption of the Freezing Regulation, has already been discussed on Verfassungsblog by Til Leichsenring and Julia Popp. Based on Article 40(2) TEU and the subsidiary character of Article 122(1) TFEU, Leichsenring and Popp argue that the Council cannot circumvent CFSP procedures by hiding behind alleged economic risks.

The authors undoubtedly have a point when they write that the EU’s desire to neutralize the risk of a Hungarian veto with the Freezing Regulation is an “open secret”. However, this cannot change the fact that the economic risks posed by a sudden and uncontrolled release of roughly EUR 200 billion in frozen CBR funds are very real. As Recital 13 of the Freezing Regulation correctly states, Russia would likely use this money to sustain and further escalate its aggression against Ukraine, making an eventual Ukrainian defeat more likely. A Russian victory, however, would entail unforeseeable economic consequences for the EU, given the likely influx of large numbers of Ukrainian refugees, the urgent need for massive increases in defense spending, etc. The case law of the ECJ merely requires that a choice of competence “must rest on objective factors which are amenable to judicial review, including, in particular, the aim and the content of the measure” (ECJ, Kadi and Al Barakaat International Foundation v. Council and Commission, C-402/05 P and C-415/05 P, para. 182). The aforementioned economic risks, which are amplified by Hungary’s persistent veto threats, constitute such objective factors. A plausible argument could also be made that the corresponding foreign and security objectives related to Russia’s aggression against Ukraine are “incidental” to these economic risks, (see, for comparison, ECJ, Commission v. Council, C-91/05, paras. 75-76). These considerations should suffice for the Freezing Regulation to be enacted under Article 122(1) TFEU. 

Conclusions

We have seen that none of the grounds for annulment on which the CBR relies is likely to succeed before the General Court. While the third ground, which challenges the competence under which the Freezing Regulation was enacted, stands the best chance of being upheld, it still appears highly unlikely that the court will apply overly strict scrutiny to the Council’s credible reliance on economic risks. Given that Russia currently shows no inclination to end the war or provide reparation, the CBR’s assets should thus be expected to remain frozen for the foreseeable future.