The Bottom Line
- Third-Country Risk is Real: The EU’s Russia sanctions regime can impact non-Russian companies. Businesses with complex supply chains must be vigilant, as being wrongly listed can halt operations overnight.
- Legal Challenges Work: Proactively challenging a sanctions listing at the EU General Court can be a powerful tool. In this case, the legal action appears to have prompted the EU Council to reconsider and reverse its decision.
- Victory Can Be Costly: Even if your company is successfully removed from a sanctions list, you may not recover your legal fees. If the EU Council removes you before a final judgment, the court may order each side to bear its own costs, leaving your firm with a substantial bill.
The Details
This case involved Qisda Optronics, a Chinese electronics manufacturer that was unexpectedly added to the EU’s list of entities subject to restrictive measures for supporting Russia’s military-industrial complex. The listing, imposed in late 2024 and maintained in early 2025, carried severe commercial consequences, effectively prohibiting the supply of goods and technology. In response, Qisda filed an action with the EU’s General Court to annul the decision, arguing it had been included on the list in error.
The dynamic of the case shifted dramatically before it could be argued on its merits. Shortly after Qisda lodged its legal challenge, the Council of the European Union reversed course and adopted new regulations to remove the company from the sanctions list. With its name cleared, Qisda achieved its primary objective. However, this left the crucial question of who should pay for the legal proceedings. Qisda argued that the Council should cover all costs, as its name was included wrongfully and only removed due to the pressure of the lawsuit. The Council disagreed, stating its reversal was based on a “fresh assessment,” not an admission of error.
The General Court’s final order provides a critical lesson for corporate leaders and their legal counsel. Because the Council’s reversal made the case moot, the court never ruled on whether the initial listing was legally sound. Without being able to determine if the Council was at fault, the court could not justify ordering it to pay Qisda’s costs. Instead, it made a discretionary ruling based on a “fair assessment of the circumstances,” ordering each party to bear its own legal expenses. This outcome highlights the financial gamble of litigation: a win on paper does not always translate to a full financial recovery.
Source
General Court of the European Union
