Paris Judicial Court Decisions Relating to Frozen Assets

In three nearly identical decisions issued on 25 February 2025, the Paris Judicial Court (the Court) issued an important ruling that frozen assets cannot be seized for the benefit of a creditor without prior authorisation from a competent national authority (e.g. the French Treasury – Direction Générale du Trésor). Consequently, the court ordered the lifting of enforcement measures sought against the Iraqi assets.

Factual background

Through the issuance of two ICC arbitral awards, dated 6 February 1996 and 12 March 2003, Iraq’s Ministry of Defence, Ministry of Justice, and the Salah Aldin public entity (Iraqi State Entities) were ordered to pay a Dutch company, Instrubel N.V. (Instrubel), the amount of 16.7 million euros, in addition to interest.

On 20 March 2013, said awards were granted exequatur by the French first-instance court. The Paris Court of Appeal subsequently upheld the decision of the French first-instance court on 20 November 2018.

Almost a year later, on 20 January 2014, Instrubel sought provisional seizure (saisie conservatoire) of various assets – such as claims (créances), intangible assets (droits d’associés), and securities (valeurs mobilières) –, owned by Montana, a company incorporated under the laws of Panama.  Montana was listed among the entities whose funds, assets, or resources were frozen under UN Security Council Resolution 1518 of November 2003 (the 2003 Assets UN Resolution), due to their association with Saddam Hussein’s regime. Instrubel argued that Montana was linked to the Iraqi State.

In 2019 and 2020, Instrubel initiated several seizures (saisies-attributions), all of which were based on a judgment issued by the Nanterre First Instance Court on 15 May 2018 and authorised by an order from the Paris First Instance Court dated 29 May 2019. These included:

• A seizure initiated on 25 June 2019, targeting assets held by Montana in accounts at BP2S bank;
• A seizure initiated on 27 June 2019, targeting assets held in accounts at Société Générale bank;
• A seizure initiated on 24 July 2019, again targeting assets at Société Générale bank; and
• A seizure initiated on 16 January 2020, targeting assets held at BP2S bank.

In response to these seizures, Montana commenced proceedings in 2019, seeking to challenge the order of the Paris First Instance Court dated 29 May 2019 and to annul the seizures carried out on 25 June 2019 at BP2S bank.

Montana also commenced another action in 2020, also seeking to challenge the same order and the seizures carried out on 16 January 2020 at BP2S bank.

In 2021, Montana commenced a third action, targeting the same order and the seizures carried out on 27 June 2019 and on 24 July 2019 at Société Générale bank.

Key Issue

In those three proceedings, the central issue was whether Instrubel could lawfully seize Montana’s frozen assets, on the basis that the ICC arbitral awards – ordering Iraqi State Entities to pay damages and interests – had already been recognised.

Under French law, Articles L.111-1-1 and L.111-1-2 of the Code of Civil Enforcement Procedures (CCEP), as interpreted by relevant case law, recognises the possibility of seizing assets held or controlled by an entity deemed an “emanation of the State“.¹ Such a qualification requires the demonstration of two cumulative criteria, namely:

• the entity lacks sufficient functional independence; and
•  its assets are indistinguishable from those of the State.²

The Three First-instance Decisions

On 25 February 2025, the Paris Judicial Court issued three key decisions regarding the frozen assets, addressing several critical issues, including the ownership of the assets (A), the relationship between Montana and the State of Iraq (B), and the need for prior administrative authorisation to enforce seizures (C).

A. The ownership of the assets

The court first raised the issue of ownership of the frozen assets and deemed it necessary to verify whether the transfer of funds from Montana was properly executed.

As mentioned above, the court observed that Montana was listed among the entities whose funds, assets, or resources were frozen under the 2003 UN Assets Resolution. This was deemed relevant by the court because the European Council Regulation (EC) No 1210/2003 of 7 July 2003 (the 2003 EU Regulation) adopted the UN Resolution into European law, thereby making it directly applicable under French law.

Article 104 of Law No. 2009-1674 of 30 December 2009 provided for the transfer of funds and economic resources targeted by Regulation (EC) No. 1210/2003 to be carried out in several stages. First, the French Government issues a list of frozen assets, informing potential creditors whether their claims can be collected. Second, a subsequent government decree is required to operate and finalise the transfer.³

Instrubel argued that the transfer of funds and economic resources of Montana was already carried out following the issuance of a first decree, without the need to await a second decree which it considers purely informative.

However, the Paris Judicial Court took a different stance. The court found the terms of Law No. 2009-1674 to be unambiguous in requiring two distinct steps for the transfer of funds and economic resources. It also found that the decree’s terms specifying that the funds and economic resources of the entities listed in the annex are “subject to” transfer, necessarily indicates that it is only the first decree, pending the issuance of the second decree which completes the transfer of funds.

As a result, the frozen assets remained the property of Montana, and Instrubel needed to prove that Montana was an emanation of the State of Iraq.⁴

B. The relationship between Montana and the State of Iraq

The Paris Judicial Court consequently raised this second issue. The court relied on the aforementioned Article 111-1-2 of the CCEP, allowing the enforcement of measures on assets belonging to a foreign State, and on case law admitting that the seizure could be directed against an emanation of a State.⁵

Regarding the first criterion, namely the entity’s lack of functional independence, Instrubel argued that Montana was not truly independent from the Iraqi State. Rather, it argued that Montana was used by the Iraqi State to manage and invest state funds abroad.

Regarding the second criterion, namely the entity’s assets being the same as those of the State, Instrubel presented compelling evidence demonstrating a commingling of assets between Montana and the Iraqi State. In fact, Montana appeared to lack independent resources, operating instead with funds diverted from the Iraqi State.

Additionally, the court observed that Montana’s inclusion in the 2003 Assets UN Resolution also created a presumption that it was an emanation of the Iraqi state. In the court’s view, Montana’s subsequent delisting further demonstrated the Iraqi State’s interest in the company and served to reinforce that presumption.⁶ Based on all these elements, the court concluded that, at the time the enforcement measures were undertaken, Montana constituted an emanation of the Iraqi State. Accordingly, Instrubel was entitled to proceed with the seizure of its assets in execution of the judgment and awards issued against Iraq.

C. The need for prior administrative authorisation before enforcing seizures

Although Montana could be equated with the Iraqi State, the Paris Judicial Court held that this alone was not sufficient to render its assets subject to enforcement.

The judges relied on Article 6.1 of the 2003 EU Regulation, which empowers the designated national competent authority to authorise the use of frozen funds under certain conditions.

Referring to a prior ruling by the French Court of Cassation, the Paris Judicial Court held that Instrubel was required to obtain an administrative authorisation from the Direction Générale du Trésor, the competent French authority designated for such matters.⁷

Furthermore, this authorisation was a necessary precondition to initiating any application for judicial authorisation under Article 111-1-1 of the CCEP for provisional or enforcement measures against frozen assets.

The French judges also relied on the Court of Justice of the European Union’s (CJEU) ruling of 11 November 2021 in the Bank Sepah case, which stated that no seizure of frozen assets could be carried out without administrative authorisation obtained from a national authority concerning Iranian funds. To reinforce its position, the Paris Judicial Court highlighted that the French Cour de cassation had already adopted this approach in a decision dated 7 September 2022.⁸

Ultimately, the court annulled the seizure of the frozen assets by Instrubel and lifted the enforcement measures imposed on Montana.

The three decisions issued by the Paris Judicial Court are significant as they illustrate the legal and procedural complexity of seizing frozen assets. Such enforcement is particularly difficult when it requires navigating overlapping frameworks of international (EU) and domestic (French) law, including the need to obtain both administrative and judicial authorisations.

Daniel Boruzi, Stagiaire, Paris, assisted with the preparation of this briefing.

Footnote

1. Tribunal judiciaire de Paris, 25 février 2025, RG n° 24/81607 : “L’article L. 111-1-2 du code des procédures civiles permet l’exercice de mesures d’exécution forcée sur des biens appartenant à un Etat étranger si l’Etat concerné a expressément consenti à l’application d’une telle mesure, ou qu’il a réservé ou affecté ce bien à la satisfaction de la demande qui fait l’objet de la procédure, ou lorsqu’un jugement ou une sentence arbitrale a été rendu contre l’Etat concerné et que le bien en question est spécifiquement utilisé ou destiné à être utilisé par ledit Etat autrement qu’à des fins de service public non commerciales et entretient un lien avec l’entité contre laquelle la procédure a été intentée. Ces articles organisent l’articulation entre les droits des créanciers et l’immunité d’exécution des Etats. La jurisprudence admet que la saisie puisse être dirigée contre une émanation de l’Etat, soit une entité qui, quelle que soit sa forme, ne se trouve pas dans une indépendance fonctionnelle suffisante pour bénéficier d’une autonomie de droit et de fait à l’égard de l’Etat et si son patrimoine se confond avec celui de l’Etat (Cass. Civ. 1ère, 6 février 2007, n° 04- 13.107 et 04-16.888, 1re Civ., 6 février 2007, pourvoi n° 04-13.108, 04-16.889, 1re Civ., 14 novembre 2007, pourvoi n° 04- 15.388, CA Paris 26 janvier 2023 n° 21/22374, CA Paris 15 sept. 2022 n° 20/00419), de sorte que cette entité se confond avec l’Etat.“. [Translation by AI : Article L. 111-1-2 of the Code of Civil Procedure allows for the enforcement of measures on property belonging to a foreign state if the state concerned has expressly consented to the application of such a measure, or if it has reserved or allocated this property to satisfy the claim that is the subject of the procedure, or when a judgment or arbitral award has been rendered against the state concerned and the property in question is specifically used or intended to be used by the said state for purposes other than non-commercial public service and is linked to the entity against which the procedure was initiated. These articles organize the relationship between the rights of creditors and the immunity of states from execution. Jurisprudence admits that the seizure can be directed against an emanation of the state, that is, an entity which, regardless of its form, does not have sufficient functional independence to benefit from legal and factual autonomy from the state, and if its assets are merged with those of the state.]
2. Tribunal judiciaire de Paris, 25 février 2025, RG n° 24/81607 : “La jurisprudence admet que la saisie puisse être dirigée contre une émanation de l’Etat, soit une entité qui, quelle que soit sa forme, ne se trouve pas dans une indépendance fonctionnelle suffisante pour bénéficier d’une autonomie de droit et de fait à l’égard de l’Etat et si son patrimoine se confond avec celui de l’Etat (Cass. Civ. 1ère, 6 février 2007, n° 04- 13.107 et 04-16.888, 1re Civ., 6 février 2007, pourvoi n° 04-13.108, 04-16.889, 1re Civ., 14 novembre 2007, pourvoi n° 04- 15.388, CA Paris 26 janvier 2023 n° 21/22374, CA Paris 15 sept. 2022 n° 20/00419), de sorte que cette entité se confond avec l’Etat.“. [Translation by AI : Jurisprudence admits that the seizure can be directed against an emanation of the state, that is, an entity which, regardless of its form, does not have sufficient functional independence to benefit from legal and factual autonomy from the state, and if its assets are merged with those of the (Cass. Civ. 1ère, 6 février 2007, n° 04- 13.107 et 04-16.888, 1re Civ., 6 février 2007, pourvoi n° 04-13.108, 04-16.889, 1re Civ., 14 novembre 2007, pourvoi n° 04- 15.388, CA Paris 26 janvier 2023 n° 21/22374, CA Paris 15 sept. 2022 n° 20/00419), so that this entity is merged with the state.]
3. Tribunal judiciaire de Paris, 25 février 2025, RG n° 24/80751 : “L’article 104 de la loi n° 2009-1674 du 30 décembre 2009 prévoyait un transfert des fonds et ressources économiques visés par le règlement (CE) n° 1210/2003 en plusieurs étapes : un premier arrêté listant les fonds et ressources économiques faisant l’objet de la mesure de gel et ouvrant un délai de recours à toute personne qui prétendrait disposer d’un droit sur ces biens, puis un second arrêté opérant le transfert effectif vers le Fonds de développement pour l’Irak, et enfin un décret en Conseil d’Etat qui viendrait préciser les modalités particulières de transfert pour chaque catégorie de biens. Cet article a été abrogé par la loi n° 2013-672 du 26 juillet 2013 et le mécanisme de transfert en plusieurs étapes a été reproduit dans son article 85.“. [Translation by AI : Article 104 of Law No. 2009-1674 of December 30, 2009, provided for the transfer of funds and economic resources targeted by Regulation (EC) No. 1210/2003 in several stages: a first decree listing the funds and economic resources subject to the freezing measure and opening a period for any person claiming to have a right to these assets to appeal, then a second decree effecting the actual transfer to the Development Fund for Iraq, and finally a decree by the Council of State specifying the particular modalities of transfer for each category of assets. This article was repealed by Law No. 2013-672 of July 26, 2013, and the multi-stage transfer mechanism was reproduced in its Article 85.]
4. Tribunal judiciaire de Paris, 25 février 2025, RG n° 24/80751 : “Ainsi, il convient de retenir qu’en l’absence du second arrêté prévu par le mécanisme législatif de transfert aux mécanismes successeurs du Fonds de développement irakien, les fonds et ressources économiques de la société Montana Management Inc. sont demeurés la propriété de la société Montana Management Inc. Page 6 / 15 25 février 2025 Il n’y a donc pas lieu d’étudier le moyen subsidiaire de la société Montana Management Inc. concluant à l’insaisissabilité de ses fonds et ressources en raison de leur transmission au mécanisme successeur de Fonds de développement irakien, transmission qui n’a pas eu lieu.“[Translation by AI: Thus, it should be noted that in the absence of the second decree provided for by the legislative transfer mechanism to the successor mechanisms of the Iraqi Development Fund, the funds and economic resources of Montana Management Inc. remained the property of Montana Management Inc. Therefore, there is no need to consider the subsidiary argument of Montana Management Inc. regarding the non-seizability of its funds and resources due to their transfer to the successor mechanism of the Iraqi Development Fund, a transfer that did not take place.]
5. Tribunal judiciaire de Paris, 25 février 2025, RG n° 24/81607 : “L’article L. 111-1-2 du code des procédures civiles permet l’exercice de mesures d’exécution forcée sur des biens appartenant à un Etat étranger si l’Etat concerné a expressément consenti à l’application d’une telle mesure, ou qu’il a réservé ou affecté ce bien à la satisfaction de la demande qui fait l’objet de la procédure, ou lorsqu’un jugement ou une sentence arbitrale a été rendu contre l’Etat concerné et que le bien en question est spécifiquement utilisé ou destiné à être utilisé par ledit Etat autrement qu’à des fins de service public non commerciales et entretient un lien avec l’entité contre laquelle la procédure a été intentée. Ces articles organisent l’articulation entre les droits des créanciers et l’immunité d’exécution des Etats. La jurisprudence admet que la saisie puisse être dirigée contre une émanation de l’Etat, soit une entité qui, quelle que soit sa forme, ne se trouve pas dans une indépendance fonctionnelle suffisante pour bénéficier d’une autonomie de droit et de fait à l’égard de l’Etat et si son patrimoine se confond avec celui de l’Etat (Cass. Civ. 1ère, 6 février 2007, n° 04- 13.107 et 04-16.888, 1re Civ., 6 février 2007, pourvoi n° 04-13.108, 04-16.889, 1re Civ., 14 novembre 2007, pourvoi n° 04- 15.388, CA Paris 26 janvier 2023 n° 21/22374, CA Paris 15 sept. 2022 n° 20/00419), de sorte que cette entité se confond avec l’Etat.“. [Translation by AI: Article L. 111-1-2 of the Code of Civil Procedure allows for the enforcement of measures on property belonging to a foreign state if the state concerned has expressly consented to the application of such a measure, or if it has reserved or allocated this property to satisfy the claim that is the subject of the procedure, or when a judgment or arbitral award has been rendered against the state concerned and the property in question is specifically used or intended to be used by the said state for purposes other than non-commercial public service and is linked to the entity against which the procedure was initiated. These articles organize the relationship between the rights of creditors and the immunity of states from execution. Jurisprudence admits that the seizure can be directed against an emanation of the state, that is, an entity which, regardless of its form, does not have sufficient functional independence to benefit from legal and factual autonomy from the state, and if its assets are merged with those of the state]
6. tribunal-judiciaire_n°2480751_25_02_2025.pdf : “Le délistage ultérieur de la société Montana Management Inc. résulte d’une demande de l’Etat irakien, suite au décès de [C] [R] et au changement des dirigeants de la société, ainsi qu’il ressort de la décision du Comité irakien de gel des avoirs des terroristes et de la réponse du point focal de l’ONU confirmant que le délistage était intervenu à la demande d’un Etat membre. Ce délistage sans explication ni motif ne peut permettre de renverser la présomption de fait qui existait au jour des mesures conservatoires et d’exécution forcée pratiquées et il démontre au contraire l’intérêt que porte l’Etat d’Irak à la société Montana Management Inc. et les liens qui les unissent.“. [Translation by AI : The subsequent delisting of Montana Management Inc. was the result of a request by the Iraqi state, following the death of [C] [R] and the change in the company’s management, as indicated by the decision of the Iraqi Committee for the Freezing of Terrorist Assets and the response from the UN focal point confirming that the delisting was carried out at the request of a member state. This delisting, without explanation or reason, cannot overturn the presumption of fact that existed on the day of the conservatory and enforcement measures taken, and it instead demonstrates the interest that the State of Iraq has in Montana Management Inc. and the ties that unite them.]
7. Tribunal judiciaire de Paris, 25 février 2025, RG n° 24/80751 : “Au jour des mesures contestées, la société Montana Management Inc. était toujours listée par l’annexe IV de ce 25 février 2025 règlement et la société Instrubel N.V. devait donc solliciter l’autorisation de la Direction Générale du Trésor, autorité française compétente désignée par l’annexe V, pour obtenir le déblocage des fonds et ressources économiques (2e Civ., 11 mai 2017, pourvoi n° 15-26.658).” [Translation by AI : On the date of the contested measures, Montana Management Inc. was still listed in Annex IV of the regulation as of February 25, 2025, and Instrubel N.V. therefore had to seek authorization from the Directorate General of the Treasury, the competent French authority designated in Annex V, to obtain the release of the funds and economic resources.]
8. Tribunal judiciaire de Paris, 25 février 2025, RG n° 24/80751 : “La Cour de cassation a d’ailleurs appliqué la solution retenue dans l’arrêt Bank Sepah au règlement (UE) 2016/44 du Conseil du 18 janvier 2016 concernant des mesures restrictives en raison de la situation en Libye et abrogeant le règlement (UE) n° 204/2011, considérant que les mesures de gel sont définies en termes similaires par le règlement de gel des fonds iraniens et le règlement de gel des fonds libyens (1re Civ., 7 septembre 2022, pourvoi n° 19-21.995).“[Translation by AI: The Court of Cassation also applied the solution adopted in the Bank Sepah decision to Council Regulation (EU) 2016/44 of January 18, 2016, concerning restrictive measures due to the situation in Libya and repealing Regulation (EU) No. 204/2011, considering that the freezing measures are defined in similar terms by the regulation freezing Iranian funds and the regulation freezing Libyan funds.]