Russia's monetary authority has declared it is seeking damages valued at $230 billion against the securities depository Euroclear. This move is a direct response by the Kremlin against plans to use frozen Russian state funds to support Ukraine.
According to accounts in local news outlets, the central bank filed a lawsuit last week for approximately 18 trillion roubles. This amount corresponds to the stated $230 billion demand.
EU leaders are set to decide later this week regarding a proposal to leverage approximately €210 billion in immobilized Russian state funds. The proposal involves providing Ukraine with a substantial loan to fund its defence and economic needs.
The vast majority of these funds, totaling €185 billion, are held at the Euroclear clearing house in Brussels. Euroclear acts as the main keeper for the Russian immobilised financial reserves.
European Union officials have argued that their plan is legally sound. Their position rests on the fact that title of the state assets still belongs to Russia, despite being it was frozen in EU countries following the 2022 military offensive of Ukraine.
Moscow, however, has labeled any utilization of the assets as theft. Authorities have threatened reciprocal measures, including seizing European corporate assets within Russia.
Kirill Dmitriev, who has assumed a key position in peace negotiations, stated on a social media platform that Russia "will win in court" and regain its assets. He added that the EU, the common currency, and Euroclear "will suffer" from the plan.
With statements seen as an attempt to create division between Europe and the United States, Dmitriev described the proposal as "a vicious attack on property rights and the international reserves system established by the United States."
The clearing house declined to provide a statement on the new legal action. It has in the past stated it is contending with more than 100 lawsuits in Russian jurisdictions.
While judges in EU countries are unlikely to recognize rulings from Russian courts, analysts expect Moscow to seek implementation in nations with closer relations to the Kremlin.
"Russian monetary authorities could try to implement a Russian court's decision against Euroclear in countries such as China, Hong Kong, the UAE, Kazakhstan, and other sympathetic nations, if such assets can be located," commented a legal expert from an NSP law firm.
European authorities said they are working on steps to deter other countries from aiding any Russian lawsuits against EU companies. Additionally, they are crafting safeguards to shield EU countries with assets in Russia from what they call "illegal expropriation."
According to the complex plan, the EU would provide an first €90 billion loan to Ukraine, backed by the proceeds generated from the immobilized assets at Euroclear. Importantly, Russia's legal claim on the underlying funds would remain untouched.
Kyiv would only be required to return the loan if and when Russia agreed to pay reparations for the immense damage inflicted during the ongoing war.
The Belgian government, backed by Italy, Bulgaria, and Malta, has urged the EU to examine an alternative method for financing Ukraine. This involves joint EU borrowing to secure a loan, using unused funds within the EU budget.
This alternative move, however, demands unanimity among all 27 member states. The Hungarian government, viewed as friendly with the Kremlin, has previously expressed its objection.
Commenting on Monday, the EU foreign policy chief, a senior official, described the proposed loan scheme as "the strongest option" for aiding Ukraine. "The reparations loan is based on the Russian frozen assets, meaning it doesn't come from our taxpayers' money, which is also significant," she remarked. "It also delivers a clear signal that when you cause all this damage to another country, you have to pay for the rebuilding."
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