Compensation will be paid without trial – Kommersant FM

Investors began to abandon their claims against Euroclear. As Vedomosti writes, the reason is that Russians began to receive compensation by presidential decree. The information is confirmed by Kommersant FM’s interlocutors. Decree No. 665, signed in the fall of 2023, allows investors to receive income from blocked foreign securities.

Russian Euroclear funds are stored in special “I” accounts, from which payments are made. Moreover, you can only get money out of court. It is impossible to foreclose on them; this is prohibited by another presidential decree signed in early January. Does this mean that more investors will abandon their claims? Aram Grigoryan, partner at the NSP law office, notes that not all losses can be compensated without a trial, which means the processes will continue:

“Decree No. 665 does not apply to compensation for the cost of securities, only to income, coupon accruals, payments and redemptions on bonds. Having received these payments, some of the plaintiffs who previously filed claims against Euroclear want to abandon or have already abandoned their claims regarding the collection of coupons, repayment of bonds or dividends. But in terms of recovering the value of securities, investors did not abandon these claims. The amount of claims for claims for recovery of the value of securities is much greater than the amount of claims for recovery of income.

Does it make sense in court to seek compensation specifically for the value of securities, taking into account the fact that type “I” accounts cannot be seized? This raises the problem of enforcing the Russian court’s decision against Euroclear in Russia. But there are several options for how these decisions can be enforced. Russian investors can take this decision, go to a friendly jurisdiction where Euroclear has foreclosure property, and enforce that decision in the friendly jurisdiction.

Another option is bankruptcy of the Euroclear property estate in Russia. A positive practice is emerging when the property of foreign persons who are not registered in Russia as independent legal entities goes through bankruptcy proceedings. In a positive scenario, a bankruptcy trustee will be appointed, who will also be able to apply to foreign jurisdictions for enforcement of the decision.

This scenario works not only in relation to the value of securities, but also for income that was not reimbursed under Decree No. 665, because not all investors will receive reimbursement. Investors’ income requirements are much greater than the amount of blocked amounts in “I” type accounts.”

It is still possible to partially compensate for the cost of the securities themselves within the framework of the decree on the exchange of assets. But the document limits the maximum amount of compensation – you cannot receive more than 100 thousand rubles. In this situation, the investor can apply directly to the Belgian Treasury and obtain a license to unfreeze assets from Euroclear, says Kira Vinokurova, co-head of the sanctions law and compliance practice:

“According to the Russian regulator, these two decrees should resolve the issue for 90% of investors, because most of them are holders of small blocks. And these mechanisms should help. If the value of an investor’s securities is much higher than 100 thousand rubles, I believe that the most reliable option is to apply for a license.

Yes, this is a fairly long-term story, but it will most likely take less time than considering a case in a foreign court or enforcing a Russian court decision abroad. Resolving the issue through the court can take from a year to two, which is longer than the average time to obtain a license.”

Euroclear itself expects that there will be significantly fewer claims against it in Russia. Representatives of the depository attribute this to the ban on collecting money from special accounts.

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Ilya Sizov