Euroclear wants to get out of business – Kommersant FM
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Euroclear does not want to litigate claims by private investors in Russia. The depository filed a motion to dismiss the case, reports RBC. We are talking about demands for almost $30 thousand, which were stated by entrepreneur Elida Khasanova. This is the first claim by a private investor against Euroclear over frozen assets. The Depository insists that the damage was not caused in Russia, the place where the damage occurred is generally unknown, and it would be logical to consider the case in Belgium.
“Kommersant FM” asked Aram Grigoryan, a lawyer, partner of the Nektorov, Savelyev and Partners bureau, who represents the interests of a group of investors in a similar dispute, to evaluate these arguments: “This Euroclear argument is quite weak, and it has already been worked out in the St. Petersburg Bank case.” , when the Russian court recognized that the consequences of sanctions and actions or inactions of Euroclear, which were committed in relation to the assets of the credit institution, arose in Russia. The damage was caused specifically in the Russian Federation.
The Depository should not forget: 248.1 of the Arbitration Procedure Code directly provides that any disputes related to sanctions restrictions can be considered by a Russian arbitration court. Euroclear’s arguments are essentially aimed at delaying the process and creating some procedural delays or grounds for further appeal.
If investors turn to the Belgian court, then, firstly, they will need a cause of action, which involves bringing it directly to Euroclear. There is no contractual relationship between the investors and the depositary, and we believe that the Belgian court will reject the claim on this basis. Secondly, it will apply local and EU law, including regarding sanctions restrictions.
The court will simply say: Euroclear acted in compliance with the sanctions restrictions – there were no violations in its actions, therefore the claim should be rejected.
The main game plan of Russian investors is to take a positive decision and foreclose on the money frozen in NSD, which belongs to Euroclear. This is a fairly large amount of funds; for 2022 it is about 220 billion rubles. And thanks to them, Russian investors plan to receive compensation. This is money credited to type “C” accounts at NSD.”
After Bank St. Petersburg won its case against Euroclear in Russia, the Belgian Treasury issued it a license to unfreeze its assets. But, as Kommersant FM’s interlocutors note, they failed to use it. The bank came under sanctions from the UK and the US. And Euroclear demanded to obtain licenses in these countries as well. This scenario is hardly applicable to individuals, but they may also have problems with unblocking, says investment lawyer Elena Ryazanova:
“The court decision itself, as well as the writ of execution and the winnings, do not indicate physical recovery of assets. If an individual goes to an arbitration court, sues Euroclear, implying that in parallel with this he submits an application for an individual license to the Belgian Treasury and hopes that a positive court decision will stimulate the issuance of such a permit, then this is one strategy.
If an application is not submitted, but only a trial is underway in Russia, I have a feeling that the Central Bank will protect the funds in type “C” accounts. This is a kind of strategic reserve within which an exchange will take place, unfriendly residents will buy back securities blocked in Euroclear from Russian residents, and they will begin to pay for them with money from these accounts. If the assets there are blocked for this purpose, then I have doubts that the regulator will allow any funds to be written off from Euroclear’s “C” type accounts based on writs of execution.”
According to the Central Bank, the assets of private investors and individuals worth 5.7 trillion rubles are blocked abroad. About a fifth of this amount comes from individuals.
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