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- The reality of the claim: will Russian bailiffs be able to recover 52 billion from Euroclear
The reality of the claim: will Russian bailiffs be able to recover 52 billion from Euroclear
Bailiffs want to recover more than 52 billion rubles from Euroclear, the FSSP told Izvestia. However, the Russian writ of execution is not valid in the EU — the Belgian courts do not recognize the decisions of the Russian Federation because of the sanctions regime. In Russia, Euroclear has practically no assets of its own, Europe has already created compensation mechanisms, and the likelihood of recovery through third countries remains slim. What to expect for Russian investors and why the Russian Federation is filing new lawsuits against the Belgian depository — in the Izvestia article.
How can enforcement proceedings work?
The Russian authorities have increased the legal pressure on the Euroclear depository. However, according to the experts interviewed by Izvestia, this will not allow to return the funds yet. Bailiffs are in the process of recovering 52.6 billion rubles from Euroclear Bank, the Federal Bailiff Service (FSSP) told Izvestia.
But the actions of the FSSP are primarily a demonstration of a legal position, and not a real asset recovery mechanism, explained Denis Astafyev, entrepreneur and founder of the SharesPro fintech platform.
In May, the Moscow Arbitration Court also granted the Bank of Russia's claim against the depository for about 18 trillion rubles (about 200 billion euros) and allowed the immediate execution of the decision.
At the same time, the probability that increased judicial pressure will lead to an actual refund remains extremely low, Denis Astafyev believes. Euroclear operates in a Belgian jurisdiction and is surrounded by European regulators who are not ready for voluntary settlements with Russia, the expert stressed.
One of the key legal barriers is the lack of recognition of Russian court decisions in the EU. As explained to Izvestia by a Belgian lawyer, head of the international service Razmorozka.com Alexey Bogdanov, the Russian writ of execution itself is not valid on the territory of Belgium.
In order to recover the funds, recognition of the Russian court decision by a local court will be required, said Olga Plekhanova, a financial lawyer and qualified investor. In the current circumstances, the probability of receiving such recognition is close to zero. An additional problem is that the dispute is directly related to the EU sanctions regime and frozen Russian reserves. The Belgian courts will consider the enforcement of such a decision to be contrary to EU public policy. In addition, Euroclear has already stated that it does not recognize the jurisdiction of the Russian court and will appeal the decision.
Increased administrative and judicial pressure on European depositories will not affect Euroclear's behavior in any way, agreed economist Andrei Barkhota. According to him, the reason for the blocking of funds has not been eliminated, so neither the number of lawsuits nor the connection of the FSSP will help yet. The only way to return the funds is to review the cases of individual small investors who can prove that they have the right to get their money back.
Can Russia recover Euroclear's assets in third countries
In Russia, Euroclear has practically no own assets. Theoretically, the Russian side can look for them in friendly jurisdictions such as Hong Kong, China, the UAE and other countries where the depository's property may potentially be located. However, success is far from guaranteed, Alexey Bogdanov said. The courts of such countries will independently assess the international jurisdiction of the Russian court, the sanctions context and issues of public order.
Moreover, the 20th package of EU sanctions specifically strengthens the protection of European companies from the execution of Russian decisions in third countries, Olga Plekhanova added. The European Commission explicitly speaks about protection against "abuse of Russian courts" and enforcement measures outside the Russian Federation.
Banks and companies from third countries will face European restrictions for their assistance in executing the Russian court decision. Euroclear will recover losses from them through their property in the EU, the expert concluded.
A hypothetical scenario in which Euroclear starts paying for Russian claims would entail immediate retaliatory measures from Brussels: tougher sanctions, blocking of the remaining settlement channels and possible disconnection from SWIFT structures involved in such payments, Denis Astafyev added. According to him, this would be a systemic gap, unprofitable for Europe, which holds frozen assets and receives income from them.
What can Russian bailiffs do in practice?
Many people imagine a picture in which Russian bailiffs are sent to search for Euroclear assets around the world. However, as Evgenia Amelkina, director of the Eastern Legal Alliance, explained, the powers of the FSSP are limited to the territory of the country. The bailiff can send requests to Russian banks, search for accounts and property in the Russian Federation, and make arrests. That's where his options end. There is no mechanism in the legislation that allows the FSSP to apply to foreign courts and demand the execution of Russian decisions abroad, the expert stressed.
Since Euroclear does not have sufficient assets in Russia, enforcement proceedings are actually running into the ceiling, experts stated. Further, according to them, it is up to the recoverer to act. In the case of the Bank of Russia's claim, the Central Bank itself or the international legal consultants it has engaged.
They will have to apply to foreign courts with a separate requirement: to recognize and enforce the decision of the Russian arbitration. This is a new independent trial in a foreign jurisdiction. Even in a favorable scenario, it takes from one to two years, and taking into account appeals, it can take up to four years or even more, they concluded.
What does the court's decision mean for the Bank of Russia and private investors
Despite all the difficulties, the position of the Bank of Russia has objectively improved, according to lawyers. Previously, there was a dispute about frozen assets. Now there is a court decision for a specific amount — an independent legal asset. It can be used in negotiations, in future international processes, and in attempts to recognize decisions in third countries as a tool of pressure on the debtor.
However, the probability of a refund is still extremely low, according to Dmitry Lesnov, Deputy General Director for brokerage Business at Finam. According to him, the dispute with Euroclear can only be resolved at the political level. Now this is the easiest and fastest way to solve the problem with frozen assets, he concluded.
In general, Euroclear has assets in Russia — accounts of type "C" and "I" for about 84 billion rubles, securities, shares in companies, Tatyana Belyanchikova, associate professor of the Department of Global Financial Markets and Fintech at Plekhanov Russian University of Economics, drew attention. However, the former belong to the investors, not to the company itself.
Moreover, a moratorium has now been imposed on them by presidential decree to preserve the possibility of exchanging blocked assets. If a separate regulatory act appears, similar to Decree No. 442 on US assets, there will also be a basis for direct write—off. This will not solve the problem with the Central Bank's funds worth 200 billion euros, but it will create a real compensation mechanism, she stressed.
Decree of the President of the Russian Federation No. 442 dated May 23, 2024 introduces a mechanism for compensation of damage caused to Russia and the Central Bank by the unfriendly actions of the United States. It allows the court to foreclose on property located in the Russian Federation belonging to American government agencies, as well as individuals and legal entities associated with them.
As for private investors, many have repeatedly filed lawsuits against Euroclear and received decisions from Russian courts, said Artem Kasumyan, senior associate at the Delcredere Bar Association. However, according to Alexey Bogdanov, until there is at least one successful example of collection through a foreign jurisdiction, the judicial strategy remains experimental.
The situation is unlikely to change radically in the near future, the financial adviser and founder of Rodin agreed.Capital Alexey Rodin. It remains only to wait for the parties to agree.
The growing legal pressure is an important step in the formation of a legal framework and negotiating capital, but not a tool for a quick refund, experts agree. Russia continues to create a symmetrical instrument, the weight of which will grow as judicial decisions accumulate and the practice of their enforcement expands. Investors should rely not on judicial victories, but on political agreements, for example, new stages of asset exchange.
Переведено сервисом «Яндекс Переводчик»
