Russia seeks $230bn in damages from Euroclear over seized assets

The Bank of Russia is seeking $230 billion in damages from Euroclear, signaling Moscow's strong opposition to using frozen Russian assets to support Ukraine. This legal action comes as EU leaders are weighing the possibility of utilizing these assets to provide financial aid to Kyiv.

The Russian central bank's claim amounts to 18 trillion roubles, according to reports in Russian state media about the lawsuit filed last week. The EU is currently considering whether to use €210 billion in frozen Russian assets to provide Ukraine with a loan, helping to fund its defense and stabilize its economy. A significant portion of these assets, approximately €185 billion, is held by Euroclear, a central securities depository located in Brussels.

EU officials maintain that their plan is legally sound because Russia still retains ownership of the funds, which were frozen shortly after Russia's full-scale invasion of Ukraine in 2022. That said, the reality is a bit more complicated. Moscow has condemned any use of these assets as theft and has threatened to seize European investments within Russia in retaliation.

Kirill Dmitriev, head of Russia’s sovereign wealth fund and a key figure in ongoing peace talks, stated on X that Russia expects to win the case and recover the assets. He further warned that the EU, the euro, and Euroclear would suffer as a result of this plan. Dmitriev also attempted to create division between Europe and the U.S., describing the EU's plan as an assault on property rights and the international reserve system established by the United States.

Euroclear has declined to comment on the matter. The company has previously stated that it is already facing over 100 lawsuits in Russia.

While EU courts are unlikely to recognize Russian court rulings, analysts believe Russia may try to enforce the judgment in countries that maintain close ties with Moscow. Gleb Boyko, from the NSP law firm, suggested that Russia might attempt to enforce a Russian court decision against Euroclear in countries like China, Hong Kong, the UAE, and Kazakhstan, assuming assets can be located in those jurisdictions.

EU officials are reportedly developing measures to discourage other countries from assisting Russia in its legal actions against European entities. They are also working on safeguards to protect EU member states with assets in Russia from potential expropriation.

The EU's proposed scheme involves providing an initial €90 billion loan to Ukraine, using funds held at Euroclear. That said, the reality is a bit more complicated. Russia's claim on the funds would remain in place. Ukraine would only be required to repay the loan if Russia agrees to pay reparations for the extensive damage caused by the war.

Some EU members, including Belgium, Italy, Bulgaria, and Malta, have urged the EU to explore alternative funding mechanisms for Ukraine, such as common EU borrowing secured against unallocated funds in the EU budget. That said, the reality is a bit more complicated. this approach would require unanimous approval from all 27 member states, and Hungary has already expressed its opposition.

EU foreign policy chief Kaja Kallas stated that the reparations loan was the “most credible option” for funding Ukraine. She emphasized that it is based on frozen Russian assets, meaning it would not rely on taxpayer money. Kallas added that this approach sends a clear message that countries responsible for causing extensive damage to another country will be held accountable for reparations.