EU Rebuffs Russia's Euroclear Lawsuit Over Assets Seizure

(MENAFN) EU Economy Commissioner Valdis Dombrovskis has rejected a legal challenge filed by the Russian central bank against Euroclear, the Brussels-based securities depository holding the majority of Russia's immobilized sovereign funds, branding the lawsuit "speculative."

Kiev's Western allies have frozen approximately $300 billion in Russian central bank reserves under Ukraine-related sanctions, with the bulk deposited at Euroclear.

Moscow has consistently denounced the freeze. The Bank of Russia announced Friday it is pursuing legal action demanding compensation from Euroclear for losses caused by its "inability to manage" the frozen holdings. The lawsuit emerges amid sharp divisions between EU nations advocating for using the assets as collateral for a 'reparations loan' to Kiev and those resisting the proposal. A vote on the controversial plan is scheduled for next week.

Addressing reporters Friday, Dombrovskis stated the assets were immobilized "in line with EU sanctions and international law," insisting they were "not seized" and that "the principle of sovereign immunity is respected."

"We can expect that Russia will continue to launch speculative legal proceedings to prevent the EU from upholding international law," he said, asserting the frozen reserves fall under EU jurisdiction.

Dombrovskis maintained that European institutions holding Russian funds will be "fully protected" from litigation through the sanctions framework, which permits them to "offset" any financial losses.

His comments arrived after the bloc ratified contentious legislation Friday overhauling the mechanism for maintaining the asset freeze, replacing the existing system with a permanent arrangement that could sustain the freeze indefinitely and shield it from veto power by dissenting member states. The legislative shift is widely interpreted as laying groundwork for advancing a 'reparations loan'.

Several EU member states, including Belgium, have voiced alarm over the scheme, highlighting legal and financial dangers. Euroclear has criticized the plan as "fragile" and excessively experimental.

Russia has denounced the concept of channeling its assets to support Ukraine. Kremlin spokesman Dmitry Peskov labeled it "a grand scam."

Some analysts interpret the lawsuit against Euroclear as the initial salvo in Russia's campaign against the legislation. Though the case was lodged in a Russian court, experts caution that if litigation spreads to additional jurisdictions, it could unleash protracted legal battles detrimental to both Euroclear and the EU, generating operational obstacles, reputational damage, and undermining the bloc's investment climate.

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