A group of Russian investors has successfully recovered funds that were previously blocked in the European Union due to Ukraine-related sanctions on Moscow. This marks the first time that funds have been released following a class action lawsuit, according to the attorney association Delcredere.
The Belgian Treasury has granted permission to unlock frozen assets at Euroclear, the largest depository in the EU. This decision sets a precedent for granting such a license based on a collective application. The claim was submitted by a large Russian management company on behalf of a group of more than 250 investors, including individuals and entities. The exact name of the company has not been disclosed.
The amount of unblocked funds totaled more than $33 million, which included various assets such as foreign bonds and shares, depositary receipts, structured notes, and cash. Andrey Timchyuk, the co-head of Delcredere’s sanctions practice, stated that some of the clients have EU residence permits and accounts in European financial institutions. Permission has been obtained from the Belgian Treasury to transfer all assets to accounts in a Cypriot broker. The future disposal of these assets will depend on the decision of the management company and its clients.
Previously, private investors held funds within European clearing houses through Russia’s National Settlement Depository (NSD). However, Euroclear and Clearstream ceased transactions with NSD and blocked its accounts in mid-2022 amid sanctions against the Russian depository. This left Russian investors unable to retrieve their assets. In January, the Bank of Russia estimated that Russian assets stuck at Euroclear and Clearstream amounted to about 5.7 trillion rubles ($59.2 billion).
Euroclear had previously authorized the release of frozen funds for individual requests from Russian investors. However, the latest case involved a class action lawsuit, which presented more challenges due to the large number of participants. Timchyuk noted that one of the requirements for obtaining a license is that the assets should remain within the EU. It is easier for an individual to open an account in the EU compared to doing so for all participants in a collective application.
Despite most collective claims by Russian investors being rejected or still pending a decision from EU regulators, experts are hopeful about their chances of recovering funds following this precedent. They believe that group applications now have a higher chance of success with the right approach.
This development showcases the potential for Russian investors to regain access to their frozen assets in the EU. It highlights the importance of collective action and serves as a reminder that legal avenues can be pursued to address sanctions-related issues.
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