The Bank of Russia has filed a lawsuit against Euroclear at Moscow’s Arbitration Court, seeking damages over what it calls the unlawful freezing of its funds and securities, as the European Union prepares to use income from the frozen assets to finance support for Ukraine.
The Russian central bank announced Friday that the lawsuit relates to Euroclear’s activities preventing Russia from accessing or managing approximately Eu193 billion held at the Brussels-based securities depository. These assets represent the bulk of roughly Eu210 billion in Russian central bank reserves frozen across the European Union following Russia’s invasion of Ukraine in February 2022.
“The activities of the Euroclear depository have inflicted damage on the Bank of Russia, as the latter is unable to use its funds and securities,” the central bank said in its statement, adding that the action was prompted by the European Commission officially considering proposals for direct or indirect use of Bank of Russia assets without authorisation.
EU windfall profits plan
The lawsuit arrives as EU member states move to formalise a mechanism approved earlier this year to channel windfall profits generated by the frozen Russian assets toward Ukraine.
The Russian central bank warned separately on Friday that it would “unequivocally” challenge any attempt by the EU to use the frozen assets themselves—rather than just the income they generate—to finance Ukraine, promising action in Russian courts, foreign jurisdictions and international tribunals.
Legal complexities
International law experts have long debated the legality of confiscating sovereign assets, with most agreeing that seizing central bank reserves would set a dangerous precedent for the international financial system. The EU’s current approach of using only the income generated by the assets, rather than the principal itself, was designed to navigate these legal constraints.
Euroclear has declined to comment on the Russian lawsuit. The institution has previously stated it is complying with EU sanctions and holds the Russian assets in segregated accounts.
EU ambassadors agreed this week to maintain the freeze on Russian central bank assets, with the bloc’s leaders expected to reaffirm their commitment to supporting Ukraine using income from the immobilised reserves.
This follows a European Commission’s announcement on 2 December of two solutions to bolster Ukraine’s financial resilience: EU borrowing and a Reparations Loan.
On 18 December a summit will be held during which Europe’s leaders are expected to reach a decision on the loan.
