The Bank of Russia filed suit in Moscow Arbitration Court against Euroclear, with no amount of damages specified. The Kremlin vowed additional action if the assets were misappropriated.
Filing in Russia, as opposed to a foreign court, might look like a weak initial gambit. However, as we’ll discuss below, the procedure Russia is relying upon is enshrined in treaties and has been deployed with mixed success in other Russia-sanctions-contesting actions. Long-standing readers will be well-versed in this topic, investor-state dispute settlement procedures, since we have discussed it at considerable length in the context of the fight over the TransPacific Partnership and the Transatlantic Trade and Investment Partnership trade deals. Obama labored mightily to push them over the line before he left office. Trump did not pursue them.
These treaties, designed to override the laws and regulations of states in order to give protected status to investors, make a mockery of national sovereignity. ISDS disputes draw on a small community of arbitrators, many of whom were involved in drafting ISDS treaty provisions, with hearing held in secret and typically not appealable. The rising (and correct) perception that this rules were gutting labor rights and environmental protection was instrumental to stopping their reach being extended further in the US. But it seems no existing ISDS provisions have been unwound.1
So Euroclear may be hoist on the ISDS petard.
The move also validates Euroclear’s and the Government of Belgium’s concerns about their liability. It should help stiffen their spines as well as those of member states like Hungary that object to the European Commission and the EU leaders pushing for the financial heist attempting to ram through legislation, using emergency powers, that would saddle them, without their consent, with a share of any losses were the EU to use the assets as collateral to continue to fund Ukraine and its war. However, Russia may be required by its agreement with Euroclear to proceed this way.
The Financial Times described the European plans that look to have teed up this action:
The suit is Russia’s first shot across Europe’s bows as Brussels moves to indefinitely immobilise the assets to fund a €90bn loan to Ukraine next week. Belgium, where most of the assets are held, has opposed the idea, fearing Russian retaliation.
The European Commission believes no courts outside the EU would have jurisdiction over the case. But Russia’s central bank said it would also “unconditionally challenge” efforts to immobilise its assets via international courts in both “friendly and hostile countries”.
It is seeking damages based on “the sum of the Bank of Russia’s blocked funds, the value of the blocked securities, and loss of expected gains”, the central bank added…
Kyiv’s western allies froze $300bn in Russia’s reserves shortly after President Vladimir Putin ordered the full-scale invasion of Ukraine in 2022. They are currently immobilised every six months through a process that requires unanimous agreement from all 27 EU members, including opponents of the scheme such as Hungary.
But the European Commission proposed using emergency powers to immobilise €210bn indefinitely to fund the €90bn loan, hoping it will bolster Kyiv’s resistance to Russia’s invasion and help secure a role for the continent in US-led peace talks. EU countries on Thursday agreed to that proposal ahead of a debate among EU leaders next week on the loan.
The Financial Times stated that Euroclear holds €185 billion of the €210 billion European total. It is not clear if that €185 billion is all central bank assets or includes the holdings of Russian companies and individuals.
The Bank of Russia has filed a lawsuit against the Euroclear depository in the Moscow Arbitration Court for damages caused to the Bank of Russia, the regulator’s press service reported…
“In connection with the illegal actions of the Euroclear depository, which are causing damages to the Bank of Russia, as well as in connection with the mechanisms officially reviewed by the European Commission for the direct or indirect use of Bank of Russia assets without the consent of the Bank of Russia, the Bank of Russia is filing a lawsuit in the Moscow Arbitration Court against the Euroclear depository for damages caused to the Bank of Russia,” the statement reads.
The regulator stressed that the actions of the Euroclear depository caused damage “due to the inability to manage cash and securities belonging to the Bank of Russia.”
The majority of Russia’s sovereign assets frozen in Europe (over €200 billion) are blocked on Euroclear’s platform in Belgium. The depository repeatedly opposed the expropriation of the assets, warning that it could lead to Russia seizing European or Belgian assets elsewhere in the world through legal action.
Earlier Russian President Vladimir Putin stated that the global financial and economic order would be destroyed, and economic separatism would only intensify, if the West stole Russia’s frozen assets. Kremlin Spokesman Dmitry Peskov noted that Moscow would definitely respond to the theft of its assets in Europe. He stressed that the Kremlin intends to organize legal proceedings against those involved in this scheme.
A favorable result in Moscow would at a minimum seem to set up Russia to be able to take compensatory action if Euroclear did not free the funds, such as immobilizing Euroclear funds in Russia, estimated at €15 billion. That would tee up litigation by those parties against Euroclear.
Moreover, when a party fails to satisfy a legal judgement, they attempt to garnish assets they can reach. So a next move by Russia if it prevails (which seems likely not just given the choice of venue but also how investor-biased ISDS provisions are) would be to sue Euroclear in other jurisdictions, such as Hong Kong and Singapore, where Euroclear has operations and substantial assets, to collect or impound assets, since there is not enough Euroclear loot in Russia to compensate Russia were it to prevail.
Mind you, I have no idea if and how this could work in practical terms. But with the Lehman bankruptcy, there was a fight over which court would have jurisdiction. This has also been a common fist fight with vulture investors, such as hedgies like Paul Singer who bought claims against Argentina on the cheap and gott a US court to enforce them. I have not followed Singer closely enough to follow his machinations, plus his operations are likely not generalizable to Russia and Euroclear. Argentina sold bonds with would have contained rule of law provisions and likely specified the jurisdiction in which claims would be heard. The analogous provisions in the Euroclear agreement would be different.
Presumably we will get a lot more detail, particularly if the underlying filing is made public so legal mavens can review it and opine further. The commentary on Twitter so far doesn’t add to the raw facts. We had pointed out yesterday that Singapore provides for discovery, which could make it a very useful venue. From the Financial Times’ comments section:
ABgk
It’s a warning shot. The real escalation would be Singapore court – Euroclear has huge assets in that jurisdiction and judges there have previously sided with a view that sovereign assets are untouchable. This is why Euroclear is so nervous – they are exposed outside EU a LOT and there are no protections. In case Singaporean court uses their assets there as a collateral, France and Germany will shrug it off and will let the Belgians to hang dry.
A recent VoxEU article states that Russia has already frozen Euroclear assets2 in Russia and some afflicted Euroclear clients have gotten recoveries:
According to the Financial Times (2025), Russia has confiscated approximately €33 billion in assets belonging to Euroclear clients. In addition, Euroclear faces more than 100 lawsuits related to immobilised and frozen assets. In response, the EU Council introduced a loss recovery derogation and a no liability clause in December 2024. A loss recovery derogation enables CSDs to request competent authorities of the Member States to unfreeze cash balances and use them to meet their legal obligations towards their clients.
Reuters (2025) reports that Euroclear invoked this regulation to release €3 billion in Russian assets to compensate clients whose holdings had been expropriated in Russia. Euroclear’s quarterly results also show a €1 billion decline in Russian assets between the second and fourth quarters of 2025, consistent with a partial unblocking of these funds. This decision set an important precedent for the confiscation of Russian assets. However, the proceeds were used to indemnify Euroclear’s clients, effectively socialising their losses from operating in Russia.
From Le Monde on December 10 about the use of arbitration to seek recoveries from sanctions:
Russia has not only threatened Europe through drone incursions and hybrid interference operations, but also in court. By exploiting old commercial treaties dating back to the end of the Cold War, Russian companies and oligarchs have multiplied arbitration proceedings to challenge the European Union’s sanctions policy, posing an increasingly serious financial risk to member states.
This warning was issued by a coalition of European NGOs, including the Veblen Institute for Economic Reforms, Friends of the Earth Europe and PowerShift, in a report published on Tuesday, December 9 titled “Frozen Assets, Hot Claims: How Russian oligarchs and other investors sue over sanctions.” These organizations estimate that at least $48 billion (€41 billion) has been claimed from the EU and its allies (the United Kingdom, Ukraine and Canada) in compensation for these sanctions – a minimum figure, as most of the 24 proceedings identified in the report have not disclosed the amounts sought.
After their villas, yachts and works of art were frozen following the invasion of Ukraine, several oligarchs have retaliated through legal proceedings, with varying degrees of success. In 2024, Piotr Aven and Mikhail Fridman won a case in the EU’s court, which found their contribution to the war to be too indirect to justify the sanctions imposed on them.
Beyond this high-profile case, several Russian oligarchs and companies have launched much more discreet proceedings, relying on investment treaties that many European states signed with the Soviet Union in the late 1980s. Designed to protect investors, these bilateral agreements have created a parallel justice system known as investor-state dispute settlement (ISDS). This mechanism allows investors to bring their cases before a panel of private international arbitrators, rather than a conventional court, to seek compensation if they believe a state has abused its rights, such as through expropriation or unfair treatment.
Fridman, for example, used the 1989 treaty between Luxembourg and Russia to demand the return of his assets that are frozen in the EU country, along with financial compensation for the “irreversible and catastrophic damage” to his business. He is seeking the equivalent of €14.5 billion, which represents half of Luxembourg’s annual budget…
Although none of these proceedings have yet succeeded, their initiators know their chances are much higher than in a European court. Arbitrators in ISDS cases must determine whether the state expropriated the complainant’s assets without valid reason – a practice prohibited by bilateral treaties, even when sanctions are in place. The Court of Justice of the EU highlighted this vulnerability as early as 2009, but “the EU member states (…) have not renegotiated their treaties to include safeguards, nor have they canceled them,” the Veblen Institute said..
From the underlying Frozen Assets, Hot Claims paper (emphasis theirs):
Our analysis also shows that:
- Overall, known ISDS claims and threats of claims by sanctioned individuals and entities alreadyamount to 62 billion USD. This is getting close to the 70 billion USD of military assistance the EU has provided to Ukraine since 2022. The true figure is very likely to be slightly higher as in more than half the cases no information about the amounts claimed is available.
- More than half of the ongoing, sanctions-related ISDS cases are against Ukraine. The others are targeting other European countries (Belgium, France, Lithuania, Luxembourg and the UK) and Canada.
- Seven ISDS cases against Ukraine’s sanctions and security policies are based on investment treaties with EU member states and a further two on the Ukraine-UK investment treaty. This shows that the investment treaties that European countries maintain with Ukraine have enabled sanctioned individuals and entities to directly challenge Ukraine’s national security policy.
- Russian oligarch Mikhail Fridman has filed five claims against sanctions-related measures and threatened a sixth case. Three of the five cases are targeting Ukraine, of which two are based on the investment treaty that Ukraine has with Belgium and Luxembourg and the other on one with the Netherlands.
- Of the 24 cases challenging sanctions, 13 have been initiated in 2025 alone, highlighting how investors are favourably resorting to ISDS to challenge the sanctions policy of Ukraine and its supporters.
The incompatibility of EU countries’ investment treaties with EU sanctions policy was highlighted by the European Court of Justice in 2009. In three rulings against Austria, Sweden, and Finland, it found that capital transfer clauses in the three countries’ investment treaties conflict with the Council’s authority to unilaterally impose sanctions on third countries. However, in the years since then, the countries and other EU Member States with similar clauses in their treaties have failed to remedy the situation. They have not renegotiated their treaties to include safeguards, nor have they cancelled them.
Another whining article by IIDS about “unintended consequences” of ISDS provisions suggests that they could be effective tools for Russia, or at least very much muddy the waters for EU member states. For instance:
The threat of investment arbitration claims from Russian actors challenging the European Union’s proposed new Ukraine support package is the latest example of how outdated investment treaties can be used to undermine governments’ responses to crises…
That Belgian decision-makers now refrain from backing the crucial Ukraine proposal for fear of arbitration based on investment treaties only adds to longstanding concerns about these instruments. Over the past decades, these treaties have increasingly been misused in ways their drafters never intended. From climate policy to public health, they now put collective security decisions at risk. Reform is more urgent than ever.
I don’t recall such tender concerns when Amazon rain forests were at risk.
In any event, pass the popcorn. Things are about to get ugly. The long-standing erosion of national rights in favor of stateless investors is being turned against its neoliberal creators.
___
1 A mini-recap from a 2023 post, Even Rich Nations Now Worried About ISDS:
In the US, Public Citizen deserves a great deal of credit for turning policy-makers against the multinational-favoring, national-law-and-regulation-gutting “free trade agreement known as ISDS, or “investor state dispute settlement. These disputes are arbitrated by secret panels with no appeal and pro-corporate cronies acting as deciders. Public Citizen’s relentless digging got key bad facts out in the open…
Some…notorious cases, the first from a 2014 post:
Germans are particularly aware of the dangers of these foreign investor panels due to payments the German government has been forced to make. Vattenfal, a Swedish company, is a serial trade pact litigant against Germany. In 2011, Der Spiegel reported on how it was suing for expected €1 billion plus losses due to Germany’s program to phase out nuclear power:
According to Handelsblatt, Vattenfall has an advantage in seeking compensation because the company has its headquarters abroad. As a Swedish company, Vattenfall can invoke investment rules under the Energy Charter Treaty (ECT), which protect foreign investors in signatory nations from interference in property rights. That includes, according to the treaty’s text, a “fair and equitable treatment” of investors.
The Swedish company has already filed suit once against the German government at the ICSID. In 2009, Vattenfall sued the federal government over stricter environmental regulations on its coal-fired power plant in Hamburg-Moorburg, seeking €1.4 billion plus interest in damages. The parties settled out of court in August 2010.
What is particularly galling about these agreements is that they give investors the right to sue over lost future profits.
A report in the UK website Vox Political suggests that Germany has figured out what the TTIP is really about and isn’t about to be snookered. Germany’s willingness to defy the US may be part of the fallout of revelations of the amount of “Five Eyes” snooping that goes on in the Eurozone, and may also reflect discomfort with US escalation of hostilities with Russia, when it is not to Germany’s advantage to participate in economic brinksmanship.
Or see this section of a Nick Corbishley post from 2016:
International arbitration lawyers have a soft spot for Latin America, for a reason: over the last ten years, the region has been one of the primary sources of their exorbitant fees, which can range from $375 to $700 per hour depending on where the arbitration takes place.
By 2008, more than half of all registered claims at the International Centre for Settlement of Investment Disputes (ICSID) were pending against Latin American countries. In 2012, around one-quarter of all new ICSID disputes involved a Latin American state.
Today the region faces a fresh deluge of ISDS claims. The countries most affected include Uruguay, whose anti-tobacco legislation has been challenged by Philip Morris at an international arbitration panel; Argentina, Ecuador and Colombia, which until a few years ago had never been on the receiving end of an investor-state dispute settlement (ISDS). Now it is the target of multiple suits that could end up setting its government back billions of dollars.
The claimants include Glencore, the world’s biggest and most heavily leveraged commodities trader; Carlos Slim-owned América Móvil, the leading wireless services provider in Latin America and the third largest in the world; the Spanish insurance company Sanitas; the Swiss pharmaceutical giant Novartis; and the Canadian miner Eco Oro and US miner Tobie Mining and Energy.
Each company on that list feels that decisions or actions taken by the Colombian government have in one way or another cost or will cost them profits to which they feel entitled. And each company is doing what it has the right to do under today’s trade treaties — suing the government of that country for damages.
It is the last company on the list — Tobie Mining and Energy — that is the biggest concern to the Colombian government for the damages it seeks: $16.5 billion. That’s a lot of money for a nation with per-capita GDP of $7,831 and whose currency has lost 40% of its value against the dollar over the last 18 months. It’s the equivalent of 20% of its national budget.
But the whole point of ISDS had seemed to be colonialism in another guise, particularly deployed against proto or actual socialist countries that might take things like workplace rules and environmental protection too seriously. But then, as Jomo describes, advanced economies started being hoist on this multinational petard.
But ISDS, although waning in support, is still far from dead.
2 It also explains what Euroclear does. Some readers seemed not to understand what securities depositaries are:
Central Securities Depositories are a core component of post-trade infrastructure. Each security issuer must select a CSD to register newly issued securities, and when these securities are traded, the CSD records the change in ownership – a process known as settlement. Beyond settlement, CSDs facilitate the distribution of cash flows such as dividends, coupons, and bond redemptions. These functions are essential to the integrity of securities issuance, the accurate recording of ownership, and the finality of settlement, making it inconceivable that European authorities would ever allow Euroclear or any other CSD to fail…
International CSDs, such as Euroclear and Clearstream, are focal points in global financial networks. States with political authority over these infrastructures can weaponise them as chokepoints to cut their adversaries off from the network
“These functions are essential to the integrity of securities issuance, the accurate recording of ownership, and the finality of settlement, making it inconceivable that European authorities would ever allow Euroclear or any other CSD to fail…”
Requires that “European authorities” understand and care about this: the
Baltic Ladies Gang (and Mertz) appear not to understand and because of their ignorance, for which they’ve been handsomely rewarded, not care.
The NATO Mob taking on the BLOB Mob thinking their respective black markets are the Global Economy.
Good treatment of the subject and has me wondering The EU is planning on permanently freezing those frozen funds which means that they are actually taking them. The Russians were always going to take the EU to court over those funds and with the war now winding up, this is the very first step that they are taking in doing so. So I would expect in the coming months and years to be an increasing number of stories of the legal proceedings as they wind their way through international courts. Will these proceedings wreck the EU financially? Probably. But after all that the EU has done to Russia and still are, I think that the Russians are beyond caring.
The venue is likely to be ISDS arbitration panels….which are biased by treaty and practice towards investors over states. Russia here is an investor. As I said, we have a LOT of material on this in our archives. This section from a 2015 post gives an idea of the degree of investor bias in these treaty provisions:
https://www.nakedcapitalism.com/2015/05/sovereignty-for-international-investors-trans-pacific-partnership-tpp.html
Now the EU is changing the rules so it no longer requires unanimity to continue the asset freeze. Maybe this will focus the minds of the individual countries deciding to vote yes. But another thing weighing on their minds is that their plans for the loot reportedly see about 40% of it going to pay themselves back for earlier ‘loans’ to Ukraine, and they are loath to write those billions off, at least in public.
BERLINER ZEITUNG with a short summarized interview with London-based lawyer Robert Volterra
use google-translate
https://archive.is/7qiRA
Outstanding overview and fun to read the interview with an outraged international lawyer!
Popcorn, indeed.
Ok. I´m sort of relieved then as I feared commentaries would suggest it´s lame because most here already knew these things Volterra being a public person of sorts (while I didn´t but neither am I a finance person).
Will not translate from an archived page. I get unending captcha challenges.
Let me know if it doesn´t work.
translation
https://archive.is/fRXJO
or the German original
https://www.berliner-zeitung.de/wirtschaft-verantwortung/top-voelkerrechtler-rechnet-mit-eu-ab-russland-enteignung-absolut-illegal-li.10009953
Recent versions of the Firefox web browser include built-in local translators, using a small language-pair model – the first time you meet a language-pair, eg German and English in this case, it fetches the appropriate pair-model (a few seconds), and the next time it meets that pair the translation, done locally on your computer, is near instantaneous). Firefox autodetects foreign language and offers to run the translation, or you can trigger it manually later too. The quality of the translation depends somewhat on the language-pair in question.
I can confirm that Firefox doesn’t care that the page came from archive.is – the translation worked as normal. The captcha might be a separate issue altogether – sometimes if a server doesn’t like something about your computer or the connection from it, it will overdo the captcha challenges.
Here’s the translation in full:
The idea of the European Union (EU) to use the infrozen assets of the Russian central bank as collateral for new Ukraine loans is incomprehensible among international law experts: “The plan to use frozen Russian state assets for reparations loans is absolutely illegal under international law and a flagrant violation of the rule of law,” Robert Volterra told the Berliner Zeitung newspaper.
Volterra is a partner of the London law firm Volterra Fietta and one of the most respected lawyers for international law. He is a visiting professor of international law at University College London (UCL) and a guest lecturer at King’s College London. Volterra finds clear words for the Brussels plans: “If a state, using ordinances, seizes the state’s assets of another state, it is as serious a violation of international law as if a state occupied by force of arms the territory of another state.”
Are guarantees just rhetoric?
For Volterra, it is crucial whether the legal design really goes so far that real access to the Russian assets is provided. He sees two possible EU strategies: “Either the EU creates a legal framework that actually enables or allows for the expropriation of sovereign Russian assets or their value. Any court in the world that adheres to the rule of law would immediately declare this illegal. Or the EU develops a system in which the assets remain unaffected in reality and the true guarantees come from the EU itself – then it is a sham operation, merely a threat of public diplomacy to Russia, and any reference to guarantees for sovereign Russian assets is empty rhetoric.”
Reminder of Subprime Crash
Volterra, a native of Canada, advises and represents governments, international organizations and individuals on a variety of contentious and non-contented issues of international law and international dispute resolution, including international borders, cross-border resources and bilateral investment agreements. He says the EU plan reminds him “a little of the US mortgage derivatives that triggered the 2008 financial crisis”: “High-risk debts were pooled and sold as low-risk debts to dentists, lawyers and retirees by promising them an attractive, secure return.” It could be a snowball system. “There are many snowball systems that we don’t know about and never collapse,” says the international law expert.
The EU’s approach is highly observed internationally, says Volterra: “All countries, including powerful competitors of the EU, are closely monitoring what the EU is doing.” In the end, the plan could be “used by other countries that do not like some EU measures as a precedent.” Volterra: “What happens if a major power rejects the EU’s environmental policy, declares it to be contrary to international law and then begins to seize the sovereign assets of the EU states?”
“Violation of the rule of law”
For the EU, access would also have long-term political consequences. Such a move “would pursue the EU for generations.” Volterra: “The deliberate violation of the rule of law is a violation of the basic principles on which the EU is supposedly based. Any future claim by the EU that it pursues a ‘moral foreign policy’ would trigger the accusation of ‘hypocrisy’ from other states. The EU would pay a heavy price for this for a long time.”
Externally, the Europeans are not deterred: the EU Commission should be able to carry out the expropriation without the possibility of vetoing a single state via an “emergency regulation”. However, it is unclear which states really want to take guarantees for the up to 210 billion loans. After massive resistance from the Belgians, the EU Commission has deleted any mention of Euroclear from the new legal texts. Chancellor Friedrich Merz supports the plan against it. He is positioning himself against Donald Trump. In a paper for the FAZ, Merz wrote that it could “not be left to other, non-European states what happens to the finances of an aggressor.”
The idiocy it hurts. Nobody apparently cares about what Volterra or any other lawyer might say. He is probably considered a Putin muppet for saying those things no matter if true. The only opinions that matter are those brewed in EU-wide group think in all those committees and by all those commissaires. I have been reading an interview of Spanish Minister of Economy, Mr. Cuerpo, in an Ecofin meeting in Brussels: “Cuerpo confident it (the Ecofin) can “accommodate” Belgium’s concerns for an agreement on Russian assets within “days”. What I see here is that Ecofin is now a meeting between a group of friends who reinforce themselves in their idiotic stance and who believe that the solution is to “accommodate” stuff which is uncomfortably unlawful but it doesn’t matter any more because. EU-wide PMC group-think is that they are somehow in a position to do unlawful things when it fits them. Nobody (within the EU) will dare to say this is not correct. This Mr. Cuerpo probably knows nothing about the Donbass but he “knows” what is needed.
Now, here the precedent being set is IMO very dangerous. It is almost certain that the “reparations fund” will fall 100% on EU taxpayers. Here, the call for emergency is an obvious scam (well, yes, Ukraine, or better, Zelensky, need for funds is an emergency) but i guess that article 122 is about emergencies affecting the EU, not third countries. I have also read in headlines that the plan includes entering Ukraine in 2027. If only to avoid this outcome I prefer if Ukraine does not exist in 2027 frankly.
Mr Cuerpo, as in Mr Body? What an appropriate name!
Well, if he married Mrs Guarro, their children would be Cuerpo Guarro. How’s that for a joy ride through your school years?
Could have been Podrido instead of Guarro. ;p
Guarro is a real surname. I am not sure that Podrido is.
In Barcelona there was a “Farmacia Guarro”… But perhaps I should leave this conversation for my Twitter account… :-)
Besides the point but I love Putin “muppet”!
Well yeah, my bad. I was intending “Putin puppet” but it works with muppet.
Euractiv
Italy, Bulgaria, and Malta join Belgium in push for alternatives to €210 billion Ukraine loan
Commission’s move to indefinitely freeze Russian assets ‘implies legal, financial, procedural, and institutional consequences’
https://www.euractiv.com/news/italy-bulgaria-and-malta-join-belgium-in-push-for-alternatives-to-e210-billion-ukraine-loan/
German-language
FAZ
“The plans to use Russian assets pose a threat to financial stability.”
https://archive.is/Mikzb
This archived most likely won´t translate automatically. You have to c&p into a translation program and do it manually
p.s.
The FAZ piece I have linked a couple of minutes ago is an interview with EUROCLEAR head Valérie Urbain. She has been with the institution since 1992!
Could the EU theoretically refuse to abide by a unfavourable judgement from a European arbitration court — through another convenient emergency regulation — or perhaps undermine it through some procedural chicanery — such as making the transfer of funds practically impossible — thus “saving” Euroclear?
In this case, does it mean that the actions by Russia against Euroclear in ISDS arbitration courts are effective insofar as they take place outside the EU, because Euroclear does not have a local “protector” in Russia, Singapore, Hong-Kong, or even the USA, and would therefore be gored by the restitution and damages imposed upon it in non-European territories?
Is thus the vulnerability of Euroclear only due to its massive exposure in non-EU countries?
No. The suit is against Euroclear, not the EU. Euroclear is already unhappy about being put in this position. It has made repeated public statements about how it views the EU asset seizure plan as illegal, which greatly bolsters Russia’s case. The assets would still be in the possession of Euroclear. Euroclear would return them to Russia if there was an unfavorable ruling. It would be terrible for their business not to. A comment further below indicates that it is Belgium, as in the state, that would be held liable (not sure if Russia sued them both, will be interesting to read the case) and that their assets could be pursued all over the world if Russia pervailed.
Paul Singer prevailed over Argentina. See the footnote. Germany had to pay Vattenfall. Australia had to pay Philip Morris.
Now the EU could try to block Euroclear from acting on a court order. Then I assume Russia goes to another jurisdiction where Euroclear also operates and gets the judgment enforced there.
Australia won against Philip Morris, but had to pay exorbitant legal fees
https://theconversation.com/when-even-winning-is-losing-the-surprising-cost-of-defeating-philip-morris-over-plain-packaging-114279
It looks like Philip Morris tried a dodge and that was the basis for the case being overturned.
Euroclear has existing corporate entities all over the world and I assume investors who use them to hold Euro assets all over the world, so not sure this would apply here. I don’t recall of another ISDS ruling v. a government having been overturned.
Geez, who’d have thunk that ISDS procedures could be employed by investors located in nations outside the collective West. What a goof in the drafting of those treaties!
Are these Euro Bonds? Debt? The money is already spent….correct?
*Sigh*
A bond is a promise to pay interest and principal. I don’t understand your issue.
From Orlov……
Among all of the discussion of this topic I have seen so far, I haven’t seen any mention of what is actually being attempted. At the core of it is the fact that the Russian funds are not money but debt. Frozen Russian funds consist of eurobonds. That is, the Russian government purchased eurobonds and deposited them in Euroclear. If the EU were to abscond with these Eurobonds, that would be a repudiation of this debt. That’s fantastic — less debt! — but where’s the money? The EU members have already spent the money the Russians gave them when purchasing these eurobonds. To actually come up with more money to stuff into the Ukrainian financial black hole, EU would have to borrow it — for example, by, you guessed it, selling more eurobonds.
“Russian funds are not money but debt”
All Fiat sovereign currencies are debt, issued as debt/tax credit. These sort of inaccuracies intentional or otherwise make a huge difference in perceptions vs reality.
Forget it Jake, it’s Fiat town.
It’s not about fiat. Go read David Graeber and get back to me.
I asked Wuk sometime ago if he had read 5000 years of Debt, response was he did not – like – it. So here we are again, after all the time and effort providing independently verifiable information/facts and … some persist with inaccuracies most likely due to environmental/indoctrination biases.
Right up there with the loanable funds theory barge. Why? Because without it the edifice of some ideologues dressed up as economists falls apart e.g. narrative. Ugh some just want – too insist – contra to all the information in the deductive reasoning[tm] approach that is Says Law and Barter theory of Money. Which then gets mangled by QTM [quantity theory of money] and then some ponder why the FED is administrated as some note – quasi Monetarist.
Not as a functional approach but, as a neoliberal ideological social construct. Especially when one considers both AET and neoclassical never refer to natural history/anthropology or any new discoveries – its end of history level rubbish. Not that myself has had to contend with all this over my life, here on NC, and other places. Now that jackpot is getting more evenly distributed heap of people that thought they were risk adverse to its machinations are now finding out the hard truth. Hence that post you did on the urge to inform/write when its rolling boulders up hills.
Wuk …. for a bloke that never value added anything, traded metal disks with some historical reference/s with others, never really adding any social value to the economy save the income spent on travel and home expenditures … back stopped by some Ayn Rand hyper atomistic individualism … and now you think its all a government drama and not the decades of elite machinations … wow … Rand was an Elite operative like Greenspend* and the lot … have a care mate …
I cannot communicate with someone who has such a fundamental misperception of money. It’s as if you believe the earth is flat.
In Oregon law – probably in most jurisdictions, but I’m not allowed to talk about those – there’s a process called “impleader.” Which word the NC spellsczech does not like. Basically it’s when a third party holds funds that are disputed between two other parties. The third party files the impleader, pays the funds into court, and says in essence “These funds are not ours. We don’t care in the slightest about them. Two other parties are arguing about who owns them. You the court get to sort it out, we’re out of here because we have no interest in being caught in the middle. Oh, and give us our reasonable attorney and court fees for filing the impleader.”
It’d be interesting (and a nice simple solution) if ISDS procedures included something simple like that. Euroclear just gets to shrug at the EU and say “the court told us so.”
I dislike thieves, and it would be nice to see ISDS being used successfully in this case for that reason alone.
Gotta say I’m enjoying reading about ISDS agreements turning on their masters, “unintended consequences” and all, thanks, and as noted already, please pass the popcorn my way.
With Trappist beer & vodka chasers ;-)
Yes, as per Yves’ suggestion, I’m getting ready my popcorn!
It is a microcosm of the ideas of free speech and the rules-based order – will you destroy it now because it is starting to work against you?
I am curious, specifically with regards to Singapore, what the consequences for their judiciary will be.
For all the talk about “rule of law” and judiciary following “the laws,” courts are always ultimately political bodies–sufficient political pressure almost invariably bends their decisions. Singapore, in particular, occupies an awkward political niche–it is, especially nowadays, unmistakably on the side of the “West,” although it presumably cares not so much for the Europeans as they do with regards the US, but, again, by reasons of geography, socio-cultural linkages, and trade-financial relationships, it cannot alienate the Chinese, Indians, or the Global South generally. I wonder how much room for (political) maneuver they possibly have if they are forced (as seems inevitable, quite soon) to deal with this situation legally.
Governments have paid up when they have lost ISDS cases. The provisions are enshrined in treaties and so any legal action pursuant to them is not like commercial litigation.
I don’t think there ever has been a case quite like this before, where 1) the “investor” is a major sovereign state; 2) the political “flavor” of the case has been so thick–for all the vilification of tobacco, it never reached the kind of spectacle russophobia has reached. I suspect we cannot view this as just another “litigation,” treaties notwithstanding. As was famously said in 1914, treaties are just scraps of paper. If you are invading Belgium, so to speak (now as in 1914), what do you care about treaties?
EU freezes Russian assets ahead of pivotal Ukraine talks; Kyiv and European allies seek to strengthen their hand as Washington-led peace talks reach critical phase
https://www.ft.com/content/bae04a8e-f8eb-419b-be88-bbdb5882d7d1
No achived link yet.
As for size and composition of the frozen Russian assets see Brad Setsers overview in https://www.cfr.org/article/how-use-russias-frozen-assets
Thank you for the link!! What Scum these think tanks are. Denial is more than a river in Egypt. It’s not their money, so “bombs away!!”
I’m not sure how long ago it’s been since we’ve had such a bunch of incompetent morons leading so many important countries. Many centuries probably.
These Euro fools just destroyed their entire banking sector. Who the heck is going to put money there if they can basically seize it as if laws didn’t apply to them? No foreign country would ever be that suicidal, from now on.
Heck, even as a citizen of one of these countries, I would already have cold feet putting my hard-earned money into one my country’s banks…
Say hello to their past financial prosperity. Dubai and Singapore are going to love this…
And all this for what? Not even to boost their own country’s prosperity by seizing foreign assets and spending them building and paying stuff at home, but to help an utterly corrupt regime in an utterly corrupt country that is literally nothing to core Europe.
How long since we had so many incompetent morons leading so many countries?
Just before WW1 was the last time.
Not sure this would apply to pre 1914 intellectuals too. Many were way smarter then.
When I hear someone bemoaning Trump and his gaggle of ignorant Christian Nationalist warmongers, I often reflect on the elegant, highly-educated, top-hatted gentlemen who led the European countries into the First World War. They seem to have sincerely believed that it would all be over quickly
Of course I was alluding to those circles who opposed the war insanity of 1914 in contrast to those “role model” intellectuals who today are actually participating in that same business and profitting of it.
Scholars who have been teaching left wing ideas and traditions for decades to students and who would eventually propagate war against Russia and China now.
In 1914 we had e.g. the infamous argument between the Mann brothers. Thomas Mann was a warmonger while his smarter brother (and some say more interesting novelist too because he was taking actual aesthetic risks) Heinrich Mann.
One should count in the fact that in Europe at that time there had been no serious collective memory of huge industrial wars killing millions. The most relevant, the French-Prussian war, offered only some rather limited prospect how total war would or could look like. But this is only being understood today.
Today in the post-1945 nuclear age we have a totally different situation. So with the benefit of hindsight I would expect more from our generation than the pre-1914.
anahuna: the elegant, highly-educated, top-hatted gentlemen who led the European countries into the First World War … seem to have sincerely believed that it would all be over quickly
Yes. An excellent book on how and why this was is THE SOCIAL HISTORY OF THE MACHINE GUN by John Ellis, a British historian, first published in 1975 and weighing in at 180-some pages. Highly recommended.
https://press.jhu.edu/books/title/2857/social-history-machine-gun
https://www.goodreads.com/book/show/98294.The_Social_History_of_the_Machine_Gun
Especially striking that Western elites could be so stupid when Western armies overseas had been mowing down ‘fuzzy-wuzzies’ overseas with Maxim guns, to the extent that in 1850 most of Africa remained unmapped by the European powers, while by 1910 only Ethiopia hadn’t been conquered, and colonized by them.
Furthermore, they were warned exactly how bad it would by this guy —
https://en.wikipedia.org/wiki/Jan_Gotlib_Bloch
(In) his six-volume master work …Future War and its Economic Consequences), popularized in English translation as Is War Now Impossible?,published in Paris in 1898 ….Bloch argued that
-The new technologies of smokeless powder, magazine rifles, machine guns and quick-firing artillery rendered manoeuvres over open ground, such as bayonet and cavalry charges, obsolete. Bloch concluded that a war between the great powers would be a war of entrenchment and that rapid attacks and decisive victories were a thing of the past. He calculated that entrenched men would enjoy a fourfold advantage over infantry in the open.
-Industrial societies would have to settle a stalemate by committing million-man armies. An enormous battlefront would develop. A war of this type could not be resolved quickly.
-Such a war would become a duel of industrial might, a matter of total economic attrition. Severe economic and social dislocations would result in the imminent risk of famine, disease, the “break-up of the whole social organization” and revolutions from below.
Yes, that´s very good material. Thank you.
Sorry for the stretch but it reminds me of Israel abusing Gaza today for developing the weapons turned on Western publics tomorrow.
It´s a pity for us that Bloch didn´t live longer to study some of WWII at least or Spanish Civil War.
Imagine if Hungary and Belgium joined the Russian suit against Euroclear. What a hoot!
Obviously, in hindsight, the Maidan coup was merely the first step in Baldrick’s great plan enabling Russia to turn Europe into its major financial colony, Russo-Europa, and it is likely to be a great success as the EU’s member states elect governments which Russia recognises as having the right to negotiate bi-lateral treaties with Russia on a most favoured nation basis ultimately leading to the establishment of a Russo-Europa Common Market within BRICS. Oo wudda tunk?
Yes, the ISDS angle is important here. I’ve posted a similar comment on MOA, but I can confirm that this poses a serious conundrum for Belgium (which has a standard investment treaty with Russia that entitles Russian investors to ISDS). The case on liability here would be unusually strong, and Belgium itself would be the party held liable.
The international framework for enforcement of these arbitral awards means that Belgian assets anywhere in the world (including Russia and the global south) would be legitimately subject to seizure by any local court until the award is satisfied. Moreover, while Belgium could refuse to pay, doing so would deal a very severe blow to the legitimacy of the ISDS system, which is a critical pillar of globalism.
Western states have already begun to worry about this issue. Spain faced a large number of cases over renewable energy tariff revisions during the last decade, and the EU went crazy trying to help Spain avoid paying. Now Switzerland is being sued by Japanese investors over its Credit Suisse shenanigans, and Chinese investors are getting active as well (watching Nexperia with interest…).
This is succinct and helpful. Thanks.
My guess is that the key EU leaders have worked themselves up into such a frenzy in their anti-Russia fervor that they would not back down in the face of a successful suit IF they can ram their scheme (circumventing the ability of Belgium and Hungary to veto the loan plan) through. They would never give the Russian assets back and the hell with the consequences.
That’s my take as well. The rule of law has been made a mockery of so many times by Europe (and the US), what’s one more violation, especially if it means “punishing” Russia? Most of the EU so-called leadership and member state governments don’t seem to care about the consequences (the politicians probably think they will be on an island somewhere sipping cocktails and snorting cocaine)
It would not even be a Pyrrhic victory though, as the many negatives would outweigh the gain, as many have pointed out. Andrei Martyanov said the funds are likely already stolen. Truth is way better than fiction and as they say “you can’t make this stuff up”.
And this what happens when the hamlet sized crazies not only hold the key portfolios on the EU Commision but have the luxury of majority voting on the one matter which really does threaten the security of the states most antagonistic towards Russia and is guaranteed to undermine the otherwise tranquil nature of the CPC:
https://www.reuters.com/business/finance/eu-set-indefinitely-freeze-russian-assets-removing-obstacle-ukraine-loan-2025-12-12/