Russian bank takes Belgium to court over $110 million in frozen funds

Russian bank takes Belgium to court over $110 million in frozen funds
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A Russian bank has launched legal proceedings against the Belgian State to gain access to more than a hundred million dollars worth of frozen assets, l'Echo and De Tijd have reported.

The assets, which are believed to total $110 million and are claimed by Bank Saint Petersburg (BSP), were frozen by the Belgian State following the imposition of EU sanctions on Russia in response to its invasion of Ukraine in February last year.

According to the bank's lawyers, since 12 August BSP has repeatedly requested access to the funds from the Belgian Treasury but has so far received no response. They argue that BSP was therefore left with no other recourse but to take legal action.

"Following our request of 12 August, we have not even received an acknowledgement of receipt [of the requests] from the Treasury," said Bruno Lebrun, a lawyer for BSP.

A squabble over sanctions

The dispute between BSP and Belgium began on 3 June, when the National Settlement Depository (NSD), a financial services company headquartered in Moscow, was added to the list of EU-sanctioned entities. This, in turn, led to Euroclear — a Belgium-based financial services company — blocking all NSD accounts registered in Belgium, including an account held by BSP, believed to contain $110 million.

BSP's lawyers argue that neither the bank nor its NSD-linked clients should be sanctioned, given that neither are associated in any way with the Russian regime.

"Russian entrepreneurs have shares in NSD accounts housed at Euroclear, and everything is frozen even if the entrepreneurs have nothing to do with the sanctions regime," said Cedric Alter, another lawyer for BSP.

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BSP's lawyers further claim that an amendment to the eighth package of sanctions passed by the European Council on 6 October, which allowed NSD funds to be unfrozen under certain conditions — conditions which BSP claims to have already fulfilled — also legally entitles BSP access to the funds.

After reiterating its demand to gain access to the funds on 17 October and once again receiving no response from the Belgian Treasury, BSP decided on 16 December to initiate legal proceedings against the Belgian State.

The day after the case's initial hearing on 21 December — at which the Belgian State refused to attend or even be represented — the Belgian Treasury announced a new series of "general conditions" for the release of the NSD funds, which they claimed must be fulfilled before 7 January. BSP's lawyers argue that the new conditions are both technically illegal and practically impossible to fulfil before the specified deadline.

"The administration is taking total liberties with respect to the development of standards by taking conditions not required by Europe," Alter said in court on Wednesday.

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