CL-2022-000456 - [2025] EWHC 1938 (Comm)

The “Future of EuroChem” memorandum suggested a number of possible structural changes for EuroChem AG and the Swiss/EU cluster, including a management buy-out. In the event, that did not come to pass and the ownership of EuroChem AG remains unchanged, save for the 10% of its shares that were transferred from MCC EuroChem.

Instead, at every level within Switzerland and the EU, board members and senior executives have signed written commitments that they have not entered into any agreement or other arrangement, legal or factual, that would allow Mr or Mrs Melnichenko to assert any influence over the conduct of EuroChem AG.

Furthermore, the group as a whole has adopted a series of compliance policies which require every subsidiary of EuroChem AG to comply with applicable sanctions. However, as noted, Mr Collishe confirmed that these policies do not apply in countries where no sanctions are legally in force (i.e., not outside the EU/USA/UK, in particular not in Russia or the UAE). Furthermore, it is apparent that EuroChem NW2, in particular, is willing to contract with sanctioned counterparties.

EuroChem AG also engaged a French audit and regulatory services provider, Advolis SAS (“Advolis”). Advolis has conducted audits of EuroChem AG and all its EU subsidiaries, to check for compliance by those companies with the EU sanctions regime, including the prohibition on making funds or economic resources available to or for the benefit of Mr and Mrs Melnichenko. Advolis has now issued a series of reports, each confirming that EuroChem AG and its EU subsidiaries have complied with sanctions and have not made any funds or other economic resources available to any designated person.

The purpose of the written commitments and policies to which I have referred, and the Advolis audits, was not only to enforce but also to demonstrate EuroChem AG’s independence from Mr Melnichenko and, more generally, from Russian influence. The intention was to satisfy the relevant EU authorities that EuroChem AG had put in place appropriate safeguards – referred to in regulatory jargon as “firewalls” – to prevent Mr Melnichenko from exercising control. Importantly, however, it is clear from the Advolis reports, and Mr Hechler ultimately confirmed, that the Advolis audits do not cover any EuroChem companies that are outside Switzerland and the EU. The firewall measures therefore do not extend to (in particular) the EuroChem companies in Russia or in the UAE.

Mr Beloborodov gave evidence that EuroChem NW2’s expenditure is subject to independent quarterly audits by an auditor he identified as RTK. These audits monitor EuroChem NW2’s financing and spending and have consistently confirmed that funds provided to EuroChem NW2 have only been used for the purpose of the new Kingisepp plant. However, these audits do not check for compliance with EU or any other sanctions. My impression was that they were intended to root out mis-spending in the form of theft or corruption. If someone with proper corporate authority (e.g. Mr Vanyushin) were to direct payment to Mr Melnichenko, I am doubtful that an RTK audit would subsequently flag this, let alone prevent it before the event.