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

The essential case advanced by EuroChem NW2 and EuroChem AG was straightforward: valid demands were made under the Bonds, which the Banks are obliged to pay.

In defending this claim, the Banks advanced a number of positive arguments.

The Banks’ primary case was that, in each of France, Italy and the Netherlands, the relevant National Competent Authority (“NCA”) had made determinations that led to the Bonds being frozen under Article 2(1) of Regulation 269. In itself, this meant it would be illegal for them to pay, under the laws of France, Italy and/or the Netherlands (or, if relevant, any other EU country).

Next, the Banks said that, even if the views of any or all of the NCAs is not determinative, the Bonds in fact fall to be frozen under the terms of Article 2(1), because the Bonds in fact belong to or are owned, held or controlled by Mr Melnichenko.

Next, the Banks said that payment under the Bonds would make funds or economic resources available to Mr and/or Mrs Melnichenko and so would be contrary to Article 2(2) of Regulation 269.

Alternatively, payment would make funds available to sanctioned Russian banks, again contrary to Article 2(2).

In so far as necessary, the Banks also relied on illegality under Article 11 of each of Regulation 269 and Regulation 833.

The Banks said that because payment would be illegal in the place of performance, on any of the bases summarised above, the Bonds are unenforceable as a matter of English law, by reason of the rule in Ralli Bros v Compania Naviera Sota y Aznar [1920] 2 KB 287; alternatively as a matter of public policy.

Alternatively, the Banks said that, under their terms, the Bonds excused payment if it would constitute a breach of sanctions law.

The Banks said that the Assignment could not cure the unenforceability of the Bonds, being a mere assignment of the proceeds of the (ex hypothesi) unenforceable Bonds. They said that the Assignment was in any event invalid under the terms of the Bonds. They also said that the Assignment failed by reason of Article 9 of Regulation 269.

Finally, the Banks said that the Bonds had now expired.

Also before me is a Part 20 claim brought by ING against Tecnimont. This arises under the Facility Agreement between ING and Tecnimont, pursuant to which ING agreed to issue its Bond and Tecnimont agreed to indemnify ING.

In summarising the issues in this way, I have conveyed that most of the positive arguments were raised by the Banks (with the support of Tecnimont), rather than by the Claimants. This is indeed the reality. However, it is important to note that the statements of case disclose lesser but significant positive arguments raised by the Claimants – in particular in their Reply, where (for example) positive allegations were made to the effect that neither EuroChem NW2 nor EuroChem AG is either owned or controlled by Mr or Mrs Melnichenko.