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

The background to Regulation 269 appears from the recitals. Recital (1) referred to Russia’s invasion of Ukraine and its condemnation by the heads of state and governments of all the member states, which had called on Russia to withdraw. Recital (3) then said that the member states underlined that the crisis should be resolved by negotiations between Ukraine and Russia, and then continued:

“… in the absence of results within a limited timeframe the Union will decide on additional measures, such as travel bans, asset freezes and the cancellation of the EU-Russia summit.”

Regulation 269 represents one of these additional measures – asset-freezing. Its purpose, therefore, was as part of a strategy to exert pressure on Russia of a kind that might help to resolve the crisis, and bring about Russia’s withdrawal from Ukraine. Its provisions therefore have to be interpreted consistently with this ambitious purpose.

Subject to the phrase “belonging to, owned, held or controlled by”, the effect of Article 2(1) is clear. If funds or an economic resource fall within that phrase, they are frozen.

The definition of “funds” expressly includes, at Article 1(g)(v), “performance bonds or other financial commitments”. Mr Fenwick KC submitted that the Bonds in this case did not fall within that definition, but I did not understand the basis on which he advanced that submission, and I was not sure that he did either. The Bonds are clearly within Article 1(g)(v).

Even if the Bonds were not within Article 1(g)(v), they must be within the definition of “economic resources”. I note, moreover, that the 2020 Opinion states that “economic resources” must be given a broad interpretation, citing in support the judgment of the European Court of Justice in Möllendorf v Möllendorf-Niehuus Case C-117/06 (ECLI:EU:C:2007:565), [56] and [62].

The definition of “freezing of funds” (and, if relevant, the definition of “freezing of economic resources”) is comprehensive. It does not merely prohibit moves and transfers. It prohibits any alteration; and any dealing with funds in any way that would result in any specified change; or any dealing with funds that would result in any change that would enable the funds to be used.

Furthermore, given that the definition of “funds” includes performance bonds, this definition of “freezing of funds” is intended to apply effectively to performance bonds.

It follows that the real issue under Article 2(1) is whether the Bonds fall within the phrase “belonging to, owned, held or controlled by”.