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

The NCA in Italy is the Comitato di Sicurezza Finanziaria (“CSF”), within the Ministry of the Economy and Finance. By a notice of 27 September 2022, the CSF froze the assets of EuroChem Agro Italy, on the basis that it was controlled by Mrs Melnichenko, via EuroChem AG.

On 13 June 2023, SocGen Milan applied to the CSF for a licence, in similar terms to SocGen’s application to the DGT of 9 June 2023. The CSF responded on 24 November 2023, as follows:

“… the undersigned Committee is of the opinion that:

- the funds and economic resources of the LLC EuroChem North-West 2 entity, including the guarantees in question, should be subject to the sanction of the freezing of funds, as they are directly attributable to the two above-mentioned sanctioned persons, and for the same reason, there is a prohibition on making funds or economic resources available to the entity itself within the meaning of paragraphs I and 2, respectively, of Article 2 of Regulation (EU) No 269/2014.

- SG Milan is prohibited, pursuant to Articles 2-ter(2)(b), 3-ter(2)(b), 2-duodecies(2)(b) and 3(2) of Regulation (EU) No 833/2014, from complying with the guarantees, and in any event from directly or indirectly providing financing or financial assistance to LLC EuroChem Northwest 2 and from making any payments thereunder, including with a view to the suspension of the performance of the underlying contracts; and in general, it is not possible for SG Milan to take LLC EuroChem NorthWest 2's request further pursuant to Article 11 of Regulation (EU) No 833/2014.

- None of the derogations provided for under Regulation (EU) No 269/2014 and Regulation (EU) No 833/2014 are available for the payment of the above-mentioned guarantees.”

On 12 July 2023, ING applied to the CSF for guidance as to whether it could pay under its Bond. The CSF responded on 22 September 2023, as follows:

“… the' Committee's view is that:

- the funds and economic resources of the entity EuroChem North-West. Z including the ING bond, must be subject to the sanction of the freezing of funds, insofar as directly linked to the two sanctioned persons mentioned above. For the same reason a prohibition applies to the making available of funds or economic resources to the same entity under, respectively, paragraph 1 and 2 of Article 2 of Regulation (EU) No. 269/2014.

- The bank is prohibited, under Articles 2b(2)(b), 3b(2)(4), 21(2)(b) and 3(2) of Regulation (EU) No. 833/1014, from complying with the INC.. Bond, and in any case from providing financing or financial assistance directly or indirectly to LLC EuroChem North-West 2 and from instructing any payment in this context„ also in light of the suspension of the performance of the Tender Contracts and the assignment and the related pledge to Sberbank Europe AG and Sberbank Russia. In general, it is not possible for your bank to act upon any request from EuroChem North-West 2 under Article 11 of Regulation (EU)No. 833/2014.”

On 28 April 2025, following correspondence with the Claimants’ Italian lawyers in relation to the Bonds which I have not seen, but in which the Claimants appear to have raised both the EuroChem AG firewall measures and the Assignment, the CSF wrote as follows:

“The Committee is aware of the existence of the "firewalls" recognized to EuroChem group companies in other countries, which are already provided for in the Commission's Guidance of 29 November 2023, and takes this into account when examining applications for exemption authorizations to unfreeze funds.

With regard to ENW2's right to receive the countervalue of the guarantees, backed by specific counter-guarantees, provided by several banking intermediaries and recently transferred to the parent company EAG, the Committee confirms the opinion already expressed in its note of 30 July 2024 referred to above.

It should be noted that the funds and economic resources of ENW2 are still frozen pursuant to Article 2 of Regulation (EU) No. 269/2014 and that Article 11 of Regulation (EU) No. 833/2014 prohibits the fulfilment of obligations arising from any contract that has been affected, directly or indirectly, by the restrictive measures.”

Accordingly, the CSF has also made a clear determination that the funds and economic resources of EuroChem NW2 are frozen, despite EuroChem AG’s firewall measures.

On 8 May 2025 and 19 May 2025, ING and SocGen Milan (respectively) made further applications to the CSF. In the course of closing submissions, I was shown a message from the CSF dated 1 July 2025 in relation to EuroChem Agro Italy, indicating that the CSF still regards that company as indirectly owned by Mrs Melnichenko, and that the evaluation of the firewall measures was still ongoing.