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

On 8 June 2022 (i.e., before any of EuroChem NW2’s demands under the Bonds), the NCA in France (the Direction générale du Trésor, “DGT”) issued a “Call for Vigilance” to controlling bodies in the field of anti-money laundering, which was later disseminated through the French Association of credit institutions and investment firms to French banks, including SG Paris. In English translation, it stated as follows:

“Legal persons considered to be owned or controlled by a sanctioned natural or legal person

On the basis of the information available at the date of transmission/publication of this call for vigilance, the Directorate General of the Treasury points out for the purposes of application of Regulation (EU) No 269/2014 of 17 March 2014 that the legal persons referred to below are considered to be owned or controlled by a sanctioned natural or legal person. …

Entities reported as owned or controlled by natural or legal persons sanctioned under Regulation (EU) No 269/2014 of 17 March 2014 as of the date of this due diligence call

Legal person owned or controlled	Sanctioned natural or legal person(s) in a position of control or ownership
EuroChem Group AG and its subsidiary EuroChem Agro France	MELNICHENKO Andrey lgorevich MELNICHENKO Aleksandra

Making funds or economic resources available to entities identified under this call for vigilance will in principle be considered as indirectly making funds or economic resources available to the sanctioned natural or legal persons who own or control them.

Nevertheless, under certain conditions expressly listed in Regulation 269/2014, accompanying measures (authorisations to unfreeze and make available) may make it possible to use some of the frozen assets with the authorisation of the Treasury Directorate-General. It is also recalled that frozen bank accounts may continue to be credited.

Setting up a monitoring system

If they can reasonably demonstrate, on a case-by-case basis and risk-based approach, taking into account all the circumstances, that the funds or economic resources in question will not be used by or for the benefit of a sanctioned person, the entities reported under this alert may request the establishment of a monitoring mechanism from the Treasury Directorate-General ([email protected]).

The addressees of this call for vigilance may make this possibility known to the entities concerned”.

As already noted, EuroChem NW2’s demands followed in August 2022, and were rejected by the Banks.

On 26 August 2022, SocGen approached the DGT seeking confirmation as to whether EuroChem AG was still considered to be owned or controlled by natural persons who are sanctioned under Regulation 269, referencing EuroChem NW2’s denial that this was the case. On 9 September 2022, the DGT replied as follows:

“There is no evidence at this stage that EuroChem Group AG and its subsidiary EuroChem Agro France SAS are neither owned nor controlled by Mr. and Mrs. Melnichenko, persons subject to an asset freeze measure under the amended EU Regulation 269/2014.”

By a letter from its solicitors of 9 June 2023, SocGen wrote to the DGT in respect of payment to EuroChem NW2 under the Bonds. The letter set out the general background, including the differing views of the parties, and then referred to the provisions of Regulation 269 permitting derogation in certain circumstances. It then said:

“It is not apparent to Société Générale that any of those derogations would apply to the current situation. Nevertheless, Société Générale wishes to be certain of the position and therefore formally requests that the DGT considers whether there is a basis for granting Société Générale a licence to pay EuroChem NW in all of the circumstances described above and, if so, to grant the relevant licence.”

The DGT responded on 8 September 2023, as follows:

“No derogation on the basis of Regulation 2014/269 is applicable to Société Générale's payments to [EuroChem NW2]. [EuroChem NW2’s] situation prevents indeed funds or economic resources from being made available for its benefit as this would have the consequence of indirectly making these funds available to a designated person, namely Mr and Mrs Melnichenko.”

On 18 October 2023, the DGT refused a request by EuroChem Agro France for permission for the proceeds of the SocGen Bonds to be paid to it (if necessary into a frozen account), rather than to EuroChem NW2, rejecting EuroChem Agro France’s suggestion that what it proposed was a simple payment to it, which would avoid making funds available for Mr or Mrs Melnichenko. The DGT then said:

“The issue is not only that of the restrictive measures against the Russian subsidiary of EuroChem because of its situation vis-à-vis Mr. and Mrs. Melnichenko, but also because under Articles 11 of Regulations 269/2014 and 833/2014 it is impossible to make such a payment.”

By about the end of 2023, EuroChem AG had put in place the firewall arrangements, and had commissioned the audits from Advolis. Having reviewed the situation, the DGT wrote on 24 May 2024, as follows:

“The French Treasury Department considers that, on the one hand, the guarantees provided by the company EuroChem A.G. and, on the other hand, the verification procedures put in place are such as to enable the French Treasury Department to ensure that funds or economic resources are not made available directly or indirectly for the benefit of sanctioned persons.

The asset freezing measures with regard to persons sanctioned by the aforementioned Regulation 269/2014 do not therefore apply to the company EuroChem A.G. and there is thus no obligation to freeze the Company's funds or economic resources, nor any prohibition on making funds or economic resources available to or for the benefit of the company EuroChem A.G.

The same applies to all subsidiaries established in the territory of the European Union. However, in the absence of an adequate measure to verify the activities of subsidiaries established outside the European Union, these remain subject to the asset freezing measures against Mr and Mrs Melnichenko”.

The Call for Vigilance stated in clear and unambiguous terms that the DGT pointed out (or indicated - in French, “signale”) that EuroChem AG was considered to be owned or controlled by Mr and Mrs Melnichenko. It necessarily followed from this that the same must apply to EuroChem NW2.

The Claimants drew attention to the fact that the Call for Vigilance said that making funds or economic resources available to EuroChem AG would “in principle” be considered as indirectly making funds available to Mr or Mrs Melnichenko. I do not see that the words “in principle” in any way negate or even soften the clarity of the earlier text. Rather, those words have to be read in the context of the very next passages in the document, which acknowledge the possibility of derogations and of firewalls (referred to as “a monitoring system”, for which the entity – i.e. EuroChem AG – would have to make a request to the DGT).

The Claimants also placed emphasis on the sentence in the DGT’s message of 9 September 2022 which included a double negative – “There is no evidence at this stage that EuroChem Group AG and its subsidiary EuroChem Agro France SAS are neither owned nor controlled by Mr. and Mrs. Melnichenko.” The Claimants said that this was not suggestive of a conclusion that EuroChem AG was owned or controlled by Mr or Mrs Melnichenko. Especially in the light of the earlier Call for Vigilance, it seems clear to me that the sentence in question was doing no more than stating, in classically bureaucratic language, that no new information had been provided which changed matters. That was certainly how SocGen understood this message, as Mr Colbert confirmed.

The correctness of this understanding is put beyond any doubt by the DGT’s messages of 8 September 2023 and 18 October 2023.

The DGT’s message of 24 May 2024 is equally clear. The firewall measures have changed the position, as regards EuroChem AG and its subsidiaries in the EU. However, there has been no change as regards EuroChem NW2, which remains subject to asset-freezing.

On 13 May 2025, SocGen’s solicitors made a further application to the DGT, in the light of the Assignment, seeking a licence for payment to EuroChem AG. The DGT has not yet responded.