EuroChem Loses Lawsuit Against European Banks Over Sanctions

The company is a producer of mineral fertilizers "EuroChem", founded by businessman Andrey Melnichenko (together with his family he ranks seventh in the ranking of Russian billionairesFORBES , with a fortune of $17.4 billion), lost a lawsuit in the High COURT of London from Societe Generale and ING Bank regarding payments under guarantees issued for the construction of a plant in Kingisepp, reportsREUTERS .

In 2021 and 2022, they issued guarantees for a total of €280 million under a construction contract with Italy's Maire. In August 2022, when the project was stopped, EuroChem demanded payment of the guarantees, but Societe Generale and ING refused, citing the fact that Melnichenko and his wife Alexandra were subject to European sanctions.

The project operator, EuroChem North-West 2 LLC, then sued the banks for €212 million ($243 million), but Judge Robert Bright dismissed the claim. He ruled that Melnichenko "de facto" controlled the EuroChem subsidiary, and the banks were "prohibited from fulfilling their obligations and making payments on them."

EuroChem does not agree with the London court's decision and intends to appeal it in September, the company told RBC. "We are taking all necessary steps to ensure the continuity of our operations and the implementation of development projects," they added.

Melnichenko, who, as of the end of 2021, together with his family, indirectly owned 92.2% of SUEK and 100% of EuroChem, was subject to EU sanctions on March 9, 2022. An RBK source reported that the businessman ceased to be a beneficiary of the companies the day before. “This decision <...> was aimed at continuing the activities of EuroChem in order to be able to supply mineral fertilizers to its consumers and clients in the agricultural sector at the international level and ensure food security around the world,” the company said in a statement. In the spring of 2023, the Melnichenko family asked European regulators to allow him to return to the beneficiaries of the trust that controls EuroChem and SUEK.

The businessman has repeatedly criticized Western sanctions, calling them baseless and comparing them to the nuclear bombing of Hiroshima. Last summer, in an interview with Tucker Carlson, Melnichenko warned that the restrictions would lead to the collapse of traditional global institutions, such as trade using the US DOLLAR .

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