Sibur Wins Austrian Court Case to Unfreeze Its European Assets

At the end of September, Sibur won a case in the Vienna Higher Regional Court, having achieved the unfreezing of the assets of its EXPORT subsidiary Sibur International GmbH, the online publication EU Reporter reported, citing sources in European legal circles. This information was confirmed to RBC by the company's press service.

The court of first instance froze the assets of the unit in June at the request of the Austrian Ministry of the Interior. The agency justified the seizure by the fact that the parent company, Sibur Holding, is allegedly controlled by individuals included in the EU sanctions lists and is closely linked to the Russian state. The ministry made its conclusion based on an “inaccurate” article in The Insider (recognized as a foreign agent media outlet and an undesirable organization) about the company’s shareholders and the earnings of the Austrian unit. “In fact, the main reason for the Interior Ministry’s decision to freeze the assets of Sibur International was the article in the online publication Insider,” writes EU Reporter.

The Vienna court , however, found that the Austrian Interior Ministry had no basis to claim that sanctioned persons owned more than 50% of Sibur Holding. Therefore, the conclusion that the parent company is owned by sanctioned persons is “unfounded,” and “The Insider’s article did not provide any specific evidence of such control.” As a result, the restrictions on the company’s assets were lifted.

"We confirm the information from EU Reporter," Sibur told RBC. RBC also sent a request to the press service of the Vienna Higher Regional Court.

Sibur International previously won a similar case against the British unit of the US corporation Kimberly-Clark, a maker of HEALTH and hygiene products. The case also related to a false claim that the company was under sanctions. Based on this claim, Kimberly-Clark refused to pay for polypropylene supplied to it in 2022, according to the EU Reporter article. The question of whether Sibur International is owned and controlled by persons under EU or UK sanctions was considered by the Arbitration Institute of the Stockholm Chamber of Commerce.

According to the October ruling of the Moscow Region Arbitration Court, where Sibur International applied to enforce the European arbitration award, the Stockholm Chamber of Commerce sided with Sibur’s Austrian division. It was established that it was not owned or controlled by persons subject to EU or UK sanctions . Thus, the British division of Kimberly-Clark has no right to refuse to pay the amounts owed to Sibur International and is obliged to pay €1.1 million and almost the same for legal and court costs. Since the Russian jurisdiction has the “highest grounds for enforcing the arbitration award,” Sibur International filed a corresponding petition with the Moscow Region Arbitration Court. It was granted.

In RUSSIA, the American corporation Kimberly-Clark is represented by the division OOO Kimberly-Clark, which owns a plant in the city of Stupino in the Moscow region. The enterprise is one of the corporation's largest production facilities in the world. It produces such products as Huggies diapers and Kotex pads.

The Austrian trial of Sibur International is a “classic legal case in every sense,” Anna Barabash, CEO of the legal company Enterprise Legal Solutions, commented to RBC. We are talking about the emergence of negative legal consequences in the absence of grounds for their occurrence and about making a decision based on information received from the media, without any verification of such information. “In other words, this decision cannot have any impact whatsoever on judicial practice related to the lifting of the arrest imposed on the assets of individuals and legal entities under sanctions for the simple reason that Sibur was not under any sanctions,” she says.

However, if the act on the basis of which the restrictive measures were imposed is recognized as unfounded, then the company has all the necessary grounds to continue to protect its legitimate interests, seeking compensation for the damage caused to it, and not only material in the form of possible losses, but also reputational. In the first case, it is possible to file a claim against officials of the Austrian Ministry of Internal Affairs. In the second case, against the media that disseminated the information on the basis of which this decision was made. "And if the likelihood of recovering damages caused by the imposition of an arrest in the absence of grounds for this can be assessed as quite low, then the practice of recovering compensation for reputational damage in EU countries is exclusively in favor of the plaintiffs. And I think that the publication is unlikely to get away with just refutations of previously published information," concludes Barabash.

Sibur Holding is the largest petrochemical player in Russia and one of the largest in the world. The company processes by-products of oil and gas production. Sibur's products are used in the production of consumer goods and automobiles, construction, energy, as well as in the chemical industry and other industries. They are sold both on the Russian market and abroad.

Sibur's net profit under IFRS in 2023 amounted to RUB 160.5 billion, revenue  - RUB 1.1 trillion, operating profit - RUB 364.6 billion.

After the company's merger with TAIF in 2021, the shareholder structure looked like this: Leonid Mikhelson (31%), Gennady Timchenko (14.45%), Chinese Sinopec and the Silk Road Fund (8.5% each), SOGAZ (10.625%), TAIF shareholders - 15%, current and former top management of Sibur - 12.325%. The company does not publicly disclose up-to-date information.