Maxima Legal has helped first investors join NSD’s fight to lift sanctions

A group of owners of financial assets frozen by European securities depositories in connection with the inclusion of National Settlement Depository (NSD) in the EU sanctions lists, working together with Maxima Legal and foreign consultants, has submitted an application to the EU General Court on behalf of an investor to join NSD’s claim to challenge the sanctions. Thus, the arguments of the affected private investors may be heard before the European Court of Justice for the first time.

Please be reminded that NSD is currently seeking to prove that the sanctions were unlawful and unjustified. However, the depositary is not using the arguments that are available to specific investors and could potentially become the basis for unblocking their assets.

The position of private investors is that the sanctions against NSD did not affect the depository itself, but rather persons not included in the sanctions lists, not related to the sub-sanctioned companies and individuals, Russian government structures, the armaments industry, and not taking decisions within the framework of the state policy. The financial assets of such investors have been blocked solely because of the specific accounting, as NSD is an intermediate custodian for a number of foreign securities, having accounts with the centralised European securities Euroclear/Clearstream depositories.

“If the court establish the right of a particular securities holder to join the dispute, he or she will become a full party to the litigation. At the same time, if the EU General Court excludes the extension of sanctions restrictions to the assets of a non-sanctioned person, there will be a legal basis to unblock the financial assets of the entire pool of similarly affected Russian investors. For example, our clients alone would be able to recover over $500 million.

If NSD’s claim is dismissed in full, the claims of the private investors will also fail. However, the reasoning in the decision will identify important legal arguments that will be important in the fight going forward. For example, the court may expressly indicate the possibility of unblocking the assets through other procedures (for example, by issuing licenses to the EU financial authorities) or the right of the private investors to apply to the EU Council or Euroclear/Clearstream for recovery of damages,” said Maxim Avrashkov, Managing Partner at Maxima Legal.

In addition, the appeal to the EU General Court will be relevant to create legal pressure in the EU on the topic of asset blocking in general and will affect the position of the Belgian Ministry of Finance when considering specific applications of investors for licences allowing the withdrawal of assets belonging to them – another promising strategy implemented by Maxima Legal team to protect the rights of private investors.


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