Private creditors holding claims against Russian state entities cannot enforce those claims against the approximately EUR 210 billion in Russian central bank assets currently immobilised in the European Union: sovereign immunity shields those reserves from private attachment under both international law and the domestic rules of each EU member state. The practical question is not whether those assets are reachable – they are not, as a matter of established law – but what strategic and procedural options remain open to creditors who sustained losses when Russian counterparties stopped paying after February 2022. This article sets out the legal framework, the open questions created by evolving EU policy, and the realistic paths that international creditors should consider.
The Legal Architecture of Immobilisation
The assets held at Euroclear and other European central securities depositories are not "frozen" in the conventional sense applied to sanctioned individuals or companies. They are immobilised under a distinct legal mechanism. In December 2025, the EU invoked Article 122 of the Treaty on the Functioning of the European Union to extend the immobilisation of Russian sovereign reserves indefinitely, maintaining a hold on approximately EUR 185 billion held at Euroclear in Belgium and a further tranche at other custodians, bringing the total estimate to around EUR 210 billion.
The distinction matters for creditors. Standard asset-freezing measures under EU sanctions regulations – typically adopted under Article 215 TFEU – are directed at listed persons and entities and allow member states to release funds for certain licensed transactions. The Article 122 mechanism is an economic emergency measure addressed to member state authorities and custodians; it does not create a private-law lien, a trust, or any form of ring-fenced fund in favour of third-party claimants. A creditor with an unpaid invoice, an unenforced arbitral award, or a judgment of the Arbitrazh court in Moscow has no standing to apply for release of these reserves in any EU jurisdiction.
Underlying all of this is the international law doctrine of sovereign immunity. Central bank assets held abroad in the performance of sovereign monetary functions attract immunity from enforcement in virtually every jurisdiction that matters to international creditors: England and Wales, the Netherlands, Belgium, Germany, France and the United States all give effect to this doctrine, either through statute or through the consistent practice of their courts. No creditor, however meritorious its claim, can circumvent immunity by pointing to the fact that the assets are already subject to a political immobilisation measure.
The Reparations-Loan Concept and Why It Does Not Help Private Creditors
In December 2025, EU leaders also agreed the terms of a EUR 90 billion budget-backed lending facility for Ukraine, underpinned conceptually by the future value of immobilised Russian assets. The so-called "reparations-loan" structure – under which windfall profits generated on the immobilised reserves would service or repay state-level lending – remained a proposal at that time and was legally contested. The Bank of Russia itself brought parallel proceedings against Euroclear: one set of claims before Russian courts in Moscow and a separate action before the EU General Court in Luxembourg.
For private creditors, this policy architecture is essentially a closed system. The windfall profits being channelled to Ukraine under earlier EU instruments are state-to-state transfers authorised by specific EU regulations; they are not distributed to the general pool of unpaid commercial creditors. The reparations-loan concept, if it ever achieves legal form, would similarly operate at the sovereign level. A company with an unsatisfied payment order, a debt collection claim, or a judgment for late payment interest arising from a Russian counterparty's default has no mechanism to participate in any of these structures.
If you represent an organisation that has sustained losses through a Russian counterparty's failure to pay, we would be glad to discuss the realistic options in your specific situation. Please write to info@ferrazwhitmore.com or visit our contacts page.
What the Bank of Russia Litigation Signals
The Bank of Russia's decision to pursue Euroclear both before Russian courts and before the EU General Court is strategically significant for private creditors who are themselves considering litigation. In the Moscow proceedings, Russian courts have jurisdiction and will apply Russian law, including the provisions of the Arbitrazh Procedure Code (APC RF) that govern enforcement. However, any judgment obtained in Moscow against a Belgian custodian cannot be enforced against Euroclear's assets or operations in Belgium or elsewhere in the EU without recognition proceedings – and EU courts are unlikely to recognise judgments that conflict with the underlying sanctions regulations.
The EU General Court proceedings are at an early stage. They raise questions about whether the immobilisation measure was adopted with a proper legal basis and whether Euroclear owes any legal duty to asset-holders whose securities it custodies. The outcome of these proceedings, and any subsequent appeal to the Court of Justice of the EU, will not directly benefit private commercial creditors. However, the legal reasoning developed in those cases – particularly on the scope of Article 122 TFEU and the relationship between EU emergency measures and private-law property rights – may affect the broader landscape of creditor rights over time.
Practical Debt Collection and Enforcement Options That Remain Open
Against this backdrop, international creditors should focus on the assets that are reachable rather than on the assets that are not. The following avenues remain available in varying degrees, depending on the specific counterparty, the contract governing the relationship, and the jurisdiction chosen for dispute resolution.
- Arbitral awards and cross-border enforcement. If a contract contains an arbitration clause and the seat is outside Russia, a creditor may obtain an award under the rules of an international arbitration institution. Enforcement in third-country jurisdictions where Russian-connected assets are held – outside the EU immobilisation perimeter – remains procedurally possible, subject to New York Convention recognition requirements and applicable sovereign immunity defences.
- Arbitrazh court proceedings in Russia. For creditors with Russian-law governed contracts or with counterparties whose assets remain inside Russia, commencing proceedings before the Arbitrazh court is still technically available. The APC RF provides a procedural framework for obtaining a payment order or a full judgment with enforcement through the Federal Bailiff Service. The practical difficulty is the significant risk that enforcement will be frustrated by currency control rules, the Government Commission approval requirements for cross-border payments, and the general restrictions on transferring assets to "unfriendly" country residents.
- Netting and set-off. Creditors who also have obligations to Russian counterparties or affiliates may have contractual or statutory rights of set-off. These should be reviewed carefully before any payment is made, as the exercise of set-off rights can interact with EU sanctions regulations in complex ways.
- Insurance and guarantee claims. Where trade credit insurance, export credit agency guarantees, or political risk insurance was in place, the primary enforcement route may be through the insurer or guarantor rather than against the Russian counterparty directly. Unpaid invoice claims under these instruments are subject to their own procedural and substantive conditions.
- Secondary market disposal. Some creditors have chosen to sell distressed Russian receivables at a discount to specialist funds or other buyers who are willing to bear the long-term enforcement risk. This crystallises a certain loss but removes the uncertainty and ongoing legal cost.
For a more detailed discussion of the debt recovery and enforcement framework applicable to your specific circumstances, our practice page on debt recovery in Russia sets out the procedural steps and strategic considerations in greater depth.
Government Commission Approval and Currency Control Restrictions
Since early 2022, a number of Russian presidential decrees and Government Commission decisions have imposed requirements that significantly restrict the ability of Russian entities to make payments to creditors resident in "unfriendly" countries – a category that includes all EU member states, the United Kingdom, the United States, and a number of other jurisdictions. Under this framework, even a creditor that obtains a valid Russian court judgment or arbitral award may find that actual transfer of funds is blocked pending Government Commission approval, which may be withheld or subject to conditions that are practically difficult to satisfy.
These restrictions interact with the immobilised assets question in an important way. Some Russian counterparties have attempted to argue before Russian courts that their payment obligations should be discharged by depositing rubles into blocked accounts or by invoking force majeure provisions. The Supreme Court of Russia has issued guidance on the interpretation of these provisions, but the position remains subject to ongoing development and the outcome in any individual case will depend on the specific contractual and regulatory circumstances.
Sanctions Compliance Risks for Creditors in Pursuit
International creditors pursuing Russian assets – whether through litigation, negotiation, or secondary market mechanisms – need to monitor their own sanctions compliance position carefully. Receiving payment from a sanctioned entity, accepting an assignment from a counterparty that has itself become designated, or entering into settlement arrangements that involve the transfer of value from sanctioned persons can all expose a creditor to regulatory liability in its home jurisdiction.
The interaction between EU sanctions regulations, UK financial sanctions, US OFAC rules, and the specific structures used by Russian entities to manage their cross-border exposures is complex. A step that appears commercially sensible – for example, accepting payment through a third-country intermediary – can create significant compliance risk if the chain of transactions involves a designated person at any point. Our sanctions and trade compliance practice covers this intersection in detail; further information is available on our Russia sanctions and trade practice page.
If you are navigating an active enforcement situation and need guidance on the compliance dimension, please contact our team at info@ferrazwhitmore.com or through our contacts page.
The 2026 Outlook and Evolving Policy
The immobilisation of Russian central bank assets was designed as a long-term holding position while the broader question of reparations, a peace settlement, or other resolution of the conflict in Ukraine remains open. The indefinite extension confirmed in December 2025 reflects the EU's assessment that a near-term resolution is not in prospect. However, the legal architecture is not static.
The Bank of Russia's litigation before the EU General Court, if it advances to a substantive hearing, will require the court to address the compatibility of Article 122 TFEU measures with property rights under EU law and potentially under international law. A ruling that found any aspect of the immobilisation legally defective – however unlikely in the short term – could have indirect consequences for the rights of third-party claimants. Similarly, any diplomatic development that led to a negotiated disposition of the assets would raise the question of how private commercial claims would be treated relative to state-level reparations demands.
For creditors, the prudent approach is to preserve their legal positions as carefully as possible – ensuring that limitation periods are not allowed to expire, that contractual notices have been given, and that any available interim remedies have been pursued – while remaining alert to the possibility that the policy environment may shift. A more detailed forward-looking analysis of what the 2026 developments may mean for asset recovery is available in our alert on immobilised Russian central bank assets.
Strategic Recommendations
For international creditors reviewing their options in light of the current framework, the following considerations are worth addressing with legal advisers at an early stage.
- Map available assets outside the immobilisation perimeter. Russian commercial entities – as distinct from the central bank – may hold assets in third-country jurisdictions that are neither subject to EU sanctions nor covered by Russian capital control restrictions. A systematic review of where counterparty assets are actually located is a prerequisite to any enforcement strategy.
- Review contractual dispute resolution clauses. Contracts that provide for Russian domestic arbitration or exclusive Arbitrazh court jurisdiction present different enforcement prospects than contracts with international arbitration clauses seated in neutral jurisdictions. The choice of forum has direct consequences for the enforceability of any award or judgment outside Russia.
- Monitor limitation periods with care. Russian law limitation periods and the limitation rules of whichever forum is competent to hear the underlying claim continue to run regardless of political events. Allowing a claim to become time-barred through inaction would permanently foreclose options that may become more viable as the geopolitical environment evolves.
- Document late payment interest claims fully. Where late payment interest has accrued under the contract or under applicable law, maintaining a complete and auditable record of the amounts due will be important both for the principal enforcement action and for any future participation in compensation or reparations mechanisms if they are established.
- Assess insolvency options for Russian counterparties. In some circumstances, commencing insolvency proceedings against a Russian counterparty in a Russian court – or, where permissible, in a third-country court – may be a lever that encourages settlement or provides access to assets that would otherwise remain unavailable.
To explore how these considerations apply to your organisation's specific position, please reach out to our team at info@ferrazwhitmore.com or visit our contacts page to arrange a discussion.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.