Russia’s central bank has filed a lawsuit in Moscow seeking $230 billion in damages from Euroclear, marking the first step in what the Kremlin has warned will be a legal nightmare for the EU over plans to use frozen Russian assets to support Ukraine.

The European Union wants to tap part of the roughly 210 billion euros worth of Russian central bank assets frozen in Europe after Moscow invaded Ukraine in 2022 to back a loan for Kyiv’s military and civilian needs in 2026 and 2027.

EU leaders agreed on Friday to indefinitely freeze the assets, arguing they must support Ukraine because if they don’t Moscow could one day attack NATO - a claim Russia denies.

Legal experts expect Moscow’s Commercial Court to issue a swift ruling against Euroclear, the Belgium-based depository that holds most of the assets. The court said it received the central bank’s claim on December 12, demanding 18.2 trillion roubles - the full value of Russia’s frozen sovereign assets.

If the central bank wins, it could seek enforcement against Euroclear’s assets in other jurisdictions, especially those deemed “friendly” by Russia.

Euroclear did not immediately respond to a request for comment.

RUSSIA WARNS EU AGAINST USING ITS ASSETS

Russia has repeatedly warned the EU that using its sovereign reserves amounts to theft, undermines confidence in central banks and the euro, and has vowed harsh retaliation, including seizing European private investors’ holdings in Russia.

“What rational investor will hold its securities in Euroclear, in euro or in the EU, if they understand that their property rights are not respected and their assets can be taken away under any pretext,” Russian President Vladimir Putin’s investment envoy Kirill Dmitriev told Reuters.

Russia’s central bank said on December 12 that EU plans to use its assets were illegal and it reserved the right to employ all available means to protect its interests.

Implementation would be challenged in “national courts, judicial authorities of foreign states and international organizations, arbitral tribunals and other international judicial instances,” it said.

RUSSIA MAY CHASE EUROCLEAR ABROAD

“The Bank of Russia may attempt to enforce a Russian court’s decision against Euroclear in China, Hong Kong, the UAE, Kazakhstan and other friendly jurisdictions, if such assets can be identified,” said Gleb Boyko from NSP law firm.

Plans to use Russian money have faced opposition in Europe, with bankers warning that seizing such a large pile of sovereign assets would be legally questionable and set a precedent.

A 2024 paper published by Sweden’s Riksbank said that such a move would mark the first time that non-belligerent countries seize the assets of a belligerent country in an ongoing war to help a third country.

The EU proposals run counter to an idea published in some versions of a US-based peace plan that the Russian reserves could be split, with some used to reconstruct Ukraine and some to create a US-Russia investment vehicle.

Dmitriev called the EU plans “a blow to the international reserves system created by the United States”.