Russian courts target Russian subsidiaries of Western companies when enforcing debts


Russian courts are currently devising new ways to seize Russian-located assets of Western companies engaged in disputes with Russian claimants. Shares in Russian subsidiaries of Western companies may be seized even when they are held by foreign entities of the group not related to the dispute.

In a recent judgment dated 20 February 2024 in the case of Ruschemalliance v Linde (Case No. А56-129797/2022), the Arbitrazh Court of Saint Petersburg not only granted a claim brought by Ruschemalliance against Linde GmbH and Linde PLC for recovery of some €750 million for an advance payment and damages under an EPC contract and a related surety agreement between the parties, but also held two non-Russian subsidiaries of the Linde Group (Linde UK Holdings No. 2 and Commercium Immobilien) jointly liable for this debt. Real estate Commercium Immobilien holds shares in the Russian subsidiaries of the Linde Group. This was done to allow Ruschemalliance to enforce its claims against the shares in the Russian subsidiaries of the Linde Group, despite the fact that these shares are not held by the actual Linde defendants in the dispute.

To justify the liability of Linde UK Holdings No. 2 and Commercium Immobilien, the Russian court treated them as co-tortfeasors in a tort (i.e. non-contractual claim) of Ruschemalliance. According to the judgment, these companies allegedly unlawfully contributed to causing harm to Ruschemalliance by the mere fact that they:

  • are controlled by Linde PLC
  • hold the Russian assets of the Linde Group, and
  • failed to voluntarily pay Ruschemalliance’s claim against Linde GmbH and Linde PLC although they were obliged to do so based on the principle of good faith.

In simple terms, the Russian court decided to treat the Russian assets of the Linde Group as the assets of Linde PLC to allow enforcement over Linde PLC’s debts.

Previously, in the case of Russian Railways v Siemens (Case No. А40- 195006/2022) the Russian courts obliged not only Russian Railway’s contractor (Siemens AG), but also Siemens AG’s Russian subsidiary to perform a service contract with Russian Railways, although it was not a party to the service contract.

The above development of Russian case law shows that Russian assets of Western companies (in particular their Russian subsidiaries) are at risk and may be seized in Russia irrespective of the structure used for holding such assets.

Mergers & Acquisitions
Ukraine Crisis Center