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International law firm McDermott Will & Schulte represented Tecnimont S.p.A. (“Tecnimont”), a subsidiary of Maire S.p.A., in defeating claims brought by EuroChem in a high-profile dispute before the English High Court (the “Claim”).
The Claim concerned the enforcement by EuroChem of €212 million payable under six on-demand bonds issued by Société Générale and ING Bank (the “Banks”). The bonds were issued in order to secure the obligations of Tecnimont and its Russian affiliate MT Russia LLC (“MTR”), which were contracted to construct a major fertiliser plant in Kingisepp, Russia until the relevant contracts were terminated in 2022. The Banks refused to make payment to EuroChem under the bonds on the basis that, inter alia, to do so would breach EU sanctions as EuroChem was owned and controlled by sanctioned oligarch Mr Andrey Igorevich Melnichenko and/or his wife Mrs Aleksandra Melnichenko. The English High Court upheld that refusal and dismissed the Claim, determining that the EuroChem beneficiary of the bonds (and the owner of the fertiliser plant that was previously being built by Tecnimont and MTR) remains owned or controlled by Mr Melnichenko.
Tecnimont was a non-cause of action Defendant to the Claim, because if EuroChem had been successful in enforcing the bonds against the Banks, Tecnimont may have been required to reimburse those sums paid by the Banks pursuant to various counter-guarantees and indemnities.
Furthermore, Tecnimont was the defendant in a related Part 20 Claim brought by ING Bank, in which Tecnimont was also largely successful, albeit some residual matters remain to be dealt with at a later date.
The judgment in the Claim was handed down today by Mr Justice Bright, with case name LLC EuroChem North-West 2 v Société Générale S.A. & Ors [2025] EWHC 1938 (Comm). A copy of the judgment can be accessed here.
The judgment will no doubt form a key part of the jurisprudence on English and EU sanctions laws, which overlap in significant respects. It includes:
- detailed consideration of the concepts of ‘ownership’ and ‘control’ under EU sanctions laws;
- a decision that Mr Melnichenko indirectly owns the EuroChem group, which (along with certain other assets) is nominally held through a Bermudian trust known as the Firstline Trust, despite him having purported to resign as a discretionary beneficiary of that trust in March 2022;
- a finding that Mr Melnichenko exerts de facto control over the Russian beneficiary of the bonds and owner of the fertiliser plant in Kingisepp;
- a decision that Mrs Melnichenko, who had replaced Mr Melnichenko as the discretionary beneficiary of the Firstline Trust, is Mr Melnichenko’s “mere proxy”;
- a confirmation that ownership under EU asset freeze laws can be indirect as well as direct;
- a determination that the Firstline Trust is not a true discretionary trust in any event (in doing so affirming a key case on so-called ‘sham’ trusts, JSC Mezhdunarodniy Promyshlenniy Bank v Pugachev [2017] EWHC 2426 (Ch));
- an important discussion as to the place of performance of the bonds issued by the Banks, which will have particular relevance to sanctions practitioners considering the nexus of a financial instrument to a particular jurisdiction; and
- the resulting conclusion that the Banks were prohibited by law from making payment to EuroChem under the bonds.
The evidentiary hearing in the parallel arbitration concerning the contracts for the construction of the Kingisepp plant, in which McDermott is also acting for Maire group companies, is scheduled to be held later this year.
Fabio Fagioli, Maire’s Group General Counsel, praised the judgment for “bringing an end to years of unnecessary litigation”, noting that “Tecnimont was pleased to have assisted Société Générale and ING Bank in successfully defeating EuroChem’s attempts to turn EU financial sanctions legislation on its head.”
Aymen Mahmoud, Managing Partner of McDermott’s London office, commented, “We’re extremely proud to have represented Tecnimont in this high-profile case, which sets an important precedent for how EU financial sanctions apply to English and offshore trust structures. The judgment underscores the strength, depth and dedication to excellence of McDermott’s international dispute resolution team and demonstrates our continuing ability to navigate complex, cross-border legal challenges. We look forward to continuing to build our close partnership with the Maire group.”
The Maire entities in the bonds litigation and the parallel arbitration under the construction contracts are represented by the disputes team of McDermott Will & Schulte, led by partners Milo Molfa, Alfonso Annibale De Marco, Jack Thorne and David Kiefer, supported by associates William Merry, James McGlaughlin, Jonathan Robb and William Evans in London, Mariafiore Miniussi in Milan, Maxime Delabarre in Paris, and Maria Cristina Rosales del Prado and Ignacio Zabala Alonso in Washington DC. Alan Mclean KC and Tom Leary, both of Blackstone Chambers in London, acted as counsel for Tecnimont in the bonds litigation.
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