ABH Holdings (ABHH) has announced possible legal action following the loss of financial assets worth more than $7 billion, including Alfa-Bank Russia, due to the inability of Cypriot and European regulators to act.
ABHH revealed in a recent rack that the country has not received adequate compensation for its losses, which it attributes to the inaction of regulators in Cyprus and Europe. The holding company had previously expressed concerns about the feasibility of doing business simultaneously in both Russia and Europe. On September 10, 2023, ABHH's directors stated that as a European company it would be beneficial to reduce exposure to Russian assets.
ABHH's Russian assets, including Alfa-Bank Russia, were held indirectly through a Cypriot company, ABH Financial Limited (ABHF), and a Russian company, AO 'AB Holding' (AOABH). On February 16, 2023, ABHF agreed to sell AOABH's shares at a fair market price, a move intended to facilitate the group's exit from Russia while securing full compensation at market value. This transaction required approval from the Cypriot Ministry of Finance.
Despite repeated efforts by ABHF for more than fifteen months, the necessary approval was not granted. The group also worked with the European Commission and several EU member states in an effort to move forward with the transaction, but these efforts were also unproductive.
The situation puts ABHH in a paradoxical position: while the EU is encouraging European companies to divest their Russian assets, regulatory delays have hampered the divestment process. The dire situation worsened on May 13, 2024, when the Moscow Oblast Arbitrazh Court, acting in relation to new Russian legislation, suspended ABHF's corporate rights over its Russian financial assets, including Alfa-Bank. This led to the termination of ownership of the shares by ABHF.
With the loss of its indirectly held Russian assets now seemingly irreversible and unlikely to be compensated, ABHH is considering legal action under national, European and international law. The company is seeking to hold the Cypriot authorities accountable for what they claim is deliberate inaction that led to this significant financial loss.
The move follows ABHH's request for arbitration filed with the International Center for Settlement of Investment Disputes (ICSID) in December. ABHH is seeking as much as $1 billion in compensation for the alleged unlawful expropriation of Sense Bank.
In January, following press reports indicating that Ukraine planned to privatize Sense Bank and its assets and transfer them to an external investor, ABHH emphasized its commitment to use the full weight of the law against all parties involved, by treat as buyers of stolen goods. In a stern warning to potential buyers, the company promised to take legal action against them in any appropriate jurisdiction.
The Ukrainian Ministry of Justice has expressed its willingness to cooperate in forming the arbitral tribunal and advancing the case, which ABHH sees as a hopeful sign of Ukraine's commitment to upholding the international rule of law.
As the legal proceedings unfold, questions arise about the broader implications for the rule of law in the West and the willingness of Western states to uphold international justice. ABHH's determined pursuit of justice sets the stage for a closely watched case that has the power to shape perceptions of the international rule of law.
