ABH Holdings Threatens Legal Action Against Cyprus Over $7 Billion Asset Loss

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ABH Holdings (ABHH) has announced potential legal action after losing financial assets valued at over USD $7 billion, including Alfa-Bank Russia, due to what it claims is the failure of Cypriot and European regulators to act.

ABHH revealed in a recent statement that it 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 conducting business in both Russia and Europe simultaneously. On 10 September 2023, ABHH’s directors stated that as a European company, reducing exposure to Russian assets would be beneficial.

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 16 February 2023, ABHF agreed to sell the shares of AOABH for a fair market price, a move intended to facilitate the group’s exit from Russia while securing full market-value compensation. This transaction required approval from the Cypriot Ministry of Finance.

Despite ABHF’s repeated efforts over more than fifteen months, the necessary approval has not been granted. The group also engaged with the European Commission and various EU member states in an attempt to move forward with the transaction, but these efforts were similarly unproductive.

The situation leaves ABHH in a paradoxical position: while the EU encourages European companies to divest from their Russian assets, the regulatory delays have hindered the divestment process. The predicament worsened on 13 May 2024, when the Moscow oblast Arbitrazh court, acting with regards to new Russian legislation, suspended ABHF’s corporate rights regarding its Russian financial assets, including Alfa-Bank. This led to the termination of ABHF’s ownership of the shares.

With the loss of its indirectly held Russian assets now seemingly irreversible and likely uncompensated, ABHH is considering legal action under national, European, and international law. The company aims to hold the Cypriot authorities accountable for what they allege is deliberate inaction resulting in this significant financial loss.

This move follows ABHH’s request for arbitration, filed with the International Centre for Settlement of Investment Disputes (ICSID) in December. ABHH is seeking no less than $1 billion in compensation for the alleged unlawful expropriation of Sense Bank.

In January, following press reports indicating that Ukraine intended to privatise and transfer Sense Bank and its assets to a third-party investor, ABHH emphasised its commitment to bringing the full weight of the law against any involved parties, treating them as purchasers of stolen goods. In a stern warning to potential buyers, the company promised to pursue legal action against them in any appropriate jurisdiction.

The Ukrainian Ministry of Justice has expressed a willingness to cooperate in forming the arbitral tribunal and advancing the case, which ABHH views as a hopeful sign of Ukraine’s commitment to upholding international rule of law.

As the legal proceedings unfold, questions loom about the broader implications for the rule of law in the West and the willingness of Western states to uphold international justice. ABHH’s resolute pursuit of justice sets the stage for a closely watched case that has the power to shape perceptions of the international rule of law.

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