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Russia Confiscates Over $1 Billion of German Firm’s Assets

In a recent development, Russia has taken decisive action against Linde, a German company, seizing assets worth more than $1 billion. This move comes after LInde failed to fulfill its obligations regarding the construction of a gas processing plant in Russia back in 2022.

Linde’s Contract Breach

Initially, Linde accepted a contract to build a gas processing plant in Russia, recieving an advance payment from a Russion company in 2021. However, when the European Union imposed sanctions on Russia due to the Ukraine conflict, Linde halted its work, citing EU restrictions.

Arbitration Court Ruling

Following this breach of contract, the St. Petersburg and Leningrad Region ARbitration Court sided with Linde’s client, RusChemAlliance (RCA), and ordered the confiscation of Linde GmbH’s assets and its subsidiaries in Europe. The court deemed that more than $1 billion worth of assets should be seized to cover damages and interest incurred due to the contract breach.

Assets Under Seizure

Among the assets subject to seizure are Linde’s shares and stakes in various Russian firms. Despite Linde’s argument that the work fell under EU sanctions, the court ruled that it did not, further strengthening the case for asset confiscation.

Legal Proceedings

RCA, owned by gas production firm RusGazDobycha and Gazprom, had contracted Linde and Renaissance Heavy Industries for the construction project in Leningrad Region. After Linde’s suspension of work, RCA filed a claim for approximately EUR1 billion in damages. Subsequently, the St. Petersburg and Leningrad Region Arbitration Court ordered the seizure of Linde’s assets in Russia as an interim measure in late 2022.

Conclusion

This ruling underscores the importance of honoring contractual agreements, especially in international business dealings. Linde’s failure to fulfill its obligations has not only resulted in financial losses but also led to the confiscation of its assets. It serves as a cautionary tale for companies engaging in cross-border ventures to carefully consider their contractual commitments and abide by them to avoid legal repercussions.

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