Decision of the Federal Constitutional Court on Cost Coverage for Russian Bank
On August 18, 2025, the Federal Constitutional Court ruled on the constitutional complaint of a Russian credit institution concerning the granting of a subsidy for German court costs. This decision sets a significant precedent regarding the exemptions applicable in Germany for parties with frozen assets due to European sanctions.
Background of the Proceedings
The complainant is a Russian financial institution whose assets were frozen as a result of EU sanctions against Russia. In a German court proceeding, it applied for legal aid, arguing that its limited ability to manage its assets constituted a financial hardship. It particularly referenced the provision in Section 138, Paragraph 1 of the Code of Civil Procedure, which allows for cost reimbursement for companies affected by sanctions.
The civil court rejected their application. Following this, the bank filed a constitutional complaint, alleging a violation of its rights to effective legal protection and equal treatment.
Legal Assessment by the Federal Constitutional Court
The Federal Constitutional Court upheld the decision of the lower courts. According to the judges, the refusal to grant a court cost subsidy was not subject to criticism, as there is neither a constitutional right to extend legal aid nor an obligation to create a broader special regulation.
The decision emphasizes that frozen assets are, under European law, fundamentally beyond the reach of the affected company until an explicit release occurs. Financial need as per the legal aid regulations is therefore not solely established by EU sanctions. Additionally, the existing exemption stipulates that cost-covering is only possible if international obligations of the European Union mandate it. In the present case, the Federal Constitutional Court found no violation of fundamental or human rights.
Relevance for Sanctioned Companies and Court Proceedings
The decision clarifies that sanctioned companies may face difficulties in enforcing their claims for court cost coverage in German legal disputes, even when financial losses arise from frozen accounts. The ruling reinforces the restrictive application of exemptions for releasing funds for court proceedings. The legal framework under which assets are blocked remains crucial.
Outlook and Legal Classification
The proceeding highlights that German courts do not have a broader obligation regarding cost coverage in favor of sanctioned parties than provided by the legislature. International and European legal standards may set the necessary framework without requiring independent actions by national jurisprudence.
Where decisions have a direct impact on practice, it is always essential to differentiate whether the sanctions directly establish a claim to legal protection in Germany. The Federal Constitutional Court, in alignment with current legal standings, denied this in the specific case.
For companies, investors, or individuals facing similar situations and requiring legal analysis of their options, qualified advice is recommended. Further information is provided by MTR Legal Attorneys in the field of Legal advice in banking law.
