Compensation of losses due to Russian aggression for business – which way is real?

Compensation of losses due to Russian aggression for business – which way is real?

Vladyslav Sokolovskyi, managing partner of Sokolovskyi and Partners Law Firm

 

Compensation to businesses for the damage caused by the Russian aggression is complicated, but possible, thanks to the public and private assets of the aggressor frozen in the West. Western countries are currently searching for legal mechanisms to apprehend these funds in order to pay for reparations. The Financial Times article «Using Russian assets to rebuild Ukraine won’t be easy» outlines several options for transferring money to Ukraine by using assets of the Russian oligarchs and the Central Bank of Russia:

- application of the US tort law to compensate for the damage caused to our country by transferring the assets of Russian oligarchs to rebuild Ukraine
- use, as a basis for the demand of transferring the Russian money, agreements between Ukraine and Russia on investment protection. They were concluded in the 1990s. By the way, this legal instrument is already being used by Ukrainian companies in international arbitrations against Russia.
- creation at the UN of a new special commission for the effective freezing and seizure of assets of all those involved in military aggression. This option, by the way, was proposed by Ukraine. The problem is that Moscow can veto the draft of such a decision in the UN Security Council
- a direct request from the US government to Congress to authorize the seizure of assets under the 1977 International Emergency Powers Act. However, there are nuances in the application of this legislation. It is not totally legally sound, and it will be difficult to adopt a new draft quickly.
I am confident that businesses and entrepreneurs will only be able to receive due compensation for the damage caused to their property, for loss of business and profits in the courts and, most likely, in international arbitration. The mentioned legal instruments can be used, or new ones could be developed, first of all in the EU, the USA and international organizations. In any case, the first step for a Ukrainian enterprise whose property has been damaged or destroyed must be the correct legal confirmation of such fact.
The consequences of the war will be creating numerous issues for us to resolve for many years to come, but we must not give up and we must fight on all fronts, including the legal one.