OPINION: Sanctions, Confiscations and Compensations: How the Legal Defense of Ukraine Works

For an entire year Ukraine has been resisting the full-scale invasion of its territory by the Russians and continues to successfully defend itself against superior enemy forces.  At the same time, the war is also being fought out on the legal battlefield.  Actions taken by the Ministry of Justice of Ukraine team, both within Ukraine and internationally, have managed to persuade Western partners to consider the use of assets, confiscated from the Russian Federation, to fund post-war reconstruction in Ukraine.

Equity Mechanism

One of the most important achievements over the past year is the gradual introduction of a compensation mechanism based on historical precedent, as in the case of the Iraqi-Kuwait war.  This approach will ensure fair compensation to Ukrainians for the damage caused by the aggressor.

Starting in the spring of 2022 the Ministry of Justice of Ukraine team has been hard at work on launching consistent international processes to allow the use of Russian sovereign assets to pay compensation to Ukrainians.  After a year of lengthy negotiations Ukraine has managed to convince partners and win support.  In February 2023, the use of such a compensation mechanism has received support from the UN General Assembly, the Parliamentary Assembly of the Council of Europe, the European Parliament, the Committee of the Council of Europe, NATO, and the national legislatures of partner countries.

As ever, the outcome should not only be declarative but should be actioned. Work has started, in the Hague (Netherlands) to compile an ‘International Register of Damage’.  This will collect and collate all information relating to the damage caused by Russian actions.  This will be applied to both individuals and legal entities (Ukrainian and foreign, whose property has been damaged).  Compensation will be paid based on the compiled data.  In order to do this it will be necessary to create a Fund using the confiscated assets of both the Russian state and those citizens of the aggressor country who are subject to sanctions.

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Seizure of property in favor of Ukraine

In addition to their international work on sanctions, the Ministry of Justice team has formed a working group led by Professor Michael McFaul, a former U.S. Ambassador to Russia and Andriy Yermak, the Head of the Office of the President. The group is engaged in seizing the property of sanctioned individuals within the country.  This is an important activity that will allow the transfer to the state of the assets of persons who acted against Ukraine.

Among the most striking achievements of the past year is the return to the state of the assets of the deposed President Viktor Yanukovych, who fled to Russia in Feb. 2014.  While it may seem that this is happening long after the event, the Ministry of Justice could only act on a legal basis which was only taken by the National Security and Defense Council in 2022.

13 citizens of the Russian Federation lost their Ukrainian assets, in addition to the fugitive president.  Among them are oligarchs and businessmen such as Deripaska, Yevtushenkov, Shelkov, as well as the rectors of Russian universities, deputies and members of the highest authorities of the Russian Federation.  The confiscated assets include companies, enterprises, industries, real estate, vehicles and luxury goods.  This work provides an example for our Western partners as to how the confiscated assets of Russia and sanctioned citizens should become the basis for paying compensation to Ukrainians.

The aggressor will pay Oschadbank

At the beginning of last year, I was invited to join the team working on sanctions, and later to the Ministry of Justice of Ukraine, as I already had a successful experience of countering the Russian Federation by way of the Oschadbank case against the seizure of property in Crimea.  Over the past year, this case has also progressed well as the French Supreme Court overturned the previous decision of the Court of Appeal of Paris and reinstated the decision of the International Arbitration.  This requires the Russian Federation to pay Oschadbank USD 1.1 billion and interest, that accrues at about USD 100 thousand per day, until it is finally settled.

This case, which began more than five years ago, involved an enormous amount of work.  In total over 30,000 pages of evidence was provided to the court, as well as a 700-slide presentation made in 2017.  The legal team was headed by Charles Brouwer, the legendary lawyer who was involved in the reduction of arms treaties made between the US and the USSR.  The Tribunal endorsed our case in 2018 although, inevitably, Russia filed an appeal to delay the case.  Justice has prevailed, which is a positive indicator for our other cases.  Each successful decision strengthen and improves Ukraine’s position.

Promotion of cases in the ECHR

In addition to financial compensation, it is vital that seek the conviction of Russians for war crimes against Ukrainians.  Importantly the main architects of the war, the political and military leadership of the Russian Federation, must not be allowed to escape responsibility.  That is why Ukraine is strongly pushing for the creation of a Special Tribunal to investigate every criminal act that arose from aggression by the Russian Federation.

Currently the European Court of Human Rights is currently deliberating on four cases against the Russian Federation. These are in respect of the illegal annexation of Crimea, the murders of Russian political opponents, then illegal detention of Ukrainian sailors and ships in the Kerch Strait, a joint lawsuit with the Netherlands on the downing of the MH17 aircraft over the Donetsk region in 2014 and the ongoing, systematic violation of the rights of people in the Donetsk and Luhansk regions.

A case was filed with the ECHR in June 2022 concerning the full-scale invasion of Ukraine by Russia.  This will support the effectiveness of the review for compensation because many of the issues raised complement each other and are similar.  Importantly the ECHR ruled, in January 2023, that confirmed Russia had occupied parts of the Donetsk and Luhansk regions since 2014 and that Russian soldiers had been in these territories for the whole period.  This ruling has initiated a review of the case by the ECHR Grand Chamber. The Grand Chamber consists of 17 judges and is convened in exceptional cases. Its verdicts cannot be appealed.

Year of new victories

In 2022, a solid legal base was created for Ukraine’s claims. It is now the time to maintain momentum, seek solutions and implement them.  We already see how position of the partners has changed. In the first days of the war, they hoped it would end quickly, with minimal impact on themselves. Now they openly talk about tribunals against Putin, and the seizure of sovereign assets. There is still a long way to go but justice and a Ukrainian, no longer looks unattainable.