19:10 12.09.2024

President's Office dpty head: Effectiveness of seeking compensation for damages from Russian aggression in Ukrainian courts is uncertain

4 min read
President's Office dpty head: Effectiveness of seeking compensation for damages from Russian aggression in Ukrainian courts is uncertain

As of early April 2024, Ukrainian courts have issued at least 397 decisions on compensation for damages caused by Russia's military actions, and this number is constantly growing, but this path has questionable effectiveness in contrast to the international compensation mechanism being created, Deputy Head of the President's Office Iryna Mudra said.

"Despite the fact that Ukrainian courts satisfy such claims, appealing to them on this issue has questionable effectiveness... The key problem is that the execution of such court decisions is virtually impossible: today in Ukraine there is no legal mechanism for executing decisions on the collection of funds from Russia," Mudra said in an interview with Interfax-Ukraine.

She said the property of Russia in Ukraine is nationalized as state property on the basis of a special law implemented by the Ministry of Justice, and this law does not provide for the execution of court decisions on claims against Russia.

"In addition, such decisions of Ukrainian courts are unlikely to be executed in other jurisdictions, and, in fact, we have not seen such decisions for two and a half years. This is due to the fact that these decisions may not comply with the rule of international law regarding jurisdictional immunities," the President's Office deputy head said.

She said due to these circumstances, Ukraine continues to work on creating an international compensation mechanism that should ensure a fair and effective way of receiving compensation for all victims.

"This takes some time, but ... we are moving at a fairly good speed: the Register (of losses for Ukraine) is working, as for the Commission (for reviewing applications to the Register) – there is no longer any doubt that it will be created, it is a matter of time, and we are already discussing the specific details of its creation," Mudra said.

According to her, the issue of the compensation fund remains, since a source for executing these decisions is needed. "And this is actually the most difficult issue on the topic of seizure of Russian assets, but we are also working on it," the President's Office deputy head said.

She believes that a number of international investment arbitration decisions against Russia for billions of dollars, for example, from Yukos for $50 billion, will not become "competitors" in the fight for Russian funds.

"If we recall Yukos, it received the verdict of the international arbitration ten years ago and during this time it was able to recover several assets in certain European jurisdictions, namely state-owned (Russian) companies, not Russia. Russian assets are protected by sovereign immunity. This is, in fact, what we are trying to remove with the doctrine of countermeasures," Mudra said.

She said it will also be difficult to recover assets of Russian state companies within the framework of such commercial arbitrations.

In addition, the President's Office deputy head said the G7 decision to allocate $50 billion to Ukraine from the income from frozen Russian assets, in which it was unanimously supported that the frozen sovereign assets of Russia should remain frozen until Russia either pays compensation or these assets are transferred to Ukraine.

"Therefore, there is a risk in relation to the gold and foreign exchange reserves that are frozen today, but, in my opinion, it is insignificant," Mudra said.

She said if Ukrainian state-owned companies such as Oschadbank or Naftogaz Ukrainy win international arbitrations against Russia, it will also be difficult for them to implement these decisions due to the protection of Russian sovereign assets by immunity.

"Therefore, I think, only through the compensation mechanism. But if we can prove to our partners that it will be possible to implement the decisions of these arbitrations, which already existed at the time of the start of the full-scale invasion or were received later. The second condition is that the compensation fund, which is a component of the compensation fund, should have funds left after all decisions on compensation for the damage caused by the aggression have been implemented. Let me remind you that the assets are $300 billion, and the World Bank estimates the losses to the state alone at $486 billion, so they are already not enough," Mudra said.

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