Authors: Olga Kuchmiienko & Viktor Pasichnyk*
| Jurisdictions: Ukraine International |
Topics: Enforcement of Judgments |
I. Introduction
Issues of recovery of damages caused by the unlawful war of one state against other have become very important following the emergence of a full-scale Russian war in Ukraine. Many individuals and companies lost control over their property located in the temporarily occupied territories or suffered from damage to their property or the destruction thereof caused by the military hostilities and constant Russian missile and drone strikes all around Ukraine.
Although we are sure that, sooner or later, Ukraine will win and hold Russia accountable for its war crimes and damage caused to the Ukrainian nation, our current focus must be on searching for instruments to recover damages while the war is raging before any reparation can be made. Therefore, the International Law Committee of the Ukrainian Bar Association[1] researched this topic and organised a series of webinars, during which leading Ukrainian and foreign international law practitioners shared their thoughts on assisting victims of the Russian armed aggression to compensate for their war-related damages. We used materials kindly provided by speakers of the webinar devoted to compensating damages by suing Russia in Ukrainian courts and enforcing their decisions abroad to complement our research, and we used them to prepare this blog post.
II. Can Russia enjoy sovereign immunity in claims filed in Ukrainian courts?
Following the emergence of a full-scale war, the Grand Chamber of the Ukrainian Supreme Court rendered a judgment declaring the absence of Russia’s sovereign immunity in a civil tort case. Although this judgment set a court practice providing those individuals who have suffered damages as the result of Russia’s invasion to sue Russia in the Ukrainian courts, it caused a heated discussion among the Ukrainian legal community given that prospects of enforcement of judgements ordering Russia to compensate the war-related damages are still uncertain.
Sovereign immunity, which protects states from such claims, as well as the attachment and seizure of their assets, is a universally recognised principle of international law and a part of Ukrainian national legislation. Although Ukrainian legislation does not directly provide grounds for lifting Russia’s sovereign immunity due to its armed aggression against Ukraine, the Supreme Court found such grounds in international law.
The Supreme Court thus noted that by invading Ukraine in breach of the international law norms and the UN Charter, Russia estopped itself from claiming any courtesy and respect from Ukraine. This conclusion is in line with ECHR case law providing that the sole purpose of sovereign immunity is to promote courtesy and mutual respect between states, and that the application of the sovereign immunity complies to European Convention on Human Rights only if (1) it pursues a legitimate aim and (2) is proportionate to the aim pursued and does not violate the very essence of the right to a fair trial.
The Supreme Court also relied on the Convention on Jurisdictional Immunities of States and Their Property as a customary rule of international law, noting that Article 12 of this convention provides that a state cannot claim to be protected by sovereign immunity if it caused the death of an individual on the territory of another state whose courts are considering such case, or caused harm to health of an individual or his property on a territory of another state. The court thus concluded that Russia’s hostile actions gave rise to a tort exception from its sovereign immunity.
Furthermore, the Supreme Court noted that (1) Russia’s invasion of Ukraine was not an act in the exercise of its sovereign rights since it blatantly violated the core principles of international law and was condemned by the UN, (2) Russia’s sovereign immunity effectively deprives claimants of the right to a fair trial and a possibility to protect their rights, the protection of which is granted, inter alia, by the Ukrainian Constitution and the European Convention on Human Rights, and (3) allowing Russia to benefit from its sovereign immunity would constitute a violation of Ukraine’s obligations under terrorism prevention treaties.[2]
Following this judgment, companies and individuals filed claims against Russia in Ukrainian courts. Ukrainian courts have already rendered several judgments in favour of claimants in such cases,[3] but most are still pending. Russia does not take part in the litigation and does not file any appeals or cassation appeals against such judgments. As a result, decisions of the courts of first instance are becoming final and binding. There are a few reasons to expect that said claims will be dismissed, and we hope that these claimants will obtain favourable decisions and start considering their enforcement.
III. Case law on lifting sovereign immunity of the aggressor state
The question of lifting the sovereign immunity of a state causing damage to foreigners on the territory of other countries, including by launching a war against other countries, is not novel. This issue has already been considered by foreign courts, although the circumstances of such cases differ. These courts concluded that sovereign immunity is not absolute and may be lifted, giving hope to Ukrainians that they will be able to effectively protect their rights and hold Russia accountable.
The issue of stripping a state of its immunity from claims for damages caused to individuals has been considered by the International Court of Justice (“ICJ”) in the Jurisdictional Immunities of the State (Germany v Italy: Greece intervening) case. In this case, Germany claimed that Italy had violated its obligation under international law to respect Germany’s sovereign immunity by (1) allowing civil claims for damages resulting from transgressions of international humanitarian law committed by the German Reich during World War II to be brought against it in Italian courts, (2) allowing the enforcement of judgments rendered against Germany by Greek courts in related cases, and (3) taking coercive measures against the German state property located in Italy.
In its ruling on 3 February, 2012, the ICJ rejected Italy’s arguments that international law does not grant or at least restrict sovereign immunity when a state has committed serious violations of the law of armed conflict. It also rejected the argument that the Italian courts were justified in denying Germany the immunity to which it would have otherwise been entitled because all other attempts to secure compensation for the various groups of victims involved in the Italian proceedings had failed.[4]
However, the Italian Constitutional Court, by the judgement No. 238, rendered in 2014 with regard to the application of the above-mentioned ICJ judgement, permitted the Italian court’s judgment against German property to be enforced. This was done in defiance of the ICJ ruling regarding the applicability of laws governing (German) state immunity regardless of violations of human rights. The Italian Constitutional Court noted that the absolute guarantee of judicial protection, standing as the supreme principle of the Italian constitutional order, places a limit on the introduction of generally recognised norms of international law, including those that restrict the ability of Italian citizens to seek redress for their rights against foreign state actions.
The Italian Constitutional Court ruled that the international law principle guaranteeing the absolute sovereign immunity of foreign states is not binding on Italian courts and that violations of fundamental human rights, war crimes, and crimes against humanity preclude the state responsible for them from asserting the sovereign immunity defence.[5]
The Ukrainian legal community is interested in this case as it can be seen as a potential chance to execute Ukrainian court judgments against Russian property in Italy.
IV. Is it possible to enforce Ukrainian judgements against Russia abroad?
Enforcement of Ukrainian judgments and pursuing Russia’s assets abroad seems to be a more attractive way to effectively recover damages due to several reasons, including but not limited to the fact that the amount of Russia’s assets in Ukraine is rather limited, that these assets are frozen, and that some of them have been already seized by the state. Moreover, there are already many claimants pursuing the recovery of damages caused by Russia’s invasion of Ukraine in the Ukrainian courts with an intention to seize Russian assets in Ukraine thereafter.
These Ukrainian judgements concerning the recovery of damages from Russia could be recognised by courts of countries where most assets against which the said judgments can be executed are located, such as the US, the UK, Canada and the EU member states.
This may be possible based on treaties on the legal assistance in civil matters, or by invocation of the principle of reciprocity in the absence of such treaties. The Convention of 2 July 2019 on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters, which was ratified by Ukraine but is yet not in force, may simplify this process in the near future.
Another issue is that EU legislation prohibits the seizure of Russian central bank’s assets, which constitute a majority of Russia’s assets in the EU. Currently, the EU is not ready to take strong measures, instead considering creating a trust to manage these assets and transfer the proceeds thereof to Ukraine, but these proceeds are unlikely to cover even a tiny fraction of claims against Russia.
However, there are precedents of successful execution of the arbitral awards against the property of a state located in another state. For instance, in Stati v Kazakhstan, an investor enforced an arbitral award against the shares of Swedish companies owned by the Kazakhstani sovereign wealth fund, which was managed by the central bank of Kazakhstan. Another prominent example is the famous Yukos saga – strategies used by investors to enforce the largest-ever arbitral award against the Russian property, including the property of its orthodox church, state-owned trademarks and shares of state-controlled companies, are closely monitored by those seeking to compensate damages caused by the Russian invasion and will serve as a guide for them.
Seizure of assets belonging to the Russian oligarchs could be a viable solution but can present implementation challenges, given the historical example of the EU withholding from implementing a mechanism for the seizure of assets belonging to Iranian citizens to enforce US court judgments issued following the creation of the Iran-US Claims Tribunal. Seizure of assets belonging to the Russian mercenaries, including the notorious Wagner group, however, is a more realistic alternative.[6]
V. How should claimants overcome potential challenges during the process of enforcement?
However, the path to enforcement of Ukrainian judgments abroad can be complicated because of the risk that Russia may oppose the enforcement, unreasonably alleging that such decisions lack solid legal grounds, are politically motivated and violate due process. However, we believe that these arguments shall be rejected by foreign courts especially if the following requirements are met.
Firstly, the most important requirement is that of due process, including but not limited to the proper notification of Russia regarding the filing of a claim against it. Given the absence of diplomatic relations between Ukraine and Russia, along with the absence of any foreign embassy executing functions of the Russian one, it is currently impossible to both notify Russia regarding claims submitted against it in the Ukrainian courts and to send all necessary procedural correspondence in due course.
Ukrainian courts currently publish notifications regarding claims filed against Russia on their website in the Russian language. Additionally, Ukrainian courts could consider sending soft copies of notifications and procedural documents to emails of the Russian embassies in other countries.[7] In other words, the idea is to demonstrate Ukrainian goodwill to comply with due process by using all appropriate measures to notify Russia regarding claims against it, and to send it all necessary documents.
Secondly, the Ukrainian judgment shall be based on a good case file, containing information on what property has suffered damage and when it took place (e.g. while the Russian army was in the territory and hostilities took place).
VI. Conclusion
There shall be ways to enforce Ukrainian judgments recovering the war-related damages from Russia abroad. In order to explore the ways Ukrainian judgments shall be based on a good case file and meet due process requirement.
*Olga Kuchmiienko is the Head of the International Law Committee of the Ukrainian Bar Association, PhD, Attorney-at-Law. Viktor Pasichnyk is a Member of the International Law Committee of the Ukrainian Bar Association, Associate at Vasil Kisil & Partners.
We express gratitude to the lecturers of this webinar The International Law for in-house lawyers: Talks about the most important. Chapter 2: LITIGATION AND ENFORCEMENT ABROAD moderated by Olga Kuchmiienko, Head of International Law Commiittee of the Ukrainian Bar Association on December the 6th 2022 – Vladyslav Bandrovsky, Deputy Head of the International Law Committee of the Ukrainian Bar Association and Associate at Sayenko Kharenko, Yulia Atamanova, Member of the International Law Committee of the Ukrainian Bar Association and Partner at LCF Group, Dmytro Donenko, Partner at EnGarde, Isabella Cannata, Associate at Lalive, and Monique Sasson, independent arbitrator. The Agenda is here: https://uba.ua/ukr/events/4345/. The link for the full recording is here: https://www.youtube.com/watch?v=dkpB0SbNRh4&ab_channel=UkrainianBarAssociation
[1] https://uba.ua/ukr/structure_committees/committee007/
[2] Refer to the presentation of Yulia Atamanova with her analysis of this judgment at the webinar The International Law for in-house lawyers: Talks about the most important. Chapter 2: LITIGATION AND ENFORCEMENT ABROAD. The Agenda is here: https://uba.ua/ukr/events/4345/. The link for the full recording is here: https://www.youtube.com/watch?v=dkpB0SbNRh4&ab_channel=UkrainianBarAssociation
[3] A good example is the Supreme Court judgment of 14 April 2022 in case No. 308/9708/19.
[4] Refer to the presentation of Isabella Cannata with her analysis of the ICJ case, at the webinar The International Law for in-house lawyers: Talks about the most important. Chapter 2: LITIGATION AND ENFORCEMENT ABROAD. The Agenda is here: https://uba.ua/ukr/events/4345/. The link for the full recording is here: https://www.youtube.com/watch?v=dkpB0SbNRh4&ab_channel=UkrainianBarAssociation
[5] Refer to the presentation of Monique Sassone with her analysis of the decision of the Italian Constitutional Court, at the webinar The International Law for in-house lawyers: Talks about the most important. Chapter 2: LITIGATION AND ENFORCEMENT ABROAD. The Agenda is here: https://uba.ua/ukr/events/4345/. The link for the full recording is here: https://www.youtube.com/watch v=dkpB0SbNRh4&ab_channel=UkrainianBarAssociation
[6] Refer to the presentation of Dmytro Donenko with his analysis of the prospect of enforcing judgements against Russia abroad, at the webinar The International Law for in-house lawyers: Talks about the most important. Chapter 2: LITIGATION AND ENFORCEMENT ABROAD. The Agenda is here: https://uba.ua/ukr/events/4345/ The link for the full recording is here: https://www.youtube.com/watch?v=dkpB0SbNRh4&ab_channel=UkrainianBarAssociation
[7] Refer to the comments made by Monique Sassone and Isabella Cannata regarding the due process requirement, at the webinar The International Law for in-house lawyers: Talks about the most important. Chapter 2: LITIGATION AND ENFORCEMENT ABROAD. The Agenda is here: https://uba.ua/ukr/events/4345/. The link for the full recording is here: https://www.youtube.com/watch?v=dkpB0SbNRh4&ab_channel=UkrainianBarAssociation