​​​​​​​Russia's Aggression against Ukraine: How to ensure the effective pursuit of reparation claims from Russia

  • 27.06.2022

Jan Barcz

Professor of International Law and the Law of EU,

Kozminski University (Warsaw),

Member of the Team Europe (Poland)

and the Conference of the Ambassadors of the Republic of Poland

 

     Russia’s brutal aggression against Ukraine in the past months has revealed the scale of the crimes against humanity, which are documented with ever-growing evidence. At the same time, the problem of reparations from Russia for the committed crimes and the inflicted damage and harm is raised by Ukraine, in the international debate and expert discussions.[1]

The unequivocally prevailing view in the discussion currently underway is that Ukraine's effective pursuit of reparations directly in the course of negotiations with Russia and their settlement in the bilateral "peace deal" is rather unrealistic. Even if Russian troops are pushed out of the Ukrainian terrritories occupied after February 24, 2022 (or also from Crimea and the self-proclaimed republics), this will not mean Russia's capitulation, not to mention its unconditional surrender. Russia's acceptance of Ukrainian reparation claims would be tantamount to admission to committing aggression and other international crimes, which the Putin regime almost certain will not do. This would probably only be possible if there was a political coup in Russia resulting in democratic forces  taking power,  recognising the unlawfulness of the invasion of Ukraine and commiting to pay reparations. However, such a scenario remains speculative.

     On the other hand, it is the unequivocal assessment that Ukraine could effectively pursue reparation claims from Russia primarily in the "international framework" - with Russian funds that are "under the control" of other countries: the reserves of the Russian central bank and the property of the Russian oligarchs. There are significant sums at stake: it is estimated that at the beginning of 2022 approximately $ 640 billion is left outside Russia[2].Up to $ 350 billion can be "easily accessible" (about $ 300 billion has been frozen so far)[3], while the location of the restis unknown (their location is currently being determined)[4].The value of the property of Russian oligarchs located outside Russia is estimated for around $ 350 billion, of which over $ 30 billion has been frozen so far[5].However, the confiscation of these funds and their allocation for reparations to Ukraine raises several significant legal problems, both in the light of international law and the national law of individual countries.[6]

 

     So what could the scenario of an effective pursuit of Ukraine's reparation claims from Russia look like?

     1) As mentioned, it is very unlikely that Putin's Russia will voluntarily agree to any form of payment of reparations for Ukraine, as this would mean admitting the act of aggression and other international crimes. Therefore, there is rather no chance of "agreeing" with Russia on the payment of reparations in some sort of bilateral "peace deal" ending the war. On the other hand, when negotiating a bilateral "peace deal", Ukraine should be particularly careful not to agree to any clauses that would in any way limit its reparation claims (neither in bilateralnor in international relations).

     2) It is particularly important to carefully document the international crimes committed by Russian troops and the damage and harm caused by them. Equally important is that the war crime, crime against humanity, and the crime of genocide proceedings are conducted fairly before Ukrainian national courts[7],the International Criminal Court (ICC), the International Court of Justice (ICJ), the International Court of Human Rights (ECtHR) and - possibly - national courts of other countries. Due to the difficulties in conducting proceedings before the ICC on the aggression committed by Russia (punishing Russian politicians and officials on this account), it may be worth considering the establishment of a special international court (Nuremberg II)[8]. Confirmation that the above-mentioned international crimes have been committed by Russia and its troops is important, as it constitutes the legal title for Ukrainian reparation claims and the confiscation of property of the Russian state and its citizens (oligarchs) to satisfy these claims.

     3) In the "international framework" there are two realistic scenarios for the pursuit (at least in part) of Ukrainian reparation claims.

  • The most realistic scenario for the implementation of at least some of the reparation claims would be the confiscation of the frozen reserves of the Russian central bank and the property of Russian oligarchs linked to the Putin regime, i.e., property located outside Russia, largely in countries and international financial institutions that have joined the sanctions against Russia.[9]
  • The second realistic scenario would beto impose a tax of a set percentage on Russia’s oil and gas export revenues as was done with Iraq's oil exports to pay reparations for its invasion of Kuwait in 1990.[10]This would have to be linked to the gradual lifting of the sanctions imposed on Russia. Such a scenario could be also interesting to Russia:  it could be in Russia's interest to pay a tax if it were lower than the discount at which it is currently being forced to sell its oil due to an effective embargo from Western buyers.[11] 

     4) The confiscation of the frozen reserves of the Russian central bank, especially the property of Russian oligarchs, creates - as mentioned - several significant legal problems. They are related to the fact that state property is, as a rule, protected by state immunity guaranteed by international law, and private property by guarantees, according to which, in exceptional cases, confiscation may be carried out, but with appropriate compensation. In the case of confiscation, the administrator of the obtained funds will be the state in which the confiscation was made. Thus, the effective settlement of Ukrainian reparation claims in the "international framework" will require the resolution of two fundamental problems:

  • firstly, to specify the legal basis for the confiscation of Russian state property and the property of Russian oligarchs;
  • secondly, the establishment of a mechanism to transfer the funds thus obtained to Ukraine to satisfy its reparation claims.

     5) As for the first issue - the legal basis for the confiscation of the reserves of the Russian central bank and the property of the Russian oligarchs linked to the Putin regime, as mentioned before - state property is protected under international law by state immunity, and private property by the above-mentioned guarantees. On the other hand, there is also an undisputed rule of international law (starting from the Hague Conventions of 1907, confirmed in the jurisprudence of the ICJ), according to which a state is materially liable for damages caused to another state resulting from a breach of international law. This also applies to reparations.In section IX (subsections 15 and 16) of UN “Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law”[12]it is emphasized that “Adequate, effective and prompt reparation is intended to promote justice by redressing gross violations of international human rights law or serious violations of international humanitarian law. Reparation should be proportional to the gravity of the violations and the harm suffered” (…) “a State shall provide reparation to victims for acts or omissions which can be attributed to the State and constitute gross violations of international human rights law or serious violations of international humanitarian law (subsection 15). If the parties liable for the harm suffered are unable or unwilling to meet such obligation “states should endeavour to establish national programmes for reparation and other assistance” (subsection 16).

     6) International practice related to the implementation of reparations shows that this general rule of international law requires clarification in each specific case: both at the level of international law (especially if the state committing international crimes does not intend to pay reparations to victims) and at the level of domestic law (especially when it comes to the confiscation of property of such a state and its private entities). This is necessary due to the scale of the legal problems related to such confiscations (as shown by the practice of countries with relevant national regulations and which have carried out similar confiscations).

     7) In the light of the above conditions, the basic elements of the "international framework" for pursuing Ukraine's reparation claims against Russia would be as follows[13]:

  • states, including primarily the states in which Russia has located its resources and in which the resources of Russian oligarchs are located, should conclude an international agreement;
  • the international agreement should include an obligation to freeze and confiscate the reserves of the Russian central bank and Russian citizens (oligarchs);
  • in particular in the second case, the conditions for confiscation (especially the "link" to the Putin regime) and the court procedures to protect the rights of the private individuals involved should be clarified;
  • since the confiscation takes place on the basis of the national law of individual states, the international agreement should therefore specify the obligation to carry out such confiscation (constitute the legal basis for the establishment of relevant regulations of national law or an appropriate interpretation of the already existing regulations of national law);
  • formally speaking, a state that confiscates the reserves of the Russian central bank and the property of Russian oligarchs would be the administrator of the funds derived therefrom; for this reason, an international agreement should also regulate a common mechanism for transferring funds to Ukraine and individual victims of Russian crimes.

     The announced proposals of the European Commission of May 25, 2022, aimed at establishing a legal basis (in EU law) for the confiscation of frozen Russian property, go in this direction. The Commission proposes to take a twofold action (under Article 83(1) TFEU):

Firstly, the Commission is proposing to add the violation of EU restrictive measures to the list of EU crimes. Secondly, the Commission is also proposing new reinforced rules on asset recovery and confiscation which, in addition to contributing to the implementation of EU restrictive measures, will have a strong impact on the fight against organised crime.[14]

     8) As regards the second issue - establishing a joint mechanism for transferring funds to Ukraineto satisfy its reparation claims, such a mechanism - as mentioned above - should also be specified in an international agreement. Itsessentialelementscould be as follows:

  • establishment of a Reparation Fund for Ukraine (international financial institution);
  • the Fund should cover two main areas of claims: state claims of Ukraine and claims of individual victims;
  • it should be a Fund formally separated from the emerging assistance fund for Ukraine (the so-called Marshall Bis Plan, consisting mainly of donations from individual states); it is extremely important as the legal basis for confiscation refers to satisfying Ukraine's reparation claims, which are a consequence of international crimes committed by Russia; instead, it would be desirable for both funds to be managed by a single international financial institution;
  • the "host" of both funds could be the European Union (in close cooperation with the G7) - it has the appropriate infrastructure and expertise: the use of theEuropean Stability Mechanism (whose main task is to support the euro area countries in the event of financial problems and which was responsible for the implementation of the  financial aid programs for Greece) or the European Commission (experienced in distributing EU funds among the EU Member States) should be taken into consideration;
  • it is all the more important as the transfer of funds (from both funds) to the Ukrainian state should be guided by the principle of conditionality, i.e. funds should be used to rebuild the political system and economy of Ukraine in accordance with the European Union standards (observance of the Union's values, including the rule of law) and building a market economy; in this context, the importance of granting Ukraine the status of a candidate country for EU membership should also be considered[15];
  • when it comes to the payment of compensation for individual victims, the experience with the payment of benefits by Germany for victims of Nazi crimes can be used; after 1991, foundations were established in a number of countries (including Ukraine), which distributed such benefits[16]; also, in this case, a good solution would be the transfer of appropriate funds by the Reparation Fund to a national foundation in Ukraine, which would deal with the payment of compensations (the criteria for granting compensations should be specified in an agreement between the Reparation Fund and the national foundation).

      9) In the event of a "Kuwaiti" scenario, it would be necessary to conclude an appropriate international agreement between the countries that imposed sanctions on Russia, taking into account in particular the countries that import oil and gas from Russia.

***

    Effective pursuit of reparation claims from Russia for the aggression against Ukraine and other international crimescommitted by Russian troops will be, above all, a comprehensive international undertaking involving the countries that imposed sanctions on Russia, with the participation of international organizations and international financial institutions. The necessary condition for the implementation of such an undertaking is the comprehensive and coherent action of the international community. Given Russia's brutal aggression against Ukraine and the international crimes committed by Russian troops, this is a great and complicated challenge, a fundamental test of the credibility and effectiveness of the international community. The reaction of the international community to date may lead to optimism, although the scale of the challenges is indicated by the controversy related to the imposition of sanctions on Russia. A very serious test will be the adoption of a legal act at the European Union level obliging the confiscation of frozen Russian property, considering that a significant part of this property is located in  EU Member States like France, Germany, and Austria.

 


[1]The article refers to my speech at the conference - Reparations from Russia for aggression against Ukraine and committed international crimes. The state of the discussion, which took place on May 11, 2022. Link to the recording: https://monitorkonstytucyjny.eu/archiwa/21911 (accessed: May 17, 2022). The text in Polish was published on May 19, 2022. Agresja Rosji na Ukrainę – jak skutecznie dochodzić reparacji od Federacji Rosyjskiej. https://monitorkonstytucyjny.eu/archiwa/21940 (access: 30.05.2022).

[2] See P. Tamma, Payback time: The West studies how to make Russia foot the war bill, POLITICO, April 12, 2022. https://www.politico.eu/article/payback-time-west-make-russia-pay- war-ukraine-bill / (access: May 16, 2022).

[3]See G. Deuber, Wirtschaftliche Aufarbeitung der Ukraine-Invasion und Reparationen. Russland-Analysen. Nr. 418/11.04.2022. Länder-Analysen. www.leander-analysen.de/russland (access: 8.05.2022 r.); L. Blank, War Reparations for Ukraine: Key Issues, Just Security,May 2, 2022.https://www.justsecurity.org/81341/war-reparations-for-ukraine-key-issues/ (access: 16.05.2022 r.).

[4]See M. FrühaufK. Gelinsky, W. Mussler, Ukraine in Trümmern: Können russische Devisenreserven den Wiederaufbau finanzieren?(11.05.2022).

https://www.faz.net/aktuell/wirtschaft/russlands-devisenreserven-fuer-den-wiederaufbau-der-ukraine-18020586.html  (access: 16.05.2022 r.).

[5]P. Tamma, H. von der Burchard, Brussels plans to help EU countries confiscate assets frozen by sanctions, POLITICO, Mai 11, 2022.

https://www.politico.eu/article/commission-to-make-sanctions-evasion-an-eu-crime/?utm_source=POLITICO.EU&utm_campaign=5165f47134-EMAIL_CAMPAIGN_2022_05_12_03_56&utm_medium=email&utm_term=0_10959edeb5-5165f47134-188946193  (access: 16.05.2022 r.).

[6]See for example: L. Blank, War Reparations for Ukraine: Key Issues, Just Security, May 2, 2022. https://www.justsecurity.org/81341/war-reparations-for-ukraine-key-issues/ (access: May 16, 2022).

P. Stephan, Giving Russian Assets to Ukraine—Freezing Is Not Seizing, Lawfare, April 26, 2022.www.lawfareblog.com/giving-russian-assets-ukraine-freezing-not-seizing

(access: 5.0.5.2022 r.).

[7] See Ukraine begins first war crimes trial of Russian soldier. Published14.05.2022.

www.bbc.com/news/world-europe-61441907 (access: 16.05.2022 r.).

[8]See DECLARATION ON A SPECIAL TRIBUNAL FOR THE PUNISHMENT OF THE CRIME OF AGGRESSION AGAINST UKRAINE. March 4, 2022.

https://justice-for-ukraine.com/wp-content/uploads/2022/03/Combined-Statement-and-Declaration-English.pdf  (access: 16.05.2022 r.).

[9] SeeR. E. Litan, Russia can be made to pay for Ukraine damage now,  March 17, 2022.

https://www.brookings.edu/opinions/russia-can-be-made-to-pay-for-ukraine-damage-now/ (access: 6.05.2022 r.).

[10]See P. Tamma, Payback time: The West studies how to make Russia foot the war bill, POLITICO, April 12, 2022. https://www.politico.eu/article/payback-time-west-make-russia-pay-war-ukraine-bill/ (access: 16.05.2022 r.).

[11]So T. Becker, director of the Stockholm Institute of Transition Economics and lead author of “A blueprint for the reconstruction of Ukraine,” quoted in: P. Tamma, Payback time: The West studies how to make Russia foot the war bill … .

[12]Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law. Resolution adopted by the General Assembly on 16 December 2005. https://documents-dds-ny.un.org/doc/UNDOC/GEN/N05/496/42/PDF/N0549642.pdf?OpenElement (access: 16.05.2022 r.).

[13]See the article for similar suggestions by Ch.  GiorgettiM. Kliuchkovskyi and P. W Pearsall. Launching an International Claims Commission for Ukraine. May 20, 2022.

https://www.ejiltalk.org/launching-an-international-claims-commission-for-ukraine/?utm_source=mailpoet&utm_medium=email&utm_campaign=ejil-talk-newsletter-post-title_2

(access: 25.05.2022).

[14]The Commission proposes rules on freezing and confiscating assets of oligarchs violating restrictive measures and of criminals Brussels, 25 May 2022. European Commission - Questions and answers Questions and Answers.https://ec.europa.eu/commission/presscorner/detail/en/QANDA_22_3265

(access: 31.05.2022 r.).

[15]See J. Barcz, Ukraina należy do Europy! Status państwa kandydującego do członkostwa w Unii Europejskiej dla Ukrainy wobec agresji Rosji?, Europejski Przegląd Sądowy 2022, No. 4, p. 4 et seq.

[16] See J. Barcz, The 1989–1991 watershed in Polish-German relations and the issue of compensation for victims of Nazi crimes living in Poland (the Agreement of 16 October 1991), PrzeglądZachodni. Journal of the Institute of Western Affairs in Poznań. 2019. Special Issue, p. 183 et seq.