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July 21, 2022

Jurisdictional Immunity of the russian federation in Ukrainian Court Proceedings: Current Status

Timur Bondaryev, founding and managing partner

 

Sergii Shkliar, founding partner 

 

Volodymyr Nakonechnyi, associate

 

I. Background
On 24 February 2022, a full-scale Russian military invasion in Ukraine started and indicated the new spiral in the Russia-Ukraine war lasting from 2014 and starting from the occupation of the Crimea and parts of the Eastern Regions of Ukraine. This new period of war caused damages of an extraordinary scale to Ukraine,

its citizens, and businesses – as of the end of April 2022 the total amount of damages (including lost profits and investments) was estimated at USD 600 bln level, and this amount keeps growing every day.

 

While politicians, lawyers, businesses and ordinary people are looking for effective mechanisms to claim and collect damages from the Russian Federation, the Supreme Court (of Ukraine) on 14 April 2022 rendered a resolution in case No. 308/9708/19 dealing with the issue of the jurisdictional immunity of the Russian Federation in Ukrainian civil court proceedings. A month later, on 18 May 2022, the Supreme Court rendered a

resolution in another case No. 760/17232/20-z and extended its reasoning as to the issue of the jurisdictional

immunity.

Below we will go through the reasoning of the Supreme Court in detail and will also try to assess how the said reasoning will affect the potential claims of commercial entities against the Russian Federation for compensation of war-related damages and what difficulties such commercial entities may face at the enforcement stage.

 

II. Supreme court’s reasoning
In both cases, the Supreme Court dealt with the jurisdictional immunity in a specific category of civil disputes – claims for compensation of non-pecuniary (moral) damage caused by the Russian aggression on an individual. The Supreme Court concluded that the jurisdictional immunity of the Russian Federation is not absolute and ruled that the courts of lower instances shall not apply the jurisdictional immunity of the Russian Federation in similar cases. The main idea of the Supreme Court’s resolutions is that the country that continuously violates and disregards international law shall not benefit from the jurisdictional immunity to avoid liability.

 

The reasoning provided by the Supreme Court in the said resolutions may be summarized as follows:

       i. The jurisdictional immunity of the Russian Federation shall not apply in accordance with customary

international law.
       ii. The jurisdictional immunity shall not apply because the Russian Federation commits an aggressive war 

against Ukraine in violation of the sovereign integrity of Ukraine. Such actions of the Russian Federation cannot be treated as acta jure imperii, and for this reason, are not protected by the jurisdictional immunity.

       iii. Application of the jurisdictional immunity by Ukrainian courts will violate the claimants’ rights for fair trial, effective remedy, and access to courts.

       iv. Application of the jurisdictional immunity by Ukrainian courts will be inconsistent with interna tional obligations of Ukraine in fighting terrorism.

 

Below we provide a detailed description and comments on most of the Supreme Court’s arguments. We will not comment on the immunity and international obligations of Ukraine in fighting terrorism because the Supreme Court did not elaborate on this argument in much detail in its reasoning.

 

1. Immunity and customary international law
The Supreme Court in the said cases concludes that the jurisdictional immunity of the Russian Federation shall not apply in accordance with the provisions of Article 11 of the European Convention on State Immunity (16 May 1972) and Article 123 of the United Nations Convention on Jurisdictional Immunities of States and Their Property (2 December 2004) (“UN Convention on Jurisdictional Immunities”) which, according to the Supreme Court, constitute a codification of the customary international law.

 

The Supreme Court also noted that the RussianFederation never ratified the UN Convention on Jurisdictional Immunities, however, the Russian Federation also did not object against the provisions of the UN Convention by signing it on 1 December 2006. The Supreme Court further noted that the state may be bound by the provisions of the international treaty even if such a treaty is not ratified in so far as the treaty reflects the rules of customary international law.

 

The Supreme Court also tried to address the famous ICJ Judgement on Jurisdictional Immunities of the State
(Germany v. Italy: Greece intervening) (3 February 2012).
 

In this Judgement, the ICJ found, inter alia, that Italy violated its obligation to respect the immunity which Germany enjoys under international law by allowing civil claims to be brought against Germany based on violations of international humanitarian law committed by the German Reich between 1943 and 1945. In doing so, the ICJ concluded that the inclusion in the UN Convention on Jurisdictional Immunities of Article 12 cannot be taken as affording any support to the contention that customary international law denies state immunity in tort proceedings relating to acts occasioning death, personal injury or damage to property committed in the territory of the forum State by the  armed forces of another State in the context of an armed conflict. Unfortunately, the Supreme Court left this ICJ’s conclusion without any attention.

 

At the same time, the Supreme Court stated that the rule on state immunity shall not be analyzed in an abstract environment and shall apply to the specific circumstances of the case. According to the Supreme Court, the state immunity of the Russian Federation shall be ignored because Ukrainian claimants do not

have access to any alternative effective remedy, reference to the Dissenting Opinion of Judge Yusuf was made. Probably, the Supreme Court tried to argue that the factual background in Germany v. Italy case and

current cases in Ukraine is quite different. Germany paid reparations to Italy while Italy “elected to use those funds to rebuild its national economy and infrastructure, rather than distributing them to individual victims amongst its nationals” and for this reason “it is difficult to see why the fact that those individuals had not received a share in the money should be a reason for entitling them to claim against the State that had transferred money to their State of nationality”. To the contrary, the Russian Federation is far from voluntary payment of reparations to Ukraine. It is quite a logical argument supporting the main idea of the Supreme Court’s resolutions that the Russian Federation shall not use customary international law in bad faith to avoid responsibility for its unlawful actions.

 

Based on the above, the Supreme Court concluded, that the immunity of the Russian Federation shall be ignored by Ukrainian courts and the “tort exception” under Article 12 of the UN Convention shall apply because (1) the damage was caused in the territory of Ukraine, (2) when causing damage the agents of the Russian Federation were in the territory of Ukraine, (3) the actions of such agents are attributable to the state, (4) the case relates to pecuniary compensation for death or injury to the person, or damage to or loss of tangible property, (5) liability for causing damage is established under the Ukrainian legislation.

 

2. Immunity and Acta Jure Imperii
The other argument of the Supreme Court is that jurisdictional immunity of the Russian Federation is not applicable because Russia commits an aggressive war against Ukraine in violation of the sovereign integrity of
Ukraine. The Supreme Court stated that the aggressive war constitutes a violation of the international law and

cannot be considered as execution by the Russian Federation of its sovereign rights protected by the immunity. Considering that the aggressive war of the Russian Federation cannot be treated as acta jure imperii the jurisdictional immunity shall not apply. In such a way, the Supreme Court continues to develop an argument

the country that continuously violates and disregards international law shall not benefit from the jurisdictional immunity to avoid liability.

 

While the idea lying behind the reasoning is clear to us, the reasoning that the aggressive war of the Russian Federation cannot be treated as acta jure imperii is rather doubtful. The ICJ in the abovementioned Judgement on Jurisdictional Immunities of the State stated that the acts of the German armed forces which were the subject of the proceedings in the Italian courts clearly constituted acta jure imperii, notwithstanding that they were unlawful, and that the jurisdictional immunity applies to both lawful and unlawful acta jure imperii.

 

3. Immunity and right to fair trial

 According to the Supreme Court an application of the jurisdictional immunity by Ukrainian courts will violate the claimants’ rights to a fair trial, effective remedy and access to courts. The Supreme Court follows the logic of the Constitutional Court of Italy which in 2014 found unconstitutionality of the provisions of the Italian laws that required compliance with the ICJ’s Judgement on Jurisdictional Immunities of the State, which required that “Italian courts deny their jurisdiction in case of acts of a foreign State constituting war crimes and crimes against humanity, in breach of inviolable human rights” like rights to a fair trial, effective remedy and access to courts. The reasoning of the Supreme Court also echoes the variety of ECtHR judgements mentioned by the Supreme Court: in Sabeh El Leil v. France, Oleynikov v. Russia, Ashingdane v the United Kingdom, Cudak v. Lithuania.

 

The similar reasoning was also actively debated by the Korean judges that did not come to an uniform application of law and rendered contradictory decisions as to the application of the jurisdictional immunity in
cases asserted by the Korean “comfort women” against Japan.


4. Conclusion
The Supreme Court’s position on jurisdictional immunity seems to be quite a logical development of court practice and civil procedural legislation of the country suffering from the Russian aggression for 8 years. At the same time, the compliance of this positionwith public international law is questionable as there are reasonable arguments both for and against waiver of the jurisdictional immunity in relation to armed actions of the Russian Federation.

 

III. Impact on claims of commercial entities

The potential claims of businesses against the Russian Federation for compensation of damages will be

resolved by Ukrainian commercial courts. Both Civil and Commercial Procedural Codes of Ukraine contain a
similar provision on the legality of court decisions – while applying the rule of law to the dispute, the court shall take into account the conclusions on the application of the relevant rules of law set out in the decisions of the Supreme Court. In our opinion, while dealing with the jurisdictional immunity of the Russian Federation commercial courts will need to address and decide on the applicability of the abovementioned positions of

the Supreme Court.

 

We assume that in most cases relating to the loss of or damage to tangible property, commercial courts will follow the logic of the Supreme Court and businesses will be able to assert their claims against the Russian Federation in Ukraine and get damages awarded (the prospects to get the claimed amounts awarded in full and approaches of Ukrainian courts to compensation of damages, especially to compensation of lost profits, are not the topic of this discussion as they require detailed comments and analyses).

 

At the same time, the compliance of the Supreme Court’s position with public international law is questionable and for this reason, we assume that businesses with high probability may face complications while seeking enforcement of such court decisions, especially in foreign jurisdictions.

 

IV. Enforcement considerations
It is quite obvious that Russian assets in Ukraine will not be sufficient to enforce the potential claims of large businesses. Moreover, Ukraine itself is targeting such assets and is adopting legislation to enable the confiscation of Russian assets. As a result, the potential successful claimants may need to seek recognition and enforcement of the Ukrainian judgements in foreign jurisdictions where significant Russian assets are located (we will not discuss the legal status of different Russian assets within this article as this topic requires

separate detailed comments and analyses).

 

The foreign courts may be reluctant to grant recognition and enforcement to Ukrainian judgements due to procedural issues (e. g. based on the observation that the Russian Federation was not duly notified of the Ukrainian proceedings, was not able to present its case and was not heard) or public policy considerations re-

lated to the jurisdictional immunity.

 

Of course, the scale of the Russian aggression against Ukraine may cause the western democracies to
review the concept of the state immunity established under international law so that the states initiating aggressive war and committing war crimes become unable to refer to its immunity to avoid responsibility for its

wrongful act. However, as of now, the concept of absolute immunity related to judicial review of acta jure

imperii remains strong and it will be a difficult task for the international community to review the concept of
customary international law in a way to respond to the challenges created by the Russian war against Ukraine.


V. Conclusion
The Supreme Court is developing the practice that makes domestic remedies available for those who suffered losses from Russian aggression. At the same time, the reasoning used by the Supreme Court is far from addressing all international law issues concerning state immunity. The long-term effect of this new Supreme

Court practice on the businesses’ claims against Russia and enforcement perspectives remains unclear.

 

Special for Ukraine-Krieg und Recht.

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