Sovereign immunity of the russian federation: Potential legislative changes in Ukraine

Timur Bondaryev, Founding&Managing partner Arzinger

Volodymyr Nakonechnyi, associate

I. Background

On 24 February 2022, Russia started a full-scale military invasion of Ukraine. This war caused an extraordinary amount of damages, which are roughly estimated at about USD 600 bln.

Therefore, politicians, lawyers, businesses and ordinary people are looking for effective mechanisms to claim and collect damages from the aggressor-state. One of the options is to file a claim for compensation of damages with the Ukrainian domestic courts. The main obstacle for such proceedings is that Russia and its assets under public international law benefit from the sovereign (jurisdictional and execution) immunity. According to the immunity principles, Russia cannot be a respondent in domestic court proceedings of another country without the prior consent (jurisdictional immunity), and its assets cannot be used for coercive enforcement of court decisions (execution immunity).

Nevertheless, the Supreme Court of Ukraine in April-May 2022 rendered the decisions in which it waived the jurisdictional immunity of the Russian Federation. The main idea of the Supreme Court’s decisions is that the

country that continuously violates and disregards international law shall not benefit from the jurisdictional

immunity to avoid liability.

In addition, significant legislative changes regarding the immunity issue are expected in Ukraine in the nearest future.

II. Bill No. 7520

On 5 July 2022, deputies of the Parliament registered Bill No. 7520, proposing to waive the Russia’s immunity in cases regarding compensation of damages caused by the aggression.

The authors note that granting of sovereign immunity to a state in a civil case serves for a legitimate purpose – it ensures compliance with the rules of international law on the basis of international courtesy and maintenance of good relations between states under conditions when states respect each other's sovereignty and territorial integrity. At the same time, there is no legitimate purpose for granting the immunity to the Russian Federation, since it is an aggressor state that does not respect the sovereignty of Ukraine.

The Bill envisages that:

• claimants can file claims for compensation of damages caused by the Russian aggression with civil (claimants-individuals) and commercial (claimants-businesses) courts against Russia. Moreover, claims may be filed against affiliates of Russia – companies and individuals sanctioned in EU and other foreign jurisdictions. The consent of Russia to be a respondent in Ukrainian court is not required, the consent of its affiliates is not required either.
• Court proceedings against Russia and / or its affiliates may not be suspended to notify the respondent of the proceedings via the competent state body of Russia or other foreign state. Summons shall be sent to respondent via post, delivery service, email to the official email address or by posting a respective summons on the official website of Ukrainian courts.

Respondent is considered to be duly notified on the date when the summons is sent to respondent or published.

Probably, in such a way the lawmakers tried to meet the minimum standard of treatment requirement on notification and to mitigate the risk that 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 respondent was not duly notified of the Ukrainian proceedings, was not able to present its case and was not heard).

• The Bill contains a rebuttable legislative presumption that damages are caused by Russia and / or its affiliates.
• Interim measures may be imposed on assets of Russia and / or its affiliates.
• Execution immunity of assets owned by Russia is waived. Any private or state bailiff may enforce court
• judgements against assets of Russia and / or its affiliates.
• The court fees are not payable by claimants in this category of cases.

III. Conclusions

The recent Supreme Court practice and the discussed potential amendments to the Ukrainian legislation can make domestic remedies available for individuals and businesses who suffered losses from the Russian aggression. At the same time, the compliance of such remedies with public international law is questionable which raises doubts as to the possibility to successfully enforce the Ukrainian court judgements in foreign jurisdictions where substantial Russian assets are located.

Special for Krieg und Recht