Recovery of damages caused by military actions of the Russian Federation

Russian armed aggression against Ukraine caused colossal losses for Ukrainian business and the private sector. Destruction and damage to assets, loss of ability to conduct activities, lost profit – all this requires an adequate legal response. In this publication, we will consider in detail the current issues related to the recovery of damages caused by Russia’s military actions.

The possibility of filing a lawsuit against the Russian Federation in a Ukrainian court

Disputes with a foreign element about compensation for damage caused on the territory of Ukraine are subject to Ukrainian courts (clause 3, part 1, article 76 of the Law on International Private Law). However, according to Art. 79 of the above-mentioned law requires the consent of its competent authorities to file a lawsuit against a foreign state.

In this regard, the Supreme Court in the Resolution dated 04/14/2022 in case 308/9708/19 made an exception that has significant practical consequences:

– Ukrainian courts have the right to ignore the immunity of the Russian Federation and consider cases of compensation for damage caused to individuals and legal entities as a result of armed aggression.

– since 2014, due to the impossibility of diplomatic relations, there is no need to send requests to the Embassy of the Russian Federation regarding consent to consider the case.

– On February 24, 2022, such sending is impossible due to the termination of diplomatic relations.

This legal position created a procedural basis for massive lawsuits regarding compensation from the Russian Federation in domestic courts.

The necessity of notifying the Russian Federation of an open court process 

Due to the break in diplomatic relations with the Russian Federation, it is physically impossible to send postal correspondence to the aggressor. Therefore, it is currently a stable judicial practice that notification of the defendant about the legal process is carried out by placing the relevant information on the official website of the court.

However, such an approach may not be appropriate if the plaintiff intends to enforce a court decision in a foreign jurisdiction in the future, since the vast majority of countries in order to recognize a foreign decision on their territory require the provision of evidence of proper notification of the defendant about an open legal process in relation to it.

For more than two years of full-scale war, domestic courts have passed a significant number of court decisions on recovery from the Russian state of damage caused by it as a result of military actions. In the majority of such decisions, the notification of the defendant about the legal process was carried out precisely through the publication of information on the court’s website. Such a circumstance can be a significant obstacle in the process of enforcement of a court decision.

In such a case, we advise you to comply with all legal requirements for sending procedural documents and notices to the defendant. To do this, you need to translate the relevant documents into Russian and send them through the postal services of third countries (for example, Georgia, Kazakhstan, Turkey).

Our firm has an extensive network of partner attorneys and lawyers around the world and therefore is able to execute such an option without any difficulties.

In addition, procedural documents and court notices should be sent to the diplomatic mission of the Russian Federation, which is located in the country in which the plaintiff plans to carry out further recognition and enforcement of the decision of the Ukrainian court.

Enforced execution of the decision of the Ukrainian court on recovery from Russia of damages caused by the war

The decision of the Ukrainian court is unlikely to be complied with by the Russian Federation voluntarily, so the plaintiffs should count on forced recovery of assets belonging to Russia.

Potential enforcement can be implemented in two ways:

1. Enforced execution of a court decision in Ukraine at the expense of the aggressor’s assets located in Ukraine. However, taking into account the amount of damage caused, the assets of the Russian Federation will not be enough to satisfy the demands of all victims of military aggression.

2. Enforcement of a court decision in a foreign country at the expense of the aggressor’s assets located in such a country.

In order to implement this option, it should be understood that in order to enforce a decision of a Ukrainian court, one must go through a special procedure for recognizing such a decision and obtaining a permit for its enforcement in a certain foreign country.

The recognition procedure is regulated by an international bilateral agreement between Ukraine and the relevant country, and in the absence of such an agreement, by the national legislation of a foreign country on the principle of reciprocity (that is, in such a country, it will be necessary to provide evidence that Ukraine, on the principle of reciprocity, recognizes and executes similar court decisions of such a country).

Ukrainian procedural legislation establishes that in order to recognize a foreign court decision on the territory of Ukraine, it is necessary to provide, in particular, evidence that the defendant, who did not participate in the case, was properly notified of the place, date and time of the hearing of the case (Article 466 of the Code of Criminal Procedure). Therefore, in countries with which Ukraine does not have a bilateral agreement, a similar requirement will most likely be applied, and in countries with which Ukraine has an agreement, everything will depend on the agreed conditions between the countries regarding this issue.

Therefore, such evidence of the defendant’s notification of the place, date and time of the hearing as the publication of information on the court’s website may potentially not be accepted.

In addition, once again, even if the plaintiff has enough procedural documents to recognize the decision of the Ukrainian court in a foreign country, it should not be forgotten that the recovery is planned from the assets of the Russian state located in a certain country. And this, in turn, again requires a solution to the issue of judicial immunity of the Russian Federation in a foreign country.

In the context of this issue, it should be taken into account that a number of states are constantly expanding the application of the principle of judicial immunity, supplementing it with such a subspecies as functional immunity. The principle of functional immunity boils down to the fact that it is allowed to levy state property that is used for commercial purposes. Property used for the performance of government functions (for example, the property of a diplomatic mission) is subject to judicial immunity.

Therefore, before choosing a foreign jurisdiction in which further enforcement of the decision of the Ukrainian court is planned, attention should be paid to countries that recognize functional immunity for state assets of another country. For example, the USA and the member countries of the European Convention on State Immunity of 1972, including Germany, Austria, Luxembourg, Cyprus, Belgium, the Netherlands, and Switzerland.

Therefore, if the plaintiff plans in the future to enforce the decision of the Ukrainian court on the recovery of damages caused by the military aggression of the Russian Federation, it is advisable to analyze all the above-mentioned nuances and evaluate the prospects for further actions even at the stage of filing a lawsuit in the Ukrainian court.

Prospects of filing a claim for damages from the Russian Federation to a foreign court

An alternative option for the victim to recover damages from the Russian Federation is to initiate a legal process on the territory of a foreign country. This option is not universal, but it can be effective in the case of establishing a legal connection of assets on the territory of Ukraine or the plaintiff with such a foreign country. These can be, in particular, the connection of business activities with such a country, issues of residence of business owners or investors, etc.

To implement such an option, the jurisdictional powers of a foreign court should be established to consider such a dispute against the Russian Federation in accordance with the provisions of their domestic legislation and the issue of judicial immunity in such a country should be analyzed. In the event that a foreign court recognizes its jurisdictional competence for consideration of this dispute and the issue of judicial immunity is positively resolved, then the further implementation of a local court decision will be much easier than implementing the recognition of a Ukrainian court decision in such a country.

Summing up the above, if you have additional questions or need domestic or international legal support for the recovery of damages caused by the military actions of the Russian Federation, please contact our company.