Ukraine is working on a new unique mechanism for receiving reparations from russia

According to recent assessments, the overall Ukraine’s economic losses due to the war, as estimated by the Ministry of Economy and KSE (Kyiv School of Economics), including both direct losses (damage and destroy of civil and military infrastructure, housing, etc.) and indirect losses (GDP decline, investment cessation, outflow of labor, additional defense and social support costs, etc), range from $564 billion to $600 billion. 

"We all agree that russia has started this full-scale invasion and it has to pay for it.

It has to pay with the punishment of the military and political leadership, pay with their assets, assets of their proxies scattered around the world", explains Deputy Minister of Justice of Ukraine Iryna Mudra. Her authority involves strengthening the international cooperation in the area of international law, international courts, and the development of the mechanisms for obtaining reparations from the russian federation. 

However, today it is not possible to receive effective compensation from russia for large-scale destruction in Ukraine through any of the existing international or national bodies. The reason for this isjurisdiction issues, arguments on the merits and the amount of compensation, obstacles in the form of sovereign immunity or practical impossibility of obtaining real funds at the stage of execution of decisions.

For example, the European Court of Human Rights that deals with human rights violations. Ukraine is currently finalizing an intergovernmental lawsuit to the ECtHR to bring russia to justice for violating the European Convention for the Protection of Human Rights and Fundamental Freedoms. However, according to Mudra, the Ministry of Justice has no illusions about a quick decision on this case for two reasons: 

  1. Such cases are considered for years
  2. When in a few years the court rules in favor of Ukraine, or a citizen or a law firm, there arises a question about the tools to enforce this decision and to actually recover monetary compensation. Unfortunately, today there are no legal mechanisms for the automatic execution of the European Court of Human Rights's judgements. And due to russia's withdrawal from the Council of Europe and the denunciation of the convention, the instruments that will induce russia to enforce the sentence are still unclear.

Damage compensation through the UN International Court of Justice is also not so easy. Apart from the duration of case proceedings and delivery of judgement, the mechanisms to impose liability on russia might also not work. The UN Security Council, to which a party should appeal in the event of russia's non-compliance with the International Court of Justice, would have to issue its own decision that would force russia to execute the verdict. However, given russia's existing veto power in the Security Council, this mechanism is also not practicable.

Due to the lack of the effective mechanisms and the realization that russia will never pay reparations voluntarily, Ukraine is working on a new unique mechanism of compensation for the damage caused by russia's illegal armed invasion.

A presidential decree №346/2022 established a work group to develop and implement international legal mechanisms to indemnify the damage caused to Ukraine as a result of the armed aggression of the russian federation.

This group consists of both public officials and representatives of Parliament, as well as representatives of the Government, of the Office of the President of Ukraine, and representatives of the legal community, leading lawyers, including international ones. 

The group elaborated a key concept of an all-encompassing framework to ensure credible compensation for the losses caused by russia to Ukraine through the conclusion of a multilateral international treaty between Ukraine and the states concerned. Basically, we are talking about the states in whose territory there are assets that have been frozen, blocked, and subject to sanctions. 

The legitimacy of such a treaty should be supported by other international acts, such as a separate resolution of the UN General Assembly, perhaps, the acts of the Council of Europe and other regional organizations. The more countries agree to become parties to such a treaty, the more compelling will be its international legal significance.

Thus, this treaty will provide for the creation of a mechanism for considering the claims of Ukraine, as well as individuals and legal entities affected by the russian aggression. That is, this will be a kind of compensation commission which will be entitled to consider the claims of legal entities and individuals of the states who became victims of russian aggression, and make decisions, and such a decision will be implemented at the expense of funds to be transferred to the compensation fund and consisting of those assets that have been frozen in different jurisdictions, and the very monetary items.

The vision of the work group is that the fund will be replenished with funds of the russian federation itself blocked in the Central Bank of russia, the National Welfare Fund, the russian Direct Investment Fund and a number of state-owned companies. Also, confiscated assets of Russian oligarchs, special taxes, the percentage of exports of Russian energy, etc. may be a source.

The mechanism is new and unique and it requires not only changes at the level of international law in terms of concluding an international agreement, but also a deep work with the national legislation of many countries.

"At the diplomatic level, we have already started communication with states; at the legal level, we communicate with the international legal and academic community and practitioners and receive feedback”, Iryna Mudra explained.