01 July 2022, 12:34

Winning a case against Russia: what's next and how to collect your money.

The pitfalls of enforcing decisions of national courts against the aggressor state

Olexiy Kharytonov
Olexiy Kharytonov «ЮФ ILF» lawyer, head of litigation and partner

Ukraine’s legal community believes right now that getting compensation for damages caused by Russia’s military aggression through litigation in domestic courts is sufficiently feasible. It’s expected that filing a claim against Russia with a Ukrainian court will allow citizens to collect non-pecuniary damages for forced displacement, death of a loved one, etc. (which cannot be done out of court), and business owners will be able to obtain compensation for losses and lost profits caused by the invasion. It seems simple enough – win your case against the terrorist state and get compensation – but it’s very likely that enforcing judgments of national courts will be a more complicated and lengthy endeavor than winning the case itself. This is first and foremost due to obstacles present in international law. We examined how feasible it is to enforce judgments of Ukrainian courts involving Russia and how it can be accomplished.

The Ukrainian version of the material read at the link.

Current case law of the Supreme Court in cases against the aggressor state.

In April 2022, media reported that the Supreme Court (SC) adopted a new legal position regarding lawsuits filed against Russia by those affected by the war. Our country’s highest judicial authority essentially gave courts the green light to examine cases on collecting damages where Russia is the respondent (the SC ruled that the aggressor state can no longer hide behind state immunity given the scale of damage it has caused).

It’s worth recalling that prior to this, national courts were refusing to satisfy lawsuits against Russia concerning damage caused during the Anti-Terrorist Operation (Joint Forces Operation), citing Article 79 of the Law of Ukraine "On Private International Law".

This article states that a foreign state, including Russia, can be a respondent in legal proceedings conducted by a Ukrainian court only if a competent authority of that state in Ukraine (e.g. an embassy) agrees to this (in other words, state immunity to being sued). This rule is based on the sovereignty and realization of sovereign rights of every state ("an equal has no authority over an equal"). Since the Russian embassy wasn’t giving its consent, it was impossible to sue Russia.

On May 18, 2022, the SC reiterated its stance that Russia no longer has immunity in Ukraine, citing additional arguments (case 760/17232/20), namely:

● Maintaining Russia’s immunity would deprive plaintiffs of effective access to justice for the protection of their rights, which is incompatible with para 1, Article 6 of the European Convention on Human Rights (right to a fair trial).

● Russia's immunity does not apply here, in accordance with customary international law codified in the UN Convention on Jurisdictional Immunities of States and Their Property (2004). This international instrument contains a provision according to which a state cannot invoke immunity in cases involving a person’s death or injury or damage to property if it was committed, in whole or in part, in the territory of the court’s state and if the author of the act was in the court’s state at the time (Article 12).

● Russia’s actions have gone beyond its sovereign rights (which state immunity is aimed at protecting), as no state is entitled to military aggression against another state. Therefore, by launching an unprovoked full-scale invasion and committing genocide against the Ukrainian people, Russia has lost the right to state immunity.

We are seeing a rapidly developing case law in Ukraine that allows any individual and business owner, without prerequisites, to pursue litigation against Russia in Ukrainian courts concerning damages caused by Russia.

However, the most urgent problem right now, both for those who already won their case against the terrorist state and those who are still to file their claims, is how to collect the money awarded by the court – what needs to be done to enforce a judgment. There are two options here:

● enforcing judgments in Ukraine;

● enforcing judgments abroad.

Both scenarios have their caveats, so let’s delve deeper and see what they are.

Enforcing judgments in Ukraine

Let’s say, citizen A wins a case against Russia (in the first instance court right away), and the court rules that the aggressor state must pay UAH 1 million in non-pecuniary damages for causing the plaintiff’s displacement from the temporarily occupied territory. Citizen A has no desire to deal with foreign jurisdictions or study foreign laws and international agreements on enforcement of judgments. He just wants to collect his money in his own country, using a legally valid court decision. So what’s next?

It should be noted that the algorithm here is not much different from collecting a debt from an individual or legal person. So even with Russia as the debtor, enforcement mainly relies on the Civil Procedure Code (Section VI) and the Law of Ukraine "On Enforcement Proceedings" (hereinafter - the Law).

Thus, under current legislation, compulsory collection of funds from Russia (assuming it refuses to comply with the judgment) will involve the following steps:

● submitting an application for a writ of execution to the court that examined your case (it’s on the basis of this document that the competent authority will be enforcing the judgment).

● submitting the writ of execution along with an application for compulsory enforcement of a court decision (para 1, part 1, Article 26 of the Law) to an office of the State Executive Service (state executor), because under the Law, private collection services may not enforce judgments where a state is the debtor (para 2, part 2, Article 5 of the Law).

Main difficulties and nuances of enforcing such judgments

● Right away there’s the issue of determining the location of enforcement: according to the Law, enforcement is carried out by the state executor at the place of residence, temporary stay or work of the debtor, or where his property is located (part 1, Article 24 of the Law).

It follows that in order to determine in which office of the State Executive Service to initiate enforcement proceedings, you essentially have to perform a search for Russia’s property located in Ukraine. You need to mention in your enforcement application that the debtor’s property is located within the jurisdiction of the appropriate office of the State Executive Service (otherwise an application submitted to the wrong office will be returned to the applicant in accordance with para 10, part 4, Article 4 of the Law).

There arises a whole slew of additional questions as well: do you need to locate any Russian property in Ukraine or only property that can be used for collection purposes; how to manage this, given that there is no dedicated register of such property; what evidence must be provided to demonstrate that Russia is the owner of that property (for instance, is it sufficient to cite sources on the Internet), etc.

Current legislation provides no answers to these questions. This could be rectified with amendments to the Law "On Enforcement Proceedings" that would allow initiating enforcement proceedings at the place of registration/residence of the claimant (then state executors would be able to launch enforcement proceedings and search for Russia’s property on their own).

● Russia’s assets in Ukraine are insufficient to satisfy the claims of all individuals affected by the invasion. Russian assets are currently being seized under the Law "On Fundamental Principles of Compulsory Seizure in Ukraine of Property Belonging to the Russian Federation and Its Residents," but these assets go to the state of Ukraine. Individuals and business owners should not expect their compensation to be paid out of this pool. At the same time, there may be a mechanism in the future that will allow collecting money in this way.

In addition, the norm of customary law (Article 19 of the UN Convention on Jurisdictional Immunities of States and Their Property) limits the range of property that is subject to collection. According to this norm, enforcement may only be applied to property that is owned by the state (and not, for instance, by Russian oligarchs) and is used for government commercial purposes (thus, the property of Russian embassies or churches is used for non-commercial purposes, while that of a Russian bank is used for commercial purposes).

Given the difficulties in finding assets owned by Russia in Ukraine and their meager amount which obviously won’t be enough for everyone, we can expect plaintiffs to seek satisfaction in foreign states.

Enforcing judgments abroad

As a rule, enforcement of judgments delivered by Ukrainian courts in a foreign state is done on the basis of international agreements (bilateral or multilateral) between Ukraine and foreign states or, in the absence of such agreements, based on the principle of reciprocity. The procedural law of the state of the court to which the person turns for enforcing the judgment will also apply here.

The person seeking to enforce a judgment against Russia abroad must apply to a foreign court for permission to enforce the judgment of a Ukrainian court / declaring said judgment enforceable (the name and format of the document may differ depending on the country’s law). Under Ukrainian law, the issue of granting permission to enforce a foreign court’s judgment must be examined by the court in whose jurisdiction the debtor's property in Ukraine is located (part 2, Article 464 of the Civil Procedure Code of Ukraine). Procedural law of other countries may contain similar provisions, so Ukrainians may still be forced to look for Russian assets in the relevant foreign state and then apply to the court that has jurisdiction over the area where said property is located.

It’s also a distinct possibility that such applications will not be granted anyway, given the legislation of other countries and the case law of international courts (International Court of Justice, European Court of Human Rights).

Why it is likely that judgments of Ukrainian courts will not be enforced abroad

It’s mainly because in most countries, states are immune to being sued. It’s usually stated in the procedural law of these countries that judgments may not be enforced in the territory of a foreign state if this goes against public order (in other words, if it is contrary to the law of the court’s state). A similar rule is found in international agreements on legal assistance in civil and criminal cases. Thus, if a country may be a respondent in Ukraine but not in another country, the foreign court will probably deny your application. An opinion is currently circulating among lawyers that courts of a country that is on good terms with Ukraine and has Russian assets could still permit enforcement even though declaring the judgment enforceable would mean going against public order). However, this doesn’t seem feasible unless the relevant country changes its approach to having states act as respondents in another state’s court.

Germany v. Italy: Greece intervening examined by the ICJ is a perfect example of a case that involves state immunity. The case concerned judgments delivered by Italian courts between 2004 and 2008 that awarded compensation to plaintiffs – victims of war crimes and crimes against humanity committed by the Third Reich during World War II (Germany was a respondent in Italian courts). In 2008, Germany instituted proceedings against Italy for violating Germany's immunity as a sovereign state and thus international law itself.

The ICJ ruled that neither international agreements nor international customary law allowed depriving states of immunity in cases involving acts which caused death, injury or property damage and which were committed in the territory of a court’s state by the armed forces of another state in the context of an armed conflict.

As for the ECtHR, in most cases that dealt with the question whether one state can be a respondent in another state’s court (McElhinney v. Ireland, Al-Adsani v. United Kingdom, Fogarty v. United Kingdom, etc.), the Court noted that while there is a trend in international law toward limiting states’ immunity, such practice is not common and does not apply to acts committed by a state’s military in another state’s territory.

Key takeaways:

 1. Judgments of Ukrainian courts against Russia can potentially be enforced in our country, but in order to enable victims of Russia’s aggression to effectively uphold their rights in court and receive actual compensation, it’s necessary to:

● Amend legislation governing enforcement proceedings (including in regards to the location of enforcement actions), as well as develop a simple and accessible procedure for enforcing decisions against the aggressor state.

● Introduce the option and develop a mechanism for collecting awarded compensation using Russian assets that have already been confiscated by Ukraine, in accordance with the Law "On Fundamental Principles of Compulsory Seizure in Ukraine of Property Belonging to  the Russian Federation and Its Residents" (to spare individuals and business owners the hassle of having to search for Russian assets on their own).

2. Collecting compensation abroad is technically possible, but it would require the following:

● Changes in the case law of international courts (namely the ICJ and ECtHR) which would make it possible for one state to be a respondent in another state’s courts when the armed forces of the former are responsible for war crimes, violation of fundamental principles and norms of international law and, consequently, for causing damage in the context of an armed conflict.

Transformation of the position of foreign states, especially those that are friendly toward Ukraine, regarding the issue of state immunity to lawsuits and judgment enforcement, which would help Ukrainians obtain compensation using seized Russian assets abroad.

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