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Claims against Russia: Why the Ukrainian Government Fell a Victim to Its Promises


Dmytro Shemelin, Lawyer at Ilyashev & Partners Law Firm
Source: Forbes Ukraine

Just a few days ago it was reported for the first time that PrivatBank filed the first investment lawsuit against Russia for the Crimean property; Oschadbank also promised to do so soon. The remaining owners of the Crimean assets keep silent, just as the state is in no hurry to file trillion lawsuits against Russia.

75 years ago, on May 13, 1940, Winston Churchill first spoke as the prime minister before the House of Commons in the UK. Three days before Germany invaded Holland. A week later, on May 20, the German tanks reached the English Channel at Abbeville, slamming the British army surrounded.

Churchill said, “I repeat to the House the words I had already said to a new government: “I can not offer anything but blood, toil, tears and sweat”.

Unlike Churchill in 1940, our politicians do not like to scare people by toil, blood and tears. Thus, in the field of international litigations against Russia, the Ukrainian government fell a victim to its own rosy promises in 2014.

Oaths of politicians to file “trillion” claims to the international courts against the aggressor in the shortest possible time caused exaggerated expectations of the people and, as a consequence, very quick disappointment. Eighteen months after the Maidan and the annexation of the Crimea Ukraine has not initiated any property or territorial claim against the Russian Federation. However, is there any use in blaming the government that the case, by all indications, is proceeding rather slowly?

International courts are indeed an excellent example of “a millstone of the Lord”: they grind slowly, but, if cared properly, quite reliably.

Can we sue the Crimea back?

The International Court of Justice, the court written with a capital letter, which considers territorial claims of the states, results of wars and annexations, awards compensations and draws borders has been operating in the Hague on the ​​Carnegie square for almost 70 years. Theoretically, it would be able to consider legality of actions of Russia in the Crimea and order to return the peninsula to Ukraine.

However, for the Court to consider the claim of one country against another, consent of both countries is required. It is clear that such an agreement from Russia cannot be received now, thus, they need to rely on the international treaties in which Russia had already agreed to transfer any disputes to the ICJ.

Unfortunately, so far no one has found such agreements, which would enable to consider a territorial dispute between Russia and Ukraine. Last year, there was a proposal to file a lawsuit against Russia on the basis of the 1999 Convention for the Suppression of the Financing of Terrorism. However, even if proved in court, that Russia is financing terrorists in the east of Ukraine, it will not help to return the Crimea.

Moreover, if by some miracle Russia agrees to consideration of the territorial dispute and the Crimea is awarded the Ukraine, there is a second problem – execution of judgments of the Court. The Court as the Pope in the famous replica of Stalin has no tank divisions. Power return of the Crimea by means of a military operation against the nuclear weapon state is excluded.

It is possible to obtain the ICJ judgment, which is not subject to execution, also in another way: to succeed in addressing the Court of Justice for an advisory opinion on the preservation of the territorial integrity of Ukraine. Ukraine itself can not file such a request, but it is possible to convince an appropriate international organization, such as UNESCO or the IMF, or to vote in the UN General Assembly.

However, considering that the international community already recognizes the Ukrainian Crimea, as confirmed by the UN General Assembly resolution of March 27, 2014, the value of judgment of the Court itself, without execution, is not so great.

For this reason, the claim of Ukraine to the ICJ on the issues of Crimea is unlikely to be considered as a priority step.

Is it possible to obtain compensation for the property in the Crimea?

At present international law solves the issues of property compensation much better. In the situation of the Crimea investment arbitration and the European Court against Russia seem attractive.

Here there is a paradox. Both of instruments are designed primarily for individuals and are based on private initiative.

Ukraine can not file a claim against Russia to the investment arbitration. Moreover, if Ukraine explicitly makes own state-owned enterprise to file investment lawsuits against Russia, or, e.g. finances arbitration proceedings from the state budget, the court of arbitration may refuse to consider such cases as the de facto initiated by the state.

Private Ukrainian companies do not hurry to file investment lawsuits: it is expensive, winning is not guaranteed, prospects for recovery from Russia are not the best, and maybe they are just reluctant to quarrel with the northern neighbor.

The great advantage of arbitration is the possibility of imposing sanctions on the Russian state property in almost every country of the world. Now Yukos is trying to implement it in practice with its $ 50 billion judgment against Russia. If Yukos succeeds, interest to arbitration proceedings will increase definitely.

The European Court (ECHR) is probably the best option for Ukraine in terms of price-result ratio. It is no wonder that Ukraine acts actively in this regard: three lawsuits have been filed already, and, as reported by the Ministry of Justice, they continue to be filled with evidence.

Ukraine is suing Russia only formally on his behalf, and in fact it is suing in the interest of private individuals – its citizens and companies. The European Court will not compensate state ownership in the Crimea.

On the other hand, the state needs help: the more people join the lawsuits of Ukraine, the more files will be submitted to the European Court, the higher is the probability of winning. So far, the mass march of the Ukrainians to the European Court against Russia is not observed.

However, the European Court suffers from a fundamental restriction – its judgments are executed in practice only voluntarily. Most recently, the Russian Constitutional Court found that the Constitution of the Russian Federation has priority over judgments of the European Court in the territory of Russia. Thus, it is easy to predict that with regard to compensation for the property appropriated in the ancient Korsun, we can hardly expect Russia’s voluntary execution of ECHR judgments.

The sanction for failure – exclusion of the infringer from the PACE – has not been applied yet. in turn, Russia is not too happy with the PACE, where it had already been called the aggressor and was deprived of the right to vote, and may consider withdrawal from the PACE as a small fee for the opportunity to ignore judgments of the European Court.

Thus, property claims against Russia, along with imposition of enforced collection on the Russian property abroad, are so far the most effective means of influence on Russia. Such cases require, above all, powerful and well-financed private initiative.

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