Sanctions on Russia and Reparations for Ukraine

Olga Golovina

Editorial Coordinator

Tuesday, 1 August, 2023

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Widespread sanctions on Russia have been introduced and strengthened since its full-scale invasion of Ukraine began on February 24, 2022. Ukrainian deputy minister of justice Iryna Mudra tells IWPR’s Olga Golovina how such policies could be integrated with a compensation mechanism for damages caused to Ukraine. 

IWPR: The British government announced plans to tighten its sanctions policy against Russia. How could this help on the road to justice?

Iryna Mudra: The UK, the EU and other G7 states have imposed a massive and unprecedented set of sanctions against Russia and persons directly or indirectly involved in the aggression against Ukraine.

On June 19, 2023 the British government announced the introduction of the new legislation enabling sanctions on Russia to be maintained until Moscow pays compensation to Ukraine. It will also make persons and entities in the UK or UK persons and entities overseas, designated under the Russia financial sanctions regime, disclose information on assets they hold in the UK.

The strengthening and imposition of new restrictive measures against the Russian Federation and persons directly or indirectly involved in armed aggression against Ukraine will provide for a proper, functioning international mechanism for reparation for damage, loss or injury
advocated by Ukraine….[and] will also prevent financing and support of the armed aggression against Ukraine and its consequences. Such actions will provide financial pressure as a tool to ultimately cease the aggression against Ukraine.

Ukraine welcomes actions aimed at the tightening of the sanctions policy by the UK and other partner states. This will provide victims who suffered from this brutal, unprovoked war with due compensation for all damage, loss or injury caused by the aggressor state. This will also help to hold the Russian Federation liable for all severe violations of international law conducted within the territory of Ukraine.

The British government has proposed a new route for frozen assets to be donated to the reconstruction of Ukraine. How might this work?

From the beginning of Russia’s full-scale invasion, the Ukrainian government in close cooperation with its global partners and prominent international organisations has developed a one-of-a-kind concept of the mechanism for reparation for damage, loss and injury caused by Russian aggression in Ukraine.

It is assumed that such a compensation mechanism would be composed of three interrelated elements: an international register of damage, a claims commission and a compensation fund mandated to examine and adjudicate claims and/or pay compensation for damage, loss or injury caused by the Russian Federation’s internationally wrongful acts in or against Ukraine.

On May 12, 2023 the International Register of Damage was created under the auspices of the Council of Europe. It will record, in documentary form, evidence and claims information on damage, loss or injury, caused on or after February 24, 2022 by the Russian Federation in the territory of Ukraine. To date, 42 states and the EU have joined or have expressed their intention to join.

On June 27, 2023 the conference of participants of the Register of Damage held its first meeting as a governing body… and its work will be launched as soon as possible.

The Register of Damage constitutes the first component of the comprehensive compensation mechanism. Ukraine in close cooperation with its international partners is working on the legal basis for a claims commission and a compensation fund.

The main goal is to pay real compensation to the victims at the cost of the aggressor, as well as the restoration of justice…both a guarantee of peace and prevention of further violations of the world order. 

What are the biggest challenges in the process of compensation payments to victims of armed aggression?

Ukraine and its allies are currently facing two main categories of challenges regarding the implementation of compensation payments to victims: legal and political.

From a legal perspective, under international and EU law and the national legislation of different states, the seizure of frozen Russian sovereign assets is quite complicated and sensitive. Mostly this is due to the principle of sovereign immunity which protects Russian sovereign assets from seizure. Ukraine is leading active discussions with its international partners on legal means aimed to limit the scope of the principle of sovereign immunity due to Russian armed aggression against Ukraine, exclusively for the purpose of holding Russia accountable for violations of the norms and principles of international law.

From the political perspective, Ukraine does not have the unilateral right to draft and launch an international instrument to serve as a legal basis for the future compensation mechanism without reaching a consensus with its international partners. It means that the concept of a compensation mechanism can be realised only in cooperation and with consent received from all states concerned.

Has the Ukrainian government looked at previous examples of an effective compensation mechanism as a model?

The Working Group, set up on May 18, 2022, has made a comprehensive legal and historical analysis of previous models of compensation mechanisms… [including] the UN Compensation Commission, the Iran-US Claims Tribunal, and the Eritrea-Ethiopia Claims Commission. The work of the UN Register of Damage Caused by the Construction of the Wall in the Occupied Palestinian Territory has been analysed as well.

Taking into account that Russia’s full-scale invasion of Ukraine is unprecedented in its nature, there is an absence of effective legal instruments or mechanisms under modern international law to both hold the aggressor liable and compensate all damage, loss and injury.

The legal architecture and experiences of international compensation mechanisms have been taken into account by the Working Group in the process of development and introduction of a one-of-a-kind concept of the International mechanism for reparation for damage, loss and injury caused by the Russian aggression.

How would compensation work regarding individual claims, rather than national or institutional?

One of the fundamental principles of the proposed International compensation mechanism is a victim-centred approach. Often, the full-scale invasion  Ukraine is compared with WWII due to the unprecedented damage, loss and injury.

However, it should be emphasised that reparation mechanisms set up at the end of WWII provided only for payments that were made directly by the defeated states to the victorious ones.

This post-WWII reparation mechanism did not take into account the interests of individuals and legal entities and did not provide them with the opportunity to gain compensation. 

At the same time, it is expected that within the framework of an international compensation mechanism claims of individuals, legal entities and state of Ukraine would be considered by a commission which would examine and adjudicate claims for compensation for damage, loss or injury.

According to Article 2, paragraph 2.3. of the Statute of the Register of Damage Caused by the Aggression of the Russian Federation Against Ukraine, claims, evidence and related information shall be submitted to the Register by natural and legal persons concerned, as well as the state of Ukraine (including its regional and local authorities, and state-owned or controlled entities).

For now, active work is ongoing within the Register of Damage to develop the rules of procedure, reception of claims, and categorisation of damage and list of potential claimants.

What we are certain of is that compensation for damage caused by the armed aggression to individuals who suffered the most - lost their health, family members, housing and victims of sexual violence - will have the highest priority when considering claims for compensation.