Potential ways to compensate for the damage of Ukrainian business caused by russian aggression
With regard to the experience of the past conflict we provide the information on potential ways to recover damages.
Such a mechanism for recovery of damages incurred by private individuals and entities due to military aggression is common for international practice. The most famous example thereof is UN Compensation Commission established as supplementary body of UN Security Council in 1991. The purpose for the commission’s activity was to consider claim for recovery of damages caused by Iraq’s armed invasion to Kuwait. Over the time the commission considered approx. 2.7 million of claims amounting to USD 352,5 bil. and awarded the victims with USD 52.4 bil of compensation which was paid out of the Iraq’s income from oil industry.
Establishment of national or multinational special commission for compensation of damages caused by russian federation’s armed invasion to Ukraine is possible.
This includes both: recovery of damages by decision of Ukrainian court or the foreign court with its subsequent enforcement in foreign jurisdiction (e.g., in the US).
For instance, in case of wrongful appropriation of the property located in Ukrainian territory by the entities under russian federation’s control (over 50% of shares or corporate rights). Should the control over such property be installed, the US court could hear the case for recovery of damages from russian federation if such entity has its representative office or conduct business in the US. The US court could confirm the jurisdiction over such case, if Ukrainian claimant could demonstrate the link with the US (e.g., the US-resident shareholder).
At the same time, should russian federation be recognized to be a terrorism sponsor state, that is not impossible at this time, there will be more grounds to file the relevant claims to the US courts.
- individual applications to the European Court of Human Rights;
- recovery of damages resulting from resolution of the inter-state claim to the International Court of Justice.
Regardless to the preferred mechanism, the following legal tasks shall be performed to ensure recovery of damages: recording, documenting, and assessment of the incurred damages.
In this context the following aspects shall be considered:
- Determination and recording the event;
- Documenting the fact of damages or destruction to the property;
- Confirmation of title for the property;
- Assessment of damages;
- Evidencing of the lost profits.
Please note that the recording, documenting, and assessment of the damages shall be made in accordance with the Procedure for determining of damages and losses caused to Ukraine as a result of the armed aggression of the russian federation, approved by the Cabinet of Ministers of Ukraine Decree #326 and methodologies adopted for implementation of the mentioned procedure.