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A key question for EU leaders debating whether to use frozen Russian property to help ukraine It’s whether the idea is legally sound. But even if they approve the plan, Russia has limited options to challenge it in court.
Leaders of the Group of 27 nations are set to decide whether to use billions of euros held in the Russian Central Bank’s frozen assets to provide loans to finance Ukraine’s military and financial needs over the next two years. The majority of the assets are held with Euroclear, a Belgium-based financial clearinghouse.
belgium Said Thursday that he wants ironclad guarantees that he will be protected from retaliation — legal, financial or otherwise — and that poses a major hurdle.
Russia is trying to target Euroclear
Russia’s Central Bank filed a complaint against Euroclear in Moscow’s Arbitration Court last week, seeking to recover assets seized since the start of the full-scale invasion of Ukraine on February 24, 2022.
The central bank said in a statement that the lawsuit was over “the illegal blocking and use of its assets in the amount of illegally held assets and lost profits.”
Should the central bank prevail, it will have to struggle to recover any decisions. For more than a decade, the EU has banned the enforcement of Russian court judgments involving frozen assets.
Belgium has repeatedly expressed concerns about its obligations with Russia under a 1989 treaty encouraging economic relations between the countries. Belgian Prime Minister Bart de Wever said on Thursday that any EU plan must take into account “fiscal risks arising from bilateral investment treaties”.
The arbitration options provided for in the treaty are limited and designed for Russian companies investing in Belgium. Lawyer Patrick Heineman, co-author of a legal risk analysis on the topic, told the Associated Press that the mechanism is “for disputes between a private investor and the state in which the investment was made”.
other options
Heinemann says Russia could try to file suit in any domestic court in the world where its assets are held, but to do so would require it to waive its state immunity – opening itself up to a host of other legal challenges. And Belgium, or any other country holding Russian assets, would have to agree to waive its own immunity for the lawsuit to proceed.
Moscow could challenge Euroclear, a private company, in a Belgian court, but it would then be vulnerable to Euroclear’s counterclaims and any outcome would likely be unenforceable in Belgium.
a last resort
Although Russia is not part of the EU, it can challenge any decision taken by Brussels in the bloc’s top court in Luxembourg. It is rare for non-member states to bring complaints to the EU Court of Justice, but it has happened, including against Moscow over EU sanctions packages. That complaint was found inadmissible.
Recently, Venezuela went after the European Union over sanctions imposed on the South American country over human rights abuses. Caracas also failed, with judges finding that Brussels had broad authority over foreign security policy.
The European Court of Human Rights ruled Russia out after a full-scale invasion, closing Moscow to that option.
The highest court of the United Nations, the International Court of Justice There is also an unexplored area, says Mike Baker, an expert in international human rights law at Trinity College Dublin, based in The Hague.
“It is not clear that any applicable treaty provides the Court with jurisdiction to hear such a case,” he told the AP.
A recent white paper from law firm Covington & Burling reached a similar conclusion, stating that “Russia does not accept the mandatory jurisdiction of the Court.”