[Joint House and Senate Hearing, 118 Congress]
[From the U.S. Government Publishing Office]
MAKING RUSSIA PAY: SOVEREIGN ASSET
CONFISCATION FOR UKRAINIAN VICTORY
=======================================================================
HEARING
BEFORE THE
COMMISSION ON SECURITY AND
COOPERATION IN EUROPE
U.S. HELSINKI COMMISSION
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED EIGHTEENTH CONGRESS
SECOND SESSION
__________
DECEMBER 6, 2023
__________
Printed for the use of the Commission on Security and Cooperation in
Europe
[CSCE118-11]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Available via www.csce.gov
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U.S. GOVERNMENT PUBLISHING OFFICE
54-252 WASHINGTON : 2024
COMMISSION ON SECURITY AND COOPERATION IN EUROPE
U.S. HELSINKI COMMISSION
HOUSE SENATE
JOE WILSON, South Carolina Chairman BEN CARDIN, Maryland Co-Chairman
STEVE COHEN, Tennessee Ranking ROGER F. WICKER, Mississippi
Member Ranking Member
ROBERT B. ADERHOLT, Alabama RICHARD BLUMENTHAL, Connecticut
EMANUEL CLEAVER, II, Missouri JOHN BOOZMAN, Arkansas
RUBEN GALLEGO, Arizona TIM SCOTT, South Carolina
RICHARD HUDSON, North Carolina JEANNE SHAHEEN, New Hampshire
MIKE LAWLER, New York TINA SMITH, Minnesota
VICTORIA SPARTZ, Indiana THOM TILLIS, North Carolina
MARC A. VEASEY, Texas SHELDON WHITEHOUSE, Rhode Island
EXECUTIVE BRANCH
Department of State - Erin Barclay
Department of Defense - Celeste Wallander
Department of Commerce - Don Graves
C O N T E N T S
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Page
COMMISSIONERS
Hon. Joe Wilson, Chairman, from South Carolina................... 1
Hon. Steve Cohen, Ranking Member, from Tennessee................. 11
Hon. Sheldon Whitehouse, from Rhode Island....................... 11
Hon. Richard Blumenthal, from Connecticut........................ 14
Hon. Victoria Spartz, from Missouri.............................. 20
WITNESSES
Ambassador Daniel Fried, Atlantic Council Weiser Family
Distinguished Fellow........................................... 4
Paul Reichler, International Law Attorney, 11KBW................. 6
Yuliya M. Ziskina, Senior Legal Fellow, Razom for Ukraine........ 9
Andriy Kostin, Prosecutor General of Ukraine..................... 17
Ruslan Stefanchuk, Chairman of the Verkhovna Rada of Ukraine..... 18
MAKING RUSSIA PAY: SOVEREIGN ASSET
CONFISCATION FOR UKRAINIAN VICTORY
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COMMISSION ON SECURITY AND
COOPERATION IN EUROPE,
U.S. HELSINKI COMMISSION,
HOUSE OF REPRESENTATIVES,
Wednesday, December 6, 2023.
The hearing was held from 2:12 p.m. to 3:41 p.m., Room 608
Dirksen Senate Office Building, Washington, DC, Representative
Joe Wilson [R-SC], Chairman, Commission for Security and
Cooperation in Europe, presiding.
Committee Members Present: Representative Joe Wilson [R-
SC], Chairman; Representative Steve Cohen [D-TN], Ranking
Member; Senator Sheldon Whitehouse [D-RI]; Senator Richard
Blumenthal [D-CT]; Representative Victoria Spartz [R-IN].
Witnesses: Ruslan Stefanchuk, Chairman of the Verkhovna
Rada of Ukraine; Andriy Kostin, Prosecutor General of Ukraine;
Ambassador Daniel Fried, Atlantic Council Weiser Family
Distinguished Fellow; Paul Reichler, International Law
Attorney, 11KBW; Yuliya M. Ziskina, Senior Legal Fellow, Razom
for Ukraine.
OPENING STATEMENT OF JOE WILSON, CHAIRMAN, U.S.
HOUSE, FROM SOUTH CAROLINA
Chairman Wilson: Ladies and gentlemen, I am Joe Wilson,
Chairman of the U.S. Commission on Security and Cooperation in
Europe, and just wanted to welcome everyone to be here. We have
a circumstance where there is markup in the House, and then we
also have different meetings that are underway, but people will
be coming and going. I am really grateful that Senator Sheldon
Whitehouse of the beautiful State of Rhode Island is here.
We will be beginning, and--because it is so important, the
issues that we are discussing today in this hearing indeed. It
is about ``Making Russia Pay: Sovereign Asset Confiscation for
Ukrainian Victory.'' I would like for our witnesses to take
their place, and then we will be truly underway.
The hearing will come to order. It has been nearly 2 years
since war criminal Putin's full-scale invasion of Ukraine. War
criminal Putin has committed murderous atrocities against
Ukrainians, including torture, systematic rape, and
indiscriminate bombing of civilians. All the while, he has made
it clear that his aims do not end in Ukraine. Putin would like
nothing more than to freeze this war, take a rest, and reignite
it a few years later after Russia's new production capacity has
kicked in. He has every intention of invading NATO countries in
his effort to resurrect the deceased Soviet empire. Speaker
Mike Johnson is correct: Putin will not stop in Ukraine and
threatens, really, the security of all of Europe; and, indeed,
threatens the security of the United States and all Western
civilization.
Meanwhile, $350 billion of frozen Russian assets sit
untouched in the U.S. and European financial systems. War
criminal Putin must pay for his war. Confiscating this money
for Ukrainian defense and construction would go a long way to
ensuring Ukraine can continue the fight. Ukrainians want to
fight and win. It is existential, and we need to have Ukraine
win. Full Ukrainian victory is the only path to a sustainable
peace with territorial integrity--beneficial for Ukraine and
beneficial for the people of Russia who are living under Putin
oppression. Victory is only possible if we are able to maintain
security assistance for Ukraine. Why not use Russia's own money
for this?
I am grateful to be an original co-sponsor of the REPO--R-
E-P-O--Act, which would enable the president to confiscate
Russian sovereign assets. This bill is critical to help
Ukraine. The $350 billion of Russian sovereign assets total
more than the United States and European Union have so far
provided for Ukraine's defense.
The REPO Act also mandates an international agreement. This
is important. We must be united with our allies in the
confiscation of the funds.
Neither the free world nor Ukraine can afford further
delays. Needless delays have already cost Ukrainian lives. Had
the administration committed to victory in Ukraine and
responded accordingly with full equipment, Ukraine could have
already won the war. Allowing this genocidal war to be
prolonged only serves the interests of war criminal Putin and
his cronies.
We are grateful to have a distinguished panel here today to
review the issues.
Ambassador Daniel is the--appreciated so much in
Washington. A living legend right here, so thank you. He served
as U.S. Ambassador to Poland, and has held economic and
national security positions with the American government.
Very important, Paul Reichler is a renowned international
law expert. He represents sovereign states before the
International Court of Justice and has unique knowledge and
experience on the subject that we have before us today, which
is a lawful undertaking to provide for securing these funds for
the benefit of the people of Ukraine.
With--Yuliya Ziskina is a senior legal fellow for Razom,
one of the most important Ukrainian-American organizations
advocating for Ukrainian victory and assisting Ukraine directly
through humanitarian support.
We are also joined by Hon. Ruslan Stefanchuk, the speaker
of the Verkhovna Rada of Ukraine.
Additionally, we are grateful to have the distinguished
prosecutor general of Ukraine, Andriy Kostin, with us today.
Thank you all for being here and we look forward to your
testimony. We will begin with the presentation by the speaker
by way of Zoom.
PRESENTATION OF RUSLAN STEFANCHUK, CHAIRMAN OF THE
VERKHOVNA RADA OF UKRAINE
Mr. Stefanchuk: Chairman Wilson, Chairman Cardin,
respectful members of the Commission, thank you for this
opportunity to appear before you today and address the issue of
confiscation of Russia's sovereign assets. At the outset, I
wish to convey my sincere gratitude to the United States, to
the Congress and the government, as well as to the American
people for their unwavering and continuous assistance to
Ukraine. Your aid and dedication is existential as we fight for
our freedom and sovereignty. We are retaining our resilience
and determination till the very end, till our victory.
Therefore, we appreciate every dollar of American support, but
Russia should pay as much of this cost as possible.
It is well-established principle of international law that
a State responsible for the international wrongful act must
make full reparation for the injury caused by international
wrongful act, particularly if the State concerned repeatedly
violate the imperative norms of international law such as
prohibition to wage aggressive war and prohibition to commit
international crimes. Throughout the past 2 years, we have been
witnessing Russia's blatant breach of these rules, resulting in
unprecedented damage and destruction to Ukraine and Ukrainian
people.
The World Bank's estimates for reconstruction and recovery
in Ukraine have been up to 411 U.S. dollars only for the first
full year of war. It includes the monetary costs of
infrastructure rebuilding as well as impact on people's lives
and livelihoods. The costs of rebuilding are already projected
to be 2.6 times greater than Ukraine's entire GDP. Russia's
unjustified and unprovoked war has reversed years of
development and economic progress of Ukraine.
Importantly, the World Bank's estimates do not envisage
potential costs related to territories remaining under Russia
occupation, parts of eastern Ukraine as well as the Crimea
region. It also does not forecast the long-term efforts
required to rectify damage resulting from Kakhovka Dam
destruction. As we cross the 2-year cycle of this war, the
number--411 billion U.S. dollars--could be very well doubled.
Most importantly, we all owe redress to millions of victims and
survivors of this war.
What are the ways forward that are permissible in
international law. We have two options that are not mutually
exclusive. Option one is the confiscation of the Russian
sovereign assets by the State executive authority via an act.
Option two is establishment of an international compensation
mechanism.
Due to time constraints, I will focus on option one. That
is being put forward in the Senate via the Rebuilding Economic
Prosperity and Opportunity--so-called REPO--Act, as well as in
the--in the House. We commend Chairman Wilson, Representative
Cohen, Senator Wicker, Representative Veasey, Representative
Lawler, Senator Blumenthal, and Senator Whitehouse, and others
for co-sponsoring the REPO Act in the House and the Senate. I
believe it can be an important step toward ensuring that
Russian assets seized because of their aggression can be
repurposed and used to support Ukrainian victory and recovery.
In our understanding, Russian State assets are not
unequivocally immune from confiscation. State-owned assets are
covered by foreign sovereign immunity only from jurisdiction of
the courts of another State, also known as adjudicated
confiscation. There is an absence of a rule on immunity
protection from the executive actions. Notably, the practice of
confiscation of sovereign assets under an administrative act or
measure is well known in wartime situations. It has taken place
in World War I, World War II, Korean War, and in other armed
conflicts. Thus, it is plausible to argue that there is a
general wartime exception to sovereign immunities in the world
when Russia, without remorse, continues act of aggression and
atrocities, where the U.N. Security Council is paralyzed to
address the issue due to the permanent member's interest who is
the very wrongdoer.
We need to find pragmatic solutions and approaches for
Russia to pay fully the reparation owed to Ukraine and
Ukrainian people. For this reason, the proposals to transfer
frozen Russian property to Ukraine as prescribed in REPO Act is
sound law and sound policy, an adequate response to an
unjustified and unprovoked aggression that destroys lives and
leads to hundreds of billions of dollars in financial damages.
Thank you for your attention.
Chairman Wilson: Thank you very much, Mr. Speaker, and I
appreciate so much you referencing, indeed, the bipartisan
situation of Republicans and Democrats actually very supportive
of the people of Ukraine. Then, with Senator Whitehouse here,
it even proves, too, remarkably, bipartisan, bicameral, and so
this is a positive achievement.
Then I want to show you that we do have some domestic
politics in America that may be an issue to go through, but we
shall. Over and over again, the American people are supportive
of the people of Ukraine for the existence of Ukraine, for the
border of Ukraine.
Additionally, I just left a meeting where we had the
foreign minister, Lord Cameron of the United Kingdom, here. He
was very eloquent, as former prime minister himself, of
describing the unity of the West. Bringing in Sweden and
Finland, who would imagine? So--and Switzerland over and over
again, and then, indeed, too, last week the former prime
minister of the U.K., Liz Truss, was here and was very
effective in bringing together why Western countries should be
so proactive in supporting the very courageous people of
Ukraine.
With that, we now proceed to Ambassador Dan Fried.
TESTIMONY OF DANIEL FRIED, AMBASSADOR, ATLANTIC
COUNCIL WEISER FAMILY DISTINGUISHED FELLOW
Mr. Fried: Chairman Wilson, Senator Whitehouse, I am
honored to testify at today's hearing and to speak in support
of the REPO for Ukraine Act.
I want to define in simple language the U.S. interest in
Ukraine. Through world war and cold war, the United States
learned the hard way that we do not want dictators marauding
around Europe starting wars of conquest. Russian President
Vladimir Putin wants to restore the Russian empire. He says so.
That puts Russia on a collision course against its neighbors,
including America's friends and allies, because that is what
restoring the empire means. Ukraine is fighting for its life,
its independence, and its place as a free-market democracy,
part of an undivided Europe and transatlantic community.
That would be good for the United States. For generations,
the goal of U.S. grand strategy advanced by Democrats and
Republicans alike has been to make the world, especially
Europe, freer and more secure, creating conditions under which
the U.S. and its friends--the free world--could prosper.
Ukraine's freedom and success in this war helps us.
Much has been said about the recent course of that war.
Ukraine's efforts to liberate more of its territory this year
did not yield the results that Ukrainians' friends hoped for,
but Russia failed to conquer all of Ukraine. Ukraine has
liberated half the territory Russia initially conquered. Russia
has failed to advance much this year. Ukraine's deep strikes
against Russian military targets have been successful, for
example against the Russian Black Sea Fleet.
I do not know how the war will end, but I am pretty sure it
will not end with a Russian victory parade in Kyiv. It may--
that war may be longer than we think, however, and certainly
longer than we hoped. Putin is counting on a long war to work
to his advantage--for Western political will to flag, giving
him the chance to grind down Ukraine. Our counter should be to
increase the pressure on Russia, to increase military support
for Ukraine, and increase the resources available to sustain
Ukraine in its fight for survival. It is a good investment, but
it takes resources--and that is where REPO comes in.
Immediately after the Russian full-on invasion last
February, G-7 governments immobilized Russian sovereign assets.
Those funds amounted to somewhere around $300 billion. That was
a bold move, well executed. That is good, but not good enough.
Ukraine needs those assets now.
The administration has requested additional funding for
Ukraine. I support that request, but all can see that this
funding is being debated. The EU, which has provided Ukraine
with roughly as much support overall as has the United States,
is also grappling with how to sustain high levels of support
for Ukraine. Russian assets can and should be used to
compensate Ukraine for some of the destruction from the war
that Russia started for no good reason. U.S. and European
taxpayers might appreciate that.
The U.S. holds only a small portion of the immobilized
Russian assets. Europeans hold the bulk. G-7 governments should
move together. The [EU's] European Union debating the issue.
The U.S. can and should show leadership by passing REPO. We
should lead.
There are arguments against G-7 governments taking this
step. I am not a lawyer. I am not a financial expert, but that
said, the argument that Russia's assets can be repurposed in
response to its illegal war under the principles of
countermeasures, a case put forth by Yuliya Ziskina here on
this panel. My friend and former colleague Phil Zelikow, seems
strong. A country that has shown contempt for international law
to the point where its president has been indicted as a war
criminal should not enjoy the benefit of international legal
protections in avoiding consequences of its illegal war.
A second argument against REPO is that repurposing Russian
sovereign assets to help Ukraine would wreck the international
financial system by undermining the credibility of the U.S. and
Europe as safe places for funds. That strikes me as
questionable. By immobilizing Russia's sovereign assets, G-7
governments show that they do not regard these assets as
untouchable. They crossed that line 2 years ago. Janet Yellen
said in October that she supports using some of the Russian--
some of the income generated by the immobilized Russian assets
to help Ukraine. Well, it seems to me that if the U.S. supports
using some of the Russian assets for Ukraine, it ought to
support using all the assets that it can.
REPO advances U.S. interests. It makes Russia pay for
Russia's war against Ukraine. I hope it becomes law. Thank you,
Mr. Chairman.
Chairman Wilson: Thank you so much, Ambassador, for your
passion on this issue, and I--we all appreciate your service as
U.S. Ambassador to Poland. I especially do because I was really
grateful my son was--oldest son, the attorney general of South
Carolina, Alan Wilson, was smart enough to marry Jennifer
Miskewicz of Polish American heritage, from Krakow. We have
proved our deep affection for the people of Central and Eastern
Europe over and over again in so many different ways.
We now proceed to Paul Reichler, Esquire, and indeed, the
legal issues here are so important because we want to be
respectful of every legal responsibility. We look forward to
your presentation.
TESTIMONY OF PAUL REICHER, INTERNATIONAL LAW
ATTORNEY, 11KBW
Mr. Reichler: Good afternoon, Mr. Chairman, Senator
Whitehouse, Representative Cohen. I am Paul Reichler. I am a
practicing attorney based in Washington, DC, and specializing
for over 40 years in public international law, which is the
representation of sovereign states in disputes with other
states before international courts and tribunals. This includes
especially representation of states in litigation before the
International Court of Justice in The Hague as well as before
other international courts and arbitral tribunals.
I furnished the Commission with my [C.V.], Commissionable
Volume which sets out the states I have represented and the
cases in which I have appeared, as well as the articles I have
published and the recognition I have received.
I also furnished the Commission with a legal memorandum
that I, along with seven of the most prominent practitioners of
public international law in the world, have co-authored. The
memorandum addresses legality of countermeasures against the
Russian Federation for its unlawful military invasion of
Ukraine and annexation of Ukraine's sovereign territory, and
its failure to pay reparations for the damages inflicted by its
unlawful actions.
The countermeasures discussed in the memorandum are very
similar to the measures that would be authorized under the REPO
Act that is presently under your consideration. Specifically,
our memorandum addresses the lawfulness under international law
of transferring Russian State assets currently frozen by U.S.
sanctions to Ukraine and other victims for compensation for the
damages caused by Russia's internationally wrongful acts. The
memorandum concludes that the transfer of frozen Russian State
assets would be lawful under international law. I will
summarize the reasons why in six key points.
First, under international law, a State--in this case,
Russia--is responsible for its internationally wrongful
conduct.
Second, when the wrongful conduct is so egregious that it
violates a peremptory norm of international law, it is
recognized to have erga omnes effects--that is, that it so
serious a breach of fundamental principles of law that it is
considered to impact all states, not just the direct victim of
the unlawful acts, so that any State may take countermeasures
against the wrongdoer to induce the cessation of its wrongful
conduct or to provide compensation to the direct victim.
Third, countermeasures may include acts that would
ordinarily be unlawful under international law, but which are
rendered lawful if taken in response to grave breaches by the
offending State.
Fourth, Russia's unprovoked war of aggression against
Ukraine and its annexation of Ukraine's sovereign territory
violate peremptory norms of international law with erga omnes
effects, such that countermeasures may be lawfully imposed
against Russia by any State.
Fifth, the transfer of already-frozen Russian State assets
would be a proportionate response to Russia's aggression and
its failure to comply with its obligation to compensate Ukraine
and other injured parties for the damages it has inflicted, as
long as the amount of Russian funds transferred does not exceed
the total amount of compensation owed by Russia and Russia's
obligation to pay compensation is reduced by the amount that is
transferred.
Sixth, the compensation should be provided through an
international mechanism that assures the fairness, objectivity,
and transparency of the process.
This is the unanimous view of the eight co-signers of our
legal memorandum, who are from the United States, the United
Kingdom, Belgium, the Netherlands, Germany, and Japan, all of
which are states that have frozen the Russian State assets held
by their banks and financial institutions. None of us
represents Ukraine or any other party with an interest in this
matter.
In addition to setting out the legal bases for these
conclusions, our memorandum seeks to dispel some of the
confusion that appears to have been generated by commentators
who have expressed concerns about sovereign immunity. In our
view, sovereign immunity is not applicable to the transfer of
frozen Russian State assets to Ukraine or other victims of
Russia's aggression, nor is it applicable to any of the other
provisions of the REPO Act.
In addressing this subject, we should understand the
difference between immunity under international law and
immunity under domestic law, including the law of the United
States.
First, under international law, the assets of a foreign
sovereign which has not engaged in internationally wrongful
conduct would normally be protected against seizure by the host
State. That protection disappears when the owner of the assets
engages in egregiously wrongful conduct with erga omnes
effects, as Russia has done, thus permitting the host State to
take lawful countermeasures against those assets to induce
cessation of the wrongful conduct or payment of compensation to
the victim. As I indicated a moment ago, a countermeasure is an
act that would be unlawful in ordinary circumstances but is
rendered lawful if it is adopted in response to another state's
egregiously unlawful conduct. That would be the case here for
the measures contemplated by the REPO Act.
Second, under domestic law, including U.S. law, sovereign
immunity is a doctrine that restrains domestic courts from
acting against the assets of a foreign sovereign. It has no
application to and imposes no restrains on executive action by
the president or legislative action by the Congress, and there
is clear precedent for this. In the International Economic
Emergency Powers Act of 1977, Congress authorized the president
in certain circumstances to freeze the assets of a foreign
sovereign. This has been done repeatedly. This is the authority
under which Russia's State assets have already been frozen. No
commentator has argued, to my knowledge, that this was a
violation of sovereign immunity since it most definitely was
not. If Congress has the power to authorize the executive to
freeze a foreign state's assets, it must also have the power to
authorize the executive to transfer them. If the assets are not
immune from seizure, they are not immune from transfer either.
The only issue is whether the transfer of the assets is
proportionate to the gravity of the wrongful conduct or the
extent of the injury caused. In this case, the requirement of
proportionality is plainly met.
I have just one more paragraph, if I may continue, if you
will indulge me, Mr. Chairman.
Finally, sovereign immunity is not absolute. It has many
exceptions, as detailed in the Foreign Sovereign Immunities Act
of 1969 and the various amendments enacted by Congress since
then, all of which have carved out additional exceptions to
immunity--for suits by victims of torture, for example; or for
suits by victims of state-sponsored terrorism. The REPO Act is
itself another example. It expressly removes any transfer of
the frozen Russian assets from judicial review. This is
certainly within the power of Congress to do. There is, thus,
no issue of sovereign immunity either under international law
or U.S. law insofar as the transfer of frozen Russian assets to
Ukraine or others is concerned, nor is there any other legal
impediment in international or U.S. law to the transfer of
these assets.
I thank you, Mr. Chairman and members of the Commission,
for the opportunity to appear before you. It has been a true
privilege for me to be here, and I would be happy to respond to
any questions you might have.
Senator Whitehouse: Mr. Chairman, before we move on to
the--
Chairman Wilson: Yes.
Senator Whitehouse: --Next witness, may I ask unanimous
consent that the legal memorandum that Mr. Reichler referred to
be made a part of the record of these proceedings?
Chairman Wilson: Absolutely. Without--
Senator Whitehouse: I would add the note that his co-
author, Philip Zelikow, has a distinguished career including
service as counsel to the U.S. Department of State.
Chairman Wilson: It is impressive, and thank you so much,
Senator, because the memorandum is so helpful and can be a
message to everyone, and maybe particularly a message to war
criminal Putin and to Tehran on what might come their way, and
maybe even to Beijing.
Additionally, we have been joined by the House Co-chairman,
I am really grateful, Steve Cohen of Tennessee. We also have
Senator Richard Blumenthal of Connecticut, and to see, again,
bipartisan--and a message truly to the axis of evil, whether it
be Moscow, Beijing, or Tehran, that there is unprecedented
bipartisan, bicameral support for the people of Ukraine.
In every way it has been a remarkable achievement to see
the unity, and so much the unity. I want to give credit. The
value of the Ukrainian American community across--in every
American State, the Ukrainian American community has
assimilated to be so proactive in community activities,
business, successful, and promoting victory in Ukraine. We are
so grateful to Yuliya Ziskina here representing Razom, which is
one of the largest Ukrainian American organizations.
TESTIMONY OF YULIYA M. ZISKINA, SENIOR LEGAL FELLOW,
RAZOM FOR UKRAINE
Ms. Ziskina: Good afternoon, members of the Commission.
Thank you for the opportunity to share my testimony with you
today. The legal case for asset transfer has been well
established by the world's leading experts, as we have just
heard, including from my fellow witness, Mr. Reichler. It is
time to recognize that what underlies the reluctance to seize
Russian State assets is not a legal barrier, but a political
one. I would like to bring a sense of urgency which is often
missing in the debate about asset seizure. The Russian goal in
this war has not changed. It is either conquer Ukraine or
destroy it. This war is being fought economically just as much
as it is being fought on the battlefield. Ukraine must win them
both.
There are three things happening right now at the same
time. One, Ukraine is struggling to keep its economy running.
It is lost a third of its GDP. Two, Russia is getting stronger.
Its GDP has grown, allowing it to increase its military
spending by 70 percent in 2024 compared to this past year.
Meanwhile, while this is happening, the Western world is
sitting on a $350 pot of Russian money. All these frozen funds
are legally owed to Ukraine as compensation for reconstruction
and reparations.
I want to emphasize that reconstruction is an ongoing
process. It is not just something that happens after the war is
over. Critical infrastructure that Russia targets, like power
stations, hospitals, railways, utilities must be continually
repaired during the war, literally to keep Ukraine's lights on.
The frozen State assets are not just needed for ongoing
physical reconstruction, but also for reparations to rebuild
victims lives. Eight percent of Ukrainians have loved ones who
are injured or killed, and among this 80 percent, each person
has on average seven close relatives or friends who were
injured or killed, including by missiles like this.
This is shrapnel from a cruise missile that I personally
brought back from Ukraine to be able to show you. The Russians
used this 1,000-pound payload to target a civilian business in
a small town in Kharkiv. These family photos are from the
destroyed home of an elderly couple. We must be using Russia's
own money now, not just to rebuild destroyed homes after the
war ends, but to be saving the lives of people who live in them
now. As Russia is pillaging Ukraine in violation of nearly
every tenet of international law and basic human morality, the
West seems more concerned with protecting Russian assets than
using those assets to protect Ukraine.
We are, in effect, Putin's best bankers. It would be a
cruel irony to deny Ukraine the lifesaving benefit of these
assets by invoking precedents for Russia's sovereignty and
property rights when Russia is blatantly violating Ukraine's
basic right to even exist. There are those that argue we should
hold the reserves until Russia voluntarily agrees to pay
reparations or even use them as bargaining chips for
negotiations. Let me be clear, Russia does not want peace.
Russia wants Ukraine. It has just increased its military
spending in the next year to almost half of its total budget.
It is showing no signs of backing down.
Given Russia's total failure to comply with any
international court orders so far, and its violation of 400
different international law treaties since just 2014, it is
naive to believe that Russia will comply with any future
judgments or agreements for reparations to Ukraine, or even a
peace treaty itself. But even if these payments were negotiated
at some point in the future, what matters is that under
international law Russia already owes this money to Ukraine. No
one disagrees with this. This is not a point of contention. The
G-7 has already confirmed that the money is never going back to
Russia. Instead of just sitting there in a pot, these funds
could essentially be a downpayment on what Russia already
legally owes.
The question is not whether Russia must pay. The question
is when. The longer the West delays tapping into Russian
reserves for crucial funding, the more we--and I mean we, not
just Ukraine--we risk losing this war. Not only from Russia's
weapons, but from every hospital that is unable to be rebuilt,
every energy station that loses power, every damaged train that
is unable to deliver medicine, and every child stolen from
their country. The U.S. must cease and transfer Russia's frozen
sovereign assets to perform Russia's existing obligation to
compensate Ukraine. Congress must include the REPO Act in the
supplemental aid package. It would provide an additional
billions of dollars during the war for Ukraine's ongoing
reconstruction.
This is not an exception to international law. It is
international law. Again, this war is being fought economically
just as much as the soldiers are fighting on the battlefield.
Ukraine needs to win them both. Thank you for your
consideration.
Chairman Wilson: Thank you very much, Ms. Ziskina, and
thank you for being the senior legal fellow for Razom. It is
just so inspiring to see the success of people of Ukrainian
American heritage.
We will now proceed for my Co-chair. I am so grateful to be
working, again, bipartisan, with Congressman Steve Cohen of
Tennessee.
STATEMENT OF STEVE COHEN, CO-CHAIRMAN, U.S. HOUSE,
FROM TENNESSEE
Representative Cohen: Thank you. Thank you, Mr. Chair. I am
going to be brief.
We have had these hearings on issues concerning Ukraine and
Russia for some time, and my record is fairly--is very
consistent and fairly well known, I think. I think what Russia
is doing is a violation of international law and needs to be
condemned at every opportunity possible. I think we need to
pass, obviously, REPO, and we passed some bills on oligarchs'
assets in the past Congress. Those moneys should also go to
Ukraine to help rebuild it.
What Putin is doing in destroying the country of Ukraine is
an attempt to genocide. He is destroyed a lot of cultural
artifacts, as well as necessary utilitarian structures and
industries. We need to get the money there as quickly as
possible, and continue the war, and supply the Ukrainians with
the military that they need to win this war. They do need our
support as well as European support, which they have been
receiving.
I want to take a minute here just to talk about one of my
subjects, that I am assigned to the Helsinki Commission as a
special representative on political prisoners. What Putin has
done in taking Navalny and Vladimir Kara-Murzoff and putting
them--Kara-Murza--and putting them into gulags, and Siberia,
and solitary confinement in a rather regular fashion, and
depriving them of medical treatment that they need, is putting
their lives at risk. It is typical Putinesque behavior. He does
not have the Chechens to operate on his behalf as they did and
in killing Nemtsov, and as they did in killing a great
journalist about 13 years ago.
They killed--now Putin does it in a slow fashion, and he
has taken a Wall Street Journal reporter. He has taken a lady
from Radio Free Europe recently and detained them. They are
political prisoners as well. Russia is a horrible
representative of the international community and where the
international community stands in 2023 and 2024.
I would like--can I ask a question? No? I am not going to
ask a question. It was just a--I do not know why I thought of
that. I yield back the balance of my time.
Chairman Wilson: No, no, hey, what we are going to do is
that we are waiting for Speaker Stefanchuk to come. In the
meantime, we are going to begin the 5-minute questioning. I am
going to differ for me to be later, but out of incredible
respect for Senator Whitehouse, as he was so early to be here,
I would like to now refer and have the 5-minute program begin
with Senator Sheldon Whitehouse of Rhode Island.
Representative Cohen: I would like to say how much I
encourage that, and second it, and think it was a wise
decision. [Laughter.]
STATEMENT OF SHELDON WHITEHOUSE, U.S. SENATE, FROM
RHODE ISLAND
Senator Whitehouse: Thank you. Thank you, Steve. Much
appreciated to you and Joe.
Mr. Reichler, my first questions are for you. The first is,
what is the meaning of the temporary or reversible standard?
How is it met in the case of seizing Russian frozen assets in
these circumstances? Put your mic on.
Mr. Reichler: Thank you. Thank you. Under general or
customary international law, which is reflected in the articles
on the responsibility of states for internationally wrongful
acts, countermeasures are limited to the nonperformance, for
the time being, of international obligations of the State,
taking the measures toward the responsible State. They shall,
as far as possible, be taken in such a way as to permit the
resumption of performance of the obligations in question. These
provisions have been interpreted by the International Court of
Justice as requiring the reversibility of countermeasures,
which is the term that you used, Senator. What that would mean
in the case of the asset transfers to Ukraine or other victims
would be that the assets--the amount of the assets transferred
may not exceed the sum total of the compensation to which
Russia owes Ukraine.
Senator Whitehouse: Got it.
Mr. Reichler: Furthermore, if I just may add--
Senator Whitehouse: My time is running out, so if you do
not mind being brief--
Mr. Reichler: That that amount would be deducted--the
amount transferred would be deducted from Russia's total
liability. That would satisfy the reversibility standard, and I
think that is what the REPO Act calls for.
Senator Whitehouse: Thank you, and, Ambassador Fried, we
have been told that the practical aftermath of seizure could
lead to a gallery of horribles, including effects on the dollar
as reserve currency, including creating a precedent for future
unjustified sovereign asset seizures, and including moving the
economic center of gravity away from the free world and from
our institutions. Are those credible to you?
Mr. Fried: Two-part answer to this. One, we all want risk-
free policy options. They seldom exist. Second, I have heard
the arguments also. I am not sure I buy them. To be blunt, the
Chinese and Saudis probably noticed that we immobilize the
Russian foreign exchange reserves. They did not pull their
money out of G-7 banks, not out of goodwill but because they
recognize that there are a few alternatives. They are going
to--where else will they put them? I am not sure. I have always
been skeptical of the arguments that this will cause a race
from the dollar-and euro-dominated international financial
system. Is there a zero risk? No. Considering the problem we
are grappling with, which is a major war, a war of conquest and
national extermination, it is worth doing.
Senator Whitehouse: Thank you.
Ms. Ziskina, you are a U.S. lawyer, you work for a U.S. law
firm. You understand the value of leverage, and you have
described the West right now as serving as Vladimir Putin's
bankers by holding on to the frozen funds for him. Tell me what
you think the effect might be if the threat of seizure of those
assets became credible to Vladimir Putin. It is one thing to
have hundreds of billions of dollars on the shelf that you can
plan on getting back at the conclusion of the conflict. It is a
very different thing if we have actually started seizing and
delivering to Ukraine those funds. Does that create
international leverage on Putin in the meantime to ameliorate
his behavior for fear of losing all of his sovereign funds?
Ms. Ziskina: Absolutely. I think it does, but first, I
would like to address this leverage argument by asking what
leverage, exactly? The funds have been frozen for over a year
and a half. If we were going to see meaningful leverage now, we
would have already seen it. Therefore, doing the same--
Senator Whitehouse: If freezing alone created the leverage,
yes.
Ms. Ziskina: If freezing alone, indeed. Russia has shown it
is willing to pay a high price to conquer Ukraine. These assets
are not leveraged by keeping them frozen. Russia has already
written them off and they are a drop in the bucket in what he
is spending on this war. By using them now, this shows that the
West is serious about Russia's act of aggression. Not only does
it show Russia and Putin the seriousness of the West, it also
serves a function of helping Ukraine withstand Russia's
aggression. That is perhaps the most important effect of this.
It is an economic counteroffensive that the West must be doing
right now.
Senator Whitehouse: Good words to end on.
My time has expired. Thank you, Chairman.
Chairman Wilson: Hey, thank you very much, Senator.
We now proceed to Congressman Steve Cohen of Tennessee, the
Co-chair of the Commission.
Representative Cohen: Thank you, sir.
Anyone of you can answer this question. I think I know the
answer, but did not Russia confiscate some assets of American
companies--like airplanes and things like that? Mr. Reichler,
you are nodding, so if you would respond.
Mr. Reichler: Yes, they did.
Representative Cohen: They took airplanes, and they took
all kind of properties that American companies had when they
decided not to operate in Russia any longer.
Mr. Reichler: Yes, they did. Without compensation.
Representative Cohen: Yes. Well, that seems like they have
kind of set the stage. Do we really need to pass a law to do
this? If it is international law and if it is appropriate that
a country take another sovereign's assets for international
crimes, which is what's happened here, is it necessary that the
Congress pass a law to authorize it? Or can the Justice
Department just do it on their own volition?
Mr. Reichler: The executive--the president has the
authority to do this without further legislation by Congress.
Obviously, the legislation is very important, nonetheless. As a
strictly legal matter, this is foreign policy. It is within the
discretion and the power of the executive branch, and the
President already has the authority under the International
Economic Emergency Act of 1977. The same power that authorizes
the president to freeze the assets also authorizes the
president to transfer them.
Representative Cohen: Well, I do not think any one of us on
the panel have--and we probably should have a better
perspective on this than you might, but I am going to ask you
the question. That is the authority I have, to ask the
question. Why in the hell are they not doing it? What is
holding up Blinken and Biden and Nod?
Mr. Reichler: I wish I could answer that question,
Congressman.
Representative Cohen: Do you have a guess?
Mr. Reichler: I am a lawyer. Speaking from a legal
perspective, there is no doubt that it would be lawful under
international law for the administration to do that. It is a
policy issue. That is one of the reasons I think that this
legislation is so important, because if Congress expresses its
will that these countermeasures, these measures should be
taken, it may make the difference in encouraging the
administration to take the action.
Representative Cohen: Before I get to Ambassador Fried, do
you know of any other country that might--Europe--that might
have a similar interest in helping Ukraine? Why--they all
would--but have any of them taken action to confiscate any
assets?
Mr. Reichler: Well, we know that G-7 countries and others
have frozen Russian State--I think that almost 20 states that
have frozen Russian State assets. Some of them are smaller
amounts. I think that, to date, no other State has transferred
the frozen Russian State assets to Ukraine. I do know, because
my colleagues who are cosigners of our legal memorandum, are
working in those states. They come from those states, and there
is--there are strong tendencies now in some if not all of those
states to move ahead with the transfers. As is often the case,
they are looking to the United States for leadership.
Representative Cohen: They have not--have their parliaments
passed authorizing legislation, or executives willing to or
considering acting on their own?
Mr. Reichler: I think it varies from State to State. I know
Canada has passed legislation, although they have very little
in the way of Russian State assets there. I can tell you for
certain that Canada has passed a law similar, certainly in
effect, to the REPO Act. In other states, depending upon their
constitutional system, they may or may not need legislative
action. That it may be possible for them to do it by executive
action without further legislation. It would vary from State to
State.
Representative Cohen: Thank you.
Ambassador Fried, you were a predecessor of Ambassador
Ashe, were you not?
Mr. Fried: I was a predecessor to Ambassador Ashe, yes,
sir. I knew him well.
Representative Cohen: Another good Ambassador.
Mr. Fried: Just to add to what Mr. Reichler said, I think
the U.S. acting alone would not make enough of a difference,
because we do not hold many of the Russian assets. The
Europeans hold much more. They hold the bulk. Passage of REPO
would be a sign to the European Union, which is wrestling with
this issue, and a sign to key governments like Germany that we
were serious. U.S. leadership could help the European Union
make a decision about this. That is certainly an added benefit
politically of REPO.
Representative Cohen: Thank you.
Thank you, Mr. Chair.
Chairman Wilson: Thank you, Congressman Cohen.
We now proceed to Senator Richard Blumenthal of
Connecticut.
STATEMENT OF RICHARD BLUMENTHAL, U.S. SENATE, FROM
CONNECTICUT
Senator Blumenthal: Thank you, Mr. Chairman, and thank you
for being here on the Senate side for this--
Chairman Wilson: We appreciate the temporary visa you
provided. Thank you. [Laughter.]
Senator Blumenthal: As you know, I have traveled frequently
to your side of the Congress, and proud to do so whenever you
have these hearings. Thank you, to you and the ranking member
for this very, very important, pertinent, and timely hearing. I
am proud to be a cosponsor of the Rebuilding Economic
Prosperity and Opportunity, also known as REPO, Act, for all
the reasons that have been stated very powerfully here.
I agree with you, Ambassador, that it would send a signal
and a message. We do not ordinarily pass legislation to send
signals or messages when already there is power to do what we
would be doing in the legislation. I think that this act has
the additional value of actually clarifying the authority to
take this action. I think it is important, critically
important, for that purpose.
You mentioned that the Europeans have control over the vast
bulk of these assets. I think it is through something called
Euroclear. I guess my question, although it may sound somewhat
technical, I think it has practical importance to those of us
who are litigators. Who would actually contest the effort to
provide these assets to the Ukrainians? Would it be Euroclear
itself? Would it be the Russians? Both of them? Would the
Russians have to submit to the jurisdiction of a court. Given
the fact that Vladimir Putin has been declared a war criminal
and there is a warrant for his arrest, would that have any
implications as well if he failed to enter an appearance, so to
speak? Maybe you can talk a little bit to the--to the
technicalities here.
Mr. Reichler: Thank you for that question, Senator. It is a
subject that we address in the legal memorandum which is now
part of the record. Russia has not submitted itself to the
jurisdiction of any international court that would have the
competence to consider a challenge brought by the Russian
Federation to the seizure and transfer of its assets. There is
no international court before which it could make a claim. It
would have to submit itself to the jurisdiction of the national
courts in the states that have seized and transferred the
assets. Of course, I cannot speak for--about the law in each of
these--in each of these states, because that is their own
domestic law.
For example, in the United States, no court would exercise
jurisdiction over such a claim because these are actions taken
in the national security interest of the United States. The
executive would be given the discretion to protect the national
security and conduct the foreign policy of the United States.
Senator Blumenthal: In other words, it would be a political
question.
Mr. Reichler: It would be a political question. Exactly.
That is right, and I think in many of the other G-7 countries
there is a similar doctrine. Although my profession is
international lawyer, I am not an expert on the domestic laws
of each of these countries.
The only other conceivable form would be if Russia had a
bilateral investment treaty with one of the states and had the
right to institute arbitration against them. The deposits of
sovereign assets in banks are not considered investments. That
would not be a feasible way for them either.
Senator Blumenthal: Let me just cut right to the answer.
Would there be in effect a default by Russia? Would there be
any legal challenge here? In other words, could not the chief
executives of those countries that have control over the assets
be at liberty to send these assets to Ukraine?
Mr. Reichler: That is--I would agree with what you just
said, Senator. The states could seize and transfer the assets
to Ukraine. Russia will not have legal recourse in any of these
courts to challenge such an act.
Senator Blumenthal: I am sure that this information is
somewhere in the materials, but maybe you could help me. How
much does the United States control?
Mr. Fried: I have heard various numbers, and the
administration has not been definitive. The number I have heard
the most is 8 billion.
Senator Blumenthal: Eight billion.
Mr. Fried: Yes.
Senator Blumenthal: The total is in the range of 300 and--
Mr. Fried: Three hundred and something billion. The
estimates--
Senator Blumenthal: Who holds the most?
Mr. Fried: Europe.
Senator Blumenthal: Yes, but--
Mr. Fried: Belgium, through Euroclear.
Senator Blumenthal: Belgium?
Mr. Fried: Belgium, through Euroclear apparently has north
of $200 billion.
Senator Blumenthal: Are these assets under the control of
the EU or individual European countries?
Mr. Fried: Individual European countries, I believe, but EU
law also govern some of this. Then you get into the tricky
business of the EU--of the commission, EU law versus national
law. That is where I stop, because I am not an international
lawyer.
Senator Blumenthal: Okay. My time has expired, but I am
certainly going to pursue this under the great leadership of my
friend and colleague Senator Whitehouse. I thank him for his
efforts on this issue.
Chairman Wilson: Thank you very much, Senator, and, indeed,
we are so fortunate that Senator Blumenthal and Senator
Whitehouse, who is the lead along with Senator Jim Risch of
Idaho. Indeed, we have got the leadership--significant
leadership in the Senate. Then on the House side we are very
grateful that Congressman Mike McCaul of Texas, the chairman of
the Foreign Affairs Committee, is the lead there. Over and over
again, very significant members of the House and Senate,
bipartisan, are working together on this issue.
I will now begin my 5 minutes, and then I am really
grateful that soon I hope we will be joined by other Members of
Congress. It--hey, we are in so many different meetings today,
it is always interesting. Mr. Reichler, can you provide any
precedents of international law on this type of asset
repossession?
Mr. Reichler: Mr. Chairman, there are a number of
precedents of various states freezing the assets of foreign
states based on their internationally wrongful conduct. This
has been done by the United States several times, by many of
the European states, and, frankly, by many states around the
world. If you like I could give you the examples, but they are
all listed in our legal memorandum. There are no examples of
the freezing of the assets and the transfer to another State,
as would be the case here. We say that there is no difference
in principle under the law. If a State is authorized to freeze
and seize the assets, it is also authorized to transfer them,
provided the transfer is done in a proportionate way.
There are examples, and the United States is a leading
practitioner of this, of freezing a foreign state's assets and
transferring them to private U.S. citizens who are victims of
wrongful conduct by that State. This was done in the case of
Iran, Cuba, and Iraq. Assets were frozen by the U.S. Government
and wronged U.S. citizens, who were wronged by those states,
received as compensation funds which were transferred from
those frozen assets. Again, we say that if the president of the
United States has the authority to transfer the frozen State
assets to aggrieved U.S. citizens, there is no difference in
principle between transferring those assets to another State
that is a victim of internationally wrongful conduct.
As my colleagues are reminding me of the Iraq's invasion of
Kuwait. That is an example of where, through the United Nations
Security Council but also individually, states, including the
United States, froze the assets of Iraq. The compensation was
provided via the United Nations and a special U.N. compensation
commission.
Chairman Wilson: Well, again, thank you for your insight.
This legislation, to me, has such significance today. Hopefully
it is a deterrence to any country that may feel like they want
to invade another country. It should hopefully be a deterrent
in regard to Iran, their threats everywhere, and the Chinese
Communist Party. What a message this can be to individuals that
this conduct should not be provided.
Additionally, with the Prosecutor General Kostin, a
question in the coming months. How could repossessed Russian
funds be most effectively used to support the Ukrainian war
effort?
TESTIMONY OF ANDRIY KOSTIN, PROSECUTOR GENERAL OF
UKRAINE
Mr. Kostin: Thank you, Chairman. You want to understand
that Ukraine needs not only financial, not only humanitarian,
not only political, but also military support. This military
support should come in time, because every day of delay cost us
lives of our servicemen, of our civilians, including those who
are--who are on the occupied territories and are suffering from
war crimes committed by Russian aggressor.
I just wanted to mention that today in Ukraine we celebrate
the day of armed forces of Ukraine. It is a professional day of
our servicemen, military servicemen, who are now brave--who are
brave heroes fighting on the front line protecting our land. I
think this hearing is about leadership and about bravery. When
we hear the words, ``be brave like Ukrainians,'' I think it is
also about all of us to take brave decision even in difficult
legal circumstances. To take brave decision and to take them in
time to save lives of Ukrainian servicemen and Ukrainian
civilians. To send this support not only to win in this war,
but also to keep our country running, to protect our civilians
from humanitarian crisis, to protect them from terror after
damaging and destroying critical civil infrastructure,
hospitals, schools. We need to be united in order to overcome
this serious situation, and in order to win this war, we need
to receive this financial support and military support in time.
These hearings are also about changing the mindset. We all
hear many--I think, many months, Russia will pay the check. Let
us change this mindset to Russia is paying the check, and this
makes us stronger, United States and Ukraine. I will also come
back to the leadership of United States. Let us not forget that
United States is the first country to confiscate private
assets, which happened this year by the decision of Department
of Justice. Today, United States become the first country,
rather than Ukraine, charging Russian war criminals for
commission of war crimes against American citizen, which was
declared today by Attorney General Garland and his team of FBI
agents, different institutions who work for this case, with our
support--with support of our prosecutors and investigators.
These true leadership of United States, if this REPO Act
will be adopted as soon as possible, will be an explicit
example not only of your leadership but of example of such
action that should be taken by other countries--Canada,
European countries--who hold the main bulk of these assets. We,
Ukrainians, always rely on your leadership. Once again,
changing mindset through leadership and bravery to take brave
decisions in time.
Chairman Wilson: Thank you so much, Prosecutor General,
and, indeed, it is inspiring to know that this is military
appreciation for the Ukrainian military. What an inspiration
the Ukrainian military is to the world today. I particularly
appreciate it because my father served overseas in China--
Kunming, Chengdu, Xian--to liberate China in 1944 from the
aggression, at that time--and then I was domestic service, but
my eldest son served in Iraq, and my second son a doctor in
Baghdad, and my third son served in Egypt, and my youngest son
served for a year, engineer in Afghanistan. Military service
the American people really appreciate.
We have been joined, of course, by a superstar here,
Congresswoman Victoria Spartz all the way from Indiana, by way
of the USSR, and actually, was born in Ukraine. Now a very
significant member of the U.S. Congress, and we have also been
joined, of course, by Ruslan Stefanchuk, the speaker of the
Rada of Ukraine. What we will do, Mr. Speaker, because we like
legislators, we will let you speak first. We respect that, and
then we will ask questions from Congresswoman Spartz.
TESTIMONY OF RUSLAN STEFANCHUK, CHAIRMAN OF THE
VERKHOVNA RADA OF UKRAINE
Mr. Stefanchuk: Yes. Chairman Wilson, and Co-Chairman
Cohen, Senator Whitehouse, Victoria Spartz, dear members of the
Helsinki Commission, dear ladies and gentlemen, first of all,
apologize. Excuse my being late. Sorry, it is not my fault, but
the traffic jam is too hard, but I am here. Thank you very
much, and I would like to thank the Commission for holding this
important hearing on making Russia pay sovereign assets
confiscation for Ukrainian victory.
This hearing is crucial for raising awareness for these
issues, not only in the U.S. Congress but also around the
world. I am sincerely grateful to the Helsinki Commission,
which is one of the most influential and respected bipartisan
group in the U.S. Congress, for its leadership in supporting
Ukraine, for drawing the attention of Members of Congress to
all aspects of Russia's war against Ukraine. They need to bring
the aggressor to justice.
Today, there is no doubt that Russia aggressor against
Ukraine is an illegal and unprovoked act of aggression against
a sovereign State. It has caused thousands of deaths,
suffering, and significant losses of my country and the
Ukrainian people. Every day Russia destroys civilian
infrastructure, bombs school and hospitals, erases cultural
heritage, and damages our environment. Russia's June 1923
bombing of the Kakhovka power plant caused more than $3 billion
in damage. This barbaric act qualified as a war crime of
ecocide. It is a grave environmental disaster. Its effect is
felt far beyond Ukrainian borders.
According to the World Bank, as of this spring 2023 the
damage caused to Ukraine exceeded from their $400 billion. It
is difficult to give an up-to-date estimate to Ukrainians
losses in the ongoing war, as the numbers are growing every
day. Russia must pay for all the damage and losses. We cannot
wait for the war to end. The best legal instrument to
introducing the mechanism for compensation for damage caused by
a Russia aggressor against Ukraine is the possibility to using
both Russia's sovereign and private assets. From the point of
view of the international law, this approach is entirely
legitimated.
We are grateful to the U.S. Congress for passing new
legislation last year that allows the confiscated assets of
Russian oligarchs to be used for Ukrainian needs, and this is
not enough. Russian sovereign assets must be confiscated and
transferred to the victims of this war through a transparent
international mechanism. Establishing an international
compensation mechanism is an integral part of comprehensive
system of accountability and restoration of justice. It is also
one of the key priority of Ukrainian president Volodymyr
Zelensky. It is impossible to achieve the expected result
without global cooperation.
Here I would like to thank the U.S. Government for
supporting Ukraine initiative to establish an international
compensation mechanism. The U.S. plays a leading role in this
process, including efforts to adopt the relevant United Nations
General Assembly Resolution in November 2022 and relevant
initiatives among G-7 countries. I would like to emphasize that
the first possible step in this regard has already been taken
with the establish of the register of the--[inaudible]. The
U.S. decision to confiscate the reserves of the Russian Central
Bank will send a clear signal to Putin and all the tyrannies
that there is no chance to avoiding responsibility for an acts
of aggression against a sovereign State. This should also send
a clear signal to our partners, especially in Europe. It is
time to act decisively. The United States, as a leader of the
free world, must lead.
I would like to express my most sincere gratitude to the
representative and senators who introduced and supported the
Rebuilding Economic Prosperity and Opportunity Act, the so-
called REPO Act. I strongly believe that the successful
adaptation of the REPO Act bring us one step closer to victory
and sets a motivating precedent for other country. This
legislative initiative not only demonstrates their commitment
to justice, but also inspires international cooperation in
order to prosecute aggressors.
We also welcome other new initiatives, such as a bipartisan
Asset Seizure for Ukrainian Reconstruction Act introduced by
Senator Sheldon Whitehouse and Lindsey Graham, along with
Representatives Joe Wilson and Steve Cohen. Putin's crony
oligarchs have been instrumental in the financial Russia
aggressor against Ukraine, and the mass murder of Ukrainians
are lining their money coffers and enjoying the freedoms they
are actively trying to destroy. According to the latest
Bloomberg Billionaires Index of November 29, 2023, Russian
oligarchs have become $38.6 billion richer, despite all the
sanctions imposed, in just 1 year. This is about two-thirds of
the administration's additional request for support for
Ukraine.
There is always the issue of the effectiveness of
sanctions. As in the case of the REPO Act, Ukraine
unequivocally supports this initiative. We are pleased to see
that it is being implemented as bipartisan and bicameral
initiative. We very much hope that this bill will quickly pass
in Congress and signed by the president. This will be another
contribution of your great country and people to restoration of
justice and fair punishment of the barbaric Putin's regime and
his corrupt clique. Thank you for your attention.
Chairman Wilson: Thank you very much, Speaker Stefanchuk,
and, indeed, we want the people of Ukraine--really the people
of the world--to say something. We could tell you that there is
support, House and Senate. We will, you are going to see it
right here. We have got distinguished senators who have been
here. We have got members of the House. We have got
Republicans. We have got Democrats. It is just startling indeed
how the American people have come together to support the
people of Ukraine, and then also a million Ukrainian Americans.
With Ms. Ziskina, who would ever--how important it is, the
role of Ukrainian Americans. Then in the House of
Representatives, again, we are so pleased with Congresswoman
Victoria Spartz, who herself is Ukrainian American heritage. To
show how people become successful, the American dream, coming
to America and then elected to the U.S. House to represent
Indiana. Congresswoman Spartz.
STATEMENT OF VICTORIA SPARTZ, U.S. HOUSE, FROM
INDIANA
Representative Spartz: Thank you, Mr. Chairman, and thank
you for all of your work. I will ask--first I will start with
our attorney, just have some practical questions, Mr. Reichler.
I came from discussions of Ukrainian aid and, regardless what
is said, majority of my Republican colleagues want to make sure
that we do deliver better weapons and faster weapons. That
hopefully we can work on this issue on a bipartisan basis, but
definitely with all of the fiscal challenges we have
discussions on, you know, how we are going to be paying for all
of that.
My question is for you, and that has been kind of
socialized has ideas to actually use some of this confiscated
assets to pay for, because ultimately Russia signed agreement--
you know, Budapest Memorandum--which actually, you know, it was
not guarantees, but assurance. We signed it too, and U.K. Which
actually with today's new foreign minister, he was very
convincing, and to really support Ukraine. It was great to have
our U.K. counterparts here. They have been doing a great job,
tried to organize Europe with all of the challenges that Europe
has.
You know, it is been, you know, a lot of, you know,
discussion how to do that. I wanted to--just to get your
thoughts on that. Is there is a way? From a, you know, legal
view--because some of my colleagues raise due process issues,
and, you know, how could that be used to, you know, to pay for
some of the weapons transfer that we really need to do urgently
to Ukraine?
Mr. Reichler: Yes. Thank you for your question,
Congresswoman.
Russia, like all states, is bound by principles of
international law, including those set forth in the United
Nations Charter. It is a member of the United Nations. One of
the most fundamental principles of international law is the
prohibition on launching wars of aggression against another
sovereign State, and the prohibition on acquiring the territory
of another State by force. Russia has violated many more
principles of international law, but let me just stop here with
those two.
These are considered such egregious violations of
international law, they are violations of what we call
peremptory norms of international law from which no State is
permitted to derogate, that they have what we lawyers call erga
omnes effects. That means the violations of these fundamental
principles are considered so egregious that every State is
considered a victim of this wrongful conduct. Therefore, every
State has the right to take countermeasures against the
wrongdoer, in this case the Russian Federation.
Those countermeasures can include measures that ordinarily
would not be considered lawful in the absence of wrongful
conduct by the other State. Where, as I have said, Russia has
committed such egregiously wrongful conduct, such egregious
breaches of the fundamental principles of international law,
every State--not just Ukraine and those that have most directly
suffered--but every State, including the United States, has the
right to take appropriate proportionate countermeasures against
Russia. Those countermeasures could include, as provided in the
REPO Act, the--not only the freezing of Russia's State assets,
which already has been done, but the seizure of those assets
and their transfer to Ukraine to offset the compensation which
Russia already owes Ukraine for the horrendous damage that it
has--
Representative Spartz: I was talking about for us paying--
because I have just a minute left--for us to pay for our
weapons transferred to Ukraine, so that we can, you know,
transfer more, and faster, and better weapons. Is that
something for United States to use this to pay--to do the
paying?
Mr. Reichler: Well, I think the United States can do what
you are suggesting under two theories. One, that it is injured
because all states are injured. Also, the United States can
claim that it is directly injured because of the cost the
United States has incurred in helping Ukraine defend itself.
Representative Spartz: Indeed, we did. I think it is
important, and unfortunately, you know, Ukraine give up nuclear
weapons. Now a lot of people forgot. Just briefly, I know that
I am almost out of time, maybe Ambassador, because there is a
challenge. We have talked with some officials on executive
branch and Europeans kind of struggling with that issue. Can
you help me, what will--because me and chairman and some other
colleagues, we have a lot of discussions and meetings with
Europeans. How could we help to make sure that--and that is
what State Department is kind of struggling too--to get
Europeans on board with this issue?
Mr. Fried: Well, I think passing the REPO Act would help.
The Europeans may be waiting for American leadership, a sign of
congressional unity. Through passage of the REPO Act, we would
strengthen the administration's hand in working with the
Europeans, both the EU, the Commission, and national states.
Saying, we have moved, now you must. We should work together.
The principle of solidarity applies, but often in the--since
the beginning of the Russo-Ukraine war, we have seen that
American leadership can help crystallize European decisions. I
think they are looking--my own discussions with the European
suggests that they are wading through the legal issues, but
they are waiting for us, and passage of REPO would help.
Representative Spartz: Thank you. I yield back.
Chairman Wilson: Thank you very much, Congresswoman Spartz.
Indeed, we so appreciate that Senator Whitehouse is here, and--
Sheldon Whitehouse, and we look forward to his questions--
additional questions.
Senator Whitehouse: Thank you, Chairman.
Is Prosecutor Kostin still with us?
Mr. Kostin: Yes, Senator.
Senator Whitehouse: Hooray. Good to hear you.
Mr. Kostin: Nice to see you, yes.
Senator Whitehouse: You and I have discussed the work that
you are doing to catalogue and gather evidence regarding the
individual harms to individual Ukrainians, whether they have
had family murdered, whether they have suffered personal
injuries, lost limbs, whether they have had their homes and
apartments destroyed. There has been a very significant burden
of cost and injury and pain put on the Ukrainian people. One of
the places in which Russian sovereign assets could be dedicated
is to provide a fund adequate to meet those claims of
individual Ukrainians. Could you give us a quick overview of
the numbers of those claims, the extent of the estimated
damages, and how you are handling having to keep tens of
thousands of cases open and organized?
Mr. Kostin: Thank you, Senator, and thank you for your
leadership. First of all, to date the Office of Prosecutor
General has registered more than 111,000 incidents of war
crimes. You rightly mentioned, these--the range of war crimes
is unprecedented, from willful killing to sexual violence and
to damage of private property, of private infrastructure of
civilians. Their homes, their houses, their business, their
cars are damaged or destroyed by Russian attacks, whether they
are held close to the front line or far from it by missile and
drone attacks.
Of course, all the victims and survivors of all war crimes,
from our point of view, has a primary role in receiving fair
compensation or reparation from the assets of the perpetrator,
because it is perpetrator's obligation to compensate damage to
every victim and survivor of war crime. At the moment, you know
that also with the leadership of United States the
International Register of Damage start its operation in The
Hague. The board of directors is already selected, and the
Register of Damage will be fully operational in coming weeks.
After that, it will start to collect claims also from the
individual victims and survivors of war crimes.
On our side, we are preparing the register of victims and
survivors, and as prosecutor general, it is my obligation to
ensure that every person who suffered from war crimes committed
by Russia will have an opportunity to file the claim to the
Register of Damage. For that, we also introduced Victims and
Witnesses Coordination Center of the Office of Prosecutor
General to help victims and survivors also to file the claims
in order to include them in the--into the register of damage,
and I thank you for your question.
At the moment, we have no estimation about the potential
claims of the victims who beloved members of family were
killed, or who were wounded, or who were tortured, humiliated.
These are the issues where Ukrainian parliament and
international compensation mechanism, starting from the
Register of Damage, should also play their role. Once again, as
a matter of delivering justice to victims and survivors, it is
not only making Russian perpetrators liable in criminal cases,
but also to ensure that all of them will receive fair
compensation by the means of the assets of their aggressive
State. Thank you.
Senator Whitehouse: Thank you, Prosecutor. Best wishes to
you and your work.
Chairman Wilson: Thank you very much, Senator, and indeed,
as we conclude, I would like to thank Senator Whitehead for
his--house for his--Whitehead--Whitehouse--for his strong
support. As we conclude, I want to get a picture in a moment
with our witnesses, and I certainly want the senator be right
in the middle, and so--behind. As we conclude, I want to thank
Congresswoman Spartz. Can you believe she is ahead of the curve
again?
There is so many good people in America who say why cannot
we get along, why do not we just sign an agreement? No, the
Budapest Memorandum should have been very revealing, and that
is that a country gave up their nuclear capability and weapons
with the understanding of territorial integrity. The agreement
with the United States, United Kingdom, Russian Federation,
Ukraine. Then there were violations in 2008, 2014, 2022, and
so, sadly, it should be understood that the Russian Federation,
following the tradition of the Soviet Union, follows no
agreements. Agreements are simply a period to rearm and to re-
oppress the people of their country.
With that, we are going to be adjourned. [Sounds gavel.]
[Whereupon, at 3:41 p.m., the hearing ended.]
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Additional Submissions for the Record
=======================================================================
Additional Submission for the Record
______
OPENING STATEMENT OF BEN CARDIN, CO-CHAIRMAN, U.S. SENATE,
FROM MARYLAND
Mr. Chairman, thank you for holding this hearing today. Putin's
unlawful war of aggression in Ukraine is a brazen violation of
international law and Russia's freely undertaken commitments as an OSCE
participating State. The horrors Russia is inflicting on Ukraine
continue even as we hold this hearing.
There is no question whatsoever that support for Ukraine in the
face of Russian aggression is absolutely critical. I call on all of my
colleagues to support urgent passage of supplemental appropriations for
Ukraine.
The supplemental is a lifeline to Ukraine, on and off the
battlefield.
Obviously, Russia has a moral and legal obligation to pay for the
damage it has done in its genocidal war.
Given the scale of the issue and the nature of the rebuilding
effort before us, we must look comprehensively at supporting Ukraine's
efforts to rebuild its country and restore its role in the global
economy.
More broadly, The United States and our European allies must
maintain strong unity in the face of Russian lawlessness. We are once
again headed into a difficult winter, but we must remain resilient and
continue our support. This is the only way we will be able to halt
Russian aggression and send a unified message about respect for
international law.
I am grateful to see the many distinguished witnesses who care
deeply about restoring peace and justice in the world. Russia's full-
scale invasion is not only an attack on Ukraine, but an attack on any
notion that there are international rules and norms. We must fight back
in a way that reinforces these rules and norms and I look forward to
hearing from you how we might do that.
Thank you and yield back.
TESTIMONY OF JIM RISCH, U.S. SENATE, FROM IDAHO
REMARKS AT HUDSON INSTITUTE ON REPO FOR UKRAINIANS ACT
NOVEMBER 16, 2023
Thank you very much, it is good to be back here again. Let me say
that the remarks I made in April about why victory in Ukraine is
critically important to American national security interests, actually
for the planet's national security interests. Nothing has changed since
then other than there is even a clearer understanding that it is
important, that there be a victory there, and that Putin is defeated
and that he is restrained from further ambitions on the planet.
Today marks the 631st day since the illegal Russian invasion of
Ukraine. Over the last year and a half, Putin has single-handedly
brought war back to Europe. We have seen Russian troops commit
unspeakable crimes against the Ukrainian people, including
indiscriminate targeting of civilian areas, indeed at times deliberate
targeting of civilian areas, and infrastructure, mass graves, sexual
violence, kidnappings, and countless other horrors.
Putin is making every effort to eliminate the Ukrainian people by
committing atrocities that amount to serious war crimes, including
genocide. Russia has to pay for the devastation it has caused, and that
is what we are here to talk about today. Indeed, it is rare I get the
chance to stand up here and tell you that the effort that we are making
here is an effort that is bipartisan, it is bicameral, and we
occasionally see issues like that. More importantly, there is
enthusiasm for this particular issue on all parts. In that regard, it
is fun to be doing one of these instead of fighting over something.
In Kyiv and Irpin last year, I saw firsthand some of the
destruction that Russia has rained down on Ukrainian infrastructure,
homes, schools, businesses, and manufacturing. The scale of the damage,
as you all know, is immense. This devastation has decimated Ukraine's
economy, with experts placing current estimates to rebuild at over $400
billion dollars. That number will only increase more the longer this
war drags on.
This harsh reality presents the United States and its allies with a
problem. How do we hold Russia--a major economy with significant
resources and veto powers at major international institutions--
accountable for its invasion of Ukraine, the destruction it has
created, and the lives it has cost? How can we best help Ukraine
rebuild its country, save its economy, and become integrated more into
the West?
This really is a simple process, a simple matter. Russia broke it,
they ought to pay for it. That is really, really simple. We understand
it, the world understands that.
The international community has overwhelmingly condemned Russia for
its war of aggression. Indeed, the International Court of Justice ruled
that Russia's invasion has violated international law, and the U.N.
General Assembly adopted a resolution establishing Russia's duty to
provide reparations to Ukraine. The G7 has also issued multiple
statements asserting that Russia must pay for Ukraine's reconstruction.
That is what we are talking about today, and that is what this effort
that we are pursuing here is very clearly targeted at.
The problem, of course, is that Russia has ignored all of this--
why? Because it can. Putin has refused to discuss compensation for
damages of course, let alone agree to pay for the reconstruction of
Ukraine, and worse, inflicts continual destruction. Russia also
continues to use its veto powers at the U.N. and other international
institutions which house traditional mechanisms for compensation,
effectively rendering these mechanisms useless.
We knew we need to do more. Thus, the REPO Act.
Meanwhile, public reporting indicates there is more than $300
billion in Russian sovereign assets currently frozen around the world,
with most of that held in Europe. We have some here in the United
States. While like-minded countries agree that Russia should pay to
rebuild Ukraine, no country has yet been willing to take a first step
to make that happen. As with all key decision points on assistance to
Ukraine thus far, U.S. leadership is absolutely essential. We are here
to provide that leadership.
European countries have hidden behind traditional, theoretical
principles that protect sovereign State assets. However, Ukraine's
situation is not a theoretical one. It is very real, and has very real
consequences.
Sadly, the truth is that Russia will never agree to its obligations
to compensate Ukraine, and Russia's veto powers have taken
international compensation mechanisms off the table. Thus, the need for
REPO.
Given this reality, the international community is left with a
choice: will law abiding nations stand by and allow Russia to skirt its
international obligations? Will we acknowledge that both domestic and
international law must evolve in order to meet this relatively new
problem, and unique problem? Make no mistake--this situation presents
the international legal system with one of its greatest test since
World War II.
The entire international system is based on the premise of
international peace and security through respect of territorial
sovereignty. If international law cannot evolve and hold Russia
accountable for violating not only a foundational principal of the U.N.
but also this most basic tenet of the international system in the
modern age, we stand no chance of deterring China from invading Taiwan,
or other authoritarian countries from future aggression.
The stakes are simply too high for us to let arcane legal theories
keep us from doing what needs to be done. Over the course of this
conflict, we have seen that U.S. leadership on key assistance to
Ukraine--from critical munitions, to tanks, to fighter aircraft and
fighter pilot training, to long range missiles--almost invariably led
other countries to follow suit. This multiplies the amount of
assistance many times over.
Now I do not want to, in any way, denigrate or take away from what
the Europeans have done. They have stepped up, we have pushed and
shoved back in forth arguing about who has done more, it is not
particularly relevant. The fact is that both sides of the Atlantic are
working on this issue, and should, and it is really been a thing that
is brought our partnerships on NATO together and our NATO countries
together--and stronger, more so than it is ever been in years.
If Russia refuses to honor its moral and legal obligations to
compensate Ukraine to help them rebuild, other countries can--and
should--seize Russia's sovereign assets and transfer them to Ukraine.
Additionally, the United States can and should lead on this issue by
passing legislation granting domestic legal authority to seize and
transfer Russian sovereign assets to Ukraine and work with our allies
to do the same.
We are going through a legal process, a lawful process and a due
process.
That is why I introduced the Rebuilding Economic Prosperity and
Opportunity for Ukrainians Act. The REPO Act is actually a pretty
simple piece of legislation. It does 4 things:
First and foremost, the REPO Act grants the president authority to
seize Russian sovereign assets frozen in the United States. It also
gives the president the authority to transfer those assets to Ukraine
for reconstruction.
Under current U.S. law, there is no clear-cut way to seize
sovereign assets of another country unless the United States is
effectively at war with that country. The bill also makes clear that
this would be a one-time authority that applies only to Russia in this
unique circumstance.
Second, because the president may not transfer all of Russia's
frozen assets, the bill creates a prohibition that the president cannot
return any Russian frozen assets until Russia has withdrawn its troops
from Ukraine and agreed to fully compensate the Ukrainians. The bill
also provides congressional oversight over any proposal to return
Russia's assets to ensure that conditions have, in fact, been met.
Third, the bill ensures these funds can get to Ukraine quickly by
limiting Russia's ability to challenge a seizure in U.S. courts.
Ukraine needs this money now if it has a hope of beginning to rebuild
before the damage to its economy becomes irreparable.
Russia would like nothing more than to tie these funds up over a
decades-long time period with complex litigation in order to keep from
having to pay up. Interestingly, our court system is designed that this
is possible if we do not have this legislation to make things happen
otherwise. This provision would provide congressional intent to U.S.
courts in this unique and extraordinary situation that Russia should
not be able to use the U.S. legal system to skirt its obligations and
to lay justice for Ukraine.
Finally, the bill directs the president to engage with other like-
minded allies and partners to establish an international compensation
mechanism. While I believe the United States should have the authority
to unilaterally seize Russian assets and send them to Ukraine, I do not
believe we should act alone. Indeed, we should have our partners with
us.
According to public reports, most of Russia's frozen assets are
located in Europe. For us to make a dent in what Russia owes Ukraine,
Europe will need to participate in this effort. This is an
extraordinary situation, collective action in concert with our allies
and partners will send the strongest possible message to Putin and any
other authoritarian State contemplating illegal military action.
Importantly, U.S. leadership here will be critical in encouraging our
European allies.
While the REPO Act is focused on U.S. domestic law, it sends a
strong message to our European partners that seizing Russia's sovereign
assets would also be legal and appropriate under international law.
Under the international law of ``countermeasures,'' third-party
countries have the right to take proportionate, temporary action aimed
at compelling another State to comply with its legal obligations.
Therefore, it is legal and appropriate for nations to terminate
Russia's sovereign immunity and transfer Russian assets to Ukraine for
reconstruction.
Some critics argue that this bill would limit the president's
ability to negotiate an end to the war in Ukraine. Those with this view
argue that the president should have total flexibility to use Russia's
frozen assets as a carrot to entice Russia to the negotiating table and
that placing pre-conditions on the return of those assets, as well as
congressional oversight, hinders that ability. However, this
legislation actually gives the president more tools to compel Russia to
negotiate.
By giving the president the discretion to use this authority, he
will have added credibility in negotiations up to and until this
authority is exercised. By making seizure a real possibility, Putin
will be under greater pressure to make a deal and meet meaningful
conditions of withdrawal and compensation. If Putin refuses, then this
creates the pathway to make Ukraine whole.
Additionally, if Russia were to attempt to challenge seizure in
U.S. Federal Courts, the bill would give Department of Justice lawyers
the ammunition they need to rebuff challenges.
The argument I probably hear most often is that seizing Russia's
sovereign assets will set a new precedent that undermines sovereign
immunity. The principle, by the way, one of a number which have grown
up over a period of time and are there for a reason, and in general and
normal circumstances, could be good propositions. The principle that
states are immune from having their property expropriated by other
states to settle debts is an incredibly important principle. The fact
that the law of countermeasures has never been used to suspend
sovereign immunity with regard to seizure of State assets is important.
However, like most legal precedents, there are rare and extreme cases
where exceptions are necessary as long are there are appropriate
guardrails to keep the exception limited.
Indeed there is precedent for seizing sovereign assets of an
aggressor State. In 1991, the international community collectively
seized Iraqi sovereign assets following Saddam Hussein's invasion of
Kuwait. I believe Russia's war in Ukraine is another unique but rare
situation that warrants such similar action and is both legal,
appropriate and very much in line with the single president that is out
there, and that is the Iraq and Kuwait situation.
Still others argue that if countries take Russia's assets, Russia
will retaliate by seizing those countries assets located inside Russia.
Putin is already seizing Western assets. In April, Russia announced a
new Presidential decree which, ironically, cited the doctrine of
countermeasures as justification to seize private companies if they are
based in countries deemed ``unfriendly'' by the Kremlin. The Russians
themselves have provided a clear legal precedent for this legal action.
They have already done this, and it is appropriate that we follow suit.
Unfriendly countries are an interesting proposition by the Kremlin.
That is probably everybody, with the exception of all the bad actors
out there like North Korea, China, Iran and Cuba and Venezuela. Only a
handful amongst the nearly two hundred countries on the planet fit this
description.
Some critics have also expressed concern that if the United States
were to take Russia's assets, we might seize other countries' assets.
They also fear that countries would move their sovereign investments
outside of the United States or finance their investments in other
currencies. The fear is that confiscation could weaken the value of the
dollar globally.
This argument does not hold water. Some countries have already
tried to shift transactions away from the dollar--like China demanding
that Saudi Arabia pay them for their oil using the Yuan. There is a
reason these efforts have failed and been rebuffed. The dollar is the
clear and safe global standard for international investment--period. It
is highly unlikely, at least for the foreseeable future, that another
currency could overtake the dollar. It is also clear this bill targets
a very specific and unique case.
The approach in the REPO Act does not just represent my view. In
crafting this legislation, I have worked closely with constitutional
law professors, international law experts, policy practitioners,
European partners, Ukrainian legal advocates, and Ukrainian government
officials. This effort to bring so many stakeholders to the table is
why this bill is THE bill on Russian sovereign assets that has
bipartisan, bicameral support. It is also why the REPO Act is Ukraine's
top legislative request of Capitol Hill.
In the Senate, I have partnered with Senator Sheldon Whitehouse--a
strong advocate for anti-money laundering and a key architect of
legislation enabling the seizure of private Russian assets in the
United States. Other Senate cosponsors include Senator Wicker, ranking
member of the Senate Armed Services Committee, and Senator. Graham,
ranking member of the Senate Defense Appropriations subcommittee.
In the House, the Foreign Affairs committee just passed its version
of the bill by an overwhelming bipartisan majority of 40-2. The REPO
Act has also been endorsed by legal and policy scholars from all parts
of the political spectrum outside of government.
We are entering a new phase of strategic competition that is
growing more fierce with each passing day. We need to develop and use
new and more creative tools to not only seek justice for those who are
wronged, but to deter bad actors from doing things like Russia has done
in Ukraine.
The countries that want to undermine and change the international
system--Russia, China, Iran, and North Korea--do not care about the
rule of law and never have. They do not care about our precedents. We
must be willing to put them on notice that they will not act with
impunity--that they will not be allowed to act with impunity. They will
be made to pay. The REPO Act will show them that is true--and I thank
all of you who share this enthusiasm and support this effort, and I
commit to you that we will move as diligently as we can to get this
legislation across the finish line. With that, I will take a question
or two, whatever you like.
LEGAL MEMORANDUM
November 20, 2023
From:
Professor Dapo Akande Chichele Professor of Public International
Law Oxford University Essex Court Chambers, London
Professor Shotaro Hamamoto School of Government/Graduate School of
Law Kyoto University
Professor Pierre Klein Center for International Law Universite
libre de Bruxelles
Paul Reichler * Public International Law Practitioner 11 King's
Bench Walk Chambers, London Professor Philippe Sands University College
London 11 King's Bench Walk Chambers, London
Professor Emeritus Nico Schrijver Grotius Centre for International
Legal Studies Leiden University, the Netherlands
Professor Christian Tams Chair of International Law Director,
Glasgow Centre for International Law and Security University of Glasgow
Philip Zelikow * Senior Fellow, Hoover Institution Stanford
University
Subject: On Purposed Countermeasures Against Russia to Compensate
Injured States for Loses Caused by Russia's War of Aggression Against
Ukraine
Issue: This Memorandum addresses whether international law permits
States that have frozen Russian State assets, held by their public or
private financial institutions, to transfer those assets in order to
provide compensation for the damage inflicted by Russia during its
unprovoked war of aggression against Ukraine, which continues to this
day with no end in sight.
I. Summary [paras 1-9]
II. Relevant Facts [paras 10-21]
III. Legal Analysis
A. Countermeasures and the Law of State Responsibility [paras 22-
42]
B. Countermeasures by States Beyond Ukraine [paras 43-63]
C. Substantive Limits on Countermeasures [paras 64-73]
D. Procedural Requirements for Countermeasures [paras 74-77]
IV. Conclusion [paras 78-82]
* Paul Reichler or Philip Zelikow are corresponding authors for
further inquiries on behalf of the signers.
I. SUMMARY
1. For the reasons set out below, the authors of this Memorandum--
experienced public international lawyers and practitioners from
Belgium, Germany, Japan, the Netherlands, Nigeria, the United Kingdom,
and the United States--having given their most serious consideration to
this issue, conclude that it would be lawful, under international law,
for States which have frozen Russian State assets to take additional
countermeasures against Russia, given its ongoing breach of the most
fundamental rules of international law, in the form of transfers of
Russian State assets as compensation for the damage resulting directly
from Russia's unlawful conduct. Only Russian State assets would be
affected. No new measures would be imposed on assets that are genuinely
privately owned. In coming to these conclusions, none of us are acting
on behalf of sponsors or clients.
2. Our recommendation, set forth below, is that the compensation be
provided through an international mechanism, to which the States
concerned would transfer the Russian State assets currently under their
control. This mechanism could support urgent programs to efficiently
and effectively mitigate further damages and aid Ukraine's recovery,
while it could also be given the authority and capacity to receive and
review claims from Ukraine and other injured parties--public and
private--and distribute appropriate compensation in line with
internationally agreed standards and procedures. The total amount of
compensation would not exceed the amount owed by Russia for the damage
it has caused. In the unlikely event that the Russian State assets
transferred to the mechanism are found to exceed the amount of damage
suffered by Ukraine and other injured States and entities, the excess
would be returned to the Russian accounts from which the assets were
transferred.
3. There is no doubt about the illegality of Russia's invasion of
Ukraine, occupation of Ukrainian territory or annexation of large parts
of it. By these actions, Russia has violated the most fundamental rules
of international law, enshrined, inter alia, in the United Nations
Charter, Article 2, paragraph 4, which prohibits the use or threat of
force against the territorial integrity or political independence of
another State. The principle is embodied in U.N. General Assembly
[``UNGA''] resolution 2625 [1970], the Declaration on Principles of
International Law concerning Friendly Relations and Co-operation among
States, which reflects customary international law and declares
unlawful and inadmissible the acquisition of another State's territory
by force. This rule is widely recognized as a cornerstone of the post-
World War II international legal order; indeed, it is an indispensable
element of the foundation upon which the entire rules-based order is
built.
4. Based on its violation of these fundamental principles, Russia's
invasion of Ukraine has been condemned three times in resolutions
adopted by the UNGA, which collectively call upon Russia to immediately
cease its armed intervention in Ukraine, withdraw its forces from
Ukrainian territory, and compensate Ukraine for the damage it has
inflicted. On March 16, 2022, the International Court of Justice
[``ICJ''] ordered provisional measures against Russia, calling on it to
immediately end its military activities against Ukraine. Russia has
ignored the UNGA's resolutions and the ICJ's Order on Provisional
Measures.
5. In the face of such a blatant violation of a State's
international legal obligations, international law permits other States
to respond with ``countermeasures''. Lawful countermeasures are
measures that would be unlawful if imposed against an innocent State,
that is, one that has not violated its international obligations, but
are permitted if they are taken against an offending State and are
intended to induce the offending State to cease its unlawful conduct,
or to comply with its obligation to compensate States that have been
injured by that conduct.
6. Third States, that is, States that have not been directly
injured by the offending State's conduct, are permitted by
international law to take collective countermeasures against the
offending State, in this case Russia, for grave breaches of its
obligations under peremptory norms of international law that have an
erga omnes character, as here.
7. Moreover, States that have been specially affected by Russia's
unlawful acts, or damaged indirectly by the threats, costs or
disruptions these acts have caused, can join in countermeasures
employed by other States on these grounds, as well.
8. As an early response to Russia's unlawful invasion of Ukraine,
several States where Russian State assets are located took action to
freeze those assets so that they would not be available to finance
Russia's war of aggression, and these assets remain frozen today.
Whether labelled as such or not, these were lawful countermeasures
under international law. They remain so, since Russia's unlawful
conduct, to which they were a response, has not ceased. Absent Russia's
offending conduct, it would have been unlawful for any State to freeze
its assets.
9. In light of the enormous level of damage and destruction Russia
has inflicted on Ukraine during nearly 2 years of war, and the immense
cost of reconstruction, some of which has been borne by States holding
Russian State assets, calls have arisen for those States to use the
frozen assets--an estimated $300 billion spread across several States--
as compensation to Ukraine and other injured parties since, under
international law, Russia is obligated t0 compensate them for all the
damage it has caused.\1\ Under this approach, any assets transferred to
Ukraine or other injured parties would be credited to Russia as an
offset against its total liability.
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\1\ See, e.g., Philip Zelikow, `A Legal Approach to the Transfer of
Russian Assets to Rebuild Ukraine' [Lawfare, May 2, 2022]https://
www.lawfaremedia.org/article/legal-approach-transfer-russian-assets-
rebuild-ukraine; `Lawrence Summers, Philip Zelikow and Robert Zoellick
on why Russian reserves should be used to help Ukraine' The Economist
[London, July 27, 2023] https://www.economist.com/by-invitation/2023/
07/27/lawrence-summers-philip-zelikow-and-robert-zoellick-on-why-
russian-reserves-should-be-used-to-help-ukraine; Oleksandr Vodiannikov,
`Compensation Mechanisms for Ukraine: An Option for Multilateral
Action' [OpinioJuris, May 13, 2022], http://opiniojuris.org/2022/05/13/
compensation-mechanism-for-ukraine-an-option-for-multilateral-action/;
Laurence Tribe, Raymond Tolentino, Kate Harris, Jackson Erpenbach, and
Jeremy Lewin, `The Legal, Practical, and Moral Case for Transferring
Russian Sovereign Assets to Ukraine' [Renew Democracy Initiative, Sept.
17, 2023] https://rdi.org/wp-content/uploads/2023/10/RDI-Making-Putin-
Pay-Report-September-2023--compressed-1.pdf; Yuliya Ziskina, et al,
`Multilateral Asset Transfer: A Proposal for Ensuring Reparations for
Ukraine' [New Lines Institute, Jun. 14, 2023] https://
newlinesinstitute.org/rules-based-international-order/multilateral-
asset-transfer-a-proposal-for-ensuring-reparations-for-ukraine/;
Kristina Hook and Yonah Diamond, `The case for seizing Putin regime
assets' [Atlantic Council, August 23, 2023] https://
www.atlanticcouncil.org/in-depth-research-reports/issue-brief/the-case-
for-seizing-russian-assets-ofaggression/.
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II. RELEVANT FACTS
10. On February 24 2022, Russia declared a ``special military
operation'' in Ukraine. In reality, the operation constituted an
unprovoked full-scale military invasion of Ukrainian sovereign
territory, following upon Russia's involvement in the occupation of
Ukrainian territory that began in 2014.\2\ The apparent aim of the
``special military operation'' was the destruction of the Ukrainian
State, with an initial objective of quickly bringing down Ukraine's
democratically elected government in Kyiv.\3\ Although Russia has thus
far failed to achieve these goals, it has managed to seize and occupy a
significant portion of Ukrainian territory, and it has illegally taken
measures to annex large parts of four Ukrainian provinces, integrating
them into the Russian Federation. It is currently waging a war of
attrition, hoping that, with a far greater population and considerably
more military resources than Ukraine, it will eventually outlast
Ukraine, ultimately forcing an acceptance of its demands.
---------------------------------------------------------------------------
\2\ See Ukraine and the Netherlands v. Russian Federation App nos
8019/16, 43800/14 & 28525/20 [ECtHR, January 25, 2023].
\3\ `Russian invasion of Ukraine: A timeline of key events' [CNN,
February 23, 2023] https://edition.cnn.com/interactive/2023/02/europe/
russia-ukraine-war-timeline/index.html; `Russia has invaded Ukraine:
what we know so far The Guardian [London, February 24, 2023] https://
www.theguardian.com/world/2022/feb/24/russia-has-invaded-ukraine-what-
we-know-so-far.
---------------------------------------------------------------------------
11. Russia's aggression has caused massive loss of life and
destruction in Ukraine. Its major cities and many smaller towns have,
for more than one and half years, repeatedly faced extensive aerial
bombardment and missile strikes aimed at population centres and
civilian infrastructure unrelated to any military activity. As of
September 24, 2023, the U.N. Office of the High Commissioner for Human
Rights recorded 27,449 civilian casualties in Ukraine, including 9,701
fatalities, but noted that the real figures are likely considerably
higher.\4\ These numbers do not include the tens if not hundreds of
thousands of Ukrainian military casualties--dead and wounded--caused by
Russia; or the damage Russia has brought about by forcing more than
seven million Ukrainians to flee the country. In February 2023, the
World Bank estimated that the reconstruction and recovery of Ukraine
would require funding of USD $411 billion over 10 years.\5\ That number
is likely to have increased considerably since the estimate was made.
For as long as Russia's aggression goes on, the scale of destruction to
Ukraine's civilian population, its armed forces, its national
infrastructure and the public and private property of its people will
continue to grow. Left unremedied, there is a danger that the Ukrainian
State and economy could collapse, which is the apparent intention of
Russia's current warfare, which includes the disruption of all of
Ukraine's maritime commerce and its civil aviation, as well as broad
attacks on vital infrastructure.
---------------------------------------------------------------------------
\4\ UNOHCHR, `Ukraine: civilian casualty update September 24, 2023'
[OHCHR, September 26, 2023]https://www.ohchr.org/en/news/2023/09/
ukraine-civilian-casualty-update-24-september-2023.
\5\ World Bank Group, `Ukraine: Rapid Damage and Needs Assessment,
February 2022-February 2023' [World Bank, Mar. 2023]https://
documents1.worldbank.org/curated/en/099184503212328877/pdf/
P1801740d1177f03c0ab18005755661-5497.pdf.
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12. The unlawfulness of Russia's military campaign in Ukraine, and
its responsibility for the immense damage it has caused, are beyond
reasonable dispute. The waging of an aggressive war to conquer another
State's territory or remove its government is a flagrant violation of
Article 2, paragraph 4, of the U.N. Charter, as well as customary
international law. An aggressive war breaches a peremptory norm of
international law--the prohibition of aggression--which is non-
derogable and admits of no exceptions. Also beyond dispute is Russia's
obligation in international law to make reparation to Ukraine for the
damage caused by its unlawful conduct. The law of State responsibility
makes Russia liable for the consequences of its breaches of its
international obligations.
13. This is the view of the vast majority of States, as reflected
in the UNGA resolution adopted shortly after Russia's invasion [ES-11/
1], by which an overwhelming majority of Member States [141 in total]:
a. deplored ``in the strongest terms the aggression by the Russian
Federation against Ukraine in violation of Article 2[4] of the
Charter'';
b. demanded that Russia immediately ``cease its use of force''
against Ukraine and ``immediately, completely and unconditionally
withdraw all of its military forces from the territory of Ukraine
within its internationally recognized borders'';
c. deplored the Russian decision of February 21, 2022 ``related to
the status of certain areas of the Donetsk and Luhansk regions of
Ukraine as a violation of the territorial integrity and sovereignty of
Ukraine and inconsistent with the principles of the Charter''; and
d. called upon Russia ``to abide by the principles set forth in the
Charter and the Declaration on Friendly Relations'' and urged
``immediate peaceful resolution of the conflict between the Russian
Federation and Ukraine through political dialog, negotiations,
mediation and other peaceful means''.\6\
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\6\ UNGA Res ES-11/1 [March 2, 2022] U.N. Doc A/RES/ES-11/1. Only
five Member States voted against the resolution: Russia, Belarus,
Democratic People's Republic of Korea, Eritrea and Syria.
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14. Russia has failed, and continues to fail, to abide by the terms
of resolution ES11/1.
15. On March 24 2022, the UNGA adopted another resolution, ES-11/2,
deploring Russia's attacks on civilian targets in Ukraine [including
educational institutions, water and sanitation systems and medical
facilities, and besiegement, shelling and air strikes in densely
populated cities in Ukraine].\7\ Again, by that resolution, an
overwhelming majority of U.N. Member States demanded the immediate
cessation of hostilities by Russia against Ukraine, in particular ``any
attacks against civilians and civilian objects'', and called for the
protection of civilians.
---------------------------------------------------------------------------
\7\ UNGA Res. ES-11/2 [March 24, 2022] U.N. Doc A/RES/ES-11/2.
---------------------------------------------------------------------------
16. In addition to UNGA resolutions ES-11/1 and ES-11/2, on
November 14, 2022, the UNGA adopted resolution ES-11/5 titled
``Furtherance of remedy and reparation for aggression against
Ukraine''.\8\ The resolution [inter alia]:
---------------------------------------------------------------------------
\8\ UNGA Res. ES-11/5 [Nov. 14, 2022] U.N. Doc A/RES/ES-11/5.
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a. recognises that Russia ``must be held to account for any
violations of international law in or against Ukraine'' and that it
``must bear the legal consequences of all of its internationally
wrongful acts, including making reparation for the injury, including
any damage, caused by such acts''; and
b. encourages Member States to establish, in cooperation with
Ukraine ``an international mechanism for reparation and damage, loss or
injury, and arising from the internationally wrongful acts of the
Russian Federation in or against Ukraine.''
17. Resolution ES-11/5 thus specifically calls for the
establishment of an international mechanism to enforce Russia's
obligation to pay reparations for any injury arising from its war of
aggression against Ukraine.\9\
---------------------------------------------------------------------------
\9\ Ibid.
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18. On February 23, 2023, the General Assembly adopted resolution
ES-11/6, which stresses the need for a comprehensive, just and lasting
peace in Ukraine, consistent with the U.N. Charter, including the
principles of sovereign equality and territorial integrity, and repeats
the demand for the immediate, complete and unconditional withdrawal of
all Russian troops from Ukraine, and the cessation of hostilities. The
resolution also emphasizes the need for accountability for Russia's
most serious breaches of international law.\10\
---------------------------------------------------------------------------
\10\ UNGA Res. ES-11/6 [February 23, 2023] U.N. Doc A/RES/ES-11/6.
---------------------------------------------------------------------------
19. Although no international mechanism to enforce Russia's
obligation to pay reparations to Ukraine has yet been established, many
States have responded to Russia's aggression and the UNGA's resolutions
by imposing coordinated economic sanctions. The freezing of Russian
State assets has been a key element of this package of measures.
20. In February 2023, officials from Australia, Canada, the
European Commission, France, Germany, Italy, Japan, the United Kingdom,
and the United States established the multilateral ``Russian Elites,
Proxies and Oligarchs'' task force [``REPO'']. In May 2023, the task
force was asked to map the location of Russian sovereign assets. In
September 2023, the task force announced that at least 280 billion
dollars worth of such assets had been located, the majority of which is
in the European Union.\11\ The freezing of Russian sovereign assets
means that the Russian government cannot access, liquidate, or earn
proceeds on them. In May 2023, G7 leaders committed to keeping Russia's
sovereign assets immobilized until Russia pays for the damage it has
caused to Ukraine.\12\
---------------------------------------------------------------------------
\11\ See, e.g., U.S. Treasury Department, `Readout: Russian Elites,
Proxies, and Oligarchs Deputies Meeting' [September 7, 2023]https://
home.treasury.gov/news/press-releases/jy1716.
\12\ The White House, `G7 Leaders' Statement on Ukraine' [May 19,
2023) https://www.whitehouse.gov/briefingroom/statements-releases/2023/
05/19/g7-leaders-statement-on-ukraine/. REPO members have committed to
fully and accurately mapping all the Russian sovereign assets
immobilised in REPO member jurisdictions. In a statement on September
7, 2023, the U.S .Treasury reported that REPO expected that effort to
be completed by the end of 2023. See Treasury, `Readout' [n. 11].
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21. In October 2023, the European Union said it would consider
proposals to at least utilize income that central securities
depositories, like Euroclear in Belgium, had earned from their
reinvestment of frozen Russian assets that had matured into cash. Under
one legal theory, this money belongs to the depository and not to
Russia. Under this theory, a government like Belgium could treat such
income as a taxable windfall profit to the company, tax practically all
of it for public use, and avoid any international legal responsibility
to Russia.\13\ While this might be a viable approach for some States,
it would significantly limit the volume of assets available for
Ukraine. In contrast, this Memorandum concludes that all of the
currently frozen Russian State assets could be subjected to lawful
countermeasures that would enable their transfer to an international
mechanism that would be able to provide compensation [the aspect of
reparations relevant here], if the States where the assets are located
are willing to transfer them.
---------------------------------------------------------------------------
\13\ See Laura Dubois and Niko Asgari, `Euroclear earns ?3bn from
Russian assets frozen by West' Financial Times [London, October 26,
2023]
---------------------------------------------------------------------------
https://www.ft.com/content/88ff88c4-6efe-40b7-b635-80eb6bd73c2c.
III. LEGAL ANALYSIS
A. Countermeasures and the Law of State Responsibility
22. The law on countermeasures is part of the law on State
responsibility, which is reflected in the Draft Articles on
Responsibility of States for Internationally Wrongful Acts [``ARSIWA'']
produced by the International Law Commission [``ILC'']. The ILC was
established by the UNGA in 1947 to encourage the progressive
development and codification of international law. The ILC has worked
on codification of the law on State responsibility since 1955. Over
subsequent decades, the ILC developed what has ultimately become
ARSIWA, through a series of reports.\14\ ARSIWA generally reflects the
rules of international law concerning the responsibility of States for
internationally wrongful acts, including the legal consequences
following from a wrongful act, and whether it is a violation of an
obligation owed to one or several States, an individual or a group, or
the international community as a whole.
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\14\ ILC, Yearbook of the International Law Commission 2001, vol 2
pt 2 [[UN, 2007] paras 30-73. In 1980, the ILC provisionally adopted
Part One of the draft ARSIWA. In 1996 [following a UNGA resolution
specifically requesting the ILC to resume work on the draft articles],
the ILC completed a first reading of Part Two and Part Three of the
draft articles, and submitted these for comments and observations. In
1997, the ILC established a Working Group on State responsibility to
address a second reading of the draft articles. In early 2001, the ILC
finalised the second reading of the draft articles, and sought further
comment and observations.
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23. On August 9, 2001, at its 270 meeting, the ILC produced a
report in which it recommended that the UNGA take note of ARSIWA and
annex it to a resolution [the ``ILC Report''].\15\ In response, on
January 28, 2002, resolution 56/83 was adopted by which the UNGA, in
paragraph 3, recorded that it had considered the ILC Report, noted its
recommendations, annexed the articles to the resolution, and commended
them to the attention of Member States.\16\ Although ARSIWA has not
been incorporated into a draft convention opened for signature, it
represents the most authoritative statement of customary international
law on State responsibility, and is frequently cited as such in the
Judgments of the ICJ and other international tribunals.\17\
---------------------------------------------------------------------------
\15\ Ibid. paras 72-73.
\16\ UNGA Res 56/83 [adopted without a vote] U.N. Doc A/RES/56/83.
\17\ See, e.g., Gabcakovo-Nagymaros Project [Hungary/Slovakia]
[Judgment] [1997] ICJ Rep 38 para 47; Armed Activities on the Territory
of the Congo [Democratic Republic of Congo v. Uganda] [Reparations,
Judgment] [2022], ICJ Rep paras 382, 388-389 & 397; Legal Consequences
of the Separation of the Chagos Archipelago from Mauritius in 1965
[2019] ICJ Rep 95, at para 177; Responsibilities and Obligations of
States with respect to activities in the Area [Advisory Opinion of
February 1, 2011] ITLOS Reports 2011, 10, paras 66-67, 112, 169, 178-
182, 194-196 & 210.
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24. ARSIWA is composed of four Parts. Part One is on `The
Internationally Wrongful Act of a State', and it consists of five
Chapters: I. General Principles; II. Attribution of Conduct to a State;
III. Breach of an International Obligation; IV. Responsibility of a
State in Connection with the Act of Another State; and V. Circumstances
Precluding Wrongfulness. Part Two addresses the `Content of the
International Responsibility of a State.' It has three Chapters: I.
General Principles; II. Reparation for Injury; and III. Serious
Breaches of Obligations under Peremptory Norms of General International
Law. Part Three is entitled `The Implementation of the International
Responsibility of a State.' It is especially pertinent to the matters
addressed in this Memorandum. Its two Chapters cover: I. Invocation of
the Responsibility of a State; and II. Countermeasures. Part Four
addresses `General Provisions.'
25. The first basic statement of principle underlying ARSIWA is
that: ``Every internationally wrongful act of a State entails the
international responsibility of that State'' [Article 1].\18\ The ILC's
commentary to Article 1 explains that an internationally wrongful act
may give rise to ``obligations of restitution or compensation, or also
give the injured State the possibility of responding by way of
countermeasures.''
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\18\ Conduct is attributed to a State where it is that of a State
organ [Article 4]; where persons or entities exercise elements of
governmental authority [Article 5]; when it is an organ of another
State placed at the disposal of the State in question when acting in
the exercise of elements of governmental authority of the latter
[Article 6] [in all these cases, regardless of whether the organ,
entity or person exceeds authority or contravenes instructions [Article
7]]; where the conduct is by person or group of persons directed or
controlled by the State [Article 8]; or when it is acknowledged or
adopted by the State [Article 11].
---------------------------------------------------------------------------
26. Countermeasures by the injured State are first addressed in
Part One, Chapter V [Circumstances Precluding Wrongfulness], Article
22, which provides that they may include acts that would otherwise be
wrongful, but are permissible as a response to a wrongful act by
another State: ``The wrongfulness of an act of a State not in
conformity with an international obligation toward another State is
precluded if and to the extent that the act constitutes a
countermeasure taken against the latter State in accordance with
chapter II of part three.''
27. The wrongfulness of a countermeasure is thus precluded if it is
taken in accordance with Chapter II of Part 3 of ARSIWA on
Countermeasures, which consists of six Articles, from Article 49
through Article 54. Article 49, entitled `Objects and Limits of
Countermeasures,' states:
``1. An injured State may only take countermeasures against a State
which is responsible for an internationally wrongful act in order to
induce that State to comply with its obligations under part two.
2. Countermeasures are limited to the non-performance for the time
being of international obligations of the State taking the measures
toward the responsible State.
3. Countermeasures shall, as far as possible, be taken in such a
way as to permit the resumption of performance of the obligations in
question.''
28. Article 51, entitled Proportionality, imposes another condition
on the use of countermeasures: ``Countermeasures must be commensurate
with the injury suffered, taking into account the gravity of the
internationally wrongful act and the rights in question.''
29. Taking these four requirements one at a time and beginning with
paragraph 1 of Article 49, ARSIWA requires that the countermeasures be
taken to induce the wrongdoing State ``to comply with its obligations
under part two''. The obligations under Part 2 include the duties to
cease ongoing wrongful conduct and to make reparation for an
internationally wrongful act. As set out in Articles 30 and 31 of Part
2: Article 30: ``The State responsible for the internationally wrongful
act is under an obligation: [a] to cease that act, if it is
continuing;[ . . . ] Article 31 [1]: ``The responsible State is under
an obligation to make full reparation for the injury caused by the
internationally wrongful act. Article 31[2]: ``Injury includes any
damage, whether material or moral, caused by the internationally
wrongful act of a State.''
30. Therefore, when a wrongdoing State breaches its obligations
under Articles 30 and 31 of ARSIWA, that is, when it does not cease its
internationally wrongful conduct or does not make full reparation for
injury caused by that conduct, the injured State may adopt
countermeasures to induce the wrongdoer to comply with the duties of
cessation and/or reparation. The word ``induce'' means ``to persuade
someone to do something, or to cause something to happen.'' \19\
---------------------------------------------------------------------------
\19\ ``Induce'' in Cambridge Dictionary https://
dictionary.cambridge.org/us/dictionary/english/induce.
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31. In this case, by transferring assets to an international
compensation mechanism, States would cause Russia to comply with its
obligation to ``make full reparation'' to Ukraine. The same measure
would also serve as an inducement or incentive to Russia to cease its
wrongful conduct and bring itself into compliance with the peremptory
norms it has been violating. On both of these bases, the transfer of
assets would constitute a lawful countermeasure because, as described
by the ILC, the transfer would be ``an instrument for achieving
compliance with the obligations of the responsible State under Part
Two'' .\20\
---------------------------------------------------------------------------
\20\ See the commentary to Article 49 of ARSIWA, at para 1.
---------------------------------------------------------------------------
32. Under the second requirement of Article 49, countermeasures
must have a temporal aspect: they can only suspend ``for the time
being'' the obligations of the injured State to the offending State
such that, for that time period, the wrongfulness of a measure in
breach of such an obligation would be precluded. Although no time
period is specified, it can be presumed that the measure would be
lawful for as long as the wrongful conduct continues, but no longer.
This would be consistent with the third requirement of Article 49, set
forth in paragraph 3: that the countermeasure must be taken in such a
way as to permit both the offending and the injured State to resume
performance of their mutual obligations. To the same end, Article 53,
entitled ``Termination of Countermeasures'' provides that:
``Countermeasures shall be terminated as soon as the responsible State
has complied with its obligations under Part Two in relation to the
internationally wrongful act.''
33. Under the third requirement of Article 49, countermeasures must
be reversible, that is, ``taken in such a way to permit the resumption
of performance of the obligations in question.'' As explained in the
Judgment of the International Court of Justice in Gabcikovo-Nagymaros
Project, since the ``purpose [of a countermeasure] must be to induce
the wrongdoing State to comply with its obligations under international
law,'' ``the measure must therefore be reversible.'' \21\ The
requirement that countermeasures be reversible is not intended to
impose strict temporal limits on their operation. As explained by the
International Law Commission, it is meant to ensure that a State is in
a position to resume performance of its obligations when the unlawful
conduct has ceased and the countermeasures have been terminated:
``Paragraph 3 of article 49 is inspired by article 72, paragraph 2, of
the 1969 Vienna Convention, which provides that when a State suspends a
treaty it must not, during the suspension, do anything to preclude the
treaty from being brought back into force. By analogy, States should as
far as possible choose countermeasures that are reversible.'' \22\
---------------------------------------------------------------------------
\21\ Gabcikovo-Nagymaros Project [Hungary/Slovakia] [1997] ICJ Rep
56-57, para 87.
\22\ See the commentary to Article 49 of ARSIWA, at para 9.
---------------------------------------------------------------------------
34. All three conditions of Article 49, therefore, demonstrate that
countermeasures are intended to induce the offending State to comply
with its legal obligations, and thus to eventually restore normal legal
relations between the parties. The countermeasures proposed herein
would, in effect, suspend the performance of certain international
obligations, including obligations of reciprocal regard between
sovereigns for the financial assets each might deposit in the other's
jurisdiction, or obligations in agreements about the treatment of such
investments.
35. There is no ``immunity'' between sovereigns in respect of
breaches of international obligations. Instead, there is State
responsibility. Ordinarily, Russia could seek compensation if another
sovereign appropriated its property. In this case, the unlawfulness of
any transfer of State assets is precluded because of Russia's ongoing
wrongful conduct.\23\ Once Russia has complied with its legal
obligations, its normal legal relations will be restored. Its future or
remaining deposits will again be entitled to respect. Russia would not
be entitled to regain any money that has been lawfully transferred to
compensate Ukraine. It could only ask that these transfers not exceed
its liability, and be credited as an offset against such liability.
---------------------------------------------------------------------------
\23\ ARSIWA, Article 22, quoted above.
---------------------------------------------------------------------------
36. Also, as the words ``as far as possible'' in section 3 of
Article 49 demonstrate, ``the duty to choose measures that are
reversible is not absolute. It may not be possible in all cases to
reverse all of the effects of countermeasures after the occasion for
taking them has ceased.'' \24\ The damage Russia has done to Ukraine
and others has to be addressed as quickly as possible for the remedies
to be effective. Otherwise, the scale of damage only grows much larger
or the damage becomes irremediable.
---------------------------------------------------------------------------
\24\ Ibid.
---------------------------------------------------------------------------
37. The countermeasure proposed herein--the transfer of frozen
Russian States assets to an international compensation mechanism that
would disburse compensation on Russia's behalf to Ukraine or other
injured parties in satisfaction of Russia's legal obligation--would
fully satisfy the condition of reversibility as understood by the ILC.
The prior legal relations would be restored.
38. Also, the relevant assets are fungible. Nothing precludes
States from reversing the interference with them if and when the reason
for the countermeasure no longer applies. The ILC further noted that
States ought to refrain from taking countermeasures that inflict any
``irreparable damage'', and, if given ``a choice between a number of
lawful and effective countermeasures, . . . should select one which
permits the resumption of performance of the obligations suspended as a
result of countermeasures.'' \25\ To illustrate, when transferring
frozen assets, States could recognise that the assets would be
transferred back should Russia comply with its obligations of cessation
and reparation. Or, alternatively, the rules and regulations governing
the compensation mechanism could stipulate that Russia would be
credited with any reparations actually paid by the mechanism, and its
remaining obligation [if any] would be correspondingly reduced. In the
event the value of its transferred assets were to exceed the amount of
reparations owed, the excess could be transferred back to Russia. On
either approach, the transfer would not impose upon Russia any
irreparable damages.
---------------------------------------------------------------------------
\25\ See the commentary to Article 49 ofARSIWA, at para 9.
---------------------------------------------------------------------------
39. Finally, to satisfy the proportionality requirement set out in
Article 51, the countermeasures would have to be ``commensurate'' with
the injury suffered by the injured State and the gravity of the
offending State's internationally wrongful conduct. To satisfy Article
53, they would have to be terminated as soon as the offending State has
resumed compliance with its international obligations.
40. In these ways, countermeasures are instrumental [rather than
punitive] in character.\26\ Provided the conditions are met, the law on
countermeasures justifies measures which would otherwise be unlawful,
where those measures are: [i] in response to a State's unlawful
conduct, [ii] for the purposes of procuring from that State cessation
of the unlawful conduct, or effecting compliance with its obligation to
pay compensation for it, [iii] proportionate to the gravity of the
unlawful conduct and the injury caused, [iv] in effect only for such
time as required to obtain compliance by the offending State, at which
point they are [v] reversible, as normal legal relations resume. It is
for each State taking countermeasures to satisfy itself that these
conditions are met.\27\ The authority to take countermeasures resides
with individual sovereign States and, in this sense, is a decentralized
and voluntary obligation.\28\
---------------------------------------------------------------------------
\26\ See the commentary to Chapter II of ARSIWA, in particular para
3.
\27\ If their assessment of that breach turns out to be incorrect,
their countermeasures will not have been justified and they will be
liable for their unlawful conduct. However, in the present case this is
a remote risk, in view of the overwhelming view that Russia's war in
Ukraine is internationally unlawful.
\28\ In his treatise on State responsibility, James Crawford, the
ILC's rapporteur for ARSIWA, observed that, ``All the categories of
self-help discussed in this chapter [on countermeasures] share an
emphasis on unilateral action; that is, they are taken by states acting
alone [or alongside other like-minded states] to seek protection or
performance of international legal rights and obligations. The measures
are adopted as a consequence of the view of the reacting State that the
target State has committed an internationally wrongful act . . . In
other words, institutional sanctions create 'vertical' relationships of
enforcement, whereas in the case of decentralized countermeasures the
relationships between the responsible and reacting State are
horizontal.'' In this case a group of like-minded States could choose
to join in taking the countermeasures against the target State.
Compulsory mandates from international organizations are unnecessary
and superfluous. Crawford, State Responsibility: The General Part [CUP,
2013] sec. 21.3.
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41. In the case of Ukraine and Russia, this means that Ukraine [and
other States, as described below] can take countermeasures against
Russia, including measures that would otherwise be in breach of its
obligations to Russia, in order to induce Russia's compliance with its
international obligations to Ukraine by ceasing all its military
activities in and against Ukraine, and by withdrawing its military
forces and other personnel from Ukrainian territory, or, to enforce
Russia's obligation to pay reparation to Ukraine by fully compensating
it [and other injured parties] for all the damage caused by its
internationally wrongful conduct. The countermeasures could include
seizure of Russian State assets to satisfy Russia's obligation to pay
reparations for the injuries it has caused, provided the value of the
assets transferred is commensurate with the injuries, and therefore
satisfies the requirement of proportionality.
42. We now turn to the standing of a group of States, beyond
Ukraine, to invoke Russia's responsibility and take countermeasures.
B. Countermeasures by States Beyond Ukraine
43. States beyond Ukraine have two potential grounds for invoking
Russia's responsibility for its internationally wrongful acts and
joining the group of States taking countermeasures. First, under
Article 42 of ARSIWA, other States are entitled to invoke Russia's
responsibility if the obligations were owed to the international
community as a whole or if the breach of the obligation specially
affected those States. Under Article 31 of ARSIWA, ``Injury includes
any damage, whether material or moral, caused by the internationally
wrongful act of a State.''
44. This Article's reference to States that are ``specially
affected'' borrows its language from the Vienna Convention on the Law
of Treaties. Like that Convention, there is no set definition of the
special impact that constitutes the injury. ``This will,'' the
commentary observes, ``have to be assessed on a case-by-case basis,
having regard to the object and purpose of the primary obligation
breached and the facts of each case. For a State to be considered
injured, it must be affected by the breach in a way that distinguishes
it from the generality of other States to which the obligation is
owed.'' \29\
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\29\ Article 42 of ARSIWA, Comment 12.
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45. Russia's war has displaced millions of refugees, imposing costs
on all the countries that have helped resettle and support them. In
addition, Russia's war and purposeful disruptions of Ukraine's
transportation routes and commerce have harmed States that depended on
that commerce for their economic well-being. Further, Russia has
responded to the lawful freezing of its assets by declaring, in a
Presidential decree, that all States participating in such asset
freezes are ``unfriendly'' and that private property owned by people or
firms domiciled in such States can be confiscated by Russia. Russia has
begun these confiscations, which are unlawful.\30\ Thus, Russia has
compounded its original unlawful conduct with further acts that widen
the circle of those specially affected. Russia's war has also created a
grave threat to the security and stability of Europe, requiring costly
responses by all member States of NATO and the European Union to stop
the aggression and shore up their own defenses.
---------------------------------------------------------------------------
\30\ In April 2023, Russia enacted Presidential decree 302, which
allowed the government to take over assets associated with
``unfriendly'' states. It has already applied this decree to take over
several private companies and turn them over to friends of the
government. President Putin extended this decree in July with
Presidential decree 520 and confiscated more companies. See, e.g.,
Yulia Solomakhina, Chase Kaniecki & Polina Lyadnova, `Nationalization
of Russian Assets of Investors from Unfriendly States Continues'
[Cleary Foreign Investment and International Trade Watch, July 24,
2023]
---------------------------------------------------------------------------
https://www.clearytradewatch.com/2023/07/nationalization-of-
russian-assets-of-investors-from-unfriendly-states-continues.
46. Second, even if it has not been specially affected, any State
is entitled to invoke Russia's responsibility in this case, because
Russia's actions have threatened the core of the international legal
system as a whole, violating obligations under peremptory norms of
international law on a systematic scale. Under Article 54 of ARSIWA,
the responsibility of a State for its internationally wrongful conduct
may be invoked either by an ``injured State'' or, in certain
circumstances, by other States which are not directly injured by that
conduct: ``This chapter does not prejudice the right of any State,
entitled under article 48, paragraph 1, to invoke the responsibility of
another State, to take lawful measures against that State to ensure
cessation of the breach and reparation in the interest of the injured
State or of the beneficiaries of the obligation breached.''
47. As explained in the Commentary: ``[I]njured States, as defined
in article 42, are not the only States entitled to invoke the
responsibility of a State for an internationally wrongful act under
chapter I of this Part. Article 48 allows such invocation by any State,
in the case of the breach of an obligation to the international
community as a whole, or by any member of a group of States, in the
case of other obligations established for the protection of the
collective interest of the group.''
48. The ICJ has long recognised that certain legal obligations are
owed to the international community as a whole: obligations erga omnes.
These obligations are by definition collective: they protect the
interests of the international community itself. \31\ They would
include, for example, the obligation to prevent and punish genocide.
The Court has held, in particular, that breaches of such an obligation
violates peremptory [i.e non-derogable] norms of international law
affecting all States, such that even States not directly affected by
the wrongful conduct have standing to sue the offending State on their
own behalves, as well as to obtain relief for the victims of the
prohibited conduct.\32\
---------------------------------------------------------------------------
\31\ Barcelona Traction Case [Belgium v. Spain] [Judgment] [1970]
ICJ Rep at para 33.
\32\ Application of the Convention on the Prevention and Punishment
of the Crime of Genocide [The Gambia v. Myanmar] [Judgment on
Preliminary Objections] [2022] ICJ Rep at paras 107-08.
---------------------------------------------------------------------------
49. The obligation of non-aggression is another peremptory norm of
international law, which has been recognized as an obligation erga
omnes.\33\ As such, it affects all States, not only the direct victim
of the aggression. A war of aggression therefore entitles any State, or
any group of States, to invoke the responsibility of the aggressor and
seek redress, just as any State may invoke the responsibility of a
State that has committed genocide.
---------------------------------------------------------------------------
\33\ As recognised by the ICJ in the Barcelona Traction case [n.
31] at para 33.
---------------------------------------------------------------------------
50. This is recognised in Article 48 of ARSIWA, which provides an
entitlement and a mechanism for third-party States to invoke the
responsibility of a wrongdoing State.\34\ Article 48 provides:
---------------------------------------------------------------------------
\34\ See further, ARSIWA, Chapter I, commentary at para 3.
---------------------------------------------------------------------------
``1. Any State other than an injured State is entitled to invoke
the responsibility of another State in accordance with paragraph 2 if:
[a] The obligation breached is owed to a group of States including
that State, and is established for the protection of a collective
interest of the group; or
[b] The obligation breached is owed to the international community
as a whole.
2. Any State entitled to invoke responsibility under paragraph 1
may claim from the responsible State:
[a] Cessation of the internationally wrongful act, and assurances
and guarantees of non-repetition in accordance with article 30; and
[b] Performance of the obligation of reparation in accordance with
the preceding articles, in the interest of the injured State or of the
beneficiaries of the obligation breached.''
51. Accordingly, third-party States, not specially affected by
Russia's unlawful acts, are also entitled to invoke Russia's
responsibility for its violation of erga omnes obligations. They, too,
can demand, inter alia, the cessation of its unlawful conduct and the
payment of reparations to any directly injured State for the injuries
Russia has caused.
52. This broad standing under Article 48 includes taking
countermeasures to achieve those ends. ARSIWA does not State this in
express terms despite a ``significant level of approval'' \35\ for
third-party countermeasures. Instead, anticipating the evolution of
such a customary norm, the ILC adopted ``a saving clause which reserves
the position and leaves the resolution of the matter to the further
development of international law.'' \36\ That clause is part of Article
54, quoted above, which expressly ``does not prejudice the right of any
State'' to invoke Article 48 and take countermeasures against an
offending State ``to ensure cessation of the breach and reparation in
the interest of the injured State or of the beneficiaries of the
obligation breached.'' The ILC Report explained that: ``By virtue of
article 48, paragraph 2, such States may also demand cessation and
performance in the interests of the beneficiaries of the obligation
breached. Thus, with respect to the obligations referred to in article
48, such States are recognized as having a legal interest in
compliance. The question is to what extent these States may
legitimately assert a right to react against unremedied breaches.''
\37\
---------------------------------------------------------------------------
\35\ M. Dawidowicz, `Third-party countermeasures: A progressive
development in international law? [2016] 4 QIL 29.
\36\ Yearbook of the ILC 2001 [n. 14] 139, para, 6 of the
commentary to Article 54.
\37\ Ibid., 137, commentary to Article 54.
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53. As one member of the ILC commented: ``The real question was
whether, where an exceptionally serious breach such as genocide--which
affected the international community as a whole and which thus
concerned all States individually--had been committed, any State of the
international community was entitled to react individually, even when
not directly injured by the breach. In his view, the answer was
emphatically in the affirmative.'' \38\ This conclusion may be said to
apply equally in relation to a use of force that is in manifest
violation of the Charter of the United Nations, such as to amount to an
act of aggression.
---------------------------------------------------------------------------
\38\ ILC, Yearbook of the International Law Commission 2000, vol 1
[UN,2005] 338.
---------------------------------------------------------------------------
54. As of 2001, the ILC Report referred to State practice under
Article 48 as ``limited and rather embryonic'', but nevertheless, even
then it identified a number of occasions when ``States have reacted
against what are alleged to be breaches of the obligations referred to
in article 48 without claiming to be individually injured'', including
by imposing economic sanctions.\39\ The examples identified by the ILC
included [amongst others]:
---------------------------------------------------------------------------
\39\ Yearbook of the ILC 2001 [n. 14] 137, commentary to Article
54.
---------------------------------------------------------------------------
a. ``United States-Uganda [1978]. In October 1978, the U.S.
Congress adopted legislation prohibiting exports of goods and
technology to, and all imports from, Uganda. The legislation recited
that `[t]he Government of Uganda . . . has committed genocide against
Ugandans' and that the `United States should take steps to dissociate
itself from any foreign government which engages in the international
crime of genocide'.'' \1\40
---------------------------------------------------------------------------
\40\ Ibid., 138 [footnotes omitted].
---------------------------------------------------------------------------
b. ``Collective measures against Iraq [1990]. On August 2, 1990,
Iraqi troops invaded and occupied Kuwait. The Security Council
immediately condemned the invasion, and ordered the imposition of a
comprehensive trade embargo and a cutoff of financial relations to
induce Iraq to put an end to its unlawful occupation and purported
annexation of Kuwait.\41\ European Community Member States and the
United States adopted trade embargoes and froze Iraqi assets. This
action was taken in direct response to the Iraqi invasion with the
consent of the Government of Kuwait.''\42\ Subsequently, the United
Nations Compensations Commission [``the UNCC''] processed claims and
paid compensation for loss and damage caused by the invasion to the
victims, partially from frozen assets.\43\
---------------------------------------------------------------------------
\41\ UNSC Res. 661 [Aug. 6, 1990] U.N. Doc S/RES/661.
\42\ Yearbook of the ILC 2001 [n. 14] 137, commentary to Article 54
[footnotes omitted].
\43\ Under the auspices of Security Council resolutions 687 [1991]
and 778 [1992]. The U.S. Government transferred Iraqi State assets to
an appropriate escrow account. U.S. Executive Order 12817 [October 23,
1992], 57 F.R. 48433. In February 2022 the Governing Council of the
UNCC adopted its final decision 277 [2022], declaring that the
Government of Iraq has fulfilled its international obligations to
compensate all claimants awarded compensation by the Commission for
losses and damages suffered as a direct result of Iraq's invasion of
Kuwait.
---------------------------------------------------------------------------
c. ``Collective measures against the Federal Republic of Yugoslavia
[1998]. In response to the humanitarian crisis in Kosovo, the member
States of the European Community adopted legislation providing for the
freezing of Yugoslav funds and immediate flight ban.'' \1\44
---------------------------------------------------------------------------
\44\ Yearbook of the ILC 2001 [n. 14] 137, commentary to Article 54
[footnotes omitted].
---------------------------------------------------------------------------
55. State practice on the freezing of assets also included the
United States' freezing of Iranian assets following the Iran hostage
crisis in 1979, which led to the establishment of another claims
tribunal. In response to the taking of hostages at the US Embassy in
Tehran, on November 14, 1979 U.S. President Jimmy Carter ordered the
freezing of all Iranian government assets held in the U.S. \45\ In the
Algiers Accords of January 19, 1981, the United States and Iran entered
into an agreement to resolve the crisis, one critical element of which
was the establishment of the Iran-United States Claims Tribunal [``the
IUSCT''], which was empowered, inter alia, to order payment of
compensation from the transferred Iranian assets.\46\
---------------------------------------------------------------------------
\45\ U.S. Executive Order 12170 [November 14, 1979], 44 F.R. 65729.
\46\ Iranian assets were transferred into a domestic escrow
account, then to an international escrow account. U.S. Executive Order
12277 [January 23, 1981], 46 F.R. 7915. The founding documents of the
IUSCT area available on its website:
---------------------------------------------------------------------------
https://iusct.com/foundingdocuments-2/
56. State practice in relation to countermeasures by third-party
States has evolved materially since 2001, as the ILC envisioned,
lending strong weight to Article 48 as a valid statement of current
international law. Instances of their application have proliferated.
Recognizing this, in 2005 the Institut de Droit International adopted a
resolution on ``Obligations Erga Omnes in International Law'' which
included the following provision [Article 5]: ``Should a widely
acknowledged grave breach of an erga omnes obligation occur, all the
States to which the obligation is owed:
[a] shall endeavour to bring the breach to an end through lawful
means in accordance with the Charter of the United Nations;
[b] shall not recognize as lawful a situation created by the
breach;
[c]are entitled to take non-forcible counter-measures under
conditions analogous to those applying to a State specially affected by
the breach.'' \47\
---------------------------------------------------------------------------
\47\ For the full text of the Resolution, see Institut de Droit
International, Fifth Commission, 'Obligations and rights erga omnes in
international law' [Krakow session, August 27, 2005]
---------------------------------------------------------------------------
https://www.idiiil.org/app/uploads/2017/06/2005--kra--01--en.pdf.
57. The freezing of an offending State's assets and other economic
sanctions, in particular, have been regularly employed over the past
two decades, including by States not directly injured, in response to
breaches by the offending State of obligations owed to the
international community as a whole. For example:
a. In response to brutal repression of the civilian population in
Libya, in February 2011 Switzerland and the US froze the assets of
Colonel Muammar Gaddafi and the Libyan Central Bank.\48\ These measures
were taken before any enforcement measures were adopted by the U.N.
Security Council pursuant to Chapter VII of the U.N. Charter.\49\
---------------------------------------------------------------------------
\48\ Swiss Federal Council, `Ordonnance instituant des mesures a
l'encontre de certaines personnes originaires de la Libye' [February
21, 2011] RS 946.231.149.82; US Executive Order 13566 [February 25,
2011].
\49\ UNSC Res 1970 [February 26, 2011]; UNSC Res 1973 [March 17,
2011]. See further: Dawidowicz, `Third-party countermeasures' [n. 35].
---------------------------------------------------------------------------
b. In May 2011, EU Member States imposed measures against Syria,
including freezing the assets of President Al-Assad and the Central
Bank of Syria.\50\ A further 10 States have undertaken to ensure the
implementation of the EU sanctions regime: Albania, Croatia, Georgia,
Iceland, Lichtenstein, Macedonia, Moldova, Montenegro, Norway and
Serbia. Australia, Canada, Japan, Switzerland and the U.S. took
``similar action'' against Syria.\51\ French President Sarkozy
established the ``Group of Friends of the Syrian People'', made up of
83 States and international organizations, which welcomed the sanctions
adopted by the EU and others, including the freezing of Syrian State
assets.\52\
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\50\ Council Implementing Decision 2011/302/CFSP [23 May 2011];
Council Decision 2012/122/CFSP [February 27, 2012]; Council Decision
2015/837/CFSP [May 28, 2015].
\51\ See further: Dawidowicz, `Third-party countermeasures' [n. 35]
at 7 and Martin Dawidowicz, Third-party countermeasures in
international law [CUP 2017].
\52\ See:
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https://carnegie-mec.org/syriaincrisis/'fa=48418 and https://
www.mfa.gov.tr/the-friends-groupreaffirmed-its-determination-to-
support-the-just-cause-of-the-syrian-people.en.mfa
c. In March 2014, EU Member States, Australia, Canada, Japan,
Liechtenstein, Switzerland and the U.S. imposed various measures
against Russia for its role in the destabilisation of Ukraine.\53\
These included, inter alia, denying Russian financial institutions
access to European capital markets, and export embargoes.
---------------------------------------------------------------------------
\53\ For the EU, see Council Decision 2014/145/CFSP [March 7,
2014]; Council Regulation 269/2014 [March 17, 2014]; Council
Implementing Decision 2014/151/CFSP [March 21, 2014].
---------------------------------------------------------------------------
d. Since Russia's unlawful invasion of Ukraine in February 2022, EU
Member States and at least 14 other States and Taiwan\54\ have adopted
a wide range of measures against Russia including: economic, financial
and banking sanctions, asset freezes and property seizures, export
controls, blocking of access to the SWIFT payment system, banning
Russian aircraft and vessels, and suspending distribution of
``disinformation outlets'' such as Russia Today.\55\
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\54\ Australia, Bahamas, Canada, Iceland, Japan, Liechtenstein,
Monaco, New Zealand, Norway, Republic of Korea, Singapore, Switzerland,
United Kingdom and the United States.
\55\ See Minami Funakoshi, Hugh Lawson, and Kannaki Deka, `Tracking
Sanctions against Russia' [Reuters, July 6, 2022]
---------------------------------------------------------------------------
https://www.reuters.com/graphics/UKRAINE-CRISIS/SANCTIONS/
byvrjenzmve/.
e. There are numerous other examples, including measures adopted by
the European Union and numerous other States against Myanmar [from 2000
to present], Zimbabwe [from 2002 to present] and Belarus [2004 to
present].\56\
---------------------------------------------------------------------------
\56\ See e.g. Elena Katselli Proukaki, The Problem of Enforcement
in International Law. Countermeasures, the Non-injured State and the
Idea of International Community [Routledge 2010] 201-202; A Pellet, A
Miron, `Sanctions' [2011] Encyclopaedia of Public International Law, at
para 58; Christian Tams, Enforcing Obligations Erga Omnes [CUP 2005,
reissued 2010], 1-251.
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58. These measures include some that would not have been lawful if
they had been taken in the absence of internationally wrongful conduct
by the State against which they were directed. Instead, they would have
been breaches of obligations owed to that State. Under ARSIWA, their
wrongfulness can only have been precluded by their imposition as
countermeasures in response to wrongful conduct by the targeted State.
The measures adopted by States not directly injured were therefore
justified as lawful countermeasures within the meaning of Part 2,
Chapter II of ARSIWA.
59. In terms of the lawfulness of a countermeasure, there is no
material difference between a measure freezing another State's assets,
and one which transfers them to the victim of the wrongful conduct as
reparations for the injuries it has suffered. To be sure, transfer of
the assets would be a step beyond freezing them. But both measures
would be lawful if taken in response to a breach of obligations under a
peremptory norm of international law with an erga omnes character;
intended to induce the cessation of the wrongful conduct or to repair
the damage caused to the injured State; if they were proportionate,
that is, commensurate with the injuries caused; and designed to
terminate upon the wrongdoer's compliance with its legal obligations,
including the obligation to pay reparation for such injuries; and if
they were reversible.
60. In 1996, the United States transferred frozen Cuban State
assets to the families of two US citizens whose planes were shot down
by Cuban aircraft. President Bill Clinton provided, by executive order,
compensation to the victims' families, paid out of Cuban frozen assets.
Subsequently, the U.S. Congress enacted legislation to permit the
families of the victims to make further claims against those assets,
\57\ and the President signed an executive order authorising additional
funds to be transferred. Subsequently, the Congress adopted legislation
allowing the transfer of frozen Iranian assets to the family of a U.S.
citizen killed by a suicide bomber, allegedly linked to Iran, and the
President approved the transfer.\58\ Since 2011, frozen assets of Iraq
have been transferred by the U.S. Government to victims of abuses found
to have been inflicted by the Saddam Hussein regime after they obtained
court judgments against that State.\59\
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\57\ The U.S. Congress amended Section 221 of the Antiterrorism and
Effective Death Penalty Act [AEDPA], to waive sovereign immunity of
foreign States that were designated as State sponsors of terrorism by
the State Department and had ``caused personal injury or death'' of
U.S. nationals through some ``act of torture, extrajudicial killing,
aircraft sabotage, hostage taking, or the provision of material support
or resources''. The Congress also amended the Omnibus Consolidated
Appropriations Act for 1997 to establish a cause of action against the
agencies of States whose sovereign immunity had been waived under
AEDPA.
\58\ The Cuba and Iran transfer stories are recounted in Saraphin
Dhanani, 'A Cautionary Tale: What Iran and Cuba Can Teach Us About
Designating Russia a State Sponsor of Terrorism' [Lawfare, January 20,
2023] www.lawfaremedia.org/article/cautionary-tale-what-iran-and-cuba-
can-teach-us-about-designating-russia-statesponsor-terrorism The
legislation allowing the Iranian transfer was Section 2002 of the
Victims of Trafficking and Violence Against Women Act of 2000.
\59\ See congressional Research Service, 'Justice for United States
Victims of State-Sponsored Terrorism Act: Eligibility and Funding'
[CRS, April 11, 2023]
---------------------------------------------------------------------------
https://crsreports.Congress.gov/product/pdf/IF/IF10341.
61. In 2022, Canada adopted Bill C-19, \60\ Division 31 of which
amended the Special Economic Measures Act. The newly introduced Section
5.6 of the Act provides: "After consulting with the Minister of Finance
and the Minister of Foreign Affairs, the Minister [responsible for the
administration of an order of seizure] may--at the times and in the
manner, and on any terms and conditions, that the Minister considers
appropriate--pay out of the Proceeds Account, as defined in section 2
of the Seized Property Management Act, amounts not exceeding the net
proceeds from the disposition of property forfeited under section 5.4,
but only for any of the following purposes:
\60\ Statutes of Canada 2022, Bill C-19 [Royal Assent] [June 23,
2022].
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[a] the reconstruction of a foreign State adversely affected by a
grave breach of international peace and security;
[b] the restoration of international peace and security; and
[c] the compensation of victims of a grave breach of international
peace and security,
[d] gross and systematic human rights violations or acts of
significant corruption.
62. Neither the United States nor Canada expressly justified their
resort to asset seizures and transfers as countermeasures. However, if
the United States and Canada may lawfully transfer, or allow the
transfer of, frozen State assets to their own citizens as compensation
for the internationally wrongful acts of another State, then there is
no persuasive legal argument against the transfer of such assets to
injured parties in other States, especially if this is undertaken to
induce the offending State to fulfil its legal obligations to the
injured parties, including its obligation to provide reparations for
the injuries it has inflicted. If these actions had been undertaken as
countermeasures, they would have been justifiable under ARSIWA.
63. In sum, States can join in countermeasures either because they
suffered particular injury from Russia's breach of obligations it owed
to them [ARSIWA Article 42], or States can assert their collective
standing to respond to a serious breach of obligations owed to the
international community as a whole [Article 48]. These two Articles are
not mutually exclusive, as the Commentary to them points out.
``Situations may well arise in which one State is `injured' in the
sense of Article 42, and other States are entitled to invoke
responsibility under article 48.'' \61\ In both cases, they can join
together in collective countermeasures.
---------------------------------------------------------------------------
\61\ ARSIWA, Comment 3 on Part Three, Chapter One.
---------------------------------------------------------------------------
C. Substantive Limits on Countermeasures
64. ARSIWA lays out the substantive and procedural limits of
permissible countermeasures. In particular, Article 50[1] provides that
countermeasures cannot suspend inviolable obligations such as the
prohibition against the use of force or obligations for the protection
of fundamental human rights. Article 50[2] provides that
countermeasures cannot be relied upon to infringe upon a State's
consular or diplomatic agents and property. None of these substantive
limitations on countermeasures would apply to the transfer of frozen
Russian State assets to compensate those damaged by Russia's
internationally wrongful acts.
65. Article 51 sets out another substantive limitation on
countermeasures. It requires that they must be proportionate to the
injury suffered, taking into account the gravity of the internationally
wrongful act and the rights in question. The seizure and transfer of
frozen Russian sovereign assets to Ukraine and other injured parties
plainly satisfies this requirement. As expressly set out in Article 51,
an assessment of proportionality takes account of both: [i] the gravity
of the internationally unlawful acts; and [ii] the rights in question.
The gravity of Russia's internationally unlawful acts cannot be
overstated. They breach not only obligations arising under a peremptory
norm of an erga omnes character, but a foundational principle of the
rules-based international order that prohibits wars of aggression and
the acquisition of territory by force. It is thus no surprise that the
General Assembly ``[d]eplore[d] in the strongest terms the aggression
by the Russian Federation against Ukraine in violation of Article 2 [4]
of the Charter".\1\62 Nor can Ukraine's rights be overstated: They are
no less than its rights to sovereignty, to territorial integrity and to
political independence--and to reparations for the violation of those
existential rights inherent in every sovereign State.
---------------------------------------------------------------------------
\62\ UNGA Res ES-11/1, para. 2; UNGA Res ES-11/6, preamble
[``Reaffirming that no territorial acquisition resulting from the
threat or use of force shall be recognized as legal.''].
---------------------------------------------------------------------------
66. The countermeasures addressed herein would not be
disproportionate, therefore, to the violations or the rights at issue.
Any sums transferred to Ukraine or other injured parties would be
credited to Russia in the form of a reduction in the amount of its
liability. As such, the countermeasures would be compensatory, not
punitive. They would enable Ukraine to begin the urgent process of
mitigating its injuries and recovering from them. Since the
authoritative estimates of the financial costs of such a recovery are
far greater than the total amount of frozen Russian State assets, there
is no risk that the proposed measures would involve transfers of assets
in excess of Russia's ultimate liability, which extends to States and
other possible claimants beyond Ukraine.\63\
---------------------------------------------------------------------------
\63\ Russia is required under Article 31 of ARSIWA to make ``full
reparation'' for the injury caused by its unlawful aggression. One
aspect of reparation can be compensation.
---------------------------------------------------------------------------
67. A first countermeasure--the freezing of Russian State assets--
has already been taken by various States. The actions of those States,
both in freezing assets and imposing a broad package of economic and
commercial sanctions, have not succeeded in influencing Russia to cease
its unlawful aggression against Ukraine. Nor have they, thus far,
induced Russia to provide reparation for the enormous injury suffered
by Ukraine and others as a result of its internationally unlawful
conduct, neither persuading nor causing such compensation to happen.
The freezing of Russia's assets and the other sanctions have thus been
largely ineffective; they have accomplished neither of the objectives
that lawful countermeasures are intended to achieve. Nor are they
likely to do so in the foreseeable future. In the circumstances,
further countermeasures are justified. If Russia cannot be persuaded to
cease its unlawful conduct, and to provide compensation for the
injuries it has caused, new and additional measures are warranted to
provide at least some compensation to Ukraine and other affected
parties in partial fulfilment of Russia's legal obligations under
international law. To the extent that the frozen Russian assets can be
transferred to the international compensation mechanism for ultimate
distribution to Ukraine and other injured parties, the countermeasures
will be effective in providing some measure of the reparations to which
they are lawfully entitled.
68. Indeed, the purpose of the international compensation mechanism
would be to ensure the effectiveness of the transfer of funds in
compensating Ukraine and others for the injuries they have suffered.
Such a mechanism could combine urgent programs to limit damage and
support recovery with claims processes modeled on similar mechanisms
employed in other conflict or post-conflict situations despite the
absence of Russia's agreement, and would provide assurance to the
States transferring the Russian State assets, to Ukraine and the other
parties that ultimately receive them, and even to Russia, that the
compensation system is transparent, evidence-based and equitable to all
interested parties.
69. Although not expressly stated in ARSIWA, a further limitation
on the countermeasures that could be taken against Russia is that they
target only assets of the Russian State. That is, they would not be
directed against the property of any private Russian entities or
nationals. It is, after all, the State that is in breach of its erga
omnes obligations under international law, not any Russian companies or
individuals [although they might be complicit in or contribute to the
State's unlawful conduct], and it is therefore the State against which
any lawful countermeasures must be taken.
70. In this way, the proposed countermeasures would be
distinguished from, and could not be invoked to justify, the unlawful
measures that Russia has taken against private companies from States
opposed to its war against Ukraine. Limiting the countermeasures to
Russian State property also avoids potential difficulties such as those
encountered in Al-Dulimi and Montana Management Inc v. Switzerland.\64\
That case arose over concerns that the designation of particular
individuals or entities on a sanctions list might have arbitrarily
swept up people or companies unrelated to the sanctioned State [Iraq].
If private assets were transferred to Ukraine, it could lead to
litigation by affected individuals against those States that engaged in
such transfers, or against Ukraine.
---------------------------------------------------------------------------
\64\ App no 5809/08 [ECtHR, June 21, 2016].
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71. In contrast, litigation by Russia to challenge the transfer of
its State assets is extremely unlikely, and all but certain to fail
given the lawfulness of the countermeasures herein proposed.\65\
---------------------------------------------------------------------------
\65\ Moreover, there is no international court that would presently
have jurisdiction over a challenge to these countermeasures, since
Russia does not accept the jurisdiction of the ICJ, the European Court
of Human Rights or any other international court that would have
competence over a dispute challenging the lawfulness of any measures
imposed against it in these circumstances, and is unlikely to suddenly
submit itself to the jurisdiction or any of these courts or tribunals.
Nor is there any international convention whose dispute resolution
clause Russia could invoke to challenge the proposed countermeasures.
The closest Russia could come would be to institute arbitration under a
bilateral investment treaty against a State imposing these
countermeasures, if such a treaty exists, but it would not get very far
with such a proceeding because the deposits of its Central Bank in
financial institutions located in other States would not constitute
``investments'' that are protected under those treaties, and the
Central Bank itself would not be an ``investor'' entitled to such
protection. ``The Central Bank of the Russian Federation qualifies
without a doubt as a State organ'': Privatbank v. Russia [2019] PCA
Cases No. 2015-21 [Partial Award] para. 237. Even if a central bank
were to be considered as a State-owned enterprise, it would not qualify
as investor where it is discharging an essentially governmental
function. Beijing Urban Construction Group v. Yemen [2017] ICSID Case
No. ARB/14/30, Decision on Jurisdiction, paras. 33, 44.
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72. Nor could Russia viably argue that its State assets are
protected from seizure or transfer by another State under the doctrine
of sovereign immunity. Sovereign immunity is a concept that prevents
the national courts of one State from sitting in judgment of the
governmental acts of another State, or from executing upon the other
State's assets. The countermeasures addressed herein would not be
judicially imposed. They would be adopted and implemented strictly by
the executive branch of government, by legislation, or by cabinet
decisions in parliamentary systems. They would be acts of State which
are not ordinarily regarded as justiciable. To be sure, sovereign
equality obligates States to protect another State's assets within
their jurisdiction in normal circumstances. That protection [or
immunity] is lost when the offending State breaches obligations owed to
an injured State or the international community as a whole, and thus
subjects itself to the lawful imposition of countermeasures which might
be unlawful absent the breach.
73. Accordingly, even if Russia were to complain about the
lawfulness of the countermeasures: [i] its complaint would be without
merit under international law; and [ii] it would not be able to find a
forum to adjudicate its claim, let alone to provide its assets with
immunity from seizure or transfer.
D. Procedural Requirements for Countermeasures
74. As indicated, in addition to the substantive requirements for
imposition of countermeasures, there are also procedural requirements.
These are listed in Article 52 of ARSIWA:
``1. Before taking countermeasures, an injured State shall:
[a] Call upon the responsible State, in accordance with article 43,
to fulfil its obligations under part two;
[b] Notify the responsible State of any decision to take
countermeasures and offer to negotiate with that State.
2. Notwithstanding paragraph 1[b], the injured State may take such
urgent countermeasures as are necessary to preserve its rights.''
75. Although Article 52 identifies the requirements for an
``injured State'' to take countermeasures, the same requirements would
apply to other States contemplating countermeasures. Accordingly,
before a State can impose countermeasures on Russia for its
internationally unlawful aggression against Ukraine, the State must
call, or must have called, upon Russia to fulfil its international
legal obligations--by, in this case, ceasing its aggression,
withdrawing its forces and personnel from Ukrainian territory, and
compensating Ukraine and other parties for the injuries caused by its
wrongful conduct. It must also notify Russia of its decision to take
countermeasures, and offer to negotiate with Russia over the fulfilment
of its obligations. It could be argued that all these requirements
already have been met in the context of adoption of the three UNGA
resolutions discussed above, given the contents of the resolutions and
the statements made in support of them; but it would not be difficult
to satisfy them independently. It should also be noted that Ukraine has
publicly asked the international community to use Russian frozen assets
to fund compensation for the war's victims.\66\
---------------------------------------------------------------------------
\66\ Chris Giles and Max Seddon, `Volodymyr Zelensky calls for
global plan to rebuild Ukraine after war,' Financial Times [London May
23, 2022]
---------------------------------------------------------------------------
https://www.ft.com/content/f625893a-4377-44f1-b100-47ee07b794ef.
76. Article 52 further provides that:
``3. Countermeasures may not be taken, and if already taken must be
suspended without undue delay if:
[a] The internationally wrongful act has ceased; and
[b] The dispute is pending before a court or tribunal which has the
authority to make decisions binding on the parties.
4. Paragraph 3 does not apply if the responsible State fails to
implement the dispute settlement procedures in good faith.''
77. Article 52 poses no impediment to the countermeasures addressed
herein. Russia's internationally wrongful conduct has not ceased; nor
has Russia given any indication that it intends to cease such conduct
or otherwise fulfil its international legal obligations. Although
Ukraine has initiated proceedings against Russia before the ICJ, the
subject matter of the dispute does not fully cover Russia's aggression
against Ukraine or the injuries it has caused. In any event, paragraph
4 of Article 52 would apply because Russia, in ignoring and refusing to
comply with the ICJ's Order on Provisional Measures, has failed ``to
implement the dispute settlement procedures in good faith''. The
commentary to Article 52 in the ILC Report recognises that where the
responsible State is not cooperating with the procedure of a court or
tribunal which has jurisdiction to hear the dispute and authority to
issue provisional measures, countermeasures remain available.\67\
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\67\ See para 2 of the commentary to Article 52 of ARSIWA.
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IV. CONCLUSION
78. Russia has used force against Ukraine in manifest violation of
the Charter of the United Nations, as found by the UNGA and the ICJ [in
a provisional measures phase]. It has done so in circumstances that
amount to an act of aggression. For the reasons stated above, the
transfer of frozen Russian State assets to an international
compensation mechanism to be used to compensate Ukraine and other
parties for the injuries caused by Russia's internationally unlawful
war of aggression would be a lawful, proportionate, reversible and
justified countermeasure, which all States are entitled to participate
in, given the erga omnes character of Russia's wrongful conduct.
79. It cannot be emphasized enough that Russia's aim of military
conquest and annexation of all or part of Ukraine gives rise to a
generational and fundamental challenge for international law: A war of
aggression that strikes at the heart of the international legal order.
If Russia is allowed to succeed, it would suggest the impotence of that
legal order to prevent or punish even the most egregious violations of
its basic rules.
80. There is no apparent likelihood that Russia will cease its
wrongful conduct until it has accomplished its objective, accepts
defeat, or experiences a change in government that results in a radical
change of policy. In the meantime, it remains defiant in the face of
condemnation by most of the international community, refusing to comply
with resolutions by the UNGA to cease its military operations against
Ukraine and withdraw from Ukrainian territory, and it is unmoved by the
sanctions imposed upon it to date, including the freezing of its assets
in various States.
81. In these circumstances, international law permits not only
Ukraine but also other specially affected states and third-party States
to take countermeasures against Russia, including measures that would
be unlawful in ordinary circumstances, but which are justifiable and
entirely lawful when employed against a State that is flagrantly
violating the fundamental rules of international law, and when they are
taken to persuade that State to cease its unlawful conduct, or to
provide reparations owed to an injured State.
82. These countermeasures could lawfully include the seizure and
transfer of Russian State assets to Ukraine and other injured parties,
provided Russia's liability is reduced by the amount of funds
transferred to them. The compensation could be best provided through an
international mechanism, to which the States concerned would transfer
the Russian State assets currently under their control. This mechanism,
the need for the establishment of which is recognized by General
Assembly resolution ES-11/5, could support urgent policy programs to
efficiently and effectively mitigate further damages and aid recovery
by distributing appropriate compensation in an independent, impartial
and transparent manner.
[all]
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