Compensating for damages caused by the Russian invasion of Ukraine has become a pressing issue. Over the past two years, significant efforts have been made both internationally and within Ukraine to develop direct mechanisms for compensation.

General mechanisms

Since 2022, there have been five main avenues for seeking damage compensation:

1. International Register of Losses
2. Ukrainian courts
3. Investment arbitration
4. Courts of foreign countries
5. European Court of Human Rights (ECHR)

The possibility of filing claims to ECHR ceased to exist after the exclusion of Russia from the Council of Europe. As of the date of this article this tool is already not accessible due to the expiration of the limitation period. The International Register of Losses is still being established, and its operational specifics, especially concerning business claims, remain unclear. Investment arbitration is suited for high-value claims where assets have been occupied and expropriated by the Russian Federation. The main issue with pursuing claims in foreign courts is complicated by issues of jurisdiction and the immunity of the Russian Federation, which is currently recognized by these countries.

While each of these mechanisms warrants a detailed discussion, such an exploration would be beyond the scope of this article. Therefore, we will focus on the mechanism readily available to all Ukrainians: filing claims in Ukrainian courts. Below, we provide a practical overview of this process based on our current practice and its potential outcomes.

Is it possible to pursue claims against Russia in Ukraine?

The short answer is yes. From 2014 (after the annexation of Crimea and “antiterrorist operation” in Donetsk and Luhansk regions of Ukraine) just until spring 2022 there were many attempts of individuals and of companies to bring Russia to justice in the Ukrainian courts. However, before April 2022 the Ukrainian courts mostly (with some exceptions) denied jurisdiction over the disputes against Russia due to the Russian immunity as a state. It is a standard clause in almost all jurisdictions that a state cannot be brought to justice in the local courts unless the relevant convent is given by that state.

From April 2022 the situation in the Ukrainian courts changed and is now been followed by all the courts in the same lien: after the full-scale invasion into Ukraine, Russia has lost its immunity in the Ukrainian courts.

Is it worth going to the Ukrainian courts?

Nowadays there are two possible mechanisms where the positive decision of the Ukrainian court can be used.

1. within the framework of the international compensation mechanism which is still being elaborated.
2. As a decision to be recognised and enforced in other jurisdictions.

With the first option, we now know for sure that within the framework of the compensation mechanism the Ukrainian judgments will not be regarded as the only necessary and final evidence. Rather it would simplify the work of the commission especially if there would be hundreds of evidences and reports. In this vein we do not know at this stage when the commission will start its work for the business and how the decisions will be made. As well as the timeframes of executing such compensation decisions are unclear.

The second option of direct recognition and enforcement of the Ukrainian judgments also has its pros and cons. From one side, it will be necessary to search for assets in the particular country and to choose the country which would allow enforcement against the sovereign state. In this regard we highly recommend to our clients to add a particular Russian company, which took part in the invasion of devastation of the asset into the co-defendants. This might make the enforcement of the decision in the foreign jurisdiction easier, especially if particular assets of that company are found.

From the other side, at this stage we do not know any “firstcommer” who would successfully use this path of enforcing the Ukrainian judgement.

However, in any case, since the Ukrainian path is now available, we suggest using it at least for those to whom the path of investment cases is unavailable/unprofitable.

What are the benefits of using this option?

Unlike in arbitration, Ukrainian courts do not take the fee for participation in the court against Russia. The legal fees will also be much lower than for participating in any other available procedure.

Moreover, before filing the claim to the court, it would be necessary to gather all the necessary and possible evidence, make all expert and accountant reports, open criminal proceedings, which is 60% of work in preparation of the claim. Therefore, in any case we highly suggest starting the evidence gathering.

What is required for filing the claim?

Filing a lawsuit against Russia requires careful preparation and adherence to legal protocols. Below is a step-by-step guide to ensure your case is properly presented in a Ukrainian court.

First, consider whether your property has been damaged or destroyed, or whether it is located in the occupied territories. In all these three cases there should be gathered and provided different evidence.

Second, determine the venue to avoid delays. Choosing the appropriate court venue is essential to prevent unnecessary delays. Make an informed decision on where your case will be heard to ensure a timely process.

Third, gather relevant evidence to initiate the case. The necessary documentation includes:

• Expert Reports: Obtain expert evaluations, especially for real estate. For movable goods, expert reports can serve as supplementary evidence.
• Criminal investigation: File an official application to receive an Excerpt from the Unified State Register of Pre-Trial Investigations. Ukrainian courts see the opening of the criminal procedure as a mandatory step before the claim.
• Evidence of Damages by Russia: establish a clear link between the damages and actions taken by Russia. There should be direct evidence showing that a particular destruction was cause by Russian actions.
• Evidence of Property Location: Provide proof of the property’s location in the occupied territories.

By following these steps in preparing your evidence, you can effectively file a lawsuit against Russia in a Ukrainian court.

Factual implementation of the decision

AGA Partners has already established groundwork with various experts in this respect. We would be happy to provide advice and recommendations upon your respective requests.

Conclusion

Filing a lawsuit in Ukrainian courts to seek compensation for business damages resulting from the Russian invasion is a viable and practical option for those to whom the path of investment arbitration is closed or is unreasonably high in value.  In any case, we believe that businesses affected by the invasion should already take proactive steps to document their losses.

Author: Dariia Zyma, Senior Associate at AGA Partners