In our previous posts in the series of articles for business on compensation for damages caused by the war, we wrote about the need for companies to start the preparatory process for the future receipt of proper compensation from the Russian Federation in advance, in particular, to collect the necessary evidence, determine and record the amount of damage.
Thus, in the previous article «Methodology for Assessing Damages Caused to Business Entities in Connection with the Armed Aggression of the Russian Federation» we noted that currently the most realistic option is to recover compensation from the Russian Federation through a national court decision.
In this article, we will consider the advantages of this strategy and the peculiarities of filing a lawsuit against the Russian Federation.
- An affordable and flexible option
As for alternatives, the mechanism of redress through the European Court of Human Rights has exhausted itself after Russia’s withdrawal from the Council of Europe and is not currently available for filing new claims. International arbitration can be an effective mechanism, but due to its peculiarities, it is not accessible to everyone. As for the funds that will be accumulated by the state for further distribution of compensation (the state fund), legal entities will clearly not have priority, so one should not rely on this mechanism as the main one (in addition, it does not yet exist and it is not clear how and on the basis of what documents it will work). At the same time, the right to apply to a national court is available to all legal entities. In addition, court proceedings in this category of cases are relatively quick, and plaintiffs are exempt from paying court fees.
- Legal effect of a court decision
A court decision that has entered into force is a final document on the territory of Ukraine that confirms the existence of losses and their amount.
- Possibility to sell the debt
If there is a court decision (see the previous paragraph), a business owner who has suffered losses due to the war may sell his or her claim to interested third parties. It is hoped that such third parties, in the form of investment funds, will appear in Ukraine.
- The possibility of recognizing and enforcing a Ukrainian court decision in the EU
Currently, there is no positive practice of recovering compensation in favor of Ukrainian businesses that have suffered losses due to the war through the recognition by a foreign court of a Ukrainian court decision and its subsequent enforcement. However, the necessary legislative basis for such a mechanism exists, and the relevant cases are being considered in the EU (decisions are expected this year).
Given the relative simplicity and accessibility of fixing a company’s losses by a court decision, given the legal force of a court decision and the opportunities that its availability opens up for a business owner, we definitely recommend that you consider this mechanism for protecting your assets!
At the same time, the plaintiff should approach the process of preparing and filing a claim for compensation against the Russian Federation with full responsibility. The claim should contain appropriate arguments, and the process of notifying the defendant (the Russian Federation) should be treated with extreme care. When recognizing a Ukrainian court’s decision, a foreign court will primarily take into account compliance with procedural rules (including notification of the defendant), i.e. the mere fact that a Ukrainian court’s decision is positive is not sufficient.
Summarizing the above, we believe that although obtaining a positive court decision on damages in a Ukrainian court does not guarantee the company’s ability to enforce such damages, the relevant practice is being developed. Therefore, it is obvious that passive delay until the reimbursement mechanisms are fully operational does not put the company in a favorable position.
By contacting our experts on the issue of compensation for losses incurred by the company in connection with the armed aggression of the Russian Federation, you will receive recommendations that will take into account the individual characteristics of your business and will be optimal for your case. Our company provides comprehensive support for the process of protecting business assets, including the processes of establishing the amount of damage caused by the full-scale invasion and implementing their compensation.
Dear clients, Smartsolutions together with the Charitable Foundation «Smart Angel» is raising funds for the needs of the 4th Operational Brigade’s «Rubizh» unit. You can support this project by the link.
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