This is our third article in a series of publications for business owners on the topic of compensation for damages caused by the war.
In our previous posts, we argued that companies should take all preparatory steps in advance, without waiting for the end of the war, to ensure that they receive proper compensation/reimbursement from the Russian Federation. In particular, in the previous post, we discussed collecting evidence to determine the amount of damage caused to businesses by armed aggression.
The very process of assessing (determining the amount of) damages caused by the war, which will be discussed in detail in this article, is regulated by The methodology approved by the joint order of the Ministry of Economy and the State Property Fund dated 18.10.2022 No. 3904/1223 (hereinafter referred to as the Methodology).
Loss assessment performed in accordance with the Methodology is used:
- within criminal proceedings in accordance with the laws of Ukraine;
- for the purposes of filing compensation claims by victims;
- for the purpose of filing claims (including collective claims) by victims in courts, including international courts, as well as for the state of Ukraine to file a claim in international courts.
In this case, the Methodology is applied for the purpose of determination:
- real losses – losses of business entities due to loss, destruction or damage to their property in connection with the armed aggression of the Russian Federation;
- lost profits – losses incurred by business entities due to the inability or obstacles to conduct their business activities;
- restoration costs – costs incurred by business entities to restore property affected by the armed aggression.
In accordance with the provisions of the Methodology, the amount of damages, among the above, is determined by conducting an independent assessment or forensic examination (expert study).
The results of the assessment should be reflected in the damage assessment report or expert opinion, respectively.
We would like to draw your attention to the following important features established by the Methodology for conducting the assessment:
- the US dollar is used as the measurement unit. The result is translated into the hryvnia equivalent at the exchange rate of the National Bank of Ukraine as of the valuation date;
- the valuation date on which the assessment of losses is carried out is any date that precedes or coincides with the date of filing a lawsuit in court (the date of applying to the relevant authority for compensation), but not earlier than 23 February 2022;
- the loss assessment report is valid until the date of compensation (inclusive).
In view of the above, the calculation of the amount of damages caused by the war, carried out in accordance with the procedure set out in the Methodology, may, in particular, be submitted by the company to a national court in order to fix these damages by a court decision.
Currently, we mostly recommend using this strategy to protect your assets – to recover compensation from the Russian Federation through a national court decision. For more details on the advantages of this strategy and the specifics of filing a lawsuit against the Russian Federation, please read our next article.
At the same time, for example of the decision of the Commercial Court of Kyiv region failure to provide the court with a calculation of the damage caused in accordance with the Methodology and evidence of an appeal to an expert institution to obtain such a calculation is grounds for leaving the company’s claim against the Russian Federation for damages without movement.
It is worth noting that the information provided in this article is general and does not take into account the specifics of each particular company affected by the war.
Based on the results of a comprehensive analysis of your business, our experts will propose an individual action plan that is optimal for your company in order to determine the amount of damage caused by the full-scale invasion and to implement their compensation.
The contact person
