Frozen Russian Assets and the Reconstruction of Ukraine: Legal Options

Following Russia’s invasion of Ukraine, a significant amount of assets linked to Russia has
been frozen around the world. This reportedly includes approximately US$300 billion in the
Russian Central Bank’s foreign currency reserves. The amount of frozen wealth that belongs
to Russian state-owned enterprises or private persons, such as so-called oligarchs, is
unknown but likely runs into tens of billions of US dollars.

There is, however, no existing legal framework for doing so. The freezing of the assets means
Russia cannot use them, but it does not permit their confiscation or handover to Ukraine. This
is notwithstanding the recognition by major sanctioning powers, including the US, EU and UK,
that it is desirable for these assets to be disbursed for Ukraine’s benefit. There is therefore a
gulf between political aspirations and available legal tools. This exacerbates the risk that the
cost of rebuilding Ukraine will fall entirely on Ukrainian and allied nations’ taxpayers, rather
than Russia as the aggressor. In the meantime, Ukraine is under severe financial strain as it
seeks to continue providing essential services to its population.

Under international law, Ukraine is entitled to full reparations from Russia for the damage the
latter caused. These continue to grow and, according to the Ukrainian government, total over
US$600 billion as of late April. But there is no real prospect of Russia honouring this
obligation. It has openly acted in defiance of international law, including by disregarding the
ruling of the International Court of Justice that ordered that Russia cease its invasion. As a
result, frozen Russian property overseas presents the only pool of assets that can realistically
be used to compensate Ukraine.

There are well-known and formidable legal challenges in the way of converting the temporary
freezing of Russia-linked assets into their permanent seizure. State-owned property is
shielded from enforcement by sovereign immunity rules. Meanwhile, the confiscation of
private property gives rise to constitutional and human rights concerns. The objective of this
paper is to present options for resolving these difficulties.