Mechanism to ensure collection of a fair and just compensation for damage caused to business by aggressor state
Attorney-at-law, Associate Partner at Legal Alliance Law Firm
Please go to the end to download the online manual in English and Ukrainian.
Since the beginning of Russia's military aggression against Ukraine, the issue of compensation for damage caused by military actions has become topical for business.
We consider two effective mechanisms:
- initiation or accession to opened criminal proceedings in Ukraine;
- appealing to the International Criminal Court (ICC).
Initiation or accession to open criminal proceedings in Ukraine
The advantage of this mechanism is that it is already available within Ukraine. It should be noted that currently, about 1,694 criminal proceedings have been opened due to violations of laws and customs of war (Article 438 of the Criminal Code of Ukraine), which, inter alia, involve destruction of the business entities' property. The State Security Service of Ukraine (SBU) has already reported on suspicion to 900 people. Such criminal proceedings are likely to be held in absentia, implementation stages are described in Chapter 24-1 of the Criminal Procedure Code.
Within criminal proceedings, it is important to obtain the victim's status, destruction, damages, lost profits recording, conduct relevant expert examinations, collect evidence, file a civil lawsuit in criminal proceedings, as well as support the victim's position in court proceedings, since the issue of upholding a civil claim will be decided during the passing of a judgment of conviction by the national court.
Separately, it should be noted that the possibility of executing such judgments through forcibly seized assets belonging to Russia's residents on the territory of Ukraine, as well as assets under distraint abroad, is being actively discussed now. The Verkhovna Rada of Ukraine has already taken a step towards it by passing the Law of Ukraine "On Basic Principles of Forcible Seizure of Objects of Property Rights of the Russian Federation and its Residents in Ukraine."
In addition, the Verkhovna Rada of Ukraine registered bill No. 7237 "On Compensation for Property Lost, Damaged and Destroyed as a Result of the Russian Armed Aggression and Equitable Distribution of Reparations" on March 31, 2022. The bill stipulates the procedure for provision of primary and full compensation for the lost, damaged or destroyed property of individuals and legal entities as a result of armed aggression, as well as sources from which such compensation will be made. If the bill is passed, all parties concerned, including business owners, will be able to receive monetary compensation or other means of support for the affected legal entities.
Appealing to International Criminal Court
The International Criminal Court (ICC) is the international criminal justice body prosecuting and convicting individuals for the gravest crimes: genocide, crimes against humanity, war crimes and acts of aggression. War crimes include destruction or damage of civilian infrastructure and their robbery. It should be noted that the uniqueness of the ICC as an international body lies in the possibility of involving victims of committed, crimes that may be individuals and legal entities in a trial. During the investigation by the ICC Prosecutor, each victim can contact him through the special web resource and provide collected evidence of a war crime. In order to participate in the proceedings (in person or through representatives), victims must apply for participation using the standard form. When completing this application, it is important to take into account the recommendations provided by the ICC. At the end of the trial, if convicted, the ICC Trial Chamber may order the convicted person to pay compensation to the victims of the crime. The Court may also decide to pay such compensation through the Trust Fund for Victims (Article 75 of the Statute). These provisions are not declaratory, as evidenced by THE PROSECUTOR v. GERMAIN KATANGA case. In this case, the ICC has ordered individual and collective reparations to be paid to the entrepreneurs who suffered damage from the crimes committed, to help each victim in the form of business support.
Following the appeal to the ICC on the situation in Ukraine by 39 ICC member states, ICC Prosecutor Karim Khan has already launched the investigation into crimes committed by the Russian military and political leadership in Ukraine. The Prosecutor is currently in the process of collecting sufficient evidence.
In view of the above, we urge business owners who have already suffered losses in Ukraine as a result of Russia's hostile actions to take active steps to participate in the investigation of the case by the ICC Prosecutor. We propose the following action plan:
1) a detailed recording of the damage and circumstances under which it was caused (requirements and tips for recording are described in the online manual);
2) submission of information to the WarCrimes.gov.ua online resource established by the Prosecutor General's Office along with Ukrainian and international partners;
3) appeal to the ICC Prosecutor via web resource;
4) application to participate in court proceedings;
5) participation in the ICC proceedings;
6) other related steps.
Regardless of the course of events and the protection mechanism chosen, a number of important steps must be taken even today, which are now available and without which it will be impossible to claim compensation in the future.
We propose a clear and consistent algorithm consisting of the following steps:
1) preservation of documents of the legal entity;
2) recording of circumstances by authorized bodies (the National Police of Ukraine, the State Emergency Service);
3) independent recording of the damage caused (drawing up the inspection report, photo and video shooting, obtaining witnesses’ testimonies and other evidence);
4) preservation of evidence obtained;
5) launching and support of criminal proceedings in Ukraine;
6) appeal to the ICC Prosecutor;
This mechanism can ensure that a fair and just compensation for the damage caused to business by the aggressor state or its direct agents is collected.
 Ukraine has preliminary made a statement on recognizing the jurisdiction of the ICC for war crimes and crimes against humanity committed on the territory of Ukraine, starting from February 20, 2014, and to date, by top officials of Russia and heads of "DNR" and "LRN," terrorist organizations who will be determined by the ICC Prosecutor (Resolution of the Verkhovna Rada of Ukraine No. 145-VIII of February 4, 2015).