How to sue Russia for $1.5 billion in compensation. Reconstructing Oschadbank's struggle for assets lost in Crimea by Rosa Tapanova and Arsen Miliutin

The Paris Court of Appeal has rejected Russia's attempt to cancel the decision to compensate Oschadbank for the loss of assets in Crimea in the amount of $1.5 billion. This is an important precedent that opens the way for Ukraine to actually recover damages from Russia through international courts and inspires other Ukrainian companies to fight for justice. Rosa Tapanova, member of the Supervisory Board of Oschadbank, and Arsen Miliutin, Deputy Chairman of the Management Board of Oschadbank, tell us what it is like to fight against Russia in the international legal arena.

On July 1, the Paris Court of Appeal denied Russia's request to set aside the 2018 award to compensate Oschadbank for losses incurred as a result of the annexation of Crimea. This is a key ruling that has taken away all arguments from Russia, which has been trying to freeze the enforcement of the arbitral award in all foreign jurisdictions where Oschadbank has filed for recognition.

French law still provides for the possibility of appealing this decision to the French Court of Cassation. However, Russia's chances are close to zero, as the French Court of Cassation expressed its position on all its arguments back in 2022 when it returned the case to the Paris Court of Appeal. In addition, this is a rather long process, and the arbitral tribunal's decision is already enforceable in France.

More than a decade of confrontation

The case itself began in 2014, when Oschadbank began collecting evidence of damage caused by the expropriation of its assets in Crimea.

In 2018, an international commercial arbitration court issued a ruling based on an agreement on mutual protection of investments that recovered approximately $1.2 billion from Russia in favor of Oschadbank. Interest is accrued on the amount, and the debt has now grown to approximately $1.5 billion.   

The recorded amount of damages was supplemented by an obligation to Russia to pay €300,000 in legal fees in the case in Paris. Against the background of the losses, the amount is insignificant but symbolic. 

Russia has avoided participating in international arbitration, but this situation has now changed. The Russian Federation is actively obstructing Oschadbank's intentions to comply with the Arbitral Tribunal's decision and is trying to delay the process in any way possible, and the bank is countering this accordingly.

Oschadbank has a better chance of finally turning the court's decision into money in its accounts, but the process is far from over. Much more needs to be done to restore justice and receive compensation. However, there are opportunities for this. And there are positive developments.

The struggle continues

Today, Oschadbank continues the process of recognizing and enforcing the Arbitral Tribunal's decision. Litigation is underway in the UK and the US. At the same time, we are searching for the assets of the aggressor country, we are applying to those foreign jurisdictions that are signatories to the New York Convention, which potentially have assets of the Russian Federation, and we will be able to recover them.

The complexity and duration of the process of enforcing the Arbitral Tribunal's award are due to the fact that it must be recognized in every foreign jurisdiction where the Russian Federation's assets may potentially be located and which do not have diplomatic immunity. These are the so-called commercial assets of the state. There is no other way to enforce the Arbitral Tribunal's award in international law.

In France, at the suit of Oschadbank, the property of the Russian Federation worth €87 million was seized. Ideally, after the sale of this property, Oschadbank will receive compensation. But this is also a difficult path - the Russian Federation is actively opposing Oschad's attempts to restore justice. But it is in France that we have the best chance of success. Although we do not dare to talk about specific terms of compensation.

Russia will actively argue that these assets are sovereign in nature and use any legal mechanisms to delay the process. And unfortunately, this is not a year or two, because we know the problem of sovereign assets that are almost impossible to confiscate without proving that these assets are commercial activities of the state.

Each country in which the Arbitration Tribunal's decision can potentially be enforced has its own judicial procedure that must be passed before the assets of the Russian Federation can be enforced and the bank can get anything.

An example for others

Oschad was a pioneer in this case. We chose the right legal strategy by using investment protection legislation. We encourage other businesses to follow our example. Here are some tips.

The main key to success is thorough documentation of the damage. At one time, many media outlets circulated a photo of a pile of paper in the office of Andriy Pyshnyi, the former chairman of the board of Oschad, with the evidence base that the bank had submitted to arbitration. It was 30,000 pages, 70 kilograms of weight, and the papers were 170 cm tall.

Another key point is the right choice of an international legal advisor, which is indispensable. Our partner, Quinn Emanuel Urquhart & Sullivan LLP, is a global legal leader in this type of dispute.

The third step is to treat the process of obtaining compensation as a strategic priority. It's not just that Oschad should receive $1.5 billion in compensation, but that all businesses can collectively receive much larger amounts. And this is realistic, because the French courts have confirmed that violations of international norms are subject to international legal liability, and therefore Russia, as an aggressor and violator of international obligations, must compensate for the damage caused.   

And what about the losses incurred by Oschad after the start of the full-scale invasion? From the very beginning of the major war, we have been recording the loss of each asset and working on a strategy to recover losses from Russia using all available international legal mechanisms.

Like all businesses in Ukraine, we are waiting for the opening of the International Register of Losses. We are committed to a long struggle that will certainly end in our victory.