The confiscation of the capital of Russian sovereign assets frozen by the European Union

The confiscation of the capital of Russian sovereign assets, frozen under various European Union Council regulations in the amount of around 210 billion euros, is more than ever on the agenda. The objective would be to use those assets towards the reconstruction of Ukraine and to compensate Ukraine for the damage suffered by it as a result of the war of aggression unleashed by Russia, estimated by the World Bank, the United Nations and the European Union at nearly 1,000 billion dollars, as at 31 December 2024.

While the European Union has taken a step in this direction, by transferring the interest generated by these assets to Ukraine, there is a debate as to whether the confiscation of the capital itself would be compliant with public international law, on the basis that this measure could infringe on the sovereignty of the Russian State.

1. Lawfulness of confiscation under international customary law

The lawfulness of the confiscation of these assets rests on that part of international customary law that was codified under the heading: "Responsibility of States for Internationally Wrongful Acts". This codification, drawn up by the UN International Law Commission and approved by its General Assembly on 12 December 2001, governs the right of States to take countermeasures. It is an integral part of customary law, a source of law that Article 38 of the Statute of the International Court of Justice expressly recognises as one of the sources of law that the Court applies (see my detailed article published in Revue de l'Union Européenne no. 677 April 2024 "From Freezing To Confiscation of Assets" (Jodeau, 2024).

2. International case law

International case law confirms that countermeasures are lawful, provided that they satisfy the substantive and procedural conditions thus codified, whenever their purpose is to bring about the cessation of the relevant unlawful acts and full reparation for the damage suffered.

3. Conditions for applying countermeasures

These countermeasures must be proportionate to the gravity of the facts and of the damage suffered (which are widely recognised in the case of Ukraine) and must be temporary (until the damage has been fully remedied) or reversible (in this case, compensable sums of money). Article 22 of the codification states that it is irrelevant in this respect that in the bilateral relations between the so-called "injured" State and the so-called "responsible" State, the countermeasure may be unlawful per se (e.g. it would undermine the sovereignty of the aggressor State), so long as the countermeasure satisfies all the other conditions laid down in the codification.

4. Implementation of countermeasures

As for the implementation procedure, unless countermeasures are taken as a matter of urgency, the aggressed State must ask the aggressor State to stop its actions and compensate for the damage suffered. Urgency need not be demonstrated here! Article 52 adds that implementation is possible in the absence of a dispute pending before a court.

5. Response to jurisdictional immunities

Thus, according to the codification, the confiscation of the capital of Russian sovereign assets can be regarded as a legitimate countermeasure, notwithstanding any infringement of the sovereignty and property of the "State responsible". It should be noted in this context that the European Union has already imposed sixteen sets of sanctions against the Russian Federation, including the freezing of its assets, without the latter having initiated a legal challenge. As an aside, if the Russian Federation, acting as plaintiff or defendant, were to challenge the confiscation of its assets in court, such action would entail forfeiture of its jurisdictional immunity.

6. Destabilisation of financial markets

Another obstacle to confiscation that is often put forward is the fear of destabilising the financial markets due to the risk of massive disinvestment in euros as a result of the loss of confidence that the countermeasure could engender. Such a fear is unjustified as it would presuppose that the investors concerned were responsible for an internationally wrongful act within the meaning of the codification.

7. Codification of customary international law

Finally, the question arises of how to improve the coordination of the rules laid down in the codification referred to here with the regime of sanctions and restrictive measures taken in respect of third States resulting from European Union law and in particular from the Regulations adopted pursuant to Article 215, TFEU [Treaty on the Functioning of the European Union]. In that regard, it would be important for the European Union to be able to expressly recognise the codification of customary international law relating to "The Responsibility of States for Internationally Wrongful Acts", in order to enshrine it as a European standard directly applicable by the Member States.

Martine Jodeau

Councillor of State, Hon.

Member of the Board,

Civil Society Organisation « For Ukraine, for Their Freedom and Ours! »

8 March 2025