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10/12/2016

Russia prepares to seize Western assets

Europe's East

Russia prepares to seize Western assets

Dmitry Medvedev. Brussels, 2013. [European Commission]

The Russian government has approved a draft bill that would allow it to seize foreign state assets, without warning. The move is seen as a tit-for-tat gesture, following Western court cases involving Russian firms.

According to the new draft bill, Russia will be able to seize foreign state assets from countries which infringe on Russia’s jurisdictional immunity, according to the Russian press.

The Ministry of Justice said the new law is meant to bring parity to the existing “jurisdictional imbalance” between Russia and other countries. In other words, Russia will now seize the state assets of other countries in proportion to the amount of Russian assets frozen in those countries.

“The amount of claims against the Russian Federation and its governmental bodies in foreign courts has been steadily increasing, at the same time Russia’s consent for involvement in these cases is never sought,” the Ministry of Justice said.

Recently, Russia signed several international treaties on the mutual protection of investment, according to which all investment disputes and litigation are carried out by international courts. Thus, Russia’s recognition of foreign court’ jurisdiction amounts to the surrender of its own sovereignty, the authors of the new bill argued.

The bill comes after several European countries seized Russian state assets in mid-June, following lawsuits from former Yukos shareholders.

>>Read: France, Belgium seize Russian assets to compensate Yukos shareholders

The Yukos plaintiffs claimed that the Russian government had illegally forced the energy company out of business, allowing Rosneft to snap up its assets and become the country’s largest oil producer.

A court in The Hague has awarded three companies representing former Yukos co-owners $50 billion in compensation from the Russian government.

Russia expects that a number of foreign countries will follow Belgium’s example, and seize Russian government assets.

Another more recent case involves the Russian company Lukoil, and a London court decision, which risks inflicting major damage to its operations across Europe.

>> Read: Romanian tax case threatens Lukoil shutdown in EU

Russian Prime Minister Dmitry Medvedev was quoted as saying that Russia is within its right to adopt legislation to enforce its response to foreign “illegal actions” carried out against his country.

“The action of these states, of course, is not based on the law, but by political motivations,” Medvedev said.

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