Compensation from Russia to Ukraine for Damage Caused in Course of 2014-2022 

Aggression Strategy Paper


  1. In his address of 3 March 2022 to the Russian Federation, President Ukraine Volodymyr Zelensky said the following: “we will restore every house, every street, every city. We will tell Russia: learn the words ‘reparations’ and ‘contributions’. You will repay us everything. Everything you did against our state, against every Ukrainian. In full. And we will not forget those who died. We. And God. You came to destroy our cities, to destroy our people, to deprive us of everything. Everything that is so dear to us”.
  1. The question of “reparations” or monetary compensation by Russia to Ukraine for damages incurred due to aggression is widely discussed in media and within professional communities (legal, banking etc.). However, the actual mechanism for such compensation remains unclear even with assets running into hundreds of billions of dollars belonging to Russia having been frozen in the US, EU and other countries.
  1. This paper attempts to describe the current situation related to the discussed point, to sum up the historical examples of the resolution of comparable situations, and to propose in very broad terms the mechanism for payment of compensation. And it will also propose questions for further discussion. The paper draws on the author’s previous experience as a Deputy Minister of Justice of Ukraine in 2016-2021 responsible for representing Ukraine before international and foreign juridical bodies.

Historical Account of Russian Aggression against Ukraine

  1. In February 2014 the Russian Federation launched a series of aggressive actions against Ukraine. The first phase of aggression consisted of the annexation of Crimea – a military operation disguised as a public revolt of pre-Russian population of the peninsula against the Ukrainian authorities. The operation was launched in February and relatively peacefully (with Ukrainian Armed Forces putting up very limited resistance to Russian forces) completed in late March 2014 with open declarations by Russia on the absorption of Crimea into it.
  1. The next stage of aggression started immediately upon completion of the first one in late March 2014, and initially consisted of staged pro-Russian demonstrations in significant cities of the Eastern and Southern regions of Ukraine, such as Kharkiv, Odesa, Zaporizhzhia, Dnipropetrovsk, Donetsk and Luhansk. However, in all but the latter two cities these “demonstrations” failed to attract any noticeable support from the local population.
  1. However, in Donetsk and Luhansk, the Russian destabilisation efforts had limited success and resulted in occupation in April 2014 of parts of these two regions. What started in the same manner as the Crimean stage, i.e. as a staged popular revolt in the cities of Donetsk and Luhansk swiftly escalated into an all-out war, which Russia fought mostly by proxy via the so-called “Donetsk and Luhansk People’s Militia (armed units, drafted from the local population and Russian mercenaries, commanded by the Russian officers, armed, trained and controlled by Russia) and Russian mercenary troops (like the Wagner Group) with occasional direct use of Russian Armed Forces.
  1. The “hot” period of active fighting continued until summer 2015, when the line between Ukrainian Armed Forces and pro-Russian troops sufficiently stabilised, with the latter holding on to the cities of Donetsk and Luhansk and slightly less than a half of the territory of the respective regions organised in the so-called “Luhansk People Republic” and “Donetsk People Republic” (“LPR” and “DPR”, respectively). Towards the end of 2015 the situation grew into a low-intensity conflict consisting of occasional skirmishes between the Ukrainian and pro-Russia/Russian troops along the contact line without any party attempting any large-scale military operations.
  1. This last phase of Russian aggression against Ukraine began in February 2022, when on 21 February 2022, Russian President Vladimir Putin declared that Russia recognised the independence of LPR and DPR. He also stated that the “Ukraine’s joining NATO creates a direct threat to the security of Russia”. On the same day, the regular Russian army openly moved into the territories of LPR and DPR ostensibly in order to, as it described, to “maintain peace” in these territories.
  1. At or about 4 am Kyiv time on 24 February 2022 the Russian Armed Forces launched massive air and missile strikes against Ukrainian territory and shortly after unleashed the biggest ground attack since World War II, invading Ukraine from three sides: the South – occupied Crimea, the North – Russia and Belarus, and the East – the so-called LPR and DPR. Direct armed aggression is continuing even now, accompanied by large-scale ground military manouevres by Russian troops situated deep inside sovereign Ukrainian territory, massive shelling and air strikes upon military and civil targets throughout the territory of Ukraine (in fact, the author is writing these lines while listening to the wailing of air raid sirens).

Factual and Legal Aspects of Damage caused by Russian Aggression

(1) Damage, depending on the stage of aggression 

  1. The damage, caused by Russia to property, the lives and health of Ukrainians varies in legal and factual nature, scope and intensity, depending on the phase of aggression.
  1. At phase one, the annexation of Crimea, due to the lack of any noticeable military engagements between the belligerent parties, there were little if any losses of property related directly to annexation itself. However, in the aftermath of the annexation a number of assets and businesses, both publicly and privately-owned, were expropriated, extinguished or access to them was denied. In particular, the following types of violation of  property rights took place:
  1. all state-owned assets (buildings, roads, pieces of art, etc.) were expropriated without payment of any compensation either by way of a formal declaration in the relevant “Nationalisation Decrees” of the Russia-established Crimean administration or by way of establishment of public bodies to replace the original Ukrainian owners;
  2. all of the property, owned by state-owned companies expropriated without payment of any compensation either by way of a formal declaration in the relevant “Nationalisation Decrees” of the Russia-established Crimean administration or by way of establishment of publicly-owned companies to replace the original Ukrainian owners;
  3. some privately-owned assets or businesses were nationalised via inclusion into “Nationalisation Decrees” of  Russia-established Crimean administration or reversal by way of the Russia-established courts of Ukrainian privatisation;
  4. interruption of the banking activities of Ukrainian banks, stealing their assets (including premises, cash and valuables) and the transfer of the debts of the Crimean debtors of such banks to a specially established authority;
  5. takeovers of privately-owned assets or businesses by way of registration of Russian companies with similar names to the original Ukrainian owners, but with new shareholders (often with connections to the officials of Russia-established administrative bodies) or the simple taking of property by armed paramilitary troopers of the so-called “Crimean Self-Defence Force”;
  6. freezing of assets belonging to persons included in the Russian sanctions list and their relatives.
  1. During active military operations that took place in 2014-2015 in Donetsk and Luhansk Regions state-owned and privately-owned property was damaged: apartment and administrative buildings, bridges, roads, grain silos and private cottages were destroyed by shelling and occupied by troops. Significant losses were also suffered by the local population.
  1. In territories under the control of so-called DPR and LPR the local pro-Russian authorities nationalised assets belonging to the state and private owners in the same manner as described above with respect to Crimea, albeit there were fewer formal expropriations and more de facto taking of assets. Also, some factories and enterprises were disassembled and moved to Russia into the ownership of various Russian state private individuals.
  1. The third, currently ongoing phase of the Russian aggression, i.e. direct invasion into Ukrainian territory, is accompanied by unprecedented since the end of WWII destruction of civil infrastructure and mass killing of the civilian population, including children and forced deportation by Russian Armed Forces.

(2) Legal aspects of incurred damages 

  1. The legal complexity of the redemption of compensation for various damage incurred on Ukrainian territory depends to a significant extent on the legal regime of the territory where the damage was caused. Thus, the Russian Federation openly admitted to taking Crimea and even amended its Constitution in order for Russian sovereignty to cover to this territory too.
  1. The fact that the Russian Federation had effective overall control over this territory within the meaning of international public law has never been denied by Russia. There is a decision of the Grand Chamber of the European Court of Human Rights in the case of Ukraine v. Russia (re Crimea) ([GC], nos. 20958/14 and 38334/18, § 335, 14 January 2021) finding that “there is sufficient evidence for the Court to conclude that during the relevant period [after 27 February 2014] the respondent State [Russia] exercised effective control over Crimea”.
  1. In at least two investment arbitrations under the Ukraine-Russia BIT, the tribunals not only established the fact of the effective control of Russia over Crimea, but found that Russia is estopped from claiming that Crimea is not its sovereign territory, given its actions and behaviour, in particular, the amendment of its Constitution (see awards in Oschadbank v. Russian Federation, PCA Case No. 2016-14 and Everest Estate LLC et al. v. the Russian Federation, PCA Case No. 2015-36).
  1. It is to be noted in this respect that all of the violations, allegedly committed by the Russian Federation in Crimea took place after 27 February 2014. Moreover, the violations of property rights, which in the main victims submitted complaints, took place after 24 March 2014 (entry into force of amendments to the Russian Constitution), i.e. after the completion of annexation in accordance with Russian standards.
  1. As to the second stage – the occupation of the L/DPR – Russia has never admitted its participation in the 2014-2022 war in Donbas (until in February 2022 it openly moved its troops into this territory), which creates questions of proof of its effective control over these territories. Some of the damage was caused in the course of active military operation in the territory, controlled by Ukraine or contested by the belligerent parties.
  1. As to the third phase – February-March 2022 invasion in Ukraine – it is unlikely that Russia would be able to advance any cogent argument that it is not responsible for the destruction of property and mass killings. It might, as it did during the conflict, allege that at least some of the shelling of the civil infrastructure and residential areas were committed by Ukrainian Armed Forces, but this would be a technical question of proof. On the other side, all of the damage caused to property or people has taken place in the territory controlled by Ukraine or in contested areas.

(3) The existing legal infrastructure and its application to damage that has already incurred

  1. Currently, there are two international agreements involving Russia and Ukraine, providing for compulsory dispute resolution and potentially a possibility of awarding compensation for the described damage or part of it: the Convention for the Protection of Human Rights and Fundamental Freedoms (“Convention”) and the Agreement on encouragement and mutual protection of investments (“BIT”).
  1. The Convention is a multilateral human rights protection agreement, to which both Russia and Ukraine are parties, providing for the protection of, among other things, the rights to life, property and prohibition of tortures. It provides for a right of a victim of the violation of the rights to bring proceedings before the European Court of Human Rights (“ECHR”). It also provides for a possibility of an inter-state dispute to be heard before the said forum, whose possibility Ukraine has used, having filed applications against Russia with respect of the first and second phases of aggression and having announced its intention to bring proceedings regarding the third phase. Also, according to the ECHR, it entertains around 7,000 applications related to the first and second phases.
  1. Russia has recently served on the Council of Europe (with the ECHR being part of it) a note of withdrawal from this organisation, which, in effect means also withdrawal from the Convention. However, on 22 March 2022 the ECHR adopted a Resolution on the consequences of this withdrawal, deciding that the Russian Federation is to cease to be a High Contracting Party to the Convention on 16 September 2022 and that the violations of the Convention committed by until the said date would come under the jurisdiction of the Court. Thus, at least formally, the violations carried out by Russia during the first, second and, probably the third phases would at least formally be covered by the ECHR’s jurisdiction.
  1. The BIT is a bilateral investment agreement between Russia and Ukraine, which provides for the rights of investors, originating from one of the member states, to enjoy a certain level of protection in another. It contains protection against expropriation without compensation, but not fair and equitable treatment. The latter standard has, however, been imported via the most-favoured nation regime (contained in the BIT) by certain arbitral tribunals applying the BIT (see, e.g. OAO Tatneft v. Ukraine, PCA Case No. 2008-8), but was rejected by others (see, eg. State Development Corporation “VEB.RF” v. Ukraine, SCC Case No. 2019/113 and V2019/088).
  1. The BIT provides for the right of the aggrieved investor to sue the receiving State before the international arbitration (either under Stockholm Chamber of Commers or UNCITRAL Rules) for violation of the BIT. So far there are 10 sets of arbitration proceedings known, that have been initiated by Ukrainian investors against the expropriation of property by the Russian authorities following the annexation of the Crimean peninsula (the first phase). There are currently no known claims to have been brought against Russia with respect to the second phase.
  1. As to the third phase, however, neither of the above remedies seem to be capable of providing any redress to the majority of the victims. The most widespread type of damage, inflicted on the property of the Ukrainian citizens and companies is that, associated with the Russian bombings of the properties in the territories held by Ukrainian troops, either on the frontline or deep within Ukrainian-held territory.
  1. The analysis below would address this particular situation. The result of the analysis would be different if, for example, the equipment of a factory, captured by the Russian troops is dismantled and moved to Russia (there are reports of such cases in the media).
  1. As to the BIT, its protection is subject to the investment being made “by an investor of one Contracting Party in the territory of the other Contracting Party”. Whilst Crimea (and, arguably, the so-called “L/DPR”) would fall within the meaning of Russian territory due to its effective control over it, while it is unlikely that territory, which is not controlled by Russia would be regarded by an arbitral tribunal as its “territory” for the purpose of BIT.
  1. As to the Convention, ECHR case law does not seem to be favourable for the majority of victims of the third phase of Russian aggression. Not only does the ECHR deny the protection of rights if infringed by remote strikes of a territory, not controlled by the attacking state (Banković and Others v. Belgium and Others ((dec.) [GC], no. 52207/99, § 82, ECHR-2001 XII), but also excludes the application of the Convention to contested territories during the active phase of the military conflict (Georgia v. Russia (II) [GC], no. 38263/08, § 144, 21 January 2021). Therefore, unless there is a major shift in the ECHR’s case law (which cannot be excluded given the scale of the human rights violations by the Russian Federation at the third phase), the Convention would not be applicable to the damage described above to property which took place at the third phase of aggression.

Historical Examples of Awarding and Distribution of Compensation

(1) Iran-US Claims Tribunal 

  1. The Iran-US Claims Tribunal (“Tribunal”) is a permanent international arbitration institution, which considers the investment claims of citizens of the US and Iran, filed against Iran and US, respectively. The Tribunal was established in in 1981 as a means of resolution of the crisis, arising of the hostage taking of the American Embassy and the nationalisation of the property of US companies and individuals in the course of the Iranian Revolution in 1979. In response the US Administration froze all financial assets held by Iran and its nationals.
  1. The crisis was resolved with Algeria as an intermediary in 1981. Having consulted extensively with the two Governments as to the commitments each was willing to undertake in order to resolve the crisis, the Government of Algeria recorded those commitments in two Declarations made on 19 January 1981. The “General Declaration” and the “Claims Settlement Declaration”, collectively called “Algiers Declarations”, were then adhered to by Iran and the United States. Thus, neither the US nor Iran were required to formally sign it. Subsequently, the constitutionality of the Declaration was confirmed by the US Supreme Court.
  1. The conditions of the accord were as follows:
  • the American hostages in the Embassy are released;
  • the US unfreezes Iranian assets;
  • both parties terminate all court proceedings in their domestic courts, all of the claims for the recovery of expropriated property are transferred to the Tribunal;
  • the Tribunal is established as a permanent arbitration institution, considering the investment claims of US citizens against Iran and vice versa;
  • Iran voluntarily makes a contribution of US$1 bn to the budget of the Tribunal for the payment of the compensations and replenishes this amount annually.
  1. The Tribunal consists of nine Members, three appointed by each Government and three (third country) Members appointed by the six Government-appointed Members.


  1. The Tribunal is also empowered to consider the following claims:
  • claims submitted by US nationals against Iran and of Iranian nationals against the US that arise from debts, contracts, and other measures affecting property rights;
  • certain “official claims” between the US and Iranian governments relating to the purchase and sale of goods and services;
  • disputes between Iran and the US with regard to the interpretation or performance of the Algiers Declarations; and
  • certain claims between banking institutions.
  1. Claims had to be filed with the Tribunal by 19 January 1982, so their number is, therefore, finite. Approximately 1,000 claims were filed for amounts of $250,000 or more, and approximately 2,800 claims for amounts of less than $250,000. As of now the Tribunal has considered 4,700 cases and awarded US$2.8 bn in favour of US claimants against Iran and US$1 bn in favour of Iranian claimants.
  1. Claims are decided by one of the three Chambers of the Tribunal or by the Full Tribunal. Cases are distributed to Chambers by lots. The Full Tribunal decides all disputes between the two Governments, as well as important questions referred to it by the Chambers. The Tribunal conducts its business in accordance with the arbitration rules of the United Nations Commission on International Trade Law (UNCITRAL), as modified by the Governments and the Tribunal.

(2) United Nations Compensation Commission

  1. The United Nations Compensation Commission (“UN Commission”) was created in 1991 under UN Security Council Resolution 687 dated 3 April 1991 (“Resolution 687”) as a subsidiary organ of the United Nations Security Council. Its mandate is to process claims and pay out compensation for losses and damage suffered as a direct result of Iraq’s 1990–1991 invasion and occupation of Kuwait. These losses included covering property, deaths, loss of natural resources, damage to public health and environmental damage.
  1. UN Commission considered the following categories of claims:
  • Category A: claims submitted by individuals who had to depart from Kuwait or Iraq between the date of Iraq’s invasion of Kuwait on 2 August 1990 and the date of the cease-fire, 2 March 1991;
  • Category B: claims submitted by individuals who suffered serious personal injury or whose spouse, child or parent died as a result of the invasion of Iraq and occupation of Kuwait;
  • Category C: individual claims for damages up to USD 100,000 each;
  • Category D: individual claims for damages above USD 100,000 each;
  • Category E: claims made by corporations, other private legal entities and public sector enterprises, including claims for construction or other contract losses; losses from  non-payment for goods or services; losses relating to the destruction or seizure of business assets; loss of profits; and losses incurred by the oil sector.
  1. Only governments (and international organisations) were allowed to bring claims before the UN Commission and they did that on behalf of their citizens and businesses. This forced Kuwait, which naturally had by far the most numerous claims to deal with, to create an elaborate screening procedure for the claims to be presented to the UN Commission.
  1. The budget of the UN Commission is replenished at the expense of the “Oil for Food Programme”. Over USD 350 bn worth of claims in total was submitted in 2,686,131 claims. Of these claims, 1,543,619 resulted in some sort of award. The total awarded came to just over USD 52 billion. Approximately USD 50 billion of this total has been paid to claimants, with approximately USD 2.4 billion still outstanding for payment.
  1. It is important to note that the establishment of the UN Commission was part of the ceasefire as formalised in Resolution 687 of 3 April 1991. It meant Iraq agreed to its establishment and was in a position to influence its jurisdiction. For example, it extended only to direct losses caused by the invasion and any losses caused by the embargo placed on Iraq were not to be compensated.

(3) Immovable Property Commission

  1. The Immovable Property Compensation Commission (“IPC”) was instituted by the government in the “Turkish Republic of Northern Cyprus” (“TRNC”), which passed in 2005 legislation, aimed at establishing a mechanism for paying compensation to Greek Cypriots who lost control of their properties during the Turkish military intervention in 1974. The IPC was set up specifically to provide an effective remedy pursuant to the European Court of Human Rights (“ECHR”) in the Xenides-Arestis v. Turkey.  In the Demopoulos and Others v. Turkey the ECHR found that IPC constituted an effective remedy, necessary for exhaustion before submitting an application to the ECHR.
  1. Anyone who lost control of their property due to the Turkish military intervention in 1974 is eligible to make a claim to the IPC. Where the property is in the name of a deceased person, the heirs of the claimant are entitled to make a claim.
  1. As of 29 April 2022, 7,111 applications had been lodged with the IPC, of which 1,324 were settled through amicable settlements and 34 through formal hearings. The Commission has awarded over GBP 300,000,000 to the applicants in the form of compensation.
  • Ivan Lishchyna

    Managing Partner, Lishchyna & Partners

Lishchyna & Partners


Office 112, 11 Sagaydachnogo St., 04070, Kyiv, Ukraine;

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Lishchyna & Partners is a boutique law firm located in Kyiv, Ukraine.

Lishchyna & Partners advises clients on human rights protection issues at the European Court of Human Rights, cross-border dispute resolution, international investment and commercial arbitration proceedings. Lishchyna & Partners accompanies landmark and complex projects requiring the highest competence level.

Mr Ivan Lishchyna is the founder and Managing Partner of the firm.

Prior to the creation of the firm, Mr Lishchyna worked in the European Court of Human Rights for 6 years, and further in various Ukrainian top-tier law firms in positions from Associate to Partner. Most recently, Mr Lishchyna worked in public service as the Deputy Minister of Justice of Ukraine – Representative at the European Court of Human Rights for more than 5 years.

Mr Lishchyna has specialised in international dispute resolution for more than 20 years. He has significant experience in representing Clients before all major international arbitration forums, including the London Court of International Arbitration, Arbitration Institute of the Stockholm Chamber of Commerce, GAFTA, International Commercial Arbitration Court at the Ukrainian Chamber of Commerce as well as in cases considered by the arbitration courts in the composition formed in accordance with the Rules of the International Chamber of Commerce or the UN Commission on International Trade Law (UNCITRAL).

Lishchyna & Partners also represents Clients in cross-border debt recovery provided to the banks under the trade name of iLisLaw.