Back to Legal Updates

New compensation procedure for damage done to Russia and the Russian Central Bank by US actions

legal updates
24 / 05 / 2024
On 23 May 2024, President Putin signed Decree No. 442 “On the Special Procedure to Compensate for Damage Caused to the Russian Federation and the Central Bank of the Russian Federation as a Result of Unfriendly Actions by the United States of America” (“Decree”).

The Decree allows US assets and assets of foreign persons associated with the US to be used as compensation for damage done to Russia and the Russian Central Bank (“Rights Holders”). Such assets may be transferred to a Rights Holder that was wrongfully deprived of assets by a decision of a US government or judicial body.

Compensation procedure under the Decree

The Decree introduces the following compensation procedure:

  • A Rights Holder petitions the court, following the rules of jurisdiction under Russian procedural law, to determine that it has been wrongfully deprived of its property rights. The petition must contain an assessment of the damage done to the Rights Holder.
  • If the court accepts the petition, it requests that the Government Commission for the Monitoring of Foreign Investments in the Russian Federation (“Government Commission”) propose US assets and assets of foreign persons associated with the US (as well as persons they control, regardless of their place of registration) that could be used for compensation.
  • The Government Commission arranges for such assets to be identified and sends a list to the court. The following US assets and assets of foreign persons associated with the US may be transferred to the Rights Holders:
    • movable and immovable property located in the Russian Federation
    • securities and shares in the authorised capital of Russian juridical persons
    • property rights
  • The court either rules that the Rights Holder was wrongfully deprived of its property rights and awards compensation for damage or denies the Rights Holder’s petition.
  • The court ruling calls for title to US assets and assets of persons associated with the US to be terminated and subsequently transferred to the Rights Holder.
The Decree charges the Government with determining the procedure to be followed by the Government Commission in considering such a request and preparing a list of assets.

The Government may also determine the federal executive body authorized to petition the court on behalf of a Rights Holder (except when damage is to the Central Bank).