Estonia’s New Push to Seize Immobilised Russian State Assets
Russia’s aggression against Ukraine has caused extensive material damage. The World Bank Group, the government of Ukraine, the European Union, and the United Nations released a latest “Rapid Damage and Needs Assessment,” which estimates that, as of 31 December 2024, the total cost of reconstruction and recovery in Ukraine is more than 500 billion euros. With this figure, Ukraine has become the world’s largest reconstruction effort after the Second World War. By comparison, the Marshall Plan to rebuild Western Europe (1948–1951) covered seventeen States and cost around 130 billion euros in current value.
Naturally, Russia must take responsibility and make compensation for this damage. In response to its full-scale invasion of Ukraine in February 2022, numerous States imposed unprecedented economic and other sanctions against Russia and private actors who support Russia’s war effort. These sanctions froze over 300 billion euros of Russia’s State and private assets around the world. Notably, the European Union blocked about 210 billion euros in assets belonging to the Central Bank of Russia. The G7 States and the European Union have repeatedly declared that Russia’s State assets remain immobilised until it compensates Ukraine for the damage caused.
Still, the aggression continues. Ukraine needs resources both to fund its fighting and to rebuild its infrastructure. Allies have provided substantial economic and military support to Ukraine, but it has not been enough. Thus, the possibility of using the immobilised Russian State assets to fund these needs merits serious consideration.
Debate on this option started soon after Russia’s aggression and involves complex political, economic, and legal analyses. Initially, most States were very cautious, but eventually, they agreed to use the immobilised assets to generate extraordinary (windfall) profits that “support[ed] Ukraine’s self-defence and reconstruction.” Although it is a smart practical solution, these profits are still quite modest in scale compared to the amount of Russia’s immobilised assets.
Recently, Estonia renewed debate about venturing further and seizing Russia’s immobilised State assets to use them for the benefit of Ukraine. This step would be permissible under international law because it qualifies as a lawful countermeasure. The idea is not revolutionary. Although many observers do not believe that countermeasures can justify seizing assets or that States other than the directly injured State (in this case, Ukraine) may lawfully take such measures, this post will demonstrate that Estonia’s proposed approach is legally sound.
Russia’s Responsibility
Every internationally wrongful act entails responsibility (see the Draft Articles on Responsibility of States for Internationally Wrongful Acts (ARSIWA), art. 1). Russia’s aggression against Ukraine breaches the most fundamental international rules enshrined in the UN Charter, namely, the prohibition against the threat and use of force in international relations, and respect for sovereignty and territorial integrity (art. 2(4)). In addition, Russia’s armed forces have committed widespread and systematic violations of international humanitarian law. The UN General Assembly has several times determined in its resolutions (e.g., here, here, and here) that Russia has committed aggression against Ukraine in violation of international law, including the UN Charter. Numerous States and international organisations in their statements, and the International Court of Justice (ICJ) in its order of provisional measures, have called upon Russia to end its military operations and to respect its obligations under international law.
International law provides that “the responsible State is under an obligation to make full reparation for the injury caused by [its] internationally wrongful act” (ARSIWA, art. 31(1)). This obligation is automatic and does not depend on admission or recognition by the responsible State or on confirmation by an international court or other mechanism. Therefore, there is no doubt that Russia must pay for the damage caused by its aggression against Ukraine.
But how can one effectuate this compensation, given Russia’s lack of cooperation? Due to Russia’s veto power, the UN Security Council will not create a compensation mechanism like the UN Compensation Commission established after the Iraq-Kuwait conflict in 1991. At the same time, the UN General Assembly has recognised that Russia “must bear the legal consequences of all of its internationally wrongful acts, including making reparation for the injury, including any damage, caused by such acts.” In the end, a responsible State’s defiance cannot deprive the injured State of its right to reparation.
Immunity of State Assets
Generally, State immunity prevents the seizure of State assets in foreign territory. This rule ensures that other States do not interfere with the management of State assets and the exercise of governmental functions. For example, the seizure of central bank assets deposited abroad will certainly impact the operational capacity of the owner State. In fact, State practice indicates that States are expected to provide protection to central bank assets. Such rules of State immunity are based on customary international law and are partially codified in the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property (UNCSI).
State immunity comes in two forms: immunity from jurisdiction; and immunity from enforcement. There are two schools of thought on how they are relevant to the seizure of State assets. The first takes a limited approach (emphasising the UNCSI) that State immunity protects a State from judicial measures, but not from executive and legislative measures. In other words, the seizure of State assets is prohibited by court action, but it is possible by government or parliamentary action.
The second school of thought takes a broader approach, emphasising sovereign equality, claiming that State immunity protects a State from all legislative, executive, and judicial measures. Hence, seizing State assets is unlawful regardless of what branch of government makes the decision.
There is no definitive answer as to which school of thought is right. Nevertheless, it is not sensible to rely on a proposition that the permissibility of seizing the assets of a foreign State depends on which organ of the State’s power authorises the seizure. Indeed, it makes no difference to a foreign State whether its assets are seized by parliament, government, or court action. The result is essentially the same: the foreign State cannot use its assets.
Countermeasures as a Mechanism for Seizure
In the “freeze to seize” debate, it is crucial to understand that Russia owes Ukraine a debt and refuses to pay. Seizure is not theft as Russia has argued. States are trying to find a lawful way to compel Russia to fulfil its obligation to compensate those affected by its own aggression. A possible answer to the dilemma lies in countermeasures. In the simplest terms, a State’s refusal to respect the immunity of Russian State assets, as a response to its violations of international law, is precluded from being wrongful so long as it complies with the legally recognized conditions for a countermeasure.
Countermeasures have several conditions. First, “[a]n injured State may only take countermeasures against a State which is responsible for an internationally wrongful act in order to induce that State to comply with its obligations …” (ARSIWA, art. 49(1)). Few dispute that Russia has committed internationally wrongful acts and that the seizure of Russia’s State assets amounts to pressure to comply with international law. Some have argued that the seizure is not permissible because it is not directed at persuading Russia to compensate, but at directly obtaining compensation. But Russia has persisted in its aggression for years and has shown no willingness to compensate, so it is reasonable to move on from simple persuasion to bringing some form of pressure to induce compliance.
Also, we should not overemphasise a single word or give it too soft a meaning. The Cambridge Dictionary explains that the word “induce” means “to persuade someone to do something, or to cause something to happen” (emphasis on the second part). Furthermore, the International Law Commission (ILC), in its commentaries to ARSIWA, has described countermeasures as “an instrument for achieving compliance with the obligations of the responsible State.”
Second, countermeasures must be temporary (ARSIWA, art. 49(2)) and must terminate “as soon as the responsible State has complied with its obligations …” (ARSIWA, art. 53). Once the errant State fulfils its obligation to compensate for its damage, States must resume the obligation to respect the immunity of Russian State assets. Preferably, Russia would compensate Ukraine directly, but if this does not happen, States can seize immobilised Russian State assets and give Russia credit accordingly. Once the seizure has yielded satisfactory compensation, the need and reason for countermeasures disappear.
Third, States must, as far as possible, take countermeasures “in such a way as to permit the resumption of performance of the obligations in question” (ARSIWA, art. 49(3)). In other words, countermeasures must be reversible as the ICJ has emphasised. In Russia’s case, States can reverse the decision not to respect the immunity of Russia’s State assets. Moreover, financial assets are fungible. If it turns out that the seizure was excessive or unlawful, the imposing State can transfer assets back to Russia. The ILC has warned against “inflicting irreparable damage” and has noted that States should select countermeasures “which permit[] the resumption of performance of the obligations suspended as a result of countermeasures.” Furthermore, reversibility is not an absolute requirement, as total reversibility of a given situation is often impossible.
Fourth, countermeasures must be proportionate considering the gravity of the internationally wrongful acts and the rights in question (ARSIWA, art. 51). This requires that the States that decide to seize Russia’s State assets must cooperate to ensure they do not seize more than is necessary to compensate the damage caused by Russia’s aggression, taking care to return any surplus to Russia. After all, countermeasures are not a form of punishment. Concerning gravity, disregard for the immunity of State assets is a lesser evil in comparison to aggression.
Fifth, before using countermeasures, the injured State must “call upon the responsible State … to fulfil its obligations …” and “notify the responsible State of any decision to take countermeasures and offer to negotiate with that State” (ARSIWA, art. 52(1)). It is safe to say that Russia has been sufficiently called upon to resume its obligations and to make compensation for its damage (the debates and resolutions by the UN General Assembly alone should suffice). Furthermore, Russia has been on notice for some time of the talks to seize its State assets. Finally, Russia clearly does not want to negotiate and continues its aggression against Ukraine and refusal to compensate. For these reasons, countermeasures cannot come as a surprise to Russia.
Considering Russia’s full-scale invasion of Ukraine, including its violations of international law and crimes, States may reasonably determine that the stringent conditions for countermeasures are met.
Countermeasures by States Other Than Ukraine
An injured State is entitled to invoke the responsibility of another State and to use countermeasures. But what qualifies as an injured State? There is no doubt that Ukraine, as a direct victim of Russia’s aggression, is an injured State. What about other States? Although Russia’s immobilised State assets are located in States that are not direct victims, they have legitimate concerns about Russia’s conduct and therefore can also use countermeasures. These could be described as “collective countermeasures.”
There are two potential grounds for States other than Ukraine to invoke the responsibility of Russia and to use countermeasures. First, States can claim that they are specially affected States (ARSIWA, art. 42(b)(i)). There is no definition applicable to determine whether a State is “specially affected.” The ILC has noted that the situation must be assessed on a case-by-case basis. In any case, a State may be “injured” if it is affected by the breach of the obligation in a way distinguishable from other States entitled to the obligation.
Russia’s aggression has seriously burdened many States (especially in Europe) because they have, among other things, received a great number of refugees from Ukraine, increased defence spending, and have suffered economic uncertainty. All States who support Ukraine have incurred extra costs in various fields. Russia presents a clear security threat and imposes a challenge on the whole security architecture. Russia has furthermore confiscated private property that individuals or companies from “unfriendly States” (i.e., States that have imposed sanctions against Russia) own (e.g., here), and has made it difficult for companies to liquidate their assets and leave Russia (e.g., here). Such action is unlawful.
All in all, it is fair to say these States are not mere bystanders but are specially affected States that are justified in taking action to induce Russia to comply with its obligations under international law.
Second, all States can invoke responsibility if “the obligation breached is owed to the international community as a whole” (ARSIWA, art. 48(1)(b)). For decades, the ICJ has recognised that States owe certain legal obligations to the international community as a whole. International legal scholars and institutions recognize them as erga omnes obligations, and most States acknowledge that they have a legal interest in protecting those obligations. The prohibition against aggression is a prime example of a violation of an erga omnes obligation (it qualifies also as a violation of a jus cogens norm). Russia’s aggression is not just a matter for Ukraine or even Europe, but a concern for the international community as a whole.
In such a situation, any State may demand from the responsible State cessation of the internationally wrongful act, assurances and guarantees of non-repetition, and reparation (ARSIWA, art. 48(2)). But we should venture further and consider proactive action. True, ARSIWA does not expressly regulate collective countermeasures. The chapter dedicated to countermeasures refers to injured States. However, there is nothing in ARSIWA or international law that precludes collective countermeasures. The ILC decided not to include collective countermeasures due to the embryonic nature of the relevant practice at the time.
Admittedly, relevant law and State practice were unsettled at ARSIWA’s inception in 2001 but since then, an increasing number of States have taken collective countermeasures, even if they have not labelled their measures as such. ARSIWA further recognises that the chapter on countermeasures does not prejudice the right of other States to “take lawful measures against that State to ensure the cessation of the breach and reparation in the interest of the injured State” (ARSIWA, art. 54).
If the prohibition of aggression is an erga omnes obligation (and also a jus cogens norm), that is a concern for the entire international community, as well as a foundational pillar of contemporary international law and relations. Why, then, should we deny all States the right to take countermeasures to ensure compliance with that fundamental obligation? We recognise collective self-defence and should also allow less forceful action in the form of collective countermeasures. The gap between collective retorsion and collective self-defence benefits foremost the responsible State. In this case, the benefit falls to the aggressor State, Russia.
Conclusion
Russia’s aggression against Ukraine is the most serious military conflict in Europe since the Second World War. The material cost associated with this aggression is immense. Russia has an obligation to make full reparation but refuses to pay compensation.
The law of State responsibility provides a plausible legal means to seize Russia’s immobilised State assets. Collective countermeasures allow States to circumvent the State immunity that normally protects State assets from foreign interference.
In the end, it is a political decision to seize or not to seize. But we have an opportunity to nudge the understanding and practice of international law in a direction where collective countermeasures are a viable option to ensure respect for the most fundamental legal rules and to protect the imperative interest of the international community as a whole.
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Dr René Värk is Associate Professor of International Law at the University of Tartu in Estonia.
The views expressed are those of the author, and do not necessarily reflect the official position of the United States Military Academy, Department of the Army, or Department of Defense.
Articles of War is a forum for professionals to share opinions and cultivate ideas. Articles of War does not screen articles to fit a particular editorial agenda, nor endorse or advocate material that is published. Authorship does not indicate affiliation with Articles of War, the Lieber Institute, or the United States Military Academy West Point.
Photo credit: 24th Mechanized Brigade of the Ukrainian military
