Govt commission green lights reciprocal impounding of foreign nations’ property in Russia

© Vladimir Pesnya
The governmental commission for legislation has approved a bill that if passed would allow Russia to impound property of foreign states, so long as Russian courts rule these countries are infringing the sovereignty of Russian jurisdiction.

According to business daily Kommersant, the government will shortly look into the draft and then it will be submitted to the parliament.

The current draft, developed by the Justice Ministry, would give Russian courts more powers to impound the property of foreign states. Currently such steps are only allowed on condition the government of the country in question agrees. The new rules would cancel this stipulation and introduce another – impounding would only be possible as a reciprocal measure after a court decides that a nation has damaged the economic or other interests of the Russian Federation.

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The Justice Ministry said in comments that the main idea behind the bill was to ensure a “jurisdiction balance” between Russia and foreign states. “The number of lawsuits against the Russian Federation is constantly growing and this happens without asking for our agreement for participation in these processes,” ministry sources told Kommersant. Therefore, recognizing the ruling of foreign courts is equal to conceding national sovereignty, they added.

In early July, mass media reported that several European countries, such as Belgium and France had frozen Russian state companies’ assets and curtailed their agencies in these countries. The move was in connection with the June 2014 ruling by the International Court in The Hague that ordered Russia to pay compensation of $39.9 billion, $1.85 billion and $8.2 billion to three companies connected with Yukos. The oil giant was dissolved in 2007 after its top managers and key owners were jailed for tax evasion.

The Russian Foreign Ministry described these steps as blatant violation of international law and promised to contest these decisions. President Vladimir Putin said in an interview with the heads of international news agencies that Russia would challenge the decision to seize its assets. The president added that the country didn’t recognize the ruling of the Hague court, as it doesn’t participate in the European Energy Charter.

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Earlier this month, the Russian Constitutional Court decided that no international treaty or convention has precedence over national sovereignty, and decisions by the European Court of Human Rights (ECHR) should be upheld only when they don’t contradict basic Russian law. The judge who announced the ruling explained that Russia can now refuse to fulfill the obligations imposed by the ECHR rulings, when such a refusal is the only way to prevent the violation of the basic law.

The same judge also told reporters there was a possibility the Constitutional Court would investigate the Yukos case, but only if it is taken to court by the plaintiffs. Besides, the Justice Ministry issued a statement saying all its actions connected with the ECHR’s ruling on the ‘Yukos vs. Russia’ case would be based on the ruling establishing the priority of the Russian Constitution.

These comments apparently concerned the ECHR’s ruling in July 2014 that ordered Russia to pay $2.5 billion in compensation and legal expenses to former Yukos shareholders.