EU sanctions and Russia's frozen assets /

In response to Russia’s war of aggression against Ukraine, the European Union (EU) has adopted 19 sanctions packages against Russia in close coordination with its Group of Seven partners.As part of these measures, the EU has immobilised around EUR 210 billion of Russia’s sovereign assets and froze around EUR 28 billion of private assets within its jurisdiction, while actively addressing possible utilisation of these funds as reparations owed to Ukraine by Russia under international law. Although significant steps have been taken in terms of private assets and windfall profits, many legal issues concerning the confiscation or management of state assets remain unaddressed. Hence, this paper aims to map current arguments and developments, in order to propose viable options for the use of these three asset types as reparations under EU and international law. At the EU level, proposals under the Common Foreign and Security Policy, especially those relating to the assets of the Central Bank of Russia (CBR), are hindered by unanimity decision-making processes and the possible use of veto powers by Member States. At the international level, CBR assets are protected by the laws of state immunity. Ittherefore remains questionable under what circumstances such assets could lawfully be utilised for reparations. This paper argues that currently the most viable legal option, which addresses internal and international challenges, is the establishment of an EU Instrument (reparations loan). This could be achieved through carefully designated steps, allowing a qualified majority vote to prolong restrictive measures concerning immobilisation of CBR assets, ensuring temporality and reversibility while connecting this instrument to existing reparations and compensation mechanisms that adjudicate upon Russia’s violations and its obligation to pay reparations or compensation. At an international level, this paper argues that an EU Instrument can be justified in terms of central bank assets’ immunity by offering a new interpretation of the relationship between procedural rules on immunities and secondary rules on countermeasures. Such argumentation does, however, involve important legal risks highlighted throughout the paper.