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Russia: expropriation of assets belonging to the United States of America (or related subjects) as compensation for damages suffered by the Russian Federation and the Central Bank of the Russian Federation

On May 23, 2024, the President of the Russian Federation promulgated Decree no. 442 “On the special procedure for compensation for damages suffered by the Russian Federation and the Central Bank of the Russian Federation in Russia due to hostile actions of the United States of America” (“Decree 442”).

Decree 442 binds the Russian Government to establish within 4 months from the date of entry into force of the decree itself, also by means of amendments to the current legislation, a specific procedure that allows Russia and the Central Bank to obtain compensation for damages suffered for effect of decisions eventually taken by state or judicial authorities of the USA, as a result of which the Russian Federation or the Central Bank of the Russian Federation were deprived of their rights to assets belonging to them.

Decree 442 provides that the claims for compensation for damages must be submitted to the competent Russian court according to internal jurisdictional rules and be accompanied, inter alia, by evidence of the illegitimate confiscation of assets and by the quantification of the suffered damages.

The damages would be compensated through expropriation of assets belonging to the USA and/or the so-called US Persons, meaning, pursuant to Decree 442, any foreign person “connected” with the USA (including US citizens, persons resident/registered in the US, persons whose principal place of business or income from such activity is located in the USA), as well as entities controlled by them, regardless of the place of their registration.

The list of assets that may be expropriated in order to satisfy the right to compensation for damages contemplated by Decree 442 will be kept by the Government Commission for the Control of Foreign Investments. In this regard, it should be noted that this body is the same body competent to issue authorization for the sale of Russian assets by owners belonging to the so-called “Unfriendly states”.

The list may therefore include movable and immovable assets of the USA and US Persons, including securities, shares in the capital of Russian companies, property rights of the USA or US Persons.

The procedure for forming the list of assets intended for compensation is also left to the implementing measure to be issued by the Government of the Russian Federation.

Olga Pljukhina, Vittorio Loi