How the Council of Europe proposes seizing Russia's frozen assets

As autumn approaches, the issue of frozen assets is once again moving to the forefront of the agenda. Defense funding shortfalls for this year and next necessitate securing an amount of capital comparable to the loan already allocated. European Pravda has previously reported on the ideas being discussed within the EU.

At the same time, a practical proposal on the transfer of Russian assets to Ukraine has emerged from Strasbourg – specifically from the Council of Europe (CoE). The proposal suggests transferring Russian funds to Kyiv on the basis of a court ruling, namely one from the European Court of Human Rights.

Read more about the initiative in the article by Ivan Horodysky the Dnistryanskyi Center: Strasbourg seeks Russian assets: can Russian funds be transferred to Ukraine pursuant to an ECtHR ruling?

From the very beginning of Russian aggression, the Council of Europe has taken a firm pro-Ukrainian stance.

However, the specific issue of confiscating Russian sovereign assets remained outside the Council's operational focus for a long time – likely because the organisation lacked the necessary leverage in this area.

The organisation is involved neither in the custody of Russian funds (it is worth recalling that the majority of the Russian Central Bank's assets are held in Belgium at the Euroclear depository) nor in decisions regarding their legal status. 

Council of Europe bodies can only issue non-binding recommendations in this regard – something they have done at times: in its resolutions, PACE has called on states to cooperate on this matter and to adopt appropriate national legislation enabling confiscation.

However, in early September, the PACE Committee on Legal Affairs and Human Rights approved a report calling for a more active role for the Council in the confiscation process.

The report, which has made headlines, was prepared by Tony Vaughan, a PACE member from the United Kingdom.

The core idea of Tony Vaughan's report is for member states to use Russian assets frozen within their jurisdictions to satisfy European Court of Human Rights (ECtHR) rulings on compensation – referred to as "just satisfaction" in the Court's terminology. This primarily concerns rulings in interstate cases between Ukraine and Russia, as well as other judgments for which Russia has failed to pay the awarded satisfaction.

To this end, he proposes either establishing a special Council of Europe trust fund to which these assets would be transferred, or implementing the relevant ECtHR rulings at the member-state level – a move that might require amending national laws or adopting a specific recommendation from the Council of Europe's Committee of Ministers.

The idea of using Russian assets to enforce European Court of Human Rights judgments is not fundamentally new; it has been raised in previous years. However, this is the first time the issue has been formally considered by one of the Council of Europe's institutions.

Experts question the feasibility of using Russian assets to enforce ECtHR rulings. According to expert analysis, such an approach would require either political decisions by individual Council of Europe member states seeking to implement the rulings, amendments to the European Convention on Human Rights itself (unrealistic, given the need to ratify changes to this international treaty), or a specific decision by the Council of Europe's Committee of Ministers.

This stems not only from fear of the Kremlin's reaction but also from concern that such a practice could be extended to other cases, bypassing the established procedures associated with the European Convention on Human Rights.

However, if even some progress is made in this direction, it could act as an "icebreaker", paving the way for the use of Russian sovereign assets to provide compensation to Ukraine.

Currently, the compensation amounts awarded by the ECtHR are small relative to the total value of the assets. Yet the ECtHR has issued rulings involving billions – such as the €1.86 billion awarded in compensation to Yukos. 

That said, the likelihood of utilising these assets through the ECtHR appears slim.

Yet the decisions leading to this depend not merely on Strasbourg – where the Council of Europe is based – but primarily on Brussels. It is the European Union and its decisions that determine the fate of Russian assets; should initiatives to place these assets under direct EU jurisdiction be implemented, that role will only grow.