First Cases of Sanctioned Assets Confiscation: What HACC Decisions Reveal

In December and January 2023, the High Anti-Corruption Court issued the first decisions on the confiscation of russian assets within the framework of the updated Law “On Sanctions.” Among the sanctioned persons, whose property the HACC decided to recover, are Yanukovych, three rectors of russian and Crimean universities: Torkunov, Falaleev, and Polukhin, as well as five russian parliamentarians:Paikin, Liabikhov, Kolbin, Kovidi, and Bakharev.

In particular, the HACC decided to confiscate the property of rectors and parliamentarians in Crimea, as well as the property of Yanukovych for more than EUR 20 million. Read more about who these russian proxies are, and what exactly was recovered from their property in favor of Ukraine here and here.

Let us remind you that the Ministry of Justice, which collects relevant evidence indicating support for russia’s armed aggression against Ukraine and the putin regime, is authorized to file lawsuits with the HACC for the recovery of russian assets. Recovery of assets can be applied both to citizens of russia and to foreigners and citizens of Ukraine.

Experts of Transparency International Ukraine analyzed these decisions of the Anti-Corruption Court to identify the main trends in the further consideration of such cases.

The Yanukovych Case

In the Court decision on Viktor Yanukovych, the fugitive president was identified as a subject of terrorist activity in accordance with the Law “On the Fight against Terrorism” and the Law “On the Prohibition of Propaganda of the Russian Neo-Nazi Totalitarian Regime, an Act of Aggression against Ukraine by the Russian Federation as a Terrorist State, Symbols Used by the Armed and Other Military Formations of the Russian Federation in the War against Ukraine.” It is interesting that the decision records the Ukrainian citizenship of Yanukovych — this confirms that confiscation applies not only to citizens of russia.

In its decision, the court found that despite the requirements of the Constitution to guarantee the state sovereignty and territorial integrity of the country by the President of Ukraine, Yanukovych committed actions in support of the annexation of Crimea and russia’s war against Ukraine. 

However, the HACC decided to satisfy the claims of the Ministry of Justice in part, since it did not establish the presence of Yanukovych’s accounts in PJSC Prominvestbank — the Ministry of Justice referred to them in the lawsuit. Moreover, the Anti-Corruption Court did not establish the fact of Yanukovych’s disposition of the property of his son Oleksandr, the home of his wife and the apartment of Liubov Poliezhai, the person with whom the fugitive president lived.

The court also drew attention to the fact that the recovery may concern the assets (1) owned by an individual or legal entity by right of ownership and (2) in respect of which the person may directly or indirectly (through other individuals or legal entities) perform actions identical in their content to the exercise of the right to dispose of them.

To establish the fact of disposal of assets, the court formulated a rule that a person may not directly be the owner of the property, but control the property and actually determine its fate, and this is the basis for the recovery of such property. In the case of the assets of Oleksandr Yanukovych, the home of Yanukovych’s wife, as well as the apartment of Liubov Poliezhai, the Ministry of Justice failed to prove the connection between the ex-president and the property of the women and his son.

Cases of property confiscation of rectors and parliamentarians

Interestingly, under these proceedings, property located in the Autonomous Republic of Crimea is subject to recovery. While the peninsula is under occupation, the question arises how the local assets will be recovered.

In addition to the fact that a person must own or dispose of certain assets within Ukraine, there are several facts that the court must establish in order for confiscation to be possible:

1. the fact of the appeal of the Ministry of Justice to the HACC during the period of martial law;
2. the fact of imposing sanctions on a person in the form of blocking assets after the entry into force of the updated Law “On Sanctions”;
3. the fact that a person committed actions that created a significant threat to the national security, sovereignty, or territorial integrity of Ukraine (including through armed aggression or terrorist activities), or significantly contributed (including through financing) to the commission of such actions by other persons.

In the case of Yanukovych, the NSDC had to “re-block” his assets with a new decision after updating the Law “On Sanctions” to fulfill the necessary conditions for confiscation. Such a need did not arise with the rectors and parliamentarians — their assets were blocked after the introduction of martial law and the updating of the Law.

Regarding the observance of human rights, the HACC points to three criteria of the European Convention on Human Rights, which are important to observe when restricting property rights: 1) restrictions should take place in accordance with national legislation, 2) pursue a legitimate goal, and 3) be proportional to the legitimate goal.

If everything is clear with the first two criteria because confiscation takes place based on the Law “On Sanctions” to protect national security, then the latter criterion is more complicated. Thus, Article 1 of the First Protocol of the European Convention on Human Rights states that no one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. Thus, for the criterion of proportionality, the proportionality between the public interest and the restriction of property rights is important. 

The HACC found that the application of the sanction is commensurate with the damage caused by russian proxies to the interests of society. To confirm this, in all cases, the court cites data on the losses of the civilian population after the full-scale invasion of Ukraine by russia, which are published by the Office of the UN High Commissioner for Human Rights. The court agreed with the Ministry of Justice that the confiscated assets would be used to cover the losses of Ukraine caused by the illegal actions of russia and by the sanctioned persons in particular, which is also in the public interest.

Thus, the HACC has developed the first full-fledged practice in cases of recovery of property of russian proxies in favor of Ukraine. We hope that this practice will be useful for future cases.

The analysis was prepared by Nataliia Sichevliuk, legal advisor at Transparency International Ukraine.

This publication was prepared with the financial support of the European Union. Its content is the sole responsibility of Transparency International Ukraine and does not necessarily reflect the views of the European Union.