On March 3, 2022, the Verkhovna Rada (parliament) of Ukraine adopted the Law on the Basic Principles of the Forcible Seizure of Objects to Which the Russian Federation and Its Residents Have Property Rights in Ukraine.
The preamble of the law states that the law was adopted in response to Russia’s full-scale aggression against Ukraine and is aimed at protecting of the sovereignty and territorial integrity of Ukraine, its national interests, and its national security.
The law defines urgent defense needs as the legal basis for the forcible seizure of objects to which the Russian Federation has property rights. It establishes the rules and procedures under which Ukrainian authorities can expropriate the property owned directly or through affiliates by the Russian Federation on the territory of Ukraine. (Law on the Basic Principles of Forcible Seizure, preamble.)
Content of the Law
The law allows for the expropriation of movable and immovable property, funds, bank deposits, securities, corporate rights, and other property and assets located or registered in Ukraine. It targets legal entities, their branches, and their representative offices operating in Ukraine when the founder, shareholder, or beneficial owner is the Russian Federation, or in which the Russian Federation, directly or indirectly, owns interest in the capital, shares and membership units. (Art. 1(1).)
According to the law, the forcible seizure of property of the Russian Federation in favor of the Ukrainian state is to be carried out without any compensation of its value due to the war waged by the Russian Federation against Ukraine and the Ukrainian people. (Art. 2(2).)
Legal Procedures for Expropriating Property Rights
The law stipulates the legal procedure through which Russian property can be seized and its ownership transferred. The provisions of the law prescribe that the decision to expropriate the property is to be taken by the National Security and Defense Council (NSDC) of Ukraine. (Art. 3(1).)
The Cabinet of Ministers of Ukraine must submit a draft decision to the NSDC enumerating the property to be seized, status of the objects of property, names of owners, and timeline for seizure. (Art. 3(2), (3).)
The NSDC’s decision to confiscate Russian property is to be implemented by a decree issued by the president of Ukraine. (Art. 3(1).) The law requires that the presidential decree be approved by the Verkhovna Rada no later than six months after the expiration or termination of martial Law. (Art.3(4).)
Furthermore, the expropriated property must be transferred, on a temporary or permanent basis, to a specialized state–owned enterprise. (Art. 4(1).)
The registration of Ukraine’s title to the expropriated property is to be held on the basis of the presidential decree. The title registration is required only for immovable property, corporate rights, and means of transport. (Art. 4(2).)
However, if state registration of the property rights to a specific seized object is not required under Ukrainian legislation, the state automatically becomes the owner of that asset from the effective date of the decree of the president on the forcible seizure of the given object of property rights. (Art. 4(4).)The law explicitly states that any restraining orders or injunctive relief of Ukrainian courts may not suspend the decision of Ukrainian authorities to expropriate the Russian property or stop the procedure of title registration. (Art. 4(3).)