Four Russian oligarchs who lost their property in Ukraine as a result of the nationalisation of Sense Bank plan to appeal this decision on the basis of a bilateral investment treaty between Ukrainian and the Belgium-Luxembourg economic union (BeLux).

Source: As reported by the Belgian financial daily L'Echo

Details: L’Echo reports that four oligarchs who are closely connected to Putin intend to apply for international arbitration, invoking the Agreement between the Belgo-Luxembourg Economic Union and the Government of Ukraine on the reciprocal promotion and protection of investments to demand more than a billion dollars from Ukraine.

The basis for the lawsuit will be the fact that the bank is owned by the Luxembourg holding company ABH Holdings (ABHH), the majority shareholders of which are Mikhail Fridman, German Khan, Alexei Kuzmevich and Petr Aven.

The four men, who are subject to EU sanctions, believe that their investment, which ABHH values at more than a billion dollars, was taken from them when Sense Bank was nationalised.

Although the composition of the company's shareholders today has undergone certain changes, the four Russians were the majority shareholders at the beginning of the full-scale war.

When rumours of the nationalisation of the bank first started to circulate, ABHH immediately declared that it would use the bilateral investment treaty between the BeLux and Ukraine to recoup its lost assets. 

Article 4 of this treaty is invoked to justify their claims. "Each of the Contracting Parties undertakes not to adopt any measure of expropriation or nationalisation," the article begins.

The provision further states that contracting parties are entitled to treatment that is at least equal to that granted to investors of the most favoured nation "as regards restitution, indemnification, compensation or other settlement" if their investments suffer losses owing to war.

It is on this legal basis that ABHH intends to initiate a case before an international arbitration organisation.

Attention was called to this situation by the Belgian French-speaking green party Ecolo.

The Greens, including two members of parliament from the Ecolo party, Samuel Cogolati and Wouter de Vriendt, decided to raise the alarm about the intentions of the Russians.

"The oligarchs who have had their bank in Ukraine – rightly – expropriated wish to make use of the Belgian-Ukrainian treaty to make as much money as possible on the backs of Ukrainian taxpayers, who are already unjustly impacted by the illegal war of aggression launched by Russia in 2022," says Samuel Cogolati.

The members of parliament plan to question the Foreign and Finance Ministers, Hadja Lahbib and Vincent Van Peteghem, to see if Belgium can prevent the oligarchs from demanding this exorbitant amount from Ukraine.

The Greens want the Belgian government to take urgent action to protect Ukraine from this potential court case.

Cogolati added that "It is out of the question for us to allow Russian oligarchs to hijack with impunity a legal instrument – concluded at Belgium’s initiative – to dispossess the Ukrainian people."

According to L’Echo, it remains to be seen whether the Belgian state can really do anything about this.

The bilateral treaty, which was signed in 1996, came into effect on 27 July 2001, and it will remain in effect for another 10 years if no party objects within six months of its expiration.

Even if the Belgian state were to leave the treaty in place, the agreement has a "sunset clause", Professor Hakim Boularbah of the University of Liège told L'Echo. Even if the treaty were terminated, its provisions would still apply to investments made before the date of its expiration for an additional ten years.

Background: In July, Ukraine decided to nationalise the Ukrainian Sense Bank under the terms of martial law.

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