Bill seeking to enable use of frozen Russian assets sent to 2nd reading in parliament

Estonian parliament. Photo: Madis Veltman

The constitutional committee of the Estonian parliament on Tuesday sent to second reading at the plenary a bill seeking to enable the use of Russian assets frozen under international sanctions to compensate for the war damages inflicted on Ukraine.

The amendment to the International Sanctions Act and related laws establishes a domestic mechanism to ensure the financial responsibility of the aggressor state for damages caused by the severest violations of international law. The amendment permits the use of assets belonging to individuals and companies that have contributed to Russia's unlawful actions and have been frozen under sanctions, as advance payments for damages owed by Russia to Ukraine. Additionally, the bill clarifies the competencies of state authorities in implementing international sanctions and provides clearer legal bases for the enforcement and supervision of these sanctions.

Ahead of second reading, the constitutional committee made seven motions to amend the bill, including one stipulating that the Foreign Ministry would decide on the use of assets as an advance payment for compensation during the administrative process. In the original wording, permission to use the assets would have had to be obtained from an administrative court.

According to the bill, the decision to use assets as an advance payment for compensation assumes that the unlawful act has caused damage that has been proven and must be compensated under international law, and that the affected foreign state has presented a corresponding claim to the foreign state that caused the damage, which has not been fulfilled within a reasonable time.

To initiate the process of using the assets in Estonia, Estonia must receive a relevant request, and an agreement must be made with the requesting state on the terms of using the assets as advance compensation and transferring the right to claim to the owner of the assets. Additionally, there must be sufficient proof of the asset owner's connection to the unlawful act.

According to the amendment made to the bill, the Foreign Ministry must determine all circumstances and ownership relations related to the asset and establish that there are no exceptional circumstances that would make the interests of the individual outweigh the need to apply the measure. According to the bill, the asset owner has the right to challenge the decision to use the assets in administrative court.

The government-initiated bill passed first reading in the Riigikogu in mid-November. Before sending it to second reading, the constitutional committee discussed the creation of the corresponding regulation and its importance several times with constitutional and banking experts, foreign policy specialists, and court representatives.

The constitutional committee proposed that the second reading of the bill be conducted next Wednesday, May 8.