What is the Register of Damage, and how does it work with the Diia Register? How to get there, with what money, and according to what estimate will compensations be made to the victims? We talked about these pressing issues with the executive director of the International Registry of Damage, Markiyan Klyuchkovskyi.
- On June 27, 2023, the member states of the International Register of Damages Caused by the Aggression of the Russian Federation Against Ukraine appointed Markiyan Klyuchkovskyi as the Executive Director of the Register.
- Previously, Markiyan was a partner at Asters, where he co-chaired the practice of international arbitration and litigation, and after the full-scale invasion of Russia, he became a member of the working group on the development and implementation of international legal remedies for compensation for damages caused to Ukraine as a result of the armed aggression of the Russian Federation.
Olya Veretilnyk (Dead Lawyers Society) entered into a criminal conspiracy with Yura Gaidai (Centre for Economic Strategy) in order to record an interview with Markiyan. This intention was defiantly implemented.
What is the International Register of Damage, and why did you create it?
There is no mechanism that actually exists today; it needs to be created from scratch. There are many reasons for this. One of them is Russia’s right to veto in the UN Security Council. And, obviously, Russia’s lack of consent to voluntarily cooperate in creating such a mechanism. And this is not an easy way because we do not have the opportunity to rely on any existing precedent in such work.
In the spring of 2022, a group of lawyers in which I was engaged began work on the creation of what we call a compensation mechanism for Ukraine, or a reparation mechanism.
The compensation mechanism we offer consists of three components.
The first component is, in fact, a register of damage, which should record information about losses, damages, injuries, and other similar things that Ukraine and Ukrainians suffered during the full-scale invasion of Ukraine by Russia.
The second component of this mechanism is the compensation commission. This is the body that will review these stigmas and decide how much damages should be compensated in each specific case.
And the third component is the compensation fund, which accumulates funds from which, in fact, these payments will be made. This fund will be filled either by Russia voluntarily, or we will get to the Russian assets on our own and collect them for the benefit of this fund.
The Register of Damage is only the first component of this mechanism. We announced its creation in May this year. Now, we are preparing for its full operational launch so that people, companies, and government bodies can register their requirements there.
Here it is worth emphasizing that both Ukraine and other countries understand very well that the register itself, no matter how cool it is, is meaningless. This damage database does nothing for actual damages. That is why it is written in the Charter of the Register that this is only the first component of the compensation mechanism, and the states will move towards the creation of its other components.
That is, in addition to the register itself, there will be a commission that will evaluate the information in the register, but it is not there yet.
Yes, absolutely. This is a quasi-judicial body that will consider all claims. Essentially, assess their credibility, assess the amount of damage caused in each specific case, and award the amount to be compensated.
It really isn’t there yet; negotiations are currently underway. This is a difficult process because we have nothing to rely on as a direct precedent when such a mechanism would be created without the consent of the opposite party.
When will it be possible to submit information about the causing of damages, who can do it, and in what format, if it already exists?
According to our plan and according to the rules described in the Charter, citizens, companies, and the state of Ukraine can submit complaints and information about damages. Roughly speaking, any person who has suffered the damage can do it.
This will all be made exclusively in digital form through a platform that is currently being created.
As soon as this digital platform or at least its first components are ready, we will immediately open the window for submission of claims. Optimistically, this should happen by the end of the year. Perhaps this is too optimistic, and we will look at the beginning of the next one, but we are moving as quickly as possible so that while the evidence of everything that is happening in Ukraine is still fresh, people, companies, and the state have the opportunity to record everything.
There is now an option to apply for registration of damage via Diia – is this some sort of parallel process to what is happening with the International Register of Damage?
They cannot be called completely parallel because they pursue slightly different goals.
Although this mechanism via Diia you mentioned is a register of damaged and destroyed property, what is paid on it is called compensation, but in reality, it is not compensation at all.
This, in general, is the Ukrainian state providing a helping hand to those who need it most for the reconstruction of housing and other property. And provides relatively small amounts for this, let’s say so. But at the same time, this register is such an aggregator and a source of information about damages, at least in certain segments of the economy, specifically with reference to the persons who suffered.
This mechanism really has several connections with the international register we are talking about. First, you rightly say it is a kind of information aggregator. However, it will not automatically flow or transfer from one place to another. But since all this information is digital, it is much easier to do.
Moreover, we communicate a lot with the developers of the register of damaged and destroyed property, actually from a technical point of view, to make the systems as compatible as possible with each other so that this process is as simple and painless as possible.
The second moment in which they interact with each other is that to the extent that the state pays compensation to citizens, it receives the right to claim the aggressor state for the same amounts.
So, is this a kind of regression?
A kind of regression, absolutely. Although, of course, if citizens believe that their losses are greater than what they have been compensated [they can contact the register].
The Ukrainian state has the unconditional right and all the possibilities to claim damages from Russia to register these claims already in the International Register. That’s why I say that these are not exactly parallel things; they have some compatibility, but in a global sense, they just pursue different goals. We are trying to make them as compatible as possible and use the existing developments.
How do you plan to verify the information on the causing of damage?
In the next few months, the so-called Register Council will be appointed. These are seven independent specialists who will, among other things, determine the various rules and procedures of the Register, including the requirements for the submission of claims in various categories, the requirements for their evidence, and the evaluation. Therefore, it will be possible to talk about more specific rules when they are ready.
If you look at this topic from a bird’s eye view, one of the biggest challenges of the entire compensation mechanism is the number of claims: without exaggeration, we expect millions of claims. If we consider them one by one, it will take tens or even hundreds of years. Therefore, we should make some kind of more automated system for reviewing and evaluating claims, where possible.
For example, in Mariupol, there are thousands of victims whose complaints about the damage or destruction of homes will be quite similar. For example, when the UN Compensation Commission considered the consequences of Iraq’s aggression against Kuwait, it assigned a value, so to speak, to each claim. If this is extrapolated based on our reality, then it will conventionally mean that a square meter in an apartment in Mariupol is valued at a certain amount of money. Accordingly, the owner of a 100-meter apartment can automatically count on compensation, which is determined mathematically.
Where we are talking about more unique cases, there, of course, everything will happen differently; there will be an assessment of the actual damage directly. I am talking about this now very preliminarily because all these rules and approaches will still be defined in the future. But this is how we aim to work.
I can already sense that my next question is also premature because there is no order. Many have already applied to Ukrainian courts and the ECtHR for damages. It is clear that there will be a lot of court decisions where all these losses are recorded. Will this in any way affect the level of reliability of the information on the damage?
There is no specific rule yet; they will all be formed in the coming months. Our working vision of this matter is as follows: court and arbitration decisions will be taken into account for one or another circumstance, but they will not have prejudice.
That is, if a plaintiff comes with a Ukrainian court decision against Russia for 100 billion dollars, roughly speaking, this does not mean that it is automatically converted into a claim that will be satisfied. It will be evaluated, in particular, from the point of view of whether the defendant, whoever it was, participated in the trial, whether it was informed, how the trial was conducted, and how objective it was.
But such a legal assessment will take place already at the stage of the compensation commission; at the very first stage of entry into the register, it will be sufficient to submit only a court or arbitration decision.
And with regard to the most basic element of this mechanism – the fund from which all this should be reimbursed. How do you assess the prospects for its creation and raising?
I assess the prospects of creating a fund very well. It is an integral part of the mechanism; without it, the mechanism has no meaning. Because just as the register will turn into an ordinary database, the decision of the compensation commission without real payment is just a piece of paper. We don’t want that. Therefore, it will be created, and it must be filled.
There are questions here, of course.
In an ideal world, the aggressor state will come to its senses, will want to return to the civilized framework of relations in the world, either through a peace treaty or in some other way, and will agree to fill this fund on its own. To do this with direct financial infusions, some share of the income of Russian oil and gas exports, for example. There are even certain advantages in this because, in this way, the fund can be replenished indefinitely until all claimants are satisfied without any ceiling, without any maximum of this compensation.
But for us, the default scenario is that Russia will not do it voluntarily. That is why we are currently focusing our attention on Russian assets, searching for them and developing mechanisms for compensation so that Ukrainian claimants who have suffered damage will be compensated with them.
I will say obvious things now: this work is difficult. The reactions of other countries, in particular the reactions of the EU and Germany, are all public; they all proceed from the fact that this is unprecedentedly difficult and will have incomprehensible consequences.
Our answer is that the consequences of a situation where a state that violated the basic principles of international law remains unpunished are just as unclear. Therefore, we are working on this, and in the international legal format, we are looking for a solution to issues such as sovereign immunity, which, in theory, should protect the sovereign funds of states located abroad.
At the level of the European Commission, the specific idea of using frozen Russian funds has been discussed for quite some time. In the USA, not so long ago, a draft law was registered that provides for the collection and confiscation of state funds for the purposes of the compensation mechanism. This work is going on, and sooner or later, it will lead to its result. Everyone perfectly understands that if Russia does not pay for the reconstruction of Ukraine, then this burden will fall on the world community.
I recently spoke with Roman Kachur, now a deputy executive director on the World Bank’s Board of Directors, and it is he who is less optimistic about the prospects for such large-scale reparations. How do you see this process? As far as I understand, one of the main obstacles to starting to effectively recover the frozen assets of the Russian Federation, and perhaps some other assets that are currently in free circulation, is the fear of creating precedents. To what extent do you think that these are valid arguments, or is it rather a political argument in order to avoid a complicated, unpleasant process, or simply not to transfer assets to Ukraine that can work on the economy of certain Western countries, especially those that in previous years received significant benefit from the fact that tens and hundreds of billions of Russian dollars are parked there.
I can’t say it’s either one thing or another. These are not mutually exclusive things. These are really important legal issues. But so are political experiences, which are really focused on the issue of setting such a precedent.
If we look at it from a purely legal point of view, then indeed, in international law, such things are not done without the consent of another state, whatever it may be. The only way to do this without the consent of another state is through the UN Security Council. This path is, of course, blocked.
We proceed from the fact that the obligation to pay reparations for violations of international law already exists. It exists, no one disputes it, and it arises at the moment when a state commits a violation of international law. That is, Russia is already guilty.
The question is to determine the extent of this damage and find a way to repay it.
Therefore, from a legal point of view, we believe that we already have all the arguments and all the bricks of this construction. All of them, in general, have either already been presented to our partners or are in the process of being presented, so to speak. But in general, this construction already exists.
As for political considerations, we feel it very well. Each state, first of all, looks at itself, at its problems, and extrapolates these extraordinary solutions to itself and to the circumstances in which it takes part. And indeed, since we are doing it in defiance of the same accepted rules that nothing can be done without the consent of the state to which it is concerned, it creates a little discomfort.
But our answer to this is that we look at this situation as narrowly as possible. We are not saying that any violation of international law should be compensated in this way. We are talking about one of the grossest, most powerful, so to speak, violations – aggression in violation of Article 2 of the UN Charter. This fact was recognized by 141 votes of countries at a special session of the UN General Assembly, in relation to which the UN International Court of Justice issued protective measures, effectively recognizing the Russian invasion as illegal obliging Russia to withdraw its troops.
We look at all these circumstances and say, look, we want to apply such a compensation procedure only in the case when 1, 2, 3, 4 we can put all four ticks. And such situations, in fact, since the creation of the UN, by and large, have not happened. This is just the situation we already mentioned when Iraq invaded Kuwait. Then, there was a reaction at the UN Security Council level, and appropriate measures were taken. That’s why we take it easy.
I don’t really like to draw parallels with arms deliveries because these are, after all, completely different worlds – weapons and international law. But somewhere, these parallels still exist. Because what a few months ago, not to mention two years ago, seemed completely unreal, politically unacceptable, and inadmissible for safety is today a reality.
And we see the same gradual change of position, softening of the position of our fellow partners on the issues of creating a commission mechanism. At first, it caused discomfort and timidity.
Now, everyone is talking about it, and a long time ago, the question of whether it can be done has already passed to the question of how to do it. And this is exactly what applies to compensation through the confiscation of Russian assets. Sorry for such a long answer.
Well, that is, summarizing, if you manage to build this logical chain, starting from actions and responsibility for them, and confirming through existing legal mechanisms that this is the responsibility of the Russian Federation for aggression, for damages, and so on, then this should just relieve the tension parts of politicians and lawyers who say that we are setting a precedent for voluntary asset recovery. And this will scare away other investors, perhaps dubious funds, and so on.
Absolutely right. And more, here we still have to talk about the issue of fundamental basic values.
Because if we talk about the precedent, then, in our opinion, the precedent will be much worse if, relying on these formal rules of international law, the aggressor state, which commits the worst violation of international law imaginable, avoids responsibility.
That is, a situation arises when the state violates some rules of international law but hides this behind others to avoid responsibility. This is not correct. I am sure that there are states in the world that are looking at this situation from the point of view of assessing the possible consequences of their actions. Therefore, in this sense, the precedent can also be bad; it should be avoided.
I think this is a very important argument. As the lack of punishment creates threats of further destabilization, bold or unfounded steps by other countries, and unfounded aggressions, and these are all risks, and risks are higher transaction costs, damage to the growth of the world economy, and this, in fact, is what probable 95% of the world society are not interested in.
We see that the world has become so globalized and interconnected that the concept of such a local conflict actually no longer exists. Because we see how the attack on Ukraine, the aggression against Ukraine, has consequences in Asia, Africa, and Latin America, and any other conflict can have consequences in exactly the same way.
Therefore, we also look at our concept from the point of view that it is a matter of protecting international law, protecting the international rules-based order, and protecting the world order in which we live, including from an economic point of view.
Then, as far as I understood from your explanation, the following steps should be taken now: in the states or in their associations, in which there is some property of Russians, there should be adopted that somehow allows this property to be confiscated and given to Ukraine. Then, there should be an international treaty that describes how this Fund is created and how this money is directed to reparations.
Basically, yes, it is possible to discuss the order in which it should take place, whether first the international agreement and then the national legislation, or vice versa. But in general, yes, all these actions must be taken; we are talking about a set of actions both in the context of international law and in the context of national legislation in each of the countries involved in this process. Therefore, there will be a lot of choreography here.
How long can it take?
I will speak in platitudes now; forecasts are a very ungrateful thing. I will take an example from the relatively recent past. On May 18, 2022, President Zelenskyi created a working group of lawyers to work on the development and implementation of a compensation mechanism.
Half a year after that, the UN General Assembly adopted a resolution on reparations for Ukraine, in which it recognized the need for a compensation mechanism and recommended the creation of a register of damage. Half a year later, two days before the anniversary of the presidential decree, the creation of the register was already announced.
In terms of international law, this is the third cosmic speed, if not faster.
Such things have never happened so quickly before. We have a certain high bar for the pace we want to keep going forward. Whether it will be possible to do it, I will say that only the future knows the answer.
We need to find a common denominator in the creation of a compensation mechanism that will be agreed upon by many important states for us, for each of which this is the first time in this format. Therefore, I am not ready to indicate any time frame. Here, everything happens in the ASAP mode, as soon as possible.
Only our deadlines are the toughest.
Source – DeadLawyers.org
There are important remarks to each of these items, which should be addressed on a case by case basis.
If a project is funded by international financial institutions (such as World Bank, IBRD, EBRD etc.), such institutions keep the powers to introduce their own procurement rules and regulations. In practice, therefore, construction projects with international financing are usually carried out based on standard procurement procedures of the respective finance organization, being the most known and comfortable standard for international bidders.