Legal aspects of asset recovery of sanctioned persons

Abstract

The russiaʼs full-scale invasion of Ukraine has resulted in the introduction of sanctions against the aggressor by numerous countries worldwide. In par­ticular, the application of sanctions has affected both individual and legal entities associated with the aggressor. These sanctions include the freezing of assets belonging to such individuals and companies, and Ukraine, as a state that has suffered significant destruction and human losses due to russian aggres­sion, has legitimate grounds for foreclosing and further managing these assets. The legal regulation of managing foreclosed assets of sanctioned persons in Ukraine is new and dynamically evolving. At the same time, there are significant gaps in the legis­lation that lead to the risks of illegal seizure, inefficient use, and embezzlement of these assets. The purpose of this study is to comprehensively analyze the legal regulation of recovery, foreclosing and seizure of assets of sanctioned persons and assets belonging to the russian federation, as well as to identify problematic issues and develop recom­mendations for their resolution. The research used such methods as the analysis of current Ukrainian legislation and international experience in managing foreclosed assets of sanctioned persons, syste­matization and generalization of judicial practice, and comparative legal analysis. The scientific novelty of the research lies in a comprehensive and systematic approach to analyzing the legal aspects of managing foreclosed assets of sanctioned persons by Ukraine, as well as in developing practical recommendations for improving the legal regulation of this sphere. According to the study, the main problems in the management of foreclosed assets of sanctioned persons in Ukraine are the imperfection of legislative regulation (lack of a clear definition of the legal status of foreclosed assets, shortcomings in the procedures for recovery and confiscation of assets that may lead to their appeal in the future, insufficiently regulated mechanism for protecting the property rights of legal entities whose property is confiscated). Other significant problems in the management of foreclosed assets of sanctioned persons are: the lack of transparent and effective procedures for managing foreclosed assets, gaps in cooperation with other countries on issues of seizure and asset management, potential risks of appealing foreclosing decisions in international courts due to non-compliance of the deadlines for submitting reviews and appeals with international standards. Based on the problems identified in the study, the following practical recommendations can be offered to improve the legal regulation of the management of foreclosed assets of sanctioned persons in Ukraine. It is worth codifying the legislation in this area – adopting a separate law that would compre­hensively and systematically regulate the issues of foreclosing, legal status and management of assets of sanctioned persons; clearly defining in the legislation the legal status of foreclosed assets, the procedure for their accounting, storage and disposal; developing and legally enshrining transparent procedures for managing foreclosed assets at all stages – from decision-making to the sale of property; introducing mandatory public reporting by mana­gement entities on the use of foreclosed assets; creating a unified automated database of foreclosed assets, indicating their status, size, owners, etc.; establishing international cooperation and exchange of experience with other countries on the management of foreclosed assets.; ensuring transparency in the use of funds from the sale of foreclosed assets, in particular for the purposes of restoring Ukraine and compensating for war losses. The research results can be used to improve Ukrainian legislation on managing foreclosed assets of sanctioned persons, develop transparent and accountable mechanisms for managing these assets, as well as ensure cooperation between state bodies and civil society in this field, foreign countries, etc.