The Belgium government’s record of obstruction on UK and EU plans to use seized Russian assets to fund Ukraine’s economic and defence needs has puzzled legal and diplomatic experts.
Little progress on the use of Russian assets was made during Belgium’s presidency of the Council of the European Union, which ran from 1 January to 30 June 2024. Of the eight countries, including Hungary, that have held the presidency during Russia’s full scale war, Belgium’s stands out for not including security and defence aims among its priorities.
But whatever the reasons for Belgium’s position, its government may be running out of road. The diplomatic pressure on Belgium has been immense, and now its legal objections to use of the assets have been comprehensively debunked.
Background
The EU’s proposal is to use frozen Russian assets as security for loans to Ukraine, repayment due only on the payment by Russia of reparations. The lion’s share of frozen Russian assets are held in the Brussels-based central securities depository, Euroclear.
The Belgium government’s objections have lent heavily on arguments that it would face significant legal risks. The mechanisms cited included recourse by Russia through bilateral investment treaties (BITs), which Russia has signed with some EU states, including Belgium. It was also suggested that the UN’s court, the International Court of Justice (ICJ) could provide a further forum for challenge.
Legal opinion
But Belgium’s legal objections do not stand up to scrutiny, according to international law experts at law firm Covington, which has acted for the government of Ukraine pro bono in its own ICJ cases against Russia since 2014.
In a memo completed on 8 December, the firm concluded: ‘The argument that the EU should not proceed with the Reparations Loan because it involves unjustified legal risk should be given no weight by EU policymakers.
‘In reality, it would be well-nigh impossible for Russia to persuade an international court or tribunal to find and exercise jurisdiction over such a claim. And, in the unlikely event that it succeeded in doing so, its claim would likely be defeated by one or more of the other practical challenges confronting it.’
Taking bilateral investment treaties first, Covington concludes that Russia’s BITs provide remedies for private investors only. Sovereign assets are not covered, and the two types of asset cannot be conflated.
The point is also made that the use of a loan, secured on frozen Russian assets, side-steps any arguments that rely on ‘expropriation’. Any tribunal constituted to determine a BIT dispute ‘would lack jurisdiction to hear a dispute relating to alleged expropriation of Russia’s sovereign assets’, Covington notes, adding that ‘a Russian claim would face further significant challenges relating to jurisdiction, as well as admissibility, liability, and enforceability’.
As to the ICJ, the convention on which Russia might base a claim is not in force. ‘The ICJ is the international court with the widest powers to hear disputes between States over alleged violations of international law,’ Covington notes, ‘yet its jurisdiction would not reach a claim by Russia arising from an EU Reparations Loan. We are unable to imagine any viable claim that Russia could bring before other comparable international courts or tribunals in relation to this subject matter.’
A case between two member states can be heard by the ICJ with the consent of both parties, the memo notes. But why would an EU state provide such consent? In addition, ‘Russia does not accept the compulsory jurisdiction of the Court’.
EU shifts to majority vote
The requirement for EU member state unanimity for some decisions in effect gives any EU state a veto on areas that require it. EU borrowing guaranteed against its own budget is one such area, covering proposed loans to Ukraine secured in this way.
But on 3 December the president of the European Commission announced that the reparations loan proposal was a solution that can be backed by qualified majority voting. ‘We are taking the cash balances, we are providing them to Ukraine as a loan, and Ukraine has to pay back this loan if and when Russia is paying reparations,’ she said.
What will be Belgian prime minister Bart De Wever’s next move? Distribution of the loan money could be delayed by litigation, but if that was against the EU, De Wever would need the acquiescence of all the five parties that comprise his coalition government.
His next move is hard to judge, not least because the reason for the country’s stance remains enigmatic. Its exchequer benefits from taxing ‘windfall profits’ on frozen Russian assets in Belgium, which has been several billion Euros to date, but the Belgium government insists it is a staunch ally of Ukraine.
But the pace of actions that will release vital funds to Ukraine, to support its war economy and defence needs using Russian assets, has picked up. If majority voting and legal clarity can work in concert with diplomatic and political pressure, then badly needed support can be provided.
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