Who Pays for Aggression? Ukraine’s Reparation Claims and Russian Frozen Assets

As Russia’s war against Ukraine rages, inflicting suffering on the country, its people, and economy, the Russian Central Bank (RCB) assets remain immobilised (i.e., frozen). Since December 2025, the EU, on whose territory a significant chunk of these assets has been immobilised, – €210 bn worth of assets out of approximately €290 bn  – modified the legal basis for their immobilisation. The move has not only allegedly permanently immobilised these assets under Article 122(1) of the Treaty on the Functioning of the European Union (TFEU) but also avoided the risk that the measures might be discontinued due to a lack of consensus – particularly if Slovakia (or Hungary in the past) were to oppose the renewal of EU sanctions against Russia (these sanctions have to be renewed every six months). Yet this modification has not resolved a time-sensitive and pressing issue of financing Ukraine’s wartime efforts and post-war reconstruction. This post outlines the current estimates of the costs of Ukraine’s reconstruction, puts in a nutshell the ambit of the legal debate on the possibility of using immobilised RCB assets, and reflects upon the policy considerations that taint these legal debates. The final part summarizes the most recent developments related to the RCB assets.

Costs of Reconstructing Ukraine: Not Only Rebuilding but Also Guaranteeing a Long-term Economic Recovery

Since the early days of the Russian invasion, various initiatives have emerged to collect, evaluate, and analyse information on economic losses caused by the Russian aggression. One of them is the Ukraine Rapid Damage and Needs Assessments, which have been conducted five times. The most recent assessment, prepared by the World Bank Group, the Government of Ukraine, the European Commission, and United Nations agencies (e.g., UNDP, UNICEF, etc.), in coordination with humanitarian and development partners, academia, civil society organizations, and the private sector, covers the period between February 24, 2022, and December 31, 2025. It concludes that: “the total recovery and reconstruction needs are estimated at US$587.7 billion over the 10-year horizon 2026-2035, equivalent to almost three times Ukraine’s 2025 gross domestic product (GDP)”. This estimate includes not only the costs of rebuilding the destroyed and damaged infrastructure but also the costs of Ukraine’s long-term economic recovery. 

Ukraine’s Reparation Claims and Russian Frozen Assets: Between Legal Theory and Politically-Driven Practice

In the past, reparations were a matter of might over right. In other words, the ability to claim reparations in the nineteenth and early twentieth centuries was the right granted to a prevailing power by virtue of its military success. However, like the international rules for peace-making, international law on reparations has changed in the last decades. Ukraine’s right to claim reparations is well-embedded in the present-day fabric of international law. The general right to reparation is acknowledged as customary international law in Article 31 of the Draft Article on Responsibility of States for Internationally Wrongful Acts (ARSIWA). Its applicability to the Russian aggression was recognized by UNGA Resolution ES-11/5, supported by the majority of the UN Members. That resolution explicitly states that Russia “must bear the legal consequences of all of its internationally wrongful acts, including making reparation for the injury, including any damage, caused by such acts” [emphasis added].

While Ukraine’s right to reparations is not seriously disputed, international law debates have centred on the question of how this right can be realized, with a particular focus on currently immobilised RCB assets. These debates have focused on three key questions: what is the exact scope of the immunity from execution as it applies to central bank assets? Can a narrowly defined exception from immunity guarantees be developed for cases like Russia’s aggression against Ukraine? Can confiscation or temporary use of the central bank assets qualify as permissible countermeasures? 

State immunity encompasses immunity from adjudication (a procedural rule preventing a foreign State from participating in judicial proceedings before the courts of another state) and immunity from execution, according to which state assets cannot be subject to measures of enforcement. While the former embodiment of state immunity is not applicable to out-of-court proceedings, the application of the latter to the executive decisions taken outside of court proceedings is debatable. For example, Jean-Marc Thouvenin and Victor Grandaubert hold the view that immunity from execution is equal to immunity from any type of constraint; in contrast, Tom Ruys contends that immunity from execution is applicable only in the context of court proceedings. 

In view of this, there is an agreement on the minimum protection granted to central bank assets under the law of state immunity – which requires that ‘property of the central bank or other monetary authority of the state’ cannot be put under any form of constraint as a result of a court judgment. Yet it remains disputable if the same rule applies to an out-of-court decision (i.e., a decision taken by the executive branch without any court oversight).  

Against the backdrop of this uncertainty, several leading experts in the field, including Professor Philippa Webb, advocate for a narrow exception to the immunity of central bank assets in cases of armed aggression or other blatant violations of international law. This exception could be legally grounded in a UNGA Resolution adopted by the majority/qualified majority vote. Such a UNGA Resolution, in Webb’s view, could “crystallise customary international law” that recognises “an exception to immunity from judicial enforcement in narrowly defined circumstances”.

In the absence of any new exception to immunity entitlements, transfer of the RCB assets to the benefit of Ukraine could be justified as lawful countermeasures. Countermeasures are unilateral measures of a state in response to the breach of its rights by the wrongful act of another state aimed at inducing compliance of the latter with its obligations. Countermeasures are self-help actions of states that can be lawful only if taken in accordance with Articles 49–51 (substantive prerequisites), and Article 52 (procedural prerequisites) of the ARSIWA. 

Among the requirements applicable to countermeasures, three are particularly problematic in the context of the potential use of the RCB assets for Ukraine’s reconstruction: (i) the goal of countermeasures should be to induce compliance, and not the punishment of a state; (ii) whether non-injured states may take countermeasures; (iii) and to what extent they must be temporary and reversible.

However, none of these requirements presents an insurmountable obstacle as has been argued by a group of distinguished legal scholars, including Professors Dapo Akande, Philippe Sands, and Christian Tams, in their legal memo drafted and circulated in November 2023. Their legal analysis concludes: “the transfer of frozen Russian State assets to an international compensation mechanism to be used to compensate Ukraine and other parties for the injuries caused by Russia’s internationally unlawful war of aggression would be a lawful, proportionate, reversible and justified countermeasure, which all States are entitled to participate in, given the erga omnes character of Russia’s wrongful conduct.” 

The proposed objective of such measures could be inducing Russia’s compliance with two international obligations – to terminate the illegal war of aggression and to pay the reparations which are due. It is argued that other states, not directly injured by Russia’s conduct, are permitted to take collective countermeasures in case of grave breaches of obligations under peremptory norms of international law that have an erga omnes character. Finally, it is emphasised that “as the words ‘as far as possible’ in section 3 of Article 49 demonstrate, ‘the duty to choose measures that are reversible is not absolute. It may not be possible in all cases to reverse all of the effects of countermeasures after the occasion for taking them has ceased’.” Furthermore, it is argued the transfer could be considered reversible, since normal legal relations with Russia will resume after it complies with its international obligations and “[i]ts future or remaining deposits will again be entitled to respect.”  

The debate on seizing and using RCB assets is as much legal as it is politically charged. Both sides of the debate have expressed valid policy considerations that should be acknowledged. Proponents of a seizure/transfer emphasise the need to ensure accountability for Russia’s unlawful aggression and for the destruction it has caused as a result. Another valid and practical point raised in this context is the enormous cost of Ukraine’s reconstruction and the lack of alternative resources available to cover such substantial expenses. Opponents highlight the risks posed to the role of the EURO/USD as reserve currencies if any decision on the use of the RCB assets is taken. The most vocal opponents of such a move are the European Central Bank, Belgium, and Euroclear for obvious reasons. In addition, concerns have been expressed that any such use might set a dangerous precedent that could backfire in the future (for example, if a country that seizes RCB assets would engage in aggression prohibited under international law). 

In response to the latter concerns, counterarguments have been developed. First, it has been observed that since the immobilisation of RCB assets in early 2022, no significant “currency flight” has materialised, in part due to the limited number of dominant reserve currencies. Second, a narrowly defined exception to sovereign immunity, tailored to extreme violations of international law, may help mitigate concerns about the setting of a dangerous precedent.

Fight, not Flight: Responses of the Major Stakeholders

All the major stakeholders involved in this politically-tainted legal dilemma have moved from discussions to actions. 

Ukraine’s three-step solution

Ukraine solidified its legal stance on the need to use the immobilised RCB assets and has actively engaged its diplomatic channels for this purpose. Its official strategy for ensuring accountability and reparations envisions a three-step solution: (i) creation of the Register of Damage for Ukraine that functions as a database of claims, which has been accepting claims since 2024 (established under the auspices of the Council of Europe in May 2023); (ii) negotiation and ratification of the Convention Establishing an International Claims Commission for Ukraine (ongoing endeavour); and (iii) establishment of the compensation fund from which reparations ought to be paid.  

The Convention Establishing an International Claims Commission for Ukraine (Convention) was signed by 34 countries and the EU in December 2025. In May 2026, Canada became the first non-European country to sign the Convention. The Ukrainian Parliament ratified the Convention on April 30, 2026, and the European Commission ratified it on behalf of the EU on May 15, 2026. The Convention will enter into force after 25 signatories ratify it. 

Establishment of the compensation fund is the most intricate of Ukraine’s three-step solution. Precedents from the recent past show that the establishment of a claims commission – with the necessary financial backing to pay compensation, was possible only either with the explicit consent of the states involved in an armed conflict (e.g., the Eritrea-Ethiopia Claims Commission) or with the endorsement of the UN Security Council (e.g., United Nations Compensation Commission). None of these options lies in the realm of possibility, at least for now.  

G7 and the EU’s financing of Ukraine: growing needs, lacking resources 

Since 2022, the G7 countries that immobilised the RCB assets have been confronted with two concurrent issues – provision of military and financial support to Ukraine and the possible use of the assets. Initially, the G7 countries agreed to a permanent immobilisation. During the Apulia summit in June 2024, the group approved a strategy to allow windfall profits –  extraordinary revenues generated by the immobilised RCB assets – to be used for the benefit of Ukraine. Subsequently, G7 countries issued loans to Ukraine (i.e., extraordinary revenue acceleration loans), backed by future revenues generated from the immobilised RCB assets, in the cumulative amount of US$50 billion. The EU, as part of this arrangement, committed to providing an extraordinary macro-financial assistance loan of €18.1 billion and to establishing a mechanism for channelling extraordinary revenues to Ukraine, enabling it to repay the G7 loans.

The years-long debate in the EU reveals diverse, at times conflicting, views of the EU Member States: with the states bordering Russia being more supportive of the idea of putting RCB assets into use, while Belgium, to a lesser extent, Luxembourg, and France being sceptical of the legality of such a move (read: fearing any potential repercussions). 

While dozens of alternatives have been discussed – ranging from investing immobilised assets to issuing a loan guaranteed by these assets – none of them was able to bridge the gap between the views held by numerous stakeholders. 

Recently, the EU faced the need to assist Ukraine with macro-financial and military support and approved a €90 bn loan that is funded through “EU borrowing on the capital markets and will be backed by the EU budget headroom”. This funding does not use the RCB assets, yet, the relevant Regulation stipulates “the Union has the right to make use of Russian assets immobilised in the Union to repay the loan, in full accordance with Union and international law”. 

Russia’s lawfare 

In turn, Russia delivered on its threats to launch a campaign of legal warfare against Belgian Euroclear and the EU institutions for immobilising its sovereign assets. In mid-December 2025, a case against Euroclear seeking $230bn (approximately €210 bn) in damages was filed before the Moscow court. In May 2026, the Moscow Arbitration Court upheld the RCB’s claims in full. 

Following this, in February 2026, the RCB initiated a dispute challenging Council Regulation 2025/2600 adopted based on Article 122(1) of the TFEU before the Court of Justice of the European Union (CJEU). According to the scarce publicly available information, the RCB’s legal standing is based on Article 263 of the TFEU. 

The RCB claims are both procedural and substantive. The former is epitomized by the argument that the Council committed serious procedural violations by adopting the abovementioned Regulation by a majority vote and not by unanimity as required under Article 215 of the TFEU. The substantive claims have been described as follows: “the EU Regulation violates the basic and inalienable rights to access justice, inviolability of property, and the principle of sovereign immunity of States and their central banks, guaranteed by international treaties and European Union law.”

On 22 May 2026, the RCB initiated a second dispute before the CJEU, challenging Regulation (EU) 2026/467 that provides the legal basis for a €90 bn loan to Ukraine. The essence of the RCB claims is that the regulation unlawfully uses the immobilised assets “as loan collateral and/or further legalisation of the expropriation of sovereign assets.” It remains to be seen if these claims could withstand the CJEU scrutiny. 

As discussions continue and various actors engage in legal and policy moves, the question of compensating Ukraine remains both timely and increasingly pressing. It is impossible to argue that any amount of reparation paid to Ukraine could compensate for the suffering inflicted on the country and its people. At the same time, if no reparation is paid and international law fails to demonstrate its relevance in the face of the grave and blatant violations of its foundational principles, the discipline as such risks turning into mere rhetoric. 

This blogpost forms part of the Mini-symposium on international legal issues concerning a peace treaty for Ukraine. The introduction to the symposium by Anne Peters, Gregory Fox, and Florian Kriener can be found here. The symposium builds on presentations and discussions during the Conference on International Law and Peace in Ukraine organized at the Max Planck Institute for Comparative Public Law and International from April 17-18, 2026 and supported by the German Foreign Office.