The IBA’s response to the war in Ukraine
Deciphering a divergent stance on state immunity in the Ukrainian courts
State immunity is a well-established principle of international law that is frequently relied upon by states in order to fence themselves from the jurisdiction of courts and tribunals of a foreign state. In a similar vein, governments utilise state immunity in order to prevent enforcement of judgments or awards against the assets belonging to such states.
The essence of state immunity is hinged on the idea of territorial sovereignty, equality and the independence of sovereign states. Although state immunity is a principle of, and derives from, international public law, it is highly compounded by the fact that the manner of application is determined by the domestic law of the state. This factor obviously leads to divergent and occasionally incongruent stands on the applicability of state immunity matters across many jurisdictions.
Generally, state immunity issues arise on occasions where private parties interact with the state or its entities in commercial or any other dealings. However, on many occasions state immunity issues may apply in domestic courts in cases related to tortious acts or civil injuries.
From the perspective of litigation proceedings, and aside from the applicability of international law provisions, separate attention must be paid to the procedural aspects of litigation in the given state. Procedural rules of the court will serve as a stepping stone that determines the way state immunity arguments may be applied in court. It is common for the state that wants to plead a state immunity defence against any of the legal proceedings covered by the state immunity to raise compatible objections in a due and timely manner. The Ukrainian approach to state immunity brings some striking points and details of applicability of this principle in domestic courts.
Types of state immunity
Most jurisdictions adopt either an ‘absolute’ or a ‘restrictive’ approach to state immunity. The concept of ‘absolute’ immunity in a conventional sense resides in the premise that the state is completely immune from foreign jurisdiction as regards all acts of governmental nature (acta jure imperii) unless the state expressly agrees to waive the immunity.
With the increasing involvement of states in commercial activities, the alternative ‘restrictive’ approach to immunity has been developed. Upon restrictive immunity, the foreign state may only rely on immunity in respect of acts resulting from the exercise of sovereign power; if the matter relates to acts performed by a state which are of a commercial or private nature (acta jure gestionis), the courts and tribunals should reject an immunity defence. Although the restrictive approach to immunity is now widely recognised, the practice of states in applying immunity has not yet become consistent.
The legal framework for pursuing state immunity argument in Ukraine
From a public international law perspective, Ukraine has been taking a restrictive stance in the adoption of international instruments that govern the matter of state immunity. Ukraine is not a party to the United Nations Convention on Jurisdictional Immunities of States and Their Property 2004 (UN Convention) nor to the European Convention on State Immunity of the Council of Europe of 1972 as the treaties which gives effect to the ‘restrictive’ doctrine.
On the domestic level, matters germane to the state immunity in Ukraine have limited regulation as well. In particular, the Law of Ukraine On Private International Law (PIL Act) says foreign states enjoy immunity in respect of themselves and their property in Ukraine which includes:
- immunity from a lawsuit;
- immunity from interim relief; and
- immunity from enforcement of a court judgment in the territory of Ukraine.
Therefore, from this perspective, one may infer that Ukraine recognises the ‘absolute’ immunity approach. Otherwise, the Ukrainian legislative framework does not regulate the issues of state immunity as the state has not adopted a specific legislative act devoted to the state immunity matters.
Procedural aspects of pursuing state immunity defence
When absorbing the question of procedural aspects of state immunity, the question of the procedural capacity of the foreign state in the respective court proceeding has to be determined. The foreign state has a right to enjoy state immunity in the Ukrainian courts when, inter alia, a foreign state is involved in the court proceedings as a defendant or the third party. This is unless:
- the state concerned voluntarily agrees to be involved in the court proceeding, or
- otherwise is provided by an international agreement or a law of Ukraine.
As already mentioned above, Article 79 (1) PIL Act only allows to involve the foreign state as a defendant or as a third party upon obtaining the relevant consent of the competent authorities of the state concerned, except for the cases when international treaties or the Ukrainian law establish otherwise. In order for the Ukrainian court to commence the proceedings involving the foreign state, the judge would first have to ascertain that the competent authorities of the state have consented to the state's participation in the proceedings whereby waiving the immunity granted by law or such consent is derived from an international agreement or a law of Ukraine.
As a matter of applicable Ukrainian procedural rules, the law is silent on the procedural steps that the court or parties to the proceedings have to follow in order to ascertain that the competent authorities of the state gave their consent for participation in the proceeding. However, without a properly received consent of the competent authorities of a foreign state, the Ukrainian courts would have to deny commencement of the court proceedings in the case.
In this respect, the Ukrainian court gave a steer on the way how the state immunity is applied in the court proceedings.
The pervasiveness of restrictive immunity in Ukrainian case law
In the limited number of existing cases that touched upon ‘absolute’ immunity issues, the Ukrainian courts fully supported the applicability of this doctrine, reflecting that as long as a foreign state did not procure its consent to be involved as a party to the dispute – the lawsuit against such foreign state could not proceed further. However, the steadfast position of the ‘absolute’ immunity approach proved doubtful.
Even though Ukraine did not become a party to the UN Convention, the Ukrainian courts applied the ‘restrictive’ immunity approach by adopting provisions of the customary international law and European Convention on Human Rights (ECHR) in two types of cases.
The first type concerns enforcement and recognition of arbitral awards in investment treaty arbitration. Everest LLC et al v. Russian Federation has been in the spotlight of the international arbitration community as the first high-profile case whereby a new stance on the state immunity approach in Ukraine was taken.
After the claimants obtained the arbitral award on merits with respect to the claim on direct expropriation of Ukrainian assets in Crimea in their favour, they applied for recognition and enforcement of the award in Ukraine. They have also requested interim measures to be granted against the shares of three Ukrainian banks, which are subsidiaries of Russian state banks (VTB Bank, Prominvestbank, and Sberbank).
In this regard, the Ukrainian court deviated from the ‘absolute’ immunity approach via granting enforcement of an investment treaty arbitral award against the Russian Federation and the related application on interim measures. In its Resolution, the Supreme Court considered that the Russian Federation waived its immunity by having concluded the bilateral investment treaty with Ukraine and opting for international investment arbitration as a dispute resolution method.
Moreover, this conclusion was reached on the basis that the concept of ‘restrictive’ immunity applies in Ukraine on the basis of the following reasoning. Even though Ukraine is not a party to the UN Convention governing the issues of restrictive immunity, the court came to the conclusion that due to ‘customary international law and considering the ECHR judgment in the Oleynikov v. Russia case’ the restrictive immunity approach is applicable as a matter of Ukrainian law. The aforementioned ECHR judgment established that the ‘restrictive’ immunity concept in the UN Convention could be elevated to the rule of customary international law, and hence it would apply also to those states which had not signed the UN Convention.
The second type of case which endorses the ‘restrictive’ immunity approach related to claims lodged by the Ukrainian citizens seeking establishing facts of sustained damages due to the Russian Federation’s military activities in the Donbas Region and annexation of Crimea. In that case the Russian Federation was involved not as a defendant but as an interested party due to the non-actionable character of the proceeding. The court held that, in the event of a gross violation of the principles and norms of international law, Ukraine has the right to lawful restrictive measures beyond the ‘absolute’ immunity approach in response to common measures of another state such as the temporary occupation of the part of Ukrainian territory by the Russian Federation.
In another set of lawsuits against the Russian Federation, the matter concerned the collection of damages lodged by Ukrainian citizens based on military activities in the Donbas Region. In this case, the court ruled that the Russian Federation could not invoke immunity, because Article 12 of the UN Convention does not allow a state to invoke immunity from jurisdiction in personal injuries and damage to property cases. Elevating the latter provision to the principles of the international law in the meaning of the Law of Ukraine On Peculiarities of State Policy to Ensure State Sovereignty of Ukraine in the Temporarily Occupied Territories in Donetsk and Luhansk Regions, the Supreme Court stated that actions of the Russian Federation on the territory of certain districts of Donetsk and Luhansk regions, the Autonomous Republic of Crimea and the city of Sevastopol grossly violated the principles and norms of international law and therefore justified retorsion (legitimate restrictive measures in response). Therefore, even though Ukraine is not a party to the U.N. Convention, the Supreme Court still applied it in the territory of Ukraine through the lens of customary international law.
Considering the absence of a comprehensive legislative framework that regulates the issue of state immunity and episodical application of ‘restrictive’ state immunity by the Ukrainian courts, there is no established clear-cut test for applicability of ‘absolute’ or ‘restrictive’ state immunity for court proceedings involving foreign states.
Hence, while the law is directing the Ukrainian courts to follow the ‘absolute’ immunity approach, the departure from this concept was notable, especially regarding decisions to infer a restrictive immunity through the lens of customary international law. Therefore, the abovementioned cases, without a doubt, vividly illustrate a new turn in the issue of the state immunity approach in Ukraine and further court practice in the outlined direction could widely adopt a more restrictive approach to that issue.
 Ukraine, however, is a party to the Vienna Convention on Diplomatic Relations 1961.
 Under the Ukrainian Civil Procedure Code, the third party may be involved when the judgment in the litigation case may affect the rights or obligations of such third party with respect to either party.
 Article 79(1), PIL Act
 The latest precedent is the Resolution of the Ukrainian Supreme Court of 23 October 2019 in case no. 914/3360/2012. Available at: https://reyestr.court.gov.ua/Review/85295628, accessed 12 July 2021