Tomas Vail of Vail Dispute Resolution in London and independent counsel Anastasiya Ugale consider the European Court of Human Rights’ ruling on Russia’s effective control over eastern Ukraine and its implications for investment treaty claims arising from the war in Ukraine.
On 25 January, the Grand Chamber of the European Court of Human Rights made a landmark decision regarding Russia’s control over the territory of eastern Ukraine held by separatists. The court ruled that Russia exercised jurisdiction over the area from 11 May 2014 until at least 26 January 2022. The court found most of Ukraine’s complaints regarding administrative practices in eastern Ukraine in violation of the European Convention on Human Rights and the complaint of the Netherlands regarding the shooting down of Malaysian Airlines flight MH17 on 17 July 2014 to be admissible, based on sufficiently substantiated prima facie evidence.
In its non-disputing party submission in cases concerning Crimea (brought by investors under the Ukraine-Russia bilateral investment treaty), Ukraine previously argued that the term “territory” may be read broadly by application of the effective control test (see, for example, the 2017 interim award in the PrivatBank v Russia arbitration. The term “territory”, according to the PrivatBank tribunal, included “territory over which a State exercises settled jurisdiction or control and on behalf of which it has assumed responsibility for international relations” (see also the Stabil award on jurisdiction: “the Russian Federation has established effective control over Crimea, by taking physical control coupled with legal steps”). Until September 2022, when the Russian President announced the incorporation into Russia of the self-proclaimed Donetsk People’s Republic (DPR) and the Luhansk People’s Republic (LPR), as well as parts of Ukraine’s Zaporizhzhia and Kherson regions, Russia had not, at least officially, assumed responsibility for the international relations of these areas.
The court’s findings on Russia’s jurisdiction over the territories of eastern Ukraine have implications for potential investor-state arbitration claims against Russia in the context of the war in Ukraine.
To extend Russia’s jurisdiction beyond its official border, the court applied the effective control test that focused on Russia’s military presence and the extent of Russia’s influence and control over eastern Ukraine. The court first established beyond reasonable doubt that Russian military personnel were present in an active capacity in Donbas at least from April 2014, with a large-scale deployment of Russian troops from August 2014. The court next analysed extensive evidence and concluded that
“as a result of Russia’s military presence in eastern Ukraine and the decisive degree of influence and control it enjoyed over the areas under separatist control in eastern Ukraine as a result of its military, political and economic support to the separatist entities, these areas were, from 11 May 2014 and subsequently, under the effective control of the Russian Federation”.
The court’s finding was grounded in the detailed evidence supplied by the applicants and third parties, as well as adverse inferences the court drew from Russia’s conduct in the proceedings. The court emphasised a “distinct lack of frankness and transparency” in Russia’s pleadings and its failure to provide evidence on several key issues that were wholly or in large part within Russia’s exclusive knowledge; whereas Russia instead cited national security and lack of relevance. If Russia engages in potential investor-state arbitration cases, it may consider furnishing evidence of its influence or lack thereof on the separatists’ military strategy, provision of political and economic support, weapons, other military equipment, and artillery coverage of the separatists’ positions. Depending on the evidence, arbitral tribunals may come to a different conclusion regarding the level of control that Russia exercised over the DPR and the LPR.
The court also distinguished between the finding of Russia’s extended jurisdiction and the issue of attribution. It emphasised that “the acts and omissions of the separatists are attributable to the Russian Federation in the same way as the acts and omissions of any subordinate administration engage the responsibility of the territorial State”. The court concluded that in cases where a state’s effective control is established outside its sovereign borders, “the acts and omissions of the local administrations in the areas concerned w[ould] . . . be automatically attributable to the State”. This automatic attribution seemingly creates a presumption, which the court suggested Russia could seek to rebut by demonstrating on the merits “that the separatists did not, in fact, control particular pockets of land or commit the particular acts which form the basis of the allegations by the applicant States; or that the specific acts of particular separatists cannot be attributed to them”. Future arbitral tribunals may consider different evidence when deciding issues of attribution and whether to apply the rule of automatic attribution formulated by the court in the investor-state context.
Of further significance are the distinctions in the language of the European Convention on Human Rights (ECHR) applicable in the proceedings before the court and the treaties underlying arbitral proceedings. In particular, the ECHR refers to “everyone under the jurisdiction” of the respondent State (article 1) to outline the scope of its application. The protections of many bilateral investment treaties, however, extend over the “territory” of the respondent state (see, for example, Ukraine-Russia BIT, articles 2-3, 5). “Jurisdiction”, as referred to in ECHR article 1, traditionally connotes territorial application, with other bases of jurisdiction being exceptional. This exceptional jurisdiction outside of the principle of territoriality has been established in the court’s practice based on the effective control test (ratione loci). The question of whether a contracting State is genuinely exercising effective control is factual and must be established beyond reasonable doubt.
Whether arbitral tribunals will adopt the same tests and criteria as the court in evaluating effective control remains to be seen.Copyright © Law Business Research Company Number: 03281866 VAT: GB 160 7529 10
https://globalarbitrationreview.com/article/russias-effective-control-over-eastern-ukraine-implications-of-the-echr-ruling 2/2
Authors: Tomas Vail and Anastasiya Ugale
Originally Published: https://globalarbitrationreview.com/article/russias-effective-control-over-eastern-ukraine-implications-of-the-echr-ruling
Publish Date: 09 May 2023