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Mikhail Fridman, one of Russia’s richest men, is seeking sanctions related damages from Luxembourg on assets worth $15.8bn and plans to take the tiny Duchy to court if it cannot agree a payout, according to people familiar with the matter.
The challenge, filed in February, makes Fridman the first oligarch to demand compensation for sanctions against him over Russia’s invasion of Ukraine after he successfully challenged some of the grounds for the EU restrictions last month.
If successful, Fridman would potentially be entitled to a sizeable payout under an obscure 1989 treaty between Belgium, Luxembourg, and the Soviet Union protecting investors’ assets from expropriation and nationalisation, as well as “any other measures having similar effects”.
Fridman’s threat is the latest salvo in a legal battle with western authorities over the sanctions against him. The Ukraine-born oligarch, who moved to London a decade ago, initially offered guarded criticism of Putin’s invasion before souring on the west and returning to Moscow last October.
He is attempting to dismantle the one remaining justification for the EU sanctions against him by selling his stake in Alfa-Bank, Russia’s largest privately held lender.
Fridman holds his interest in the London-based investment firm LetterOne and Russian lender Alfa-Bank through vehicles in the Duchy that hold assets valued at $15.8bn in total. He intends to sue for an unspecified amount of compensation for his losses due to the sanctions if Luxembourg does not settle with him once a six-month grace period expires, the people said.
Under the treaty, Fridman can sue Luxembourg at the Stockholm arbitration court or apply for an ad hoc arbitration under Uncitral, the United Nations commission on international trade law, the people added.
“As an EU member state, Luxembourg applies EU sanctions,” the Luxembourg government said in a statement to the Financial Times. “The Luxembourg government is aware of the demand by Mr Fridman. Currently, no legal case is pending.”
“The Luxembourg government can make no further comments regarding this subject.”
“Putin is encouraging lawsuits like this,” said Alexandra Prokopenko, a fellow at the Carnegie Russia Eurasia Center in Berlin who studies Moscow’s elite. “He’s a lawyer by training — he understands that a decision in favour of the oligarchs weakens the foundation of the entire sanctions mechanism,” she said.
Fridman, who declined to comment, and his partners Petr Aven, German Khan, and Alexei Kuzmichev remain under UK, EU, and US sanctions over the war in Ukraine. The oligarchs were forced to cede control over LetterOne and moved to sell their stakes in Alfa-Bank, their biggest Russian asset.
A top EU court last month ruled against some of the justification for the sanctions against Fridman and Aven on the grounds that there was insufficient evidence the two oligarchs support Russia’s invasion of Ukraine.
The ruling only applied to sanctions imposed between February 2022 and March 2023. Fridman and Aven are challenging the subsequent period in separate legal proceedings. EU member states must decide to lift the sanctions.
Russian newspaper Vedomosti first reported on Fridman’s challenge in Luxembourg.
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