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Trading with a Friend's Enemy

Published online by Cambridge University Press:  27 October 2022

Anton Moiseienko Open the ORCID record for Anton Moiseienko [Opens in a new window]
Anton Moiseienko*
Affiliation:
Lecturer in Law, Australian National University, Canberra, Australia, [email protected].
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Abstract

Economic sanctions have been the West's response of choice to Russia's full-scale aggression in Ukraine. Predictably, speculation abounds as to what these sanctions portend for future responses to acts of interstate aggression. The principles underpinning the “trading with the enemy” laws of a seemingly bygone era have resurfaced but applied not to the sanctioning powers’ own enemies but in solidarity with another state, at least insofar as the breaches of erga omnes obligations through armed aggression are concerned. The contemporary expansion in sanctions practice may have far-reaching repercussions.

Type
Agora Essays: The War in Ukraine and the Future of the International Legal Order
Information
American Journal of International Law , Volume 116 , Issue 4 , October 2022 , pp. 720 - 730
Copyright
Copyright © The Author(s), 2022. Published by Cambridge University Press for The American Society of International Law

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Footnotes

This Essay is informed, in part, by the author's research on legal issues related to the potential ultimate disposal of frozen Russian assets, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4149158. Thanks are due to the group of academics, practitioners, and civil society organizations that provided input into and commented on that paper.

References

1 For a summary of U.S. sanctions on Russia, see Cory Welt, Kristin Archick, Rebecca M. Nelson & Dianne E. Rennack, Cong. Res. Serv., U.S. Sanctions on Russia, R45415 (2022). For a summary of UK, EU, Japanese, and Australian sanctions, see Russia Sanctions Tracker, Ashurst (June 16, 2022), at https://www.ashurst.com/en/news-and-insights/hubs/sanctions-tracker.

2 Gathii, James Thuo, Commerce, Conquest, and Wartime Confiscation, 31 Brook. J. Int'l L. 709, 710, 713 (2006)Google Scholar (“This strong rule of confiscation [during wartime] also manifests itself under contemporary international law.”). Unsurprisingly, most commentary on wartime confiscation powers dates to the pre- or post-World War II period. See, e.g., Charles Cheney Hyde, International Law: Chiefly as Interpreted and Applied by the United States 235 (1922); Lassa Oppenheim, International Law: A Treatise, Volume II War and Neutrality 157 (1921), cited in Return of Alien Property, Hearing on H.R. 10820 Before the H. Comm. on Ways and Means, 69th Cong, 275 (1926).

3 Welt, Archick, Nelson, Rennack & Ashurst, supra note 1.

4 UK Foreign, Commonwealth & Development Office Press Release, Russia Cut Off from UK Services (May 4, 2022), at https://www.gov.uk/government/news/russia-cut-off-from-uk-services.

5 Anton Moiseienko, Due Process and Unilateral Sanctions, in Research Handbook on Unilateral and Extraterritorial Sanctions 405 (Charlotte Beaucillon ed., 2021).

6 Andrew Rettman, Russian Oligarchs Spam EU Court with Sanctions Cases, EUobserver (June 2, 2022), at https://euobserver.com/world/155119.

7 For analyses of the implications of official immunities for sanctions, see Pillitu, Paola Anna, European “Sanctions” Against Zimbabwe's Head of State and Foreign Minister: A Blow to Personal Immunities of Senior State Officials?, 1 J. Int'l Crim. Just. 453 (2003)CrossRefGoogle Scholar; Bianchi, Andrea, Assessing the Effectiveness of the UN Security Council's Anti-terrorism Measures: The Quest for Legitimacy and Cohesion, 17 Eur. J. Int'l L. 881 (2006)CrossRefGoogle Scholar; Geoffrey Robertson, QC, Europe Needs a Magnitsky Law, in Why Europe Needs a Magnitsky Law: Should the EU Follow the US? (Elena Servettaz ed., 2013).

8 Mike McIntire & Michael Forsythe, Putin Faces Sanctions, But His Assets Remain an Enigma, N.Y. Times (Feb. 26, 2022), at https://www.nytimes.com/2022/02/26/world/europe/putin-sanctions-money-assets.html.

9 Tom Ruys & Cedric Ryngaert, Secondary Sanctions: A Weapon Out of Control? The International Legality of, and European Responses to, US Secondary Sanctions, 0 Brit. Y.B. Int'l L. 1 (2020).

10 Allegations of Genocide Under the Convention on the Prevention and Punishment of the Crime of Genocide (Ukr. v. Russ.), at https://www.icj-cij.org/en/case/182.

11 These include, e.g., Andrew Boyle, Why Proposals for U.S. to Liquidate and Use Russian Central Bank Assets Are Legally Unavailable, Just Security (Apr. 18, 2022), at https://www.justsecurity.org/81165/why-proposals-for-u-s-to-liquidate-and-use-russian-central-bank-assets-are-legally-unavailable; Paul Stephan, Giving Russian Assets to Ukraine—Freezing Is Not Seizing, Lawfare (Apr. 26, 2022), at https://www.lawfareblog.com/giving-russian-assets-ukraine-freezing-not-seizing; Lee Buchheit & Mitu Gulati, Alphaville's Guide to Seizing Russian Assets, FT Alphaville (Mar. 30, 2022), at https://www.ft.com/content/50aae1a2-088a-47f9-b936-30fa02cf03de; Evan Criddle, Rebuilding Ukraine Will Be Costly. Here's How to Make Putin Pay, Politico (Mar. 30, 2022), at https://www.politico.com/news/magazine/2022/03/30/rebuilding-ukraine-make-putin-pay-00021649; Scott R. Anderson & Chimène Keitner, The Legal Challenges Presented by Seizing Frozen Russian Assets, Lawfare (May 26, 2022), at https://www.lawfareblog.com/legal-challenges-presented-seizing-frozen-russian-assets; Philip Zelikow, A Legal Approach to the Transfer of Russian Assets to Rebuild Ukraine, Lawfare (May 12, 2022), at https://www.lawfareblog.com/legal-approach-transfer-russian-assets-rebuild-ukraine .

12 Articles on Responsibility of States for Internationally Wrongful Acts (ARSIWA), Art. 31, UN Docs. A/56/83, A/56/49(Vol.I)/Corr.4.

13 For the amounts of frozen central bank assets, see Charles Lichfield, The Russian Central Bank Is Running Out of Options, Atlantic Council (Mar. 4, 2022), at https://www.atlanticcouncil.org/blogs/new-atlanticist/the-russian-central-bank-is-running-out-of-options; see also Bank of Russia, Foreign Exchange and Gold Asset Management Report 6 (2022).

14 28 U.S.C. § 1611(b)(1); State Immunity Act 1978, sec. 14(4) (UK).

15 Robert Wright, Cynthia O'Murchu & Robert Smith, Jersey Freezes $7bn Worth of Assets Linked to Roman Abramovich, Fin. Times (Apr. 13, 2022), at https://www.ft.com/content/365b2f7a-2746-44d8-86bd-4beae7dfec51.

16 UK Foreign, Commonwealth & Development Office Press Release, UK Hits Key Russian Oligarchs with Sanctions Worth Up to £10 Billion (Apr. 14, 2022), at https://www.gov.uk/government/news/uk-hits-key-russian-oligarchs-with-sanctions-worth-up-to-10bn.

17 France Says It Has Frozen More Than 800 Million Euros Worth of Russian Oligarch Assets, U.S. News (Mar. 23, 2022), at https://www.usnews.com/news/world/articles/2022-03-23/france-says-it-has-frozen-more-than-800-million-euros-worth-of-russian-oligarch-assets.

18 For a detailed analysis of the U.S. Trading with the Enemy Act 1914, see Hand, C.H. Jr., The Trading with the Enemy Act, 19 Colum. L. Rev. 112 (1919)CrossRefGoogle Scholar. For the historical background to the U.S. and UK Acts, see Mulder, Nicholas, The Trading with the Enemy Acts in the Age of Expropriation, 1914–49, 15 J. Glob. Hist. 81 (2020)Google Scholar.

19 Trading with the Enemy Act, 50 U.S.C. § 4302(b) (1917) (U.S.); Trading with the Enemy Act, 2 & 3 Geo. 6, ch. 89, sec. 2(1)(a) (1939) (UK).

20 The Policy and Practice of the United States in the Treatment of Enemy Private Property, 34 Va. L. Rev. 928, 931–32, 939–40 (1948).

21 Hyde, supra note 2, at 240; cf. Edward A. Harriman, Confiscation of Enemy Private Property, 3 B. U. L. Rev. 156 (1923).

22 Oppenheim, supra note 2 (emphasis added).

23 International Committee of the Red Cross, Customary IHL: Rule 51. Public and Private Property in Occupied Territory, at https://ihl-databases.icrc.org/customary-ihl/eng/docs/v1_rul_rule51.

24 Exec. Order No. 8389 (1940).

25 Exec. Order No. 8785 (1941).

26 William Z. Slany, U.S. and Allied Efforts to Recover and Restore Gold and Other Assets Stolen or Hidden by Germany During World War II: Preliminary Study 95–147 (1997).

27 On the legal status of Germany post-World War II, see Max Rheinstein, The Legal Status of Occupied Germany, 47 Mich. L. Rev. 23 (1948).

28 Slany, supra note 26, at 122–23.

29 Oliver Bullough, The Real Goldfinger: The London Banker Who Broke the World, Guardian (Sept. 7, 2018), at https://www.theguardian.com/news/2018/sep/07/the-real-goldfinger-the-london-banker-who-broke-the-world; Robert C. Effros, The Whys and Wherefores of Eurodollars, 23 Bus. Lawyer 629, 637 (1968).

30 Slany, supra note 26, at 196.

31 See 50 U.S.C. § 4312 (vesting the president with broad powers to direct the Alien Property Custodian on the ultimate disposal of frozen assets) and Section 7 of the Trading with the Enemy Act 1939 (UK).

32 U.S. Department of the Treasury, The Treasury 2021 Sanctions Review 4 (2021).

33 50 U.S.C. § 1702(C); see also Paul B. Stephan, Seizing Russian Assets 8 (University of Virginia School of Law, Public Law and Legal Theory Research Paper Series 2022-40, 2022).

34 Anton Moiseienko, Politics, Not Law, Is Key to Confiscating Russian Central Bank Assets, Just Security (Aug. 17, 2022), at https://www.justsecurity.org/82712/politics-not-law-is-key-to-confiscating-russian-central-bank-assets.

35 Hazel Fox, QC & Philippa Webb, The Law of State Immunity 26 (3d ed. 2015).

36 Ingrid Wuerth, Immunity from Execution of Central Bank Assets, in The Cambridge Handbook of Immunities and International Law (Tom Ruys, Nicolas Angelet & Luca Ferro eds., 2019); Ingrid Wuerth, Does Foreign Sovereign Immunity Apply to Sanctions on Central Banks?, Lawfare (Mar. 7, 2022), at https://www.lawfareblog.com/does-foreign-sovereign-immunity-apply-sanctions-central-banks; cf. Matthias Goldmann, Hot War and Cold Freezes: Targeting Russian Central Bank Assets, Verfassungsblog (Feb. 28, 2022), at https://verfassungsblog.de/hot-war-and-cold-freezes.

37 The discussion of countermeasures was strikingly absent from Jurisdictional Immunities of the State (Ger. v. It.), Judgment, 2012 ICJ Rep. 99 (Feb. 3), possibly because the ICJ had no jurisdiction to rule on German conduct in 1943–1945.

38 Note, however, that the ARSIWA are ambiguous on this issue, as discussed in Linos-Alexandre Sicilianos, Countermeasures in Response to Grave Violations of Obligations Owed to the International Community as a Whole, in The Law of International Responsibility 1137 (James Crawford, Alain Pellet, Simon Olleson & Kate Parlett eds., 2010).

39 ARSIWA, supra note 12, Art. 49(3). For a further catalogue of possible obstacles to lifting immunity as a countermeasure, see Marco Longobardo, State Immunity and Judicial Countermeasures, 32 Eur. J. Int'l L. 457, 481–83 (2021).

40 Jean-Marc Thouvenin, Let's Guarantee That Russia Will Pay for the Reconstruction of Ukraine, Le Monde (May 2, 2022).

41 See, e.g., Military and Paramilitary Activities in and Against Nicaragua (Nicar. v. U.S.), Merits, Judgment, 1986 ICJ Rep. 110, para. 232 (June 27).

42 International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries, Report of the International Law Commission on the Work of Its Fifty-Third Session, 74, UN Doc. A/56/10 (2001).

43 See Andrew Clapham, War 169–233 (2021).

44 See, e.g., Charlotte Beaucillon, The European Union's Position and Practice with Regard to Unilateral and Extraterritorial Sanctions, in Research Handbook on Unilateral and Extraterritorial Sanctions supra note 5, at 118.

45 UN Charter, Art. 25.

46 As seen, most prominently, in the Kadi litigation in the Court of Justice of the European Union. Kadi v. Council and Commission, Court of First Instance, Case T-315/01 (Sept. 21, 2005); Kadi and Al Barakaat v. Council and Commission, Court of Justice, Joined Cases C-402/05 P and C-415/05 P (Sept. 3, 2008) (appeal against the first judgment); Kadi v. Commission and Council, General Court, Case T-85/09 (Sept. 30, 2012) (a first instance judgment following Kadi's relisting); Council and Commission v. Kadi, Court of Justice, Joined Cases C-584/10 P, C-593/10 P and C-595/10 P (July 18, 2013) (appeal judgment following the relisting).

47 One example of such a court case would be the ongoing litigation between Iran and the United States. Certain Iranian Assets (Iran v. U.S.), Preliminary Objections, Judgment, 2019 ICJ Rep. 7 (Feb. 13).

48 Nicholas Mulder, The Economic Weapon: The Rise of Sanctions as a Tool of Modern War 202–22 (2022).

49 Why the West Should Be Wary of Permanently Seizing Russian Assets, Economist (June 9, 2022).