- An apartment complex owned by the Russian government in Stockholm has been sold in a foreclosure auction. What does this mean for foreign investors fighting expropriation?
- The latest Snowden leak shows that the NSA, via it's partner in Australia, has violated attorney-client privilege of a U.S. law firm. Is the "Five Eyes" alliance being used to circumvent constitutional protections against U.S. surveillance against its own citizens?
A 20-year long dispute between a German businessman and the government of the Russian Federation may be coming to an end soon after numerous auctions of sovereign property were successfully carried out in Sweden, netting €8 million in the past five months.
The court’s approval of the sales of these properties may set an important legal precedent that could be used by others who have suffered corporate raiding and expropriation by the Russian authorities, says Franz Sedelmayer, the foreign investor.
On Tuesday, February 18, the Swedish authorities concluded the foreclosure sale of a complex that housed Russia’s trade mission in Stockholm for a price of €2.3 million. Russia did not participate in the auction, however, in the weeks leading up to these asset sales, had attempted to make threats via advertisements and media articles that the property was immune, and that the title would not be valid.
The new owner, a local businessman of Turkish descent, has offered the current Russian tenants of the building the opportunity to sign a rental agreement or vacate the property.
Sedelmayer, who in the 1990s set up the JSC Kamenny Ostrov security company in St. Petersburg, saw his properties and assets seized through a 1995 executive order by President Boris Yeltsin, with the help of a lesser known local official at the time, Vladimir Putin.
For almost 20 years, Sedelmayer has brought a range of lawsuits, arbitrations, and claims against Russia’s properties in Europe to recover damages. The Russian government, in turn, steadfastly fought back, citing “sovereign immunity” which protects real estate owned by foreign governments, and also deployed informal levels of influence, including an attempt by Sweden’s Kronofogden (bailiffs) to dismiss a ruling by the Swedish Supreme Court.
At one point, Sweden’s Foreign Minister Carl Bildt even intervened in the case and attempted to instruct the authorities to drop Sedelmayer’s claim against Russia. Bildt was later reprimanded for interfering with the administration of rule of law by the Swedish Parliament’s Constitutional Committee.
Nevertheless, courts in both Sweden and Germany have upheld that sovereign immunity does not apply if a property can be classified as “mixed use” – for example using part of the space for commercial purposes, such as leasing to a third-party tenant – which Sedelmayer says may now be used as case law by others seeking recovery of damages from Russian expropriations.
The auction has provoked fury on behalf of the Russia’s diplomats, who now say that they will execute a “symmetrical” response against Sweden’s diplomatic presence in Russia.
A statement from the Russian Foreign Ministry disputes the sale of the property: “The ambassador was told that the forced sale of the Trade Mission building will inevitably have negative consequences for Russian-Swedish interstate relations. The entire responsibility for such a course of events will lie on the Swedish side. An insistent call was addressed to the Swedish state to take all due measures to guarantee the inviolability and safety of the Russian mission in compliance with Sweden’s commitments under the 1991 Vienna Convention on Diplomatic Relations.”
Earlier in response to Sedelmayer’s legal crusade against Russia’s European properties, a questionable tax claim for some $65 million back in St. Petersburg was brought before the European Courts by counsel representing Moscow – however, this too was dismissed as it was determined that a foreign sovereign cannot levy taxes in another country.
“Their strategy has backfired, and now Russia has set all the precedents on sovereign immunity they should have hoped to avoid,” says Sedelmayer. “The message is pretty clear to foreign investors now – you would be crazy to invest your money in Russia. But now, at least, there is a clear path to recovering damages.”
TODAY: Kremlin slams Kiev opposition for failing agreement, Yanukovych for fleeing; Lavrov furious; world powers call on Russia not to use force as Russians protest in Crimea; Human Rights Watch calls for Khabarov’s release; Kozak says Pussy Riot were provoking conflict in Sochi; Olympics ends.
The Kremlin is warning that ‘illegal extremist groups’ are taking power in Ukraine, and blamed the opposition for ‘connivance’ and ‘inability or reluctance’ to honour agreements reached last week. A TV host on Russia’s main state channel rejected President Viktor Yanukovych and accused him of betrayal for fleeing Kiev and failing to contain the opposition, and Russia has recalled its Ukrainian ambassador. Foreign Minister Sergei Lavrov appeared to be furious over the opposition’s lack of cooperation, branding them ‘rampaging hooligans’; The Guardian said his comments appeared ‘to provide grounds for potential direct intervention‘. An unidentified Kremlin official apparently hinted that an ongoing volatile situation in Ukraine could lead Russia to send troops to Crimea, where Russians are in the majority and where ‘the revolution is viewed with fear and revulsion’. Demonstrators in Crimea held pro-Russia demonstrations over the weekend, and clashed with antigovernment protesters. The U.S. and U.K. both warned Russia not to send troops into Ukraine, and German chancellor Angela Merkel reportedly telephoned Vladimir Putin ‘to make sure nothing untoward was planned’; the two apparently agreed at least that ‘territorial integrity’ must be maintained. Finance Minister Anton Siluanov says Ukraine will not get any of the $2 billion Russia had promised it until a new government has been formed and Russia is able to ‘understand its economic policy’.
TODAY: Ukraine death count in the dozens, Obama blames Putin, Kremlin pressures Yanukovych with warnings, withheld funds; Russia to establish military command in the Arctic, faces economic stagnation and high economic crime; jail expected for Bolotnaya Square protesters; Pussy Riot use cossacks footage in new video; first gold medal.
After the death count in Ukraine hit at least five dozen yesterday, U.S. President Barack Obama criticised President Vladimir Putin personally for failing to support Ukraine’s opposition in its pursuit of social and political values such as freedom of speech and assembly and freedom from corruption. The Kremlin is putting the pressure on in various ways: it openly backed Viktor Yanukovych’s government by urging that the opposition must not be allowed to treat them ‘like a doormat’; and Dmitry Peskov says that, while Russia’s financial aid to Ukraine will not be cancelled, the situation must normalise. The Times says Yanukovych will soon be able to stay in power ‘only at Mr. Putin’s whim’; the Economist calls Putin the ‘architect’ of the current mayhem; and the FT reports that ‘many government officials say in private that Ukraine falls inside Russia’s sphere of influence’. A state-backed public opinion poll indicates that the majority of Russians view their country as free, rich, and developed.
The following article was written by Alexander Knoops and Tim Zwart in the New African magazine. Alexander Knoops is a longtime legal colleague of mine.
The relations the International Criminal Court (ICC) enjoys with states in Africa are testy. Already, the African Union has called on its member states not to cooperate with the ICC’s prosecutor regarding the case of President Omar al-Bashir of Sudan. African leaders are openly defying the Court by offering hospitality to President Bashir, despite the indictment that has been brought against him.
By recently electing Uhuru Kenyatta as their president, Kenyans have rallied behind him in opposition to the Court. The ICC should therefore watch its step in order not to lose its legitimacy in Africa. The proceedings brought against the former Ivorian president, Laurent Gbagbo, who is currently standing trial in The Hague, charged with crimes against humanity, will serve as a test case in this regard.
TODAY: Russia and Europe trade blame over further deaths in Ukraine; Ekho Moskvy under threat; Pussy Riot protesters detained in Sochi; Razvozzhayev/Udaltsov trial begins; Navalny calls out Lebedev; Russia dominates Europe in energy.
The death count in Ukraine has reached eighteen after police opened fire on protesters yesterday; Russia blamed the heightened situation on ‘Western politicians and European structures’, for encouraging Ukrainian radicals. This piece argues, however, that ‘Moscow is more active in the Ukraine than it has been for 20 years.’ Live footage of protesters gathered in Kiev is streaming here. A Russian analyst commented that the poor performance of Ukraine’s bond’s yesterday, despite a fresh cash injection from Russia, shows that ‘money from Russia is not a solution’ with more unrest on the cards. Central Bank bankers want bonuses to be tied to risks, and to amount to as much as 50% of annual pay. Ekho Moskvy radio station, which frequently provides a platform to opponents of the government, says its editorial independence is under threat after what the editor called an ‘unfair’ move to replace the company’s chief executive.
TODAY: Lavrov downplays Syria claims; I.O.C. impressed with Putin’s attendance; Vitishko protester arrested; ethnic Sochi leader detained; Bolotnaya Square protesters granted amnesty; Medvedev planning privatisations; lingerie ban; Rusal output to be lowest in eight years; Ukraine receives latest cash injection; Iran may swap oil for nuclear power.
Foreign Minister Sergei Lavrov says the world’s impression of bloodshed in Syria is caused by the manipulation of information by the media, arguing that various sources showed ‘pictures of what was happening in Iraq 10 years ago but passed it off as what is happening in Syria today.’ The International Olympics Committee are impressed by President Vladimir Putin’s frequent appearances at the Sochi Olympics. ‘He is clearly a big sports fan […] we are very happy for his support.’ A further protester was detained by police at the Sochi Games yesterday for ‘illegal picketing’; he was holding a sign in support of Yevgeny Vitishko, the environmental activist who was jailed last week and who is now on hunger strike. Former Italian parliamentarian and trans woman Vladimir Luxuria says she was detained twice in Sochi in 24 hours – the second time, for wearing a rainbow headdress. Asker Sokht, the leader of the Circassian ethnic group native to the Sochi region, has been detained under ‘unclear circumstances’. Sokht had complained that the Games were being held as if his ethnic group ‘doesn’t exist’. Three more Bolotnaya Square protesters have been amnestied and their charges dropped, as eight more are expecting to be sentenced later this week.
TODAY: Kerry blames Russia for Syria crisis; Putin watches U.S.-Russia hockey game, urges journalists not to mix sport and politics; Lavrov slams E.U. over Ukraine; four detained at pro-Ukraine rally; trans protester arrested in Sochi; convicted criminals barred from running for presidency; Vitishko begins hunger strike.
U.S. Secretary of State John Kerry says Russia is undercutting diplomatic efforts to solve the Syria crisis by enabling the country’s regime’s military campaign with arms deliveries. President Vladimir Putin was in attendance to watch Russia and the U.S. facing off at the Olympics, with the U.S. hockey team winning after a disallowed goal that led to numerous accusations of cheating. But he urged journalists not to confuse issues of sports and politics. But Reuters reads the President’s selective Olympics engagements with U.S. and Russian teams as anything but apolitical. Foreign Minister Sergei Lavrov accused the European Union of trying to create a sphere of influence in Ukraine, arguing that Kiev should not be made to choose between the E.U. and Russia. Four men were detained in St. Petersburg yesterday, apparently for attempting to interfere in a sanctioned rally in support of Ukraine’s pro-Europe movement.
I know I am a few days behind in posting about this, but Gregory Feifer’s latest column in Politico on the repeated failure on behalf of the West to grasp the internal logic of Vladimir Putin’s Russia is well worth a read. An excerpt:
“He [Putin] makes decisions not in his country’s interest, but his own. Destabilizing Russia’s neighbors, picking fights with Washington and threatening to direct nuclear missiles at Western Europe may be dreadful for Russia’s image and prospects for integration into the international community, but at home, it shows Putin to be tough.
That’s why it’s important for the White House to stop dismissing Putin—in public at least—as simply a bored schoolkid at the back of the classroom, as President Barack Obama did again during his NBC interview before the Sochi opening ceremony. There’s too much at stake.
Deeply regrettable as Nuland’s amateurishness is, America’s top officials must do more than simply be careful about boorish talk on cellphones. As long as Putin believes he’s winning a new kind of Cold War, the Obama administration should stop hoping his professed desire to cooperate will make the problem go away. Tackling it should start by understanding his real motives.
It seems there are many international issues that the administration’s strategy amounts to sticking its head in the sand. That will not work out well with regards to Russia.
Last night’s cover story in the New York Times regarding Edward Snowden’s latest leak highlights a lingering concern for many in the legal community.
According to a top-secret document released by Snowden, the NSA – via their Five Eyes partner, the Australian Signals Directorate – spied on a U.S. law firm representing Indonesia in a trade dispute with the United States. The law firm was not named in the document, however Mayer Brown of Chicago was advising Indonesia at the time.
The Australians warned an NSA liaison office that the monitoring of these talks may include “information covered by attorney-client privilege,” but the U.S. insisted that the spying continue nonetheless.