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Is Carl Bildt Attempting to Block an Auction of Russian Assets?

Carl Bildt, the Foreign Minister of Sweden, is quite well admired for his strong positions on Russia issues, his outspoken defense of freedom of expression, and his unambiguous declarations on human rights.

That’s why it is so surprising to see the allegation that Foreign Minister Bildt has stepped into the middle of a legal case in Sweden, ostensibly to prevent the authorities from auctioning off the former USSR Trade Mission (located in a prime Stockholm real estate area) belonging to the Russian Trade Delegation. This letter signed by Mr. Bildt, which has been made available to us, comes only a few months after the Russian Foreign Ministry threatened to seize the Swedish Embassy if the auction were to be allowed.

According to the plaintiff in the case, they are concerned that Mr. Bildt and other Swedish officials are being pressured by the Russian government to block the enforcement of a decision from the Swedish Supreme Court which would seize this foreign government property because it was also being used for commercial purposes instead of purely sovereign purposes.

In the past we have reported on this blog concerning the bitterly contentious legal saga of German businessman Franz Sedelmayer, whose business and assets were expropriated in Russia in the 1990s.  Ever since then, Sedelmayer and a team of lawyers have carefully and laboriously built up a pile of arbitration case law proving their damages, and working on the extraordinary difficult area of “sovereign immunity” – an exclusivity granted to assets owned by sovereign states that holds it beyond the reach of the law in terms of attachment to arbitration.

However, sovereign immunity has been repeatedly abused by the Russian state to avoid having to pay foreign investors whom were damaged by expropriations.  Ever since Mr. Sedelmayer won his case before the Supreme Court, there have been a number of comically blunt actions to block the execution of Russia’s property in Sweden.  A judge wholly unrelated to the case – but whose husband worked at the law firm representing Russia – simply ordered the bailiffs (Kronofogde) to freeze the auction (this order was eventually ignored as unlawful, the auction process was restarted).

Then there were the threatening statements from the Russian government towards Sweden.  And now, following Foreign Minister Bildt’s order to the bailiffs, the agency has put the two officials in charge of the auction, Peter Stigefelt and Filip Håkansson, on “leave” while the head of the Kronofogde Maria Mindahammar has refused to return calls from Sedelmayer’s lawyers, but instead has given interviews indicating that she will uphold Foreign Minister’s Bildt letter to stop the auction.

Much remains unclear about what is happening or why the auction process has been stopped yet again despite a court order, and we are certainly looking forward to hearing the other side of the story from the respected Foreign Minister Bildt and the Swedish authorities.

If for whatever reason it is possible for a government Minister to send orders overturning individual Supreme Court decisions at the request of the Russian government, then we are looking at a whole new ballgame for European rule of law.  If this can happen in Sweden, where wouldn’t diplomacy have the muscle to overcome law?