top of page

Ask an Expert

Editor

Alexandra Wrage.jpg
Alexandra Wrage
President and Founder, TRACE

Contributors

Nicola Bonucci.jpg
Nicola Bonucci 
International Lawyer and former
Director for Legal Affairs OECD
Dave Lee.jpg
Dave Lee
FCPA Compliance Consultant, TRACE
Sunny McCall.jpg
Sunny McCall
Senior Director II, Compliance Training, TRACE
Lee Nelson.jpg
Lee Nelson
Independent Compliance and
Ethics Attorney
Jessica Tillipman.jpg
Jessica Tillipman
Associate Dean for Government Procurement Law, The GW University Law School
  • Writer's pictureTom Firestone

The REPO Act: How Will Russia Respond?

Russia Flag

On April 24, President Biden signed the Rebuilding Economic Prosperity and Opportunity for Ukrainians (REPO) Act, which allows the President to seize Russian sovereign assets in the United States and use them for Ukrainian reconstruction. Not surprisingly, the Russian government reacted immediately, promising to challenge REPO in court and threatening to retaliate against US assets in Russia. How realistic are these threats?

 

With respect to legal challenges in the U.S., the REPO Act provides that “any action that is taken under this section shall not be subject to judicial review.” Although the Act makes an exception for Constitutional challenges, it is not clear on what rights foreign governments have under the Constitution. For example, in the case of Republic of Argentina v. Weltover, 504 U.S. 607, 619 (1992), the Supreme Court “assum[ed] without deciding” that a foreign state is a “person” for purposes of the Due Process Clause, but simultaneously cited a Supreme Court decision holding that states of the United States are not “persons” for purposes of the Due Process clause. Moreover, even if the Russian government does have due process rights, as legal scholar Ingrid Brunk has explained, it is not clear that those due process rights are as extensive as the due process rights afforded to individuals before having their property confiscated. As Brunk points out, based on existing precedent, Russia’s property interests might be more similar to social security benefits, the deprivation of which does not require a prior judicial hearing.[1] In short, any legal challenge that the Russian government brings in U.S. court will likely get very complicated very quickly.

 

The prospects for retaliation under Russian law are also not clear. There are no U.S. sovereign assets in Russia, so an exact symmetrical response is not possible. But there are private U.S. assets in Russia. Even without the REPO Act, the Russian government has used new legislation to nationalize several foreign companies. Therefore, it is not surprising that it has threatened that private U.S. assets in Russia may be the first targets of retaliation. But there is some ambiguity in the official position, presumably the result of a desire to avoid scaring off what little Western investment remains. As former President and current Deputy Head of the Security Council Dmitry Medvedev wrote on his Telegram channel, “this is a complicated story…foreigners came to invest in the Russian economy. And we guaranteed the immunity of their private property rights. But then something unexpected happened – their government declared a hybrid war on us, which includes both legal and judicial aspects.”

 

In addition to the economic concern, there is also a (nominal) legal obstacle. Article 1194 of the Russian Civil Code currently allows the Russian government to impose “responsive restrictions” on the property of individuals and legal entities from countries that have imposed similar restrictions on Russian property. However, Article 1194 does not allow for complete confiscation. While the Russian government is frequently unconstrained by its own laws, Article 1194 is still worth watching because what the Russian government does with it may provide an indication of its future intentions. For example, Medvedev has proposed expanding Article 1194 to allow for confiscation of assets of “foreign legal subjects” from “unfriendly countries” a long list which, of course, includes the United States. As Medvedev wrote on Telegram, “America and Americans should pay for their criminal decisions.”  Therefore, U.S. and other foreign companies with assets in Russia would be well advised to track Russian legislation for proposals and amendments which would allow for complete confiscation.   

 


Partner, Squire Patton Boggs   


 


Comments


!

Subscribe to BriberyMatters

Subscribe to receive the latest BriberyMatters blog posts straight to your inbox. Enter your email address below:

Thanks for subscribing!

bottom of page