Mikhail Fridman, the Russian oligarch and founder of Alfa Group, is initiating legal action against Luxembourg in European arbitration courts, seeking $15.8 billion in compensation. He claims that a Soviet-era investment agreement protects him from what he describes as “indirect expropriation” of his Luxembourg-registered assets. Fridman is the first Russian billionaire to challenge EU sanctions and seek compensation for frozen assets.
Fridman assets managed through Luxembourg-registered holding companies, were frozen under the EU sanctions regime in 2022. Fridman has proposed an out-of-court settlement to the Luxembourg government, with a demand of $15.8 billion. This proposal, made in February, gave the government six months to respond, a deadline that is now approaching. Should Luxembourg refuse the offer, Fridman plans to pursue international arbitration.
Legal experts, as cited by Vedomosti, suggest that while the Luxembourg government is likely to reject the settlement offer, Fridman has a “non-zero” chance of success in court. If Luxembourg denies the settlement, the dispute could be escalated to either the UN Commission on International Trade Law or the Stockholm Arbitration.
Fridman argues that his claim is backed by a 1989 investment protection agreement between Belgium, Luxembourg, and the USSR, which mandates compensation for nationalizing or expropriating assets. Luxembourg, however, is expected to argue that the freezing of assets is justified on the grounds of protecting public order, which is excluded from the investment protection regime.
Fridman’s case is part of a broader trend where sanctioned oligarchs seek legal recourse. Nearly all oligarchs under the sanctions regime have initiated legal actions to unfreeze their assets, disputing claims of their alleged closeness to Putin as unfounded and based on insufficient evidence.
Fridman, along with his business partners Peter Aven and Andrey Kosogov, has also filed a request for arbitration against Ukraine, seeking over $1 billion in compensation for what they claim is the “illegal expropriation” of the local Alfa Bank.
