Law360 (May 12, 2022, 3:58 p.m. EDT) — Russia’s largest financial institution, Sberbank, said Thursday it would pursue investor-state action against Ukraine after the country passed a decree allowing it to seize Russian assets.

The bank’s press office confirmed the news to Law360 on Thursday. Sberbank, which owns around a third of all banking assets in Russia, is majority-owned by the Russian government.

“Sberbank initiates investment arbitration against Ukraine with a claim for damages based on the Agreement between the Government of the Russian Federation and the Cabinet of Ministers of Ukraine on the Encouragement and Protection mutual investment fund, dated November 27, 1998,” the bank said in a statement.

The move comes after Ukraine’s parliament, the Verkhovna Rada, this week passed a decree titled On Compulsory Seizure of Property in the Russian Federation and its Residents by a vote of 334 to 0.

VEB.RF, Russia’s economic development institution, is also said to have filed an investor-state lawsuit. The bank, which describes itself as a non-profit, could not immediately be reached for comment outside of normal business hours in Russia on Thursday.

Additional details of the decree were not available on the Verkhovna Rada’s website, but local media reported that its targets include 99.8% of Prominvestbank shares held by VEB.RF and 100% of the shares of the International Reserve Bank owned by Sberbank.

Sberbank did not respond to a request for more information about the claim.

According to a copy of the Russian-Ukrainian treaty on a website maintained by the United Nations, the two countries have six months to try to resolve a dispute through negotiation before it can be submitted to arbitration.

At this stage, disputes will be resolved either by “a competent court or arbitration tribunal of the contracting party, in whose territory the investments were made”, the Arbitration Institute of the Stockholm Chamber of Commerce, or by ad hoc arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law.

Representatives of Ukraine could not immediately be reached for comment on Thursday.

This is not the first time Russia has seen its assets seized since invading Ukraine in February. Last month, Germany announced that it had taken control of Gazprom Germania, a unit of Russian state energy company Gazprom, until at least September 30.

Russia itself has threatened to nationalize foreign assets in recent months, introducing a bill to nationalize the assets of any company more than 25% owned by foreigners from “hostile” countries, including the United States, Canada, the United Kingdom and those of Europe. Union, at the Russian State Duma in April.

Additionally, the Kremlin has been repeatedly found liable in international arbitration for expropriating Ukrainian assets in Crimea after Moscow annexed the peninsula in 2014.

–Edited by Dave Trumbore.

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