Friedman demands damages from Luxembourg for sanctions-related losses

Mikhail Fridman, one of russia's richest men, is seeking compensation from Luxembourg for sanctions-related losses on assets worth $15.8 billion.

He plans to sue the tiny duchy if it fails to agree on a payment, according to people familiar with the matter.

The lawsuit, filed in February, makes Friedman the first oligarch to seek compensation for sanctions against him over russia's invasion of Ukraine after he successfully challenged some of the grounds for the EU restrictions last month.

If successful, Friedman would potentially be entitled to a substantial payout under a little-known 1989 treaty between Belgium, Luxembourg and the Soviet Union that protects investors' assets from expropriation and nationalization, as well as “any other measures having similar effects.”

Friedman's threat is the latest salvo in his legal battle with Western authorities over sanctions against him. The Ukrainian-born oligarch, who moved to London a decade ago, initially expressed restrained criticism of Putin's invasion, but then became angry with the West and returned to Moscow last October.

He is attempting to undermine the only remaining justification for EU sanctions against him by selling his stake in Alfa-Bank, russia's largest private lender.

Friedman owns stakes in London-based investment firm LetterOne and russian lender Alfa-Bank through companies in the Duchy, which hold assets totaling $15.8 billion. He intends to sue for an unspecified amount of compensation for his losses due to the sanctions if Luxembourg does not settle with him after the six-month grace period.

According to the agreement, Friedman can file a lawsuit against Luxembourg in the Stockholm Court of Arbitration or apply to a special arbitration under Uncitral, the UN Commission on International Trade Law, the sources added.

“As an EU member state, Luxembourg is subject to EU sanctions. The Luxembourg government is aware of Mr. Friedman's request. No legal action is currently pending,” the Luxembourg government said.

Source: Financial Times