Special measures of the Republic of Belarus: seizure of property of individuals and legal entities with links to "unfriendly" countries
On October 6, 2022, the Law of the Republic of Belarus of January 3, 2022 No. 240-З "On Seizure of Property" (hereinafter – the Law) was officially published. The Law governs forcible seizure of property on the grounds of social necessity in favor of the Republic of Belarus in response to unfriendly acts.
The Law also supplements art. 236 (2) of the Civil Code of the Republic of Belarus (grounds for seizure of ownership rights) with new ground for forcible seizure of property from the owner: "forcible seizure in other cases prescribed by the law".
Who may be subject to the decision on seizure of property
The decision to seize property may be taken with respect to:
- a foreign state committing unfriendly acts;
- a person from a foreign state (individuals and legal entities)* committing unfriendly acts and their affiliates*.
The Law introduces the principle of objectivity, according to which the seizure of property is applied only as a retaliatory measure when unfriendly acts are committed.
The term "unfriendly actions" is not defined by the Law.
Foreign persons:
- related to foreign states committing unfriendly acts (including citizenship of such states, place of registration, place of predominant economic activity or predominant profit-making in such states);
- persons who are under the control of these foreign persons, regardless of the place of their registration or the place of their preferential conduct of business activities.
The Law provides its custom definition of affiliated persons: legal entities and/or individuals who directly and/or indirectly (through other legal entities and/or individuals) determined the decision to commit unfriendly acts or influenced such decision by foreign states committing unfriendly acts, as well as legal entities and/or individuals dependent on the decisions of persons from such states and included in the list determined by the Council of Ministers of the Republic of Belarus.
What property can be seized
The property that may be seized includes things, including money and securities, other property, including property rights, located in the territory of the Republic of Belarus and belonging to the subjects of the seizure.
Who takes a decision to seize the property
The decision on seizure of property shall be taken by the Council of Ministers of the Republic of Belarus. After adoption of such decision, the Belarusian State Committee on Property (hereinafter – SCP) shall initiate legal proceedings before the Economic court of Minsk requesting seizure of property.
The case shall be considered within one month from the date of initiation of proceedings with publishing relevant information on the Internet portal no later than ten days before the court hearings.
Evaluation of seized property
Seized property shall be accepted for accounting by the subjects to which they were transferred at their market value (except for land plots, shares, bonds), determined by an independent evaluation by state organizations engaged in evaluation activities, in prices as of the date of the court's decision. Shares of business companies shall be accepted for accounting at their nominal value.
Independent evaluation of property shall be provided by state bodies.
Transfer of ownership right
Seized property in accordance with the Law shall be transferred into the ownership of the Republic of Belarus. The seized funds are subject to transfer to the republican budget.
The court's ruling is the basis for registration actions on the transfer of the right of ownership to the seized objects. Seized property in respect of which no registration and/or accounting is required shall be transferred to the ownership of the Republic of Belarus from the date of the court decision.
Parallel proceedings in the international arbitration court, foreign court
Article 7 of the Law stipulates that a decision of an international court, international arbitration (arbitration) court or a court of a foreign state committing unfriendly acts to secure a claim does not suspend proceedings on the case and is not a reason for failure to register the transfer of ownership.
Commentary
The Law is applied with respect to investors from the countries that are in the list of foreign states that commit unfriendly acts against Belarusian legal entities and/or individuals. In this regard, the question may arise about the correlation of this Law with the provisions of the Law of the Republic of Belarus of 12.07.2013 "On Investments" and the international treaties on protection of investments concluded by foreign states with the Republic of Belarus.
Taking into account the provision of the Law that proceedings in an international arbitration (arbitration) court, court of a foreign state shall not suspend proceedings on seizure of property and registration of transfer of ownership rights, it is likely that application of the Law will not be limited by the actions of international treaties.
