LONDON — The British government is taking a firmer stance regarding the frozen assets of former Chelsea Football Club owner Roman Abramovich, aiming to recover £2.5 billion generated from the sale of the club over three years ago and redirect it to Ukraine. In a rare joint announcement from Treasury chief Rachel Reeves and Foreign Secretary David Lammy on Monday, officials declared their determination to pursue legal action against Abramovich if necessary.
Legal hurdles ahead
Despite the government’s assertive rhetoric, legal experts have raised significant doubts about the viability of these threats. They argue that the government lacks a solid legal foundation to claim and subsequently distribute the proceeds from Abramovich’s asset sale. The British administration is likely to encounter the same challenges it has faced since Russia’s extensive invasion of Ukraine began in February 2022: while freezing the assets of oligarchs can be accomplished relatively easily, the actual seizure of those assets presents a more complex legal landscape.
“We’re basically into the territory that we have with all these oligarchs, which is that you can’t just take money off people because you don’t like them,” stated Tom Keatinge, director of financial security at the Royal United Services Institute (RUSI), a notable security think tank.
Abramovich sold Chelsea to an American consortium in 2022 after the U.K.’s Office of Financial Sanctions Implementation granted a license for the sale. A precondition for this transaction was that he must not personally benefit from the profits. Nevertheless, the proceeds have remained untouched in a British bank account, caught in a semantic dispute over their intended use to support Kyiv.
Proceeds entangled in legal ambiguity
The U.K. government has emphasized that these funds should be allocated for humanitarian efforts in Ukraine. However, Abramovich contends that the funds should be directed towards “all victims of the war in Ukraine,” which includes individuals in Russia. He has been under formal sanctions since March 2022 due to his alleged connections with President Putin, a characterization he disputes.
To date, Abramovich has not faced charges related to his frozen assets, meaning the British government requires his consent to utilize the funds, as they remain legally his property. A sanctions lawyer, who spoke under anonymity to maintain the confidentiality necessary for legally sensitive issues, remarked, “I just cannot see any possible substance by which they would have a cause of action against Abramovich, because the funds are sanctioned. They’re still his assets, that’s not disputed.”
“The funds will not be transferred into anyone else’s hands unless Abramovich chooses to give them away,” the lawyer added.
In their joint statement, Reeves and Lammy did not specify the legal measures they might pursue, only expressing their commitment to ensure that the proceeds from the Chelsea sale reach humanitarian causes in Ukraine, following Russia’s unlawful invasion. They expressed their frustration over the lack of agreement with Abramovich thus far, stating, “While the door for negotiations will remain open, we are fully prepared to pursue this through the courts if required, to ensure people suffering in Ukraine can benefit from these proceeds as soon as possible.”
Another sanctions lawyer, Tan Albayrak of Reed Smith, echoed the earlier sentiments regarding the absence of a legal basis for the government’s claims. “I do not see a legal basis, either way, because the funds are frozen. They cannot be used to fulfill any of the parties’ wishes,” he noted. “In sanctions laws, frozen means frozen — and just that,” he added. “Normally, the funds can’t be distributed — neither according to Mr. Abramovich’s wishes nor to the U.K. government’s wishes.”
Even with the focus on the £2.5 billion in question, this amount pales in comparison to the vast sums frozen by both the EU and the U.K. since the onset of the Ukraine conflict. While Britain has successfully frozen around £24 billion of Russian assets, the EU’s figure stands at approximately €200 billion. Both entities have opted to utilize the interest gained from these funds to assist Ukraine rather than attempting direct seizures, indicating a hesitance to venture into legally ambiguous territories.
In March, Belgium’s Prime Minister remarked that such actions could be perceived as “an act of war,” potentially leading to systemic risks within the global financial system. The aforementioned sanctions lawyer suggested that Reeves and Lammy’s statement aims to showcase a robust stance on sanctions, yet they lack a mechanism to proceed legally. “There’s no way of doing this via civil litigation at all,” they concluded.