For the first time, a Russian oligarch is seeking compensation for sanctions imposed on him over Russia’s invasion of Ukraine. Mikhail Fridman, one of Russia’s wealthiest individuals, is demanding nearly €15 billion in damages from Luxembourg – the estimated value of his holdings frozen in the country due to EU sanctions. This sum accounts for half of Luxembourg's 2024 state budget.

His claim is based on a little-known “bilateral investment treaty” between Belgium, Luxembourg and the Soviet Union. This treaty, dating back to 1989, was designed to safeguard European investors' assets from expropriation and nationalisation during the late Soviet era. Fridman claims that Luxembourg's freezing of his assets constitutes a violation of this treaty.

Fridman amassed his fortune in banking, oil and retail. He co-founded Alfa Group, which owns Alfa Bank, Russia's largest private commercial bank. His assets are managed by his Luxembourg-based holding company LetterOne. In April, he effectively contested some of the EU sanctions against him on the grounds that there was not enough evidence linking him to Russia’s invasion of Ukraine.

According to recent reports from Luxembourg media, Fridman proposed an out-of-court settlement with the Luxembourg government in February and plans to take the matter to court if they cannot reach an agreement within six months. The case would then likely proceed to an international arbitration court.

Luxembourg's foreign affairs ministry seems unconcerned at this point, pointing out that the decision to freeze Fridman's assets was made by the EU, not Luxembourg. However, it is uncertain whether this argument will be effective in court. Legal experts worry that the treaty, which has not been updated for years and does not meet current legal standards, could pose challenges.