Igor Galitsky, lawyer, PhD in Law, Deputy Head of International Dispute Resolution Practice at Investment Lawyer Group

This past February 21st, Russian troops struck a facility belonging to the American company Mondelez International in the city of Trostyanets, Sumy Oblast. A missile hit one of the factory's production buildings. The factory, which has been producing Milka chocolate and Lux potato chips since the 1990s, is one of the first major US investments in the economy of independent Ukraine.

Earlier, on the 5th of January, a Russian drone struck the Dnipropetrovsk Oil Extraction Plant owned by Bunge Global SA, the American giant from St. Louis, Missouri, which owns the Oleina brand. Three hundred tonnes of sunflower oil spilled onto the city's roads, blocking traffic on the Dnipro Embankment for several days.

Mondelez and Bunge are not the only examples of American companies that have suffered the attacks by the aggressor state. On 17 February 2026, Foreign Minister Andrii Sybiha publicly stated that Russia was systematically attacking American businesses in Ukraine, citing specific examples: the Boeing office in Kyiv and the Flex electronics manufacturing plant in Mukachevo. According to the American Chamber of Commerce (AmCham), since the start of the full-scale invasion, 47% of AmCham's American member companies have reported damage or destruction to their facilities, 57% have had employees injured, and 38% have had employees killed.

Different companies, different industries, different cities. One thing they have in common is that foreign businesses operating in Ukraine are suffering direct physical damage from Russian strikes. So, the question that inevitably arises for every investor is: are there legal mechanisms for compensation for the damages caused by the aggressor state? And how well do they work in practice?

Compensation mechanisms: current situation

Let's start with the main issue – there is currently no automatic and quick way to obtain money from Russia for investors' assets destroyed in Ukraine. However, instruments are being developed, and some of them are already starting to work.

For example, the international Register of Damage for Ukraine (RD4U), established under the auspices of the Council of Europe, accepts and systematizes claims for damages from individuals and (in the future) legal entities, as well as from the state of Ukraine itself. Registration alone does not lead to the return of money, however. RD4U is intended as the first systemic element of a future compensation fund that could be financed from frozen Russian assets.

Currently, legal entities cannot yet submit applications via the Diia portal, although the relevant categories have already been defined by the Register's Charter. Full access for non-residents is also presented as a ‘future’ stage.

Nevertheless, recording damages in RD4U is an important prerequisite for potential access to compensation. It is important not to delay the preparation of evidence.

The second option is Ukrainian courts. An investor can file a claim with a national court for compensation for damages caused by the Russian Federation. However, there is a fundamental obstacle here – the doctrine of sovereign immunity: a state cannot be sued in the courts of another state without its consent.

Despite the general doctrine of sovereign immunity, the Supreme Court of Ukraine has developed an approach that allows claims against the Russian Federation for compensation of damages caused by its armed aggression to be considered. In a number of rulings (in particular, dated 14 April 2022 in case No. 308/9708/19 and dated 18 May 2022 in case No. 760/17232/20-ц) the Supreme Court proceeds from the concept of limited state immunity and recognizes that tort claims for damages to life, health and property caused on the territory of Ukraine as a result of the Russian Federation's aggression constitute an exception to state immunity. Therefore, Ukrainian courts have the right to ignore the Russian Federation's defence of sovereign immunity and consider such claims on their merits. However, it will be difficult to enforce such a decision of a Ukrainian court in foreign jurisdictions.   

Even with a positive court ruling, it is currently extremely difficult to force Russia to comply with it abroad, in jurisdictions where most of Russia's liquid assets are located. Foreign courts will refer to the defendant state's sovereign immunity.

The third option is international investment arbitration. Proceedings in this type of arbitration are expensive and can take years. This option is primarily applied to assets in occupied territories. Arbitration tribunals recognize that the Russian Federation, having established ‘effective control’, is responsible for the expropriation of property.

Precedents already exist. In April 2023, Naftogaz received a $5 billion ruling on Crimean assets, Oschadbank received $1.1 billion, and DTEK received $267 million in November 2023.

However, the costs of such proceedings can reach tens of millions of dollars, and enforcement of the award abroad remains a particularly resource-intensive stage: locating assets, freezing them, overcoming the doctrine of sovereign immunity, etc.

Insurance of foreign investments against military risks

MIGA (Multilateral Investment Guarantee Agency, World Bank Group) insures political and military risks for international investors, covering expropriation and hostilities. The first wartime guarantee has already been issued: $9.2 million for the M10 Industrial Park project in Lviv (investor – Dragon Capital), covering the risks of hostilities for a period of 10 years.

The DFC (America's Development Finance Institution) offers political risk insurance for up to $1 billion, not only for American investors, but also for European and Ukrainian investors. The DFC has already allocated $250 million to support Ukrainian agricultural producers.

The expansion of the mandate of the Ukrainian Export Credit Agency (ECA) has become fundamentally important at the national level. From 1 January 2024, following the coming into force of Law No. 3497-IX, the ECA is authorized to insure direct investments in Ukraine against military and political risks. In May 2024, the ECA Insurance Policy was approved, and the agency began accepting applications.

What does ECA insurance cover? Direct investments and dividends. List of risks: military conflict, armed aggression, hostilities, terrorist acts, sabotage, occupation and annexation, as well as compulsory alienation, illegal revocation of a licence, prohibition of settlements, inability to convert or transfer currency. Insurance is available to both foreign and Ukrainian investors.

However, there are significant exceptions: ECA does not cover losses from weapons of mass destruction and cyber attacks, as well as indirect losses such as lost profits (except in cases of dividends insurance). There are also geographical restrictions – the investment target cannot be located in territories where, on the date of conclusion of the contract, hostilities are taking place or which are under occupation. In other words, the insurance protects new investments in relatively safe regions, rather than retroactively compensating for the damage that has already been done.

Why it matters for businesses

As we can see, mechanisms for compensating investors for losses incurred in Ukraine do exist, but none of them provide quick results. RD4U has not yet opened the submission of applications from legal entities and non-residents. The decisions of national courts face complications of sovereign immunity when attempting to enforce them abroad.

International investment arbitration is currently the most effective mechanism for obtaining compensation for damages. However, the significant cost of the process and the lengthy duration of proceedings may deter investors from seeking such remedies. In addition, the enforcement of arbitral awards may be complicated by sovereign immunity and actions by the Russian Federation aimed at delaying the proceedings.

On the other hand, insurance against military risks through ECA, MIGA and DFC is a tool that is already working and gives investors real protection before the damages arise in the first place.

Is this sufficient? No. Ukraine needs systematic improvement of investment legislation, strengthening of the judicial system, and expansion of RD4U mechanisms to legal entities. Equally important is active participation in the creation of an international compensation fund using frozen Russian assets. Until this fund is operational, insurance will remain the most practical tool for those who have already invested real money in Ukraine.