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From Grotius to von der Leyen

Transforming Sanctions with Substitute Compliance


Sanctions have been on the forefront of media coverage for some time now. Just this 26th November, the Süddeutsche Zeitung reported on a Russian couple facing prosecution in Munich over the violation of EU sanctions during the sale of their property. This will hardly stir pity in the average reader. The same will be true regarding the failed attempt of Russian oligarchs to get the sanctions on their assets lifted in front of the EU-Court in September. After all, putting sanctions on the property of wealthy individuals or governments caters to an inherent feeling of justice, rooted in most legal systems. However, it might feel even more just to not only implement sanctions, but to simply take the property away and funnel the proceedings towards a good cause. Ursula von der Leyen proposed something like this exactly one year ago. It is an elegant, innovative idea that plays to a basic sense of justice. Traditionally, sanctions aim to coerce the target into compliance, restrain its capacities, and signal its wrongdoing to other members of the international community. Now, sanctions could turn into a means of enforcement for damage claims, simply “doing what is right” without having to wait for the other side. In the following, we will relate to this concept as “substitute compliance”.

This idea is not unheard of. Even Grotius in 1646 wrote that “a state which does not receive reparation for injury done to itself or its nationals may justly seize goods of the wrongdoing state and its nationals to recover the loss”. Grotius’ idea has remained a recurring phenomenon in modern-day state practice. One of the most prominent examples is the Certain Iranian Assets case. The USA had authorized enforcement measures by private individuals against Iranian property for the purpose of compensating victims of terror attacks. But, as just as substitute compliance may feel, would it be lawful?

To answer this question, this blog post explores (I) whether the current legal bases for sanctions could support substitute compliance, (II) what legal and factual limits apply, and (III) how they could be addressed.

Taking Stock: Current Legal Bases for Sanctions

Just like putting an asset under sanction, using it to pay for the substitution of compliance of the sanctioned state requires an adequate legal basis. There are several available:

First, sanctions can be based on Chapter VII of the UN Charter. If the Security Council determines that a threat or breach of the peace exists (Art. 39 UNCh), it can introduce sanctions short of the use of force under Art. 41 UNCh. It is generally accepted that the Security Council enjoys maximum freedom of assessment within these norms (e.g. ICTY Tadić case, para. 39). It could therefore always supplement its sanctions with substitute compliance.

Second, sanctions can also constitute a countermeasure under Art. 49 ff. of the ILC’s Draft Articles on State Responsibility for Internationally Wrongful Acts (DARS). The sanctioned state will regularly have committed an internationally wrongful act (Art. 2 DARS), which leads to an obligation to pay reparations (under Art. 31 DARS and as is custom, see PCIJ Factories at Chorzów case, p. 29). If this secondary obligation is breached as well, then a possible countermeasure could simply be paying what that state owes using its frozen assets. A similar approach has been theorised by ECJ Attorney-General Juliane Kokott before.

Third, a sanction can be a measure of collective self-defence under Art. 51 UNCh. The measure taken would have to be necessary and proportionate (see ICJ Oil Platforms case, para. 43). Answering the Russian invasion of Ukraine would appear to easily fall within these bounds. However, the defending state would have to invite this measure (see ICJ Nicaragua case, para. 199).

Fourth, regional organisations can implement sanctions under their own regimes, as ECOWAS did against Mali after a putsch in 2012. The sanctioned state, however, needs to have consented to these regional norms, which does not work in the EU-Russia context. EU sanctions on Russia must therefore be based on one of the other concepts above.

Thus, the current legal bases for sanctions already allow for substitute compliance. However, they are all hedged in by potent legal and factual limits, as will now be shown.

Limits, Legally and Factually

State Immunity

One legal limit is state immunity. This is less relevant when private individuals, like the Russian couple in Munich, are targeted. However, substitute compliance’s impact becomes salient when applied to State assets. They can represent a value many times that of one individual’s wealth, e.g. if the central bank is targeted. Then, however, state immunity applies. This follows from the principle of sovereign equality enshrined in Art. 2(1) UNCh. Thereby, state property is protected from all measures of constraint by another state – a rule which is not only part of international customary law, but also follows from Art. 18 and 19 UN Convention on Jurisdictional Immunities of States and Their Property. This prohibits substitute compliance in principle.

However, this concept of state immunity is being questioned: Some voices plead to limit it pertaining to violations of ius cogens (e.g. genocide or piracy) by state organs. Even so, the jurisprudence of the ICJ indicates that the rule would be upheld (Jurisdictional Immunities of the State case, para. 93). It is understood as a procedural limitation, not addressing the material issue of violations of ius cogens. Thus, its protection of state assets would be unaltered. Therefore, substitute compliance enacted unilaterally by a state is unlawful.

Potential for Abuse

Unlike Security Council decisions, which are at least constrained by its voting mechanism, sanctions introduced unilaterally by a state carry great potential for misuse. There currently exist no rules in international law that could govern how the proceeds are to be spent, which leads to uncertainty. Moreover, within the current global financial system, a small number of financial hubs attract a significant concentration of foreign state assets, far higher than elsewhere. Because of this imbalance, only a handful of powerful states can freeze and spend enough assets to make effective use of “substitute compliance”.

Efficacy: Removing the Carrot?

Lastly, a sanction can be conceptualised as a combined carrot-and-stick situation: the freezing of an asset is the “stick”. Getting the freeze lifted represents a desirable “carrot”. However, if the frozen asset has already been spent to pay for the costs of substituting compliance, there is no carrot left to induce actual compliance by the sanctioned state in the future. Unfreezing Russian assets would then, for example, not be an argument for the cessation of hostilities, as they will have been invested in Ukraine already. The result comes at the expense of actual compliance. This needs to be considered when deciding upon implementing this instrument.

Addressing the Limits of Substitute Compliance

Thus, substitute compliance faces severe limitations. Additionally, spending another state’s assets for them represents a heavier blow than merely freezing them. We believe, however, that states will nonetheless resort to this instrument in the future. We see two possibilities to handle this in the short term:

Firstly, the Security Council could legitimise the instrument within an Art. 39, 41 UNCh resolution. This would trump state immunity and lend a great amount of legitimacy. The voting mechanism also makes abuse less likely to occur. However, questions of efficacy remain. In any case, such a resolution seems quite unlikely under the current deadlock.

Secondly, an individual state could issue a unilateral declaration when implementing substitute compliance. In this declaration, it could set out which prerequisites it saw fulfilled that lead it to take this new measure, which limits it applied, and even if it might offer any compensation if an error has occurred. This would not so much affect the legality of the measure. However, it would lend it greater legitimacy and provide a strong point if the other party retaliates without grounds or if abuse is later in question. It could even set a precedent from which customary international law could develop.

We recognize that such self-limitations are unlikely to occur. However, as this requires only the acting state’s will and carries actual benefits for it, we think that the use of such declarations could be far more likely to happen than a Security Council resolution. It would also provide greater legitimacy and could potentially curb concerns of abuse.


In conclusion, introducing substitute compliance is already possible under the current legal bases for sanctions. However, with or without the Security Council, a strong limit is posed on it at least by state immunity. Additionally, it invites abuse and removing the carrot could make actual compliance less effective. This could be solved by the issuing of a unilateral declaration by the state introducing such a measure, which would provide a level of legal justification for it. In any case, despite the inherent feeling of justice that this idea carries, its implementation will need to be handled carefully.

Dawit Frick

Dawit Frick reads Law at Ludwig-Maximilians-Universität Munich with a focus on International and European Law. He further studied International and Comparative Law as well as International Relations in Seoul.

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Benedikt Leidner

Benedikt Leidner reads Law at Ludwig-Maximilians-Universität Munich, specializing in Public International and European Law. He holds a Diploma in Legal Studies from the University of Oxford, where he focused on Public International Law and English Private Law.

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