Expropriation risks for foreigners in Russia will rise

Significance

Operating restrictions on Western firms since 2022 have expanded into expropriation risks over the last year. This month Putin signed a decree to authorise the seizure of US assets in response to any decision by Washington to confiscate Russian assets.

Impacts

• Confiscation of Western assets in Russia will be met with multiple lawsuits for investment treaty breaches, and vice versa.
• Western firms that remain in Russia will book substantial losses if they are forced to exit under domestic pressure.
• Russia’s sovereign assets in the West face an increased risk of seizure amid renewed efforts to funnel frozen Russian funds to Ukraine.