Attached is the case where the UKCA considered an application for declaratory relief sought by L1T FM Holdings and LetterOne Core Investments Sarl that a compensation would be due under Article 1 of Protocol 1 to the ECHR (violation of a right to property).
The relief was sought in connection with the forced sale by one of the appellants of its optic fibre UK company. This forced sale was demanded by the UK Government on the basis of national security risks. These risks were identified on the basis of an alleged affiliation of the appellants with the UBOs who are subject to the UK asset freeze sanctions against Russia. The appellants, in essence, claimed that the forced sale did not allow them to obtain the market value for the company. Accordingly, it was in breach of the UK obligations under Protocol 1 to the ECHR to ensure full compensation for any expropriated asset.
The UKCA dismissed the appeal.
As to the level of compensation and the procedure for its determination, the UKCA rules that (among other matters): (i) the compensation shall be “reasonably related to a value” (the standard which is not equivalent to a market value of a company, but can be above or below such a market value); (ii) the reasonableness will depend on the circumstances; and (iii) in case of national security motivated expropriation, the executive will be accorded wide margin of appreciation.
Applying the above to the facts of the sale (forced sale completed within a one year period and in the middle of the development cycle of the company), the UKCA was satisfied that no breach of Protocol 1 to the ECHR occurred.
Starting from 2022, various companies located in Europe and affiliated with Russian persons where expropriated by national governments on similar grounds. The case is an important authority as to how this category of claims is likely to be treated in the European national courts. It is also very likely that this and other similar cases will eventually settle at the ECtHR for final judgement on the sufficiency of compensation.