Entrepreneurs expect that appropriate compensation mechanisms will be created for them.

The American Chamber of Commerce in Ukraine presented the results of the Doing Business After 15 Months of Full-Blown War in Ukraine survey, according to which 49% of respondents indicated that their business was damaged during the war: 27% of them have minor damage, 22% have significant damage that requires substantial restoration.

53% of companies affected by the Russian aggression do not plan to claim compensation from the aggressor country. 32% have not yet decided. Only 15% are considering claiming compensation from Russia for direct losses or lost profits.

The main reasons for these low figures are the number of losses (two-thirds of those companies have suffered losses of less than $10 million), the complexity of the process, the uncertainty of the outcome of compensation and the high costs. Companies have to compensate for losses and damage caused by the war using their own resources.

The main difficulties in the compensation process, according to business representatives, are:

  • Unclear legal enforcement strategy (48%),
  • an overly lengthy court and enforcement procedure (40%),
  • significant costs associated with the court proceedings (27%),
  • lack of experience in litigation in non-Ukrainian jurisdictions (21%),
  • shortcomings of the valuation methodology in Ukraine (19%).

Entrepreneurs whose property has been damaged by Russian missiles and shells can record the damage and calculate the losses. Since the end of 2022, appraisers have been working according to an updated methodology developed by the State Property Fund. Most of these requests came from de-occupied communities.

Clarification of the State Property Fund of Ukraine

The first thing to do if your business has suffered losses due to aggression is to determine the value of the damage. The official website of the State Property Fund of Ukraine (SPFU) has published recommendations for assessing losses caused by the aggression of the Russian Federation. The SPFU suggests following the following steps to determine the value of losses:

  • Step 1: Collect all possible documentary evidence of damage and/or destruction of property due to armed aggression;
  • Step 2: Confirm your ownership of the property. It is necessary to prove that the damaged or destroyed property was on the company’s balance sheet;
  • Step 3: Order a damage assessment. Contact an expert who evaluates business property. The expert will assess the damage following the Methodology for Assessing Business Losses as a Result of Russian Aggression, developed by the SPFU team in cooperation with the Ministry of Economy. You will receive a damage assessment report based on the work results;
  • Step 4: Get the report reviewed. Send the report for review to business valuation specialists, who will confirm that the valuation aligns with the Methodology. We recommend contacting professional unions of appraisers;
  • Step 5: Save the peer-reviewed report. Wait with the report for the opportunity to file a lawsuit against the aggressor country. If your information receives a negative review, demand that the expert revise the damage assessment. The SPFU recommends that affected entrepreneurs order a damage assessment now. The sooner you do this, the more evidence you will have to file a lawsuit against Russia. The American Chamber of Commerce and Ernst & Young emphasize that to support Ukraine’s economic recovery, it is critical to streamline the process of obtaining compensation from the aggressor and seek support from donors to restore business.

See also

  • Ukrainians actively open their businesses in Poland. Since the beginning of 2022, Ukrainians have created over 10,000 companies in Poland.
  • SSU to notify of suspicion oligarch with Russian roots Pavlo Fuks. He is under sanctions and is suspected of significant financial fraud and tax evasion.