Mikhail Fridman, a co-founder of Russia’s Alfa Group, is claiming about $16 billion from Luxembourg, which froze his assets there. As of 15 October 2026 his arbitration claim is still pending, even though the EU has lifted his sanctions. On 22 September 2026, the Council of the EU extended its sanctions over Ukraine’s territorial integrity for three more years, to 22 September 2029, but dropped a few names. According to Paperjam and the Kyiv Independent, two of them were Fridman and Alisher Usmanov.
The case shows a tool few families think about: a treaty that lets a private investor take a state to an international tribunal. Here is how such cases work, and why governments worry about them.
How Fridman came off the EU sanctions list
The Council’s press release says the listings of three individuals and one entity were not renewed, without naming them; more than 3,000 remain. The Kyiv Independent reported that the delisting followed a threat by France, Luxembourg and Slovakia to let the whole regime lapse. Renewal needs unanimity.
Publicly, Prime Minister Luc Frieden said the decision served the country’s “best interests”, Paperjam reported. On 12 October he briefed parliament’s foreign affairs committee behind closed doors. Two opposition MPs, Sam Tanson (Greens) and Franz Fayot (Socialists), described the session to the Kyiv Independent. According to Tanson, he explained that the aim was to make the arbitration go away, given its size relative to the national budget. His office did not comment to the newspaper.
Fridman’s lawyer, Aaron Bass, told Paperjam that his client is “currently assessing his legal strategy” and acknowledges Luxembourg’s “positive role” in lifting the sanctions. The two MPs said the claim had not been withdrawn.
What a bilateral investment treaty is
A bilateral investment treaty is an agreement in which two countries promise to protect investments made by each other’s investors, for example against expropriation without compensation. Unusually, the investor can enforce it directly, by starting arbitration against the host state.
Fridman relies on a 1989 treaty signed by the Soviet Union and the Belgium-Luxembourg Economic Union. Javier Garcia Olmedo, an arbitration specialist at the University of Luxembourg, told Paperjam that its arbitration clause is narrow: it covers disputes about the amount or payment of compensation for expropriation. In an earlier case under the same treaty, Berschader v. Russia, a tribunal read this clause narrowly and refused to widen its jurisdiction. Kamalia Mehtiyeva, a law professor writing in Le Club des Juristes, expects jurisdiction to be the first battle.
How investor-state arbitration works
Who can sue. An investor from one treaty country with an investment in the other. The Permanent Court of Arbitration (PCA) lists Fridman as a national of Russia and Israel. Companies can claim too, so the country where a holding company sits can decide which treaties apply. (We explain holding companies in Holding Structures in Plain English.)
Where, and under which rules. Under this treaty, an investor can choose the Stockholm Chamber of Commerce or ad hoc arbitration, according to an expert quoted by Paperjam. Fridman chose ad hoc arbitration under the 1976 UNCITRAL rules. The PCA in The Hague administers the case, number 2025-42, and the legal seat is Hong Kong. Only courts at the seat can set an award aside, and only on limited grounds. The PCA dates the start of proceedings to 13 August 2024.
Who decides. Under the UNCITRAL rules, each side appoints one arbitrator, and those two choose the presiding arbitrator. If a state refused to take part, the PCA’s Secretary-General could appoint arbitrators, Garcia Olmedo told Paperjam in 2024. According to the Luxembourg Times, Fridman appointed Gourab Banerji and Luxembourg appointed Klaus Sachs, and Joongi Kim, a Yonsei Law School professor in Seoul, was named presiding arbitrator on 5 November 2025.
How long, and what then. The expert quoted by Paperjam estimated two to five years. An award binds the parties, and a winner can try to enforce it in other countries under the New York Convention.
Why states fear these cases
- Size. Paperjam put the claim at nearly 15% of Luxembourg’s GDP. Garcia Olmedo calls the figure a litigation strategy, not an expected award.
- Volume. By the end of 2025, sanctioned persons had brought 24 such challenges, eight against EU states, Paperjam reported. Belgium, also party to the 1989 treaty, faced nine notices by May 2026, according to Belgian press cited by Paperjam.
- One state carries the risk. Sanctions are agreed by 27 governments, but each claim targets one. Fayot said Frieden spoke of “no solidarity at EU level” for any damages. Garcia Olmedo warns of “regulatory chill”: the threat of a claim shaping policy before any ruling.
The EU’s “no-claims” shield
A European Commission spokesperson told the Kyiv Independent that EU sanctions regulations contain a “no-claims clause” that shields states from such compensation claims. The legal text is narrower than the nickname: Article 11 of Regulation 269/2014, the regulation behind these listings, says that claims connected with a contract or transaction affected by the sanctions shall not be satisfied when listed persons make them.
The 18th sanctions package of July 2025 went further. According to Paperjam, an award from such a case rendered outside the EU cannot, in principle, be recognised or enforced in an EU state, and states can, under certain conditions, recover their damages and legal costs. Garcia Olmedo told Paperjam that Fridman “should not be able to enforce a judgment in Europe”, though attempts elsewhere remain possible. He added that the delisting does not end the case, but may complicate the damages claim now that the assets are no longer frozen.
A fair caveat
The tribunal has not ruled on anything yet, including whether it has jurisdiction. The prime minister’s remarks in committee are known only through MPs’ accounts. The claim is usually reported as $16 billion; euro figures differ between outlets, from €13.8 billion (Luxembourg Times) to about €14.5 billion (Paperjam). Fridman has not said whether he will continue.
Five lessons to take away
- A treaty can make an investor a litigant against a state. No government has to take up the case.
- The clause can decide a case before the facts do. A narrow arbitration clause can stop a claim at the door.
- A claim is not an award. The claimant sets the headline number.
- Winning is not collecting. Where an award can be enforced matters as much as the ruling.
- Politics and law run on separate tracks. A delisting can change the damages picture without ending the case.
Questions to bring to your advisors
Which investment treaties, if any, protect our cross-border holdings, and through which entity? Does the treaty let individuals claim, and what does its arbitration clause actually cover? How could sanctions rules, or the EU’s limits on enforcing awards, affect a claim? These are questions to bring to your advisors, not advice.
