Compensation for Business Property Destroyed by War

On November 28, 2025, the Cabinet of Ministers of Ukraine adopted Resolution No. 1541 approving the Procedure for Partial Compensation of the Value of Property Destroyed or Damaged as a Result of the Armed Aggression of the russian federation. Formally, the resolution introduces a business compensation mechanism, but in legal terms this model is far more complex and significantly more cautious than it may initially appear.

In reality, the state has created not a classical damage compensation system, but a special quasi-compensation framework combining elements of budgetary support, insurance mechanisms, and a recourse model for future claims against the russian federation. That is why it is critically important for businesses to properly understand the legal structure of this program before joining it.

The key issue is that compensation under Resolution No. 1541 is not an unconditional obligation of the state. It is not a civil-law damages mechanism in the traditional sense, where an injured party has a guaranteed right to full restoration of its financial position. Instead, the mechanism functions as a support program operating strictly within the limits of state budget allocations and subject to a number of preliminary financial and procedural requirements.

The entry mechanism itself is particularly illustrative. To participate, a business entity must not only submit an application via Diia or the Export Credit Agency portal, but also conduct an independent valuation of each property asset, pay a contribution equal to 0.5% of the estimated losses, and provide proof of ownership.

At the same time, this contribution is not an insurance premium in the classical sense. It does not create an automatic obligation for the state to make a payment. Moreover, even if financing is unavailable or the relevant conditions are not met, these funds are non-refundable. In practice, businesses are paying merely for access to the state support mechanism, the outcome of which depends on numerous future factors.

The restrictions regarding compensation eligibility are even stricter. The Resolution directly excludes businesses with tax debt, ongoing bankruptcy proceedings, sanctions exposure, or beneficial owners who are citizens of the aggressor state. Separate requirements also apply to agricultural businesses.

Importantly, the program is not retroactive. If property was destroyed earlier, businesses cannot benefit from the compensation mechanism.

This creates a rather paradoxical situation where many companies that suffered the greatest losses during the early stages of the full-scale invasion are effectively excluded from the new framework.

The procedure for documenting losses also deserves special attention. This is where the most significant legal risks for businesses will arise. The Resolution effectively creates a model in which the prospect of obtaining compensation directly depends on the quality of the initial documentation of shelling or destruction consequences. Emergency service reports, police records, inspection acts, photo and video evidence, and inclusion of information in state registries become not mere formalities, but critically important elements of the evidentiary framework.

This reveals one of the fundamental problems of Ukrainian practice: most companies begin dealing with legal documentation of losses only after destruction occurs, whereas effective protection of property interests during wartime requires preparation long before the risk materializes.

Equally important is the state’s liability cap. The maximum compensation amount is limited to UAH 10 million and may not exceed the amount of direct actual losses. At the same time, the total initial budget for the program is only UAH 1 billion. Once this limit is exceeded, acceptance of applications may be suspended.

For medium-sized and large businesses, this means one obvious thing: the program is inherently incapable of fully restoring the financial position of an enterprise.

Even more interesting is the legal structure governing the assignment of claims against the russian federation. By submitting an application, a business automatically joins the mechanism assigning to the state the right to pursue claims against russia within the amount of compensation paid. Essentially, Ukraine is building a recourse model under which, after partially compensating losses from the budget, the state acquires the right to recover those amounts from the aggressor state.

At the same time, businesses retain the right to independently seek recovery of uncompensated damages, including through international courts and arbitration mechanisms. This may eventually become one of the key elements of the future wartime reparations system.

A separate section of the Resolution addresses compensation of insurance premiums for war-risk insurance contracts. However, even here the state chose not direct subsidization, but a conditional co-financing model. For each application, businesses must pay a separate UAH 5,000 contribution, which is also non-refundable even if compensation is denied.

Furthermore, compensation is available only after the insurance contract expires and the insurance premium has been fully paid. If the contract is terminated early, the right to compensation is lost entirely.

Ultimately, Resolution No. 1541 creates a highly complex and multi-layered legal framework in which the state attempts simultaneously to support businesses, limit budgetary risks, and establish the future foundation for international claims against russia.

For businesses, however, the key conclusion is different: this system does not guarantee automatic or full compensation for losses. It merely creates a procedural mechanism for the possible receipt of partial compensation, provided that businesses undertake proper legal preparation, join the program in time, and ensure flawless documentation of wartime damage.

This is why the issue of wartime business losses is gradually shifting from the sphere of “post-war compensation” into the sphere of systematic legal risk management during the war itself.