On 26 February 2022, Canada, the European Commission, France, Germany, Italy, the United Kingdom and the United States decided to prohibit transactions with the Russian Central Bank, which in effect amounts to freezing the latter’s assets deposited with banks in the respective countries (see for example here for the U.S. measure and here for the EU one). On 9 March 2022, the EU approved a similar measure in respect of the Central Bank of Belarus.
Such unilateral sanctions are not unprecedented: the U.S. froze the assets of the respective central banks of Iran, Venezuela and, more recently in 2021, Afghanistan. Freezing the assets means that they are blocked and therefore can no longer be withdrawn, transferred, paid, etc.: in principle, it is essentially a temporary measure, that is not tantamount to a confiscation. In some cases, however, the sanctioning State goes one step further and allows the funds to be used to satisfy judgments against the targeted State (this is what happened with the assets held by Iran’s Central Bank in the U.S., thereby triggering litigation at the International Court of Justice) or to benefit the population of the targeted State (this is what the U.S. administration recently announced in February 2022 for half of the frozen reserves of the Afghan Central Bank).
The property of foreign central banks enjoys a strong protection under the international law rules governing sovereign immunity. For example, the 2004 United Nations Convention on Jurisdictional Immunities of States and Their Property, which is not in force yet but is increasingly regarded by domestic courts as reflecting rules of customary international law in most of its provisions, clearly provides that central bank property is covered by immunity from measures of constraint (see Articles 18, 19(c) and 21(1)(c)).
As such, the Convention only applies, nevertheless, to measures of constraint (“such as attachment, arrest or execution”) taken “in connection with a proceeding before a court” (Articles 18 and 19). Hence the question whether, under existing customary international law, sovereign immunity also protects central bank assets (and more generally State property) against measures of constraint which – like the asset freezes discussed here in the context of the sanctions against Russia – take the form of an administrative decision adopted by the executive branch of government, thus outside any court proceedings. There is still some controversy on this issue.
The very ratio of the immunity – namely safeguarding the sovereignty of the State by protecting its property against measures of constraint taken by other States – seems to support the view that any measure limiting the availability of the property for the State, does entail the applicability of the immunity, irrespective of whether the measure is related to a court proceeding or is imposed by the government as a sanction. However, relevant State practice should still develop in order to confirm it. The recently adopted sanctions against the Russian and Belarussian central banks may lead to some clarification in this respect.