Recovery of $5B from Russia for Crimean assets of Naftogaz: UK court recognizes Hague decision
A court in the United Kingdom has recognized the decision of the Hague arbitration to compensate Naftogaz Group for $5 billion for assets seized by Russia in Crimea.
According to Ukrinform, this was reported by the Naftogaz of Ukraine.
"Naftogaz of Ukraine and five other companies of the Naftogaz Group have received an order from the UK's High Court of Justice recognizing an arbitral award to compensate Naftogaz Group for damages (including interest) in the amount of $5 billion, as well as a partial arbitral award on jurisdiction and liability. The order was issued by the court on December 5, 2023," the statement said.
On April 12, the Arbitral Tribunal of the Permanent Court of Arbitration in The Hague issued a final award in the case of compensation by Russia for damages caused by Russia's illegal seizure of Naftogaz Group's assets in the Autonomous Republic of Crimea in 2014.
According to Naftogaz Group CEO Oleksiy Chernyshov, "Naftogaz Group is one step closer to restoring justice. The British court has recognized the recent arbitral award to compensate Naftogaz for losses of $5 billion for the Group's assets in Crimea seized by Russia."
"Since the aggressor has not voluntarily paid the funds stipulated by the Hague judgment, we continue to use all available mechanisms to recover these funds in the target jurisdictions where Russian assets are located," Chernyshov commented.
Naftogaz noted that among all the arbitration awards on the claims of Ukrainian investors about Russia's illegal seizure of their assets in Crimea, the amount of compensation for this claim, which was ruled in favor of the company, is the largest.
The application to the UK court is part of Naftogaz Group's global strategy to recover the said compensation.
Naftogaz is also working on obtaining confirmation and enforcement of the arbitral award in the United States of America and other target jurisdictions.
Russia is scheduled to appear before the U.S. District Court for the District of Columbia on February 23, 2024 following successful service of a subpoena on Russia through diplomatic channels.
Interest provided for non-payment of funds in accordance with the arbitral award continues to accrue until full payment of compensation.
On April 12, 2023, the Arbitral Tribunal at the Permanent Court of Arbitration in The Hague ordered Russia to pay $5 billion in compensation for the damage caused by the seizure of Naftogaz Group's assets in Crimea in 2014. The arbitral award was made after hearings to determine the amount of compensation, which ended in March 2022 amid Russia's full-scale invasion of Ukraine.
In October 2016, Naftogaz and six other companies of the Naftogaz Group initiated arbitration proceedings (PCA case No. 2017-16) against the Russian Federation based on the agreement between the Cabinet of Ministers of Ukraine and the Government of the Russian Federation on the promotion and mutual protection of investments, also known as the Ukrainian-Russian Investment Treaty.
Naftogaz asked the Arbitration Tribunal to order Russia to pay compensation for violation of the Investment Treaty, in particular for the illegal expropriation of Naftogaz's strategically important energy investments, which became one of Russia’s main targets in Crimea in 2014.
Hearings on jurisdiction and liability were held at the Peace Palace in The Hague in May 2018.
In February 2019, the arbitral tribunal ruled in favor of Naftogaz. The arbitral tribunal confirmed its jurisdiction over the case and found that Russia had breached its obligations under the Investment Treaty by illegally expropriating Naftogaz's investments in Crimea.
Therefore, the second stage of the arbitration proceedings involved determining the amount of compensation for the losses incurred by Naftogaz Group.
In July 2022, the Hague Court of Appeal confirmed the jurisdiction of the Arbitral Tribunal in this case.
As reported, Naftogaz's legal advisor has developed a strategy to enforce compensation of $5 billion from Russia for property in the temporarily occupied Crimea.