Compensation for assets seized in Crimea: Russia loses cassation appeal versus Naftogaz in Dutch court

The relevant statement was made by Naftogaz Group’s press service, an Ukrinform correspondent reports.

“The decision of the Supreme Court strengthens the position of Naftogaz Group in enforcement proceedings to recover the debt owed by Russia for the illegal seizure of assets in Crimea. We are grateful to our legal advisors, Covington & Burling and NautaDutilh, for their outstanding work. Naftogaz is on the path to restoring justice,” Naftogaz of Ukraine NJSC Board Acting Chairman Roman Chumak noted.

As emphasized by Naftogaz Group, the Dutch courts have confirmed for the second and final time the legality and validity of the Partial Award issued by the arbitral tribunal at the Permanent Court of Arbitration in The Hague.

A reminder that, in October 2016, Naftogaz and another six companies, which are part of Naftogaz Group, initiated arbitration proceedings against the Russian Federation at the Permanent Court of Arbitration (PCA) based on the agreement between the Cabinet of Ministers of Ukraine and the Government of the Russian Federation on the encouragement and mutual protection of investments.

Naftogaz requested that the PCA oblige Russia to pay compensation for the viation of the investment protection agreement, in particular for the illegal exprriation of Naftogaz’s strategically important energy investments, which became one of Russia’s main targets in Crimea in 2014.

In February 2019, the PCA issued a partial award in favor of Naftogaz, confirming its jurisdiction over the case and establishing that Russia had breached its obligations under the Investment Protection Agreement by illegally exprriating Naftogaz’s investments in Crimea.

The second stage of the arbitration proceedings invved determining the amount of compensation for the losses suffered by Naftogaz Group. In July 2022, the Hague Court of Appeal confirmed the jurisdiction of the PCA in this case.

On April 12, 2023, the PCA ordered Russia to pay USD 5 billion in compensation for the losses caused by the seizure of the assets of Naftogaz Group’s companies in Crimea in 2014. The arbitration award came after hearings to determine the amount of compensation, which ended in March 2022 against the backdr of Russia’s full-scale invasion of Ukraine.

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