Naftogaz claims victory in dispute with Russia over $5 bln compensation for Crimean assets

MOSCOW. April 13 (Interfax) - The Arbitration Tribunal at the Permanent Court of Arbitration in The Hague has decided Russia should pay $5 billion in compensation to Naftogaz Ukrainy in connection with the loss of assets in Crimea, Ukrainian media reported, citing the Ukrainian company.

The court found that the amount of compensation should be equal to the fair market value of Naftogaz assets at the moment they become Russia's property, the report says.

"Arbitral awards can be enforced through the enforcement mechanism. Therefore, in the event that Russia refuses to voluntarily abide by the court's decision, in accordance with the New York Convention of 1958, Naftogaz has the right to begin the process of recognition and admission to enforcement of the decision on the territory of those states where Russia's assets are located.

According to Naftogaz, the arbitration award was made after hearings to determine the amount of compensation, which ended in March 2022.

In October 2016, Naftogaz and six other companies of the Naftogaz group initiated arbitration proceedings against Russia on the basis of an agreement between the Cabinet of Ministers of Ukraine and the Russian government on the promotion and mutual protection of investments. Naftogaz asked the arbitration tribunal to oblige Russia to pay compensation for violation of the investment protection agreement, including for "expropriation of strategically important energy investments."

Oral hearings on issues of jurisdiction and liability were held in May 2018. In February 2019, the tribunal ruled in favor of Naftogaz. The Tribunal confirmed its jurisdiction to hear the case and decided that Russia violated its obligations under the investment protection agreement. Accordingly, the current (second) stage of arbitration proceedings concerned the determination of the amount of compensation for the losses to Naftogaz.

In turn, the Russian Ministry of Justice earlier stated that Moscow does not recognize the decision by the Hague court to recognize Russia's guilt. "The Russian Federation did not participate in the relevant proceedings and does not recognize the partial decision due to the lack of jurisdiction for arbitration to consider the claim of NJSC Naftogaz and others against the Russian Federation," the ministry's press service said in a statement.

The Hague Arbitration Court is considering a number of similar cases against Russia.