23 Jun 2023 11:09

Naftogaz files motion in U.S. to collect $5 bln from Russia awarded by Hague tribunal

MOSCOW. June 23 (Interfax) - Naftogaz Ukraine, along with five Naftogaz group companies, has filed a motion to the United States District Court for the District of Columbia to confirm the earlier award by the Arbitral Tribunal of the Permanent Court of Arbitration at The Hague requiring Russia to pay $5 billion, including interest, in compensation for the damages and lost property of Naftogaz in Crimea, Ukrainian media reported, citing the oil and gas company's website.

The motion was filed because arbitration rulings can be carried out through compulsory enforcement. Under the 1958 New York Convention, Naftogaz has the right to initiate the process of recognition of and admission to award enforcement in countries hosting Russian assets, the company said.

"Since Russia has not voluntarily paid the funds to Naftogaz as provided for by the award, we intend to leverage all available mechanisms to recover these funds. We are currently working on this in the United States and other target jurisdictions," Naftogaz Group CEO Alexei Chernyshov said in the press release.

Under U.S. laws, confirmation of the award is mandatory unless the court establishes the existence of causes to refuse or delay recognition or enforcement of the award set out in the New York Convention. Interest for non-payment of funds in accordance with the award continues to accrue until the full payment of compensation under the award, Naftogaz said.

Naftogaz said in April that the Arbitration Tribunal at the Permanent Court of Arbitration in The Hague had ruled Russia should pay $5 billion in compensation to Naftogaz in connection with the loss of assets in Crimea. Dmitry Peskov, the Russian president's press spokesman, said Russia would analyze the ruling.

Naftogaz and six other companies of the Naftogaz group in October 2016 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.

The Russian Justice Ministry earlier stated that Moscow does not recognize the decision by the court in The Hague 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 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.