Russia’s multimillion-dollar assets in France may be transferred to Naftogaz. French court gives the go-ahead
17 April 17:56
The Paris court has recognized and authorized the enforcement of the Hague arbitration award for $5 billion in damages caused by the illegal expropriation of Naftogaz’s assets in Crimea. This was reported by the Naftogaz Group, according to "Komersant Ukrainian".
“This result is part of our global campaign to enforce the arbitration award. This is an extremely important legal victory for Naftogaz of Ukraine and five other companies of the Group. It allows Naftogaz to start the collection procedure in France,” explained Roman Chumak, CEO of Naftogaz Group.
As part of this process, Naftogaz has already registered encumbrances on a number of assets owned by the Russian state and located in France, with a total value of more than EUR 120 million. This is the first step towards the enforcement of the arbitration award.
What Russia stole from Naftogaz in Crimea
Naftogaz was a leading participant in the natural gas market in Crimea, carrying out activities in the exploration, production, transportation, storage, processing and distribution of gas.
The list of stolen property includes special permits for subsoil use, equipment and infrastructure, rights to operate pipelines and gas storage facilities, shares in gas pipelines and more than 675 million cubic meters of gas in underground storage facilities.
A brief history of the lengthy litigation
In October 2016, Naftogaz initiated arbitration proceedings against Russia, claiming compensation for Moscow’s illegal seizure of the Group’s property in violation of the bilateral investment protection treaty between Ukraine and Russia.
After years of arbitration proceedings, on April 12, 2023, the tribunal formed under the auspices of the Permanent Court of Arbitration in The Hague ordered Russia to pay Naftogaz more than USD 5 billion for violating the terms of the agreement.
Initially, Russia refused to participate in the case, but later changed its position and actively participated in the stage of consideration of the compensation issue.
Recently, the Supreme Court of the Kingdom of the Netherlands dismissed the cassation appeal of the Russian Federation to set aside the tribunal’s decision on jurisdiction and merits.
Despite the arbitral award and the ruling of the Supreme Court of the Netherlands, Russia refuses to pay Naftogaz the amount awarded. As a result, Naftogaz has initiated an international collection campaign aimed at enforcing the arbitral award in jurisdictions where Russia has assets.
Naftogaz and five other Group companies have also filed a motion with the US Federal District Court in the District of Columbia to recognize the arbitral award and to allow its enforcement.
According to Roman Chumak, CEO of Naftogaz Group, there have already been some successes in several other jurisdictions, including the UK and Finland.
“We are determined to recover the full amount of compensation and protect the rights of Ukrainian state-owned enterprises in the international arena,” the official emphasized.
Success in this case will set a precedent that could help other Ukrainian companies that have suffered losses and damages due to Russian aggression.
Who else is suing Russia over thefts in Crimea
In June 2015, 18 companies and an individual applied to the Hague Arbitration for property lost in the annexed Crimea.
“The claimants stated that due to the measures taken by Russia in Crimea, they were deprived of the right to invest in real estate in Crimea, and later these properties were expropriated from the rightful owners,” the press release of the Permanent Court of Arbitration in The Hague said.
on May 2, 2018, the arbitration tribunal issued a unanimous award on liability and damages. According to preliminary information, this amount exceeds USD 140 million.
In November 2023, Ukraine’s largest private energy holding DTEK of Rinat Akhmetov reported that the arbitration court in The Hague had fully satisfied DTEK’s claim against the Russian Federation for the seizure of assets in the illegally annexed Crimea and ordered Russia to pay the Ukrainian company $267 million in damages. The trial on DTEK Krymenergo’s claim against Russia had been ongoing since 2017.”
Privatbank, Ukrnafta, Belbek airport, Stabil, Everest Estate, and Oschadbank have also filed lawsuits against Russia to protect their property in Crimea on the basis of the Ukrainian-Russian intergovernmental agreement on the promotion and mutual protection of investments.
Ukrenergo is also suing Russia for illegally expropriated energy assets and investments in Crimea. The amount of the invoice issued by the company to the aggressor is €527 million. This claim will be considered by the Arbitration Tribunal in Paris.
There have been other lawsuits filed in international courts, where not only money but also Russian foreign property was demanded as compensation.
As a reminder, in March 2014, about 480 enterprises and organizations were “nationalized” in the Russian-annexed Crimea.
