Losses from Russian seizure of Naftogaz Group’s assets in Crimea amount to about $8 billion

Naftogaz and six of its subsidiaries submitted their Reply Memorial on Quantum in the Permanent Court of Arbitration proceedings against the Russian Federation, responding to Russia’s Counter-Memorial on Quantum. In its Reply Memorial, Naftogaz further substantiates its claim for compensation for its assets that the Russian Federation unlawfully expropriated in Crimea in March 2014 – damages valued at approximately USD 8 billion, including interest.

Earlier, the Tribunal found that the Russian Federation had breached a number of BIT provisions by the expropriation of Naftogaz group’s assets in Crimea.

Despite Russia’s appearance in the arbitration in January 2017, it refused to actively participate in the proceedings for nearly three years. Thereafter, Russia submitted its Counter-Memorial in December 2019, but did not put forward any alternative measure of damages.

Instead, Russia argued that it owes Naftogaz nothing despite that Russia does not dispute that it unlawfully expropriated Naftogaz’s assets.

For reference:

Naftogaz commenced the arbitration (PCA Case No. 2017-16) against the Russian Federation in October 2016 under the Agreement on the Encouragement and Mutual Protection of Investments between the Cabinet of Ministers of Ukraine and the Government of the Russian Federation, commonly known as the Russia-Ukraine bilateral investment treaty. Naftogaz seeks compensation for Russia’s breaches of the bilateral investment treaty, primarily for the unlawful confiscation of its valuable energy assets in Crimea that were among Russia’s primary targets following its unlawful invasion and occupation of Crimea in 2014.

Oral hearings regarding jurisdiction and liability took place at the Peace Palace, in The Hague, in May 2018. In February 2019, the arbitral tribunal found for Naftogaz, holding that it has jurisdiction to hear Naftogaz’s claims, and that Russia is liable for unlawfully expropriating Naftogaz’s investments, in violation of Russia’s obligations under the treaty. This second phase of the arbitration is therefore limited to the determination of the quantum of Naftogaz’s losses.

A hearing on quantum is scheduled for May 2020 in The Hague. The final award on the quantum is expected by the middle of 2021.

Earlier it was reported that Naftogaz was completing the preparation of documents for the trial on assets in Crimea.

Source: Naftogaz

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