Ukraine will challenge compensation of $112 million for Tatneft in a Russian court

The Ministry of Justice of Ukraine filed a cassation appeal with the Supreme Court of the Russian Federation, which disputes the decisions of lower courts in the compensation case of Tatneft for $112 million.

“Appealed acts: determination of the arbitral court in the case of recognition and enforcement of the decision of the foreign court and the foreign arbitral award of March 11, 2019; resolution (determination) of the cassation court of June 21, 2019”, the commercial case file says.

In 2008, the Russian Tatneft began arbitration against Ukraine in accordance with the Russian-Ukrainian agreement on the promotion and mutual protection of investments. The case concerns the company Ukrtatnafta, which was created in 1994 in accordance with the decrees of the presidents of Ukraine and Tatarstan on the basis of the Kremenchuk refinery.

Earlier, 18.296% of Ukrtatnafta's shares belonged to structures close to Tatneft, the Ministry of Land and Property of Tatarstan owned 28.7788% of the shares, and another 8.6% of shares belonged directly to Tatneft. However, as a result of legal proceedings in Ukraine, the share of Tatarstan shareholders in the refinery was practically nullified, and the company had new shareholders close to the Privat group of Ihor Kolomoyskyi and Hennadiy Boholyubov.

In 2014, international arbitration ruled in favor of Tatneft and ordered Ukraine to pay compensation to the Russian company in the amount of $112 million, as well as interest. Since then, Ukraine has been trying to challenge this decision in international courts. In 2017,  Tatneft filed a similar petition – to enforce a court decision – with the High Court of London, which granted the company’s petition. In 2018, the Royal Court of London rejected the appeal of Ukraine and sentenced Tatneft to reimburse court costs, as a result, the total amount of compensation in favor of the Russian company grew to $146 million.

Since 2017, representatives of Ukraine and Tatneft have been arguing in the Moscow Arbitration Court about its effective jurisdiction, as well as about the existence of property in Ukraine on the territory of the Russian Federation, which can be taken into account as part of the recovery of a claim by a Russian oil company. Tatneft insisted that the part of the building of the Cultural Center of Ukraine in Moscow, which is used for commercial purposes, could be enforced, but the Ukrainian side managed to prove the diplomatic immunity of the building.

Therefore, the case was referred to the Arbitration Court of the Stavropol Territory: in this region Ukraine also has property – a sanatorium named after Semashko. In February 2019, the Arbitration Court of the Stavropol Territory approved Tatneft’s statement to Ukraine on the recognition and enforcement of a foreign court decision, according to which Ukraine should pay the company $112 million and interest due to the situation around Ukrtatnafta. In June, Ukraine lost the dispute to the cassation court.


Tags: contracts, oil, hydrocarbon production, court, legislation, The Minystry of Energy and Coal Mining, добыча нефти, RF, Oil refinery plant, foreign affairs, oil transit, debt

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