The Arbitration Court at the Permanent Court of Arbitration in The Hague has ordered Russia to pay $5 billion in compensation to the Ukrainian state company Naftogaz for the loss of its assets in Crimea. The court made this decision on April 12.
“The court ruled that the amount of compensation should be equal to the fair market value of Naftogaz assets until expropriation. Although Russia insisted that Naftogaz was not entitled to any compensation, the Arbitration Court did not agree with this claim.
The Ukrainian company claims that Russia is also obliged to reimburse the costs of arbitration proceedings.
The press service of Naftogaz emphasized that if the Russian authorities do not voluntarily agree to comply with the court decision, the company has the right to “start the process of admission to the recognition and execution of the decision” in countries where Russian assets are located. Federation is located.
“We are talking about the repurchase of assets related to the development of gas fields and the development of other strategically important infrastructure,” said Aleksey Chernyshov, head of the state-owned company.
According to him, Naftogaz lost “drilling rigs, gas pipelines, its own fleet and administrative buildings” in Crimea.
The press service of the court has not yet issued any decision on this matter. At the time the hearings began (February 21), the Ukrainian company demanded compensation of approximately $10 billion, double the amount ultimately decided by the court.
Moscow’s reaction
Commenting on the court’s decision, Dmitry Peskov, the press secretary of the President of the Russian Federation, promised that Moscow would decide on further action after the court decision was reviewed by Russian experts.
“Actually, this case took place. It’s not new. But the solution is new. It needs to be analysed,” he said.
Leonid Slutsky, chairman of the State Duma Committee on International Relations and leader of the Liberal Democratic Party, told the RIA Novosti agency that he politicized the court’s decision and said it was aimed at “legitimizing the looting of Russian assets” abroad.
“We still need to understand the veracity of Naftogaz’s interpretation,” Slutsky said.
Konstantin Dolgov, a member of the Federation Council, believes that Russia will not comply with the decision of the international courts on the payment of Ukraine.
“It’s a ridiculous situation. I am absolutely certain that there will be no action to implement this. Amendments were made to the Constitution in accordance with the realization of the priority of our law over all international norms. NSN.
long trial
Naftogaz and its subsidiaries, which own 17 fields, gas transmission systems and drilling rigs in Crimea, filed a lawsuit against Russia before the International Court in the fall of 2016.
The Ukrainian side believes that Moscow should pay compensation for the violation of the intergovernmental agreement on investment protection, including the “nationalization of strategically important energy investments”.
Officially, the assets of Naftogaz were expropriated by the decision of the Crimean Parliament on March 17, 2014.
The court in The Hague ruled in favor of Kiev in 2019, and the second phase of the arbitration proceedings regarding the amount of compensation began on February 21 this year. The Russian Ministry of Justice had previously stated that Moscow did not recognize the decision of The Hague tribunal and therefore did not participate in the proceedings.
The Financial Times considers it unlikely that the Ukrainian company will return the full amount awarded to it. The publication reminded that Russia’s assets, including the reserves of the Central Bank of Russia, were frozen in 2022 under sanctions in Western countries.