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 oil and gas company Naftogaz for the loss of its assets in Crimea. The decision was issued on April 12 and represents the court’s assessment of the fair market value of Naftogaz assets as of the time of expropriation.
According to the ruling, the compensation should reflect the fair market value of Naftogaz assets up to the moment of expropriation. Russia had argued that Naftogaz was not entitled to any compensation, but the Arbitration Court did not accept that position. In addition to the principal amount, Naftogaz asserts that the costs of arbitration should be reimbursed by Russia, a claim the Ukrainian company continues to pursue as part of the case outcome.
The press service of Naftogaz emphasized that if Russia does not voluntarily comply with the court’s decision, the company may seek recognition and enforcement of the award in locations where Russian assets are held. This step would be pursued in jurisdictions within which Russia maintains assets, with the aim of ensuring practical satisfaction of the ruling.
According to Aleksey Chernyshov, head of Naftogaz, the awarded figure covers the repurchase of assets tied to the development of gas fields and other strategically important infrastructure. Chernyshov noted that Naftogaz lost drilling rigs, gas pipelines, its own fleet and administrative buildings in Crimea, and that the judgment recognizes the value of those losses.
The court’s press service has not issued further decisions on related enforcement steps. At the outset of the case in late February, Naftogaz initially sought around $10 billion, a figure significantly higher than the amount ultimately determined by the Hague tribunal.
Moscow’s response
In response to the ruling, Dmitry Peskov, the press secretary for the Russian president, indicated that Moscow would review the decision with Russian experts before deciding on subsequent actions. He described the case as an event with a new solution that requires careful analysis rather than a simple conclusion.
Leonid Slutsky, who chairs the State Duma Committee on International Relations and leads the Liberal Democratic Party, suggested in comments to RIA Novosti that the decision could be politicized and argued it appeared aimed at legitimizing the export of Russian assets. He added that, while the veracity of Naftogaz’s interpretation must be assessed, the political implications were not negligible.
Konstantin Dolgov, a member of the Federation Council, voiced skepticism that Russia would comply with the international court’s payment order, framing the situation as unlikely to yield enforcement. He asserted that constitutional priorities in Russia supersede international norms in this context and cast doubt on any immediate compliance. The discussion highlighted ongoing tension between national legal prerogatives and international judicial decisions.
Background and timeline
Naftogaz and its subsidiaries, which own 17 gas fields, transmission systems and drilling rigs in Crimea, filed a lawsuit against Russia at the International Court in the fall of 2016. The Ukrainian side maintains that Moscow violated an intergovernmental agreement on investment protection by nationalizing strategic energy investments, among other actions that affected Naftogaz assets. Officially, the assets were expropriated following a 2014 decision by the Crimean Parliament.
The Hague tribunal initially ruled in Kyiv’s favor in 2019. The second phase of the arbitration, focused on the amount of compensation, began on February 21 of the current year. Russia’s Ministry of Justice had previously stated that Moscow did not recognize the court’s decision and did not participate in the follow-up proceedings. Analysts note that the final amount may be influenced by broader sanctions and asset freezing patterns affecting Russia’s financial standing. Financial press coverage highlighted that the likelihood of recovering the full awarded sum is tempered by the broader legal and economic sanctions environment that has constrained Russia’s asset availability since 2022, including components tied to central bank reserves. This context shapes expectations about practical enforcement and recovery.