The Permanent Court of Arbitration in Hague, the Netherlands, has ruled that Russia should compensate Ukrainian oil monopoly Naftogaz for the assets the company has lost control of since the start of Russia’s occupation of the Ukrainian territory of Crimea in 2014, the CEO of Naftogaz said at a press conference on March 1
“We were able to prove that Russia, as a state, is responsible for the loss of our assets in Crimea and must answer for it. This means providing compensation,” Andriy Kobolyev said.
The court will rule on the sum of the compensation in the next stage of the trial. This could drag on until next year, Kobolyev says.
Naftogaz estimates the value of the expropriated assets in Crimea and the Black sea shelf at $5 billion. This includes assets of Naftogaz itself and its subsidiaries: gas reserves, pipelines and infrastructure for gas and oil extraction.
Naftogaz says these were the most valuable energy assets in Crimea and they were the main target of Russia when it confiscated Ukrainian property after it invaded and started to occupy Crimea. The occupation authorities of Crimea “nationalized” Naftogaz’s assets soon after the beginning of the occupation.
The Hague Arbitration found that Russia’s actions against Naftogaz were illegal and violated the bilateral agreement between Ukraine and Russia on the mutual protection of investments. This agreement obliges Russia to respect and protect Ukrainian assets, including those in Crimea.
This is not the first time that Ukraine and Ukrainian companies have won a case against Russia in the Hague Arbitration Court for losses caused by Russia’s illegal occupation of Crimea — the court has also ruled that Russia should compensate the state bank PrivatBank, which is seeking $1 billion compensation. In another ruling, the court ordered Russia to compensate 18 Ukrainian companies for losses amounting to $159 million.
On Sept. 12, 2018 Kyiv’s court of appeals ruled to arrest the shares of the Ukrainian subsidiaries of the Russian banks VTB, Prominvestbank and Sberbank to enforce the rulings of the Hague Arbitration court.
