The National Joint Stock Company Naftogaz of Ukraine and its 6 subsidiaries initiated arbitral proceedings against the Russian Federation on October 17th claiming damages caused by the illegal takeover of assets in the Crimea, as reported by the press-service of the company.
Naftogaz initiated the proceedings in accordance with the agreement between the Cabinet of Ministers of Ukraine and the Government of the Russian Federation on the promotion and mutual protection of capital investments, more generally known as the Russian-Ukrainian bilateral investment treaty. Naftogaz preliminary damage estimates were at $2.6 billion, the statement reads.
According to the company, the matter centers on assets of Naftogaz of Ukraine, Chornomornaftogaz, Ukrtransgaz, UkrGasVydobuvannya, UkrTransNafta, Gas of Ukraine and Likvo.
"After the illegal invasion of the Crimea and the occupation of the peninsula in 2014, the Russian Federation applied a large and well-coordinated scheme of property seizures of Ukrainian companies without compensation. Naftogaz had several valuable energy assets in the Crimea. Russia’s seizure flagrantly violates the bilateral investment agreement that requires the Russian Federation to respect and protect Ukrainian assets including those in the Crimea,” stated Naftogaz of Ukraine.
The report does not specify what court the suit has been filed in but earlier similar suits regarding lost assets in the Crimea were filed at The Hague, notably by Oschadbank and a number of companies owned by Ihor Kolomoyskyi. In February, Naftogaz initiated a negotiation process regarding the loss of its assets in the Crimea, sending notification to the Russian Federation about investment disputes founded on the bilateral agreement on mutual protection of capital investments between the two countries.
The six-month period of negotiations ended in August. The negotiation process was unsuccessful, which is a prerequisite for starting the arbitral process against the Russian Federation regarding the investment treaty.
Naftogaz of Ukraine engaged Covington & Burling LLP, a New York-based firm, to protect their interests in the legal battle over lost Crimean assets.