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Hague court Oks Ukrainian case against Russia

July 4, 2017

The Permanent Court of Arbitration in the Hague has said it has jurisdiction to hear the case of a Ukrainian company seeking to recover damages for property lost when Russia annexed Crimea.

Ukraine Kiew Ukrnafta-Gebäude
Image: picture-alliance/dpa/RIA Novosti/E. Kotenko/

The Ukrainian energy firm PJSC Ukrnafta is seeking damages for gas stations taken over in Crimea after Russia's annexation in 2014. The claimants argue that they were unfairly stripped of property and are owed compensation. This case, and others like it, will now be heard at the Permanent Court of Arbitration in the Hague.

The Netherlands-based court ruled that the case was covered by a 1998 bilateral investment treaty between Ukraine and Russia designed to encourage economic cooperation and expansion. The court ruled that the bilateral investment treaty permitted investors of one country whose property has been appropriated by the other country to launch private arbitration proceedings.

The court said it would also hear claims brought against Russia by 10 other Ukrainian companies, including Stabil LLC.

"In each case, the claimants seek compensation for property expropriated by the Russian authorities after the Russian annexation of Crimea," James Boykin, a partner at Hughes Hubbard & Reed, representing five of the claimants, told DW. 

He said that in all five cases, the tribunals have now affirmed their jurisdiction and found that the Russian Federation’s obligations under the treaty apply to the claimants’ investments. These include an airport, a network of bank branches, various property on the Crimean coast and chains of petrol stations, Boykin said. 

"Our objective is to obtain an award of compensation equal to the value of each expropriated property," Boykin said, adding that collectively, the compensation sought by the claimants in the cases totals more than $1 billion (940 million euros).

Russian recalcitrance

Russia has said it would not consent to participate in arbitration proceedings.

A Russian foreign ministry spokesperson said it had studied Ukraine's claims but that Kyiv had "not shown interest in dialogue with Moscow," and had ignored concerns over the rights of ethnic Russians and Russian-speakers in Ukraine.

"The Russian Federation’s refusal to participate in these arbitrations will not prevent the arbitrations from moving forward and any awards rendered in these cases will be enforceable in any of the 145 countries that are signatories to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards," Boykin said.

The conflict that broke out in eastern Ukraine after the change of government in Kyiv and annexation of Crimea has since claimed almost 10,000 lives, as well as reciprocal sanctions between Russia and the EU and US.

jbh/bea (Reuters)