Ukraine’s Naftogaz says Russia was ordered to pay $5 bln in arbitration case

Ukraine’s state-owned gas company Naftogaz on Thursday said Russia has been ordered by an arbitration court in The Hague to pay $5 billion in compensation for unlawfully expropriating its assets in annexed Crimea in 2014.

Naftogaz CEO Oleksiy Chernyshov described Wednesday’s ruling by The Hague’s Arbitration Tribunal at the Permanent Court of Arbitration as a “key victory on the energy front” and said he expected more decisions in Ukraine’s favor to come.

“Despite Russia’s attempts to obstruct justice, the Arbitration Tribunal ordered Russia to compensate Naftogaz for losses of $5 billion,” Naftogaz said.

“Russia must now comply with this decision in accordance with its obligations under international law,” it said in a statement.

Russia, which launched a full-scale invasion of Ukraine in February 2022, seized the peninsula of Crimea in 2014, drawing a wave of sanctions from Western governments.

There was no immediate comment from Russia’s Gazprom on the ruling.

Naftogaz initiated arbitration proceedings with six other companies within Naftogaz Group in October 2016, it said.

Naftogaz said the arbitration award was made after hearings to determine the amount of compensation, which ended in March 2022.

Tim Ash, an analyst at BlueBay Asset Management, said the ruling was a “huge legal win for Ukraine, and I would think more (is) to come.”

Naftogaz has been in talks with investors on a debt restructuring to bring the company out of a months-long default.