Naftogaz Group has obtained permission from the District Court of Vienna Inner City (Austria) to enforce an arbitral award against Russia (the “Crimea Award”) for more than USD 5 billion.
In particular, the court authorized the encumbrance of over 20 real estate properties owned by Russia in Austria, which will be sold through auction. These assets alone are estimated to be worth more than EUR 120 million. Similar legal actions are ongoing in other jurisdictions.
Another practical step toward recovering more than $5 billion from Russia for the unlawful seizure of Naftogaz Group’s assets in Crimea. Similar actions are also ongoing in other jurisdictions. Sooner or later, Russia will pay for everything. Without fail” commented Sergii Koretskyi, Chief Executive Officer of Naftogaz.
Austrian law firm DORDA is representing Naftogaz in the enforcement proceedings. DORDA's team is led by partner Alexander Karl and principal associate Robert Keimelmayr, who are being supported by associate Teresa Stingl.
Background:
Naftogaz commenced arbitration proceedings against Russia in October 2016, seeking compensation for Moscow’s seizure of its property in violation of a bilateral investment treaty between Ukraine and Russia. Naftogaz had been the leading player in the natural gas industry in Crimea, and was active in gas exploration, production, transport, storage, processing, and distribution. The company’s property included special permits for subsoil use; equipment and infrastructure; pipeline and gas-storage operation rights; ownership interests in gas pipelines; and over 675-million cubic meters of stored gas.
After a years-long arbitration, on April 12, 2023, a tribunal composed of Judge Ian Binnie, C.C., K.C., Dr. Charles Poncet, and Professor Dr. Maja Stanivuković, and constituted under the auspices of the Permanent Court of Arbitration (PCA) in The Hague, ordered Russia to pay Naftogaz more than USD 5 billion for Russia’s treaty violations.
This award remains the largest to date among all investor-state claims brought by Ukrainian entities over Russia’s unlawful actions in Crimea.
The tribunal’s damages award followed a partial award in which the tribunal found that it had jurisdiction to hear Naftogaz’s claims and that Russia was liable for the expropriation of Naftogaz’s property.
The Supreme Court of the Kingdom of the Netherlands recently dismissed the cassation appeal of the Russian Federation to overturn the tribunal’s partial award on jurisdiction and merits.
Notwithstanding the tribunal’s award and the Dutch Supreme Court’s judgment, Russia has refused to pay Naftogaz the amount due. Naftogaz has therefore launched an international enforcement effort, seeking to enforce the award in countries where Russia holds assets.
Naftogaz is represented in this case by Covington and Burling, namely David Pinsky, Clovis Trevino, Paris Aboro and Dean Acheson.
