Aequo acting as the Ukrainian counsel alongside Covington & Burling LLP as the lead counsel supported NJSC Naftogaz of Ukraine, the largest oil and gas company in Ukraine, and its subsidiaries NJSC Chornomornaftogaz, JSC Ukrtransgaz, Likvo LLC, JSC Ukrgazvydobuvannya, JSC Ukrtransnafta, and Gaz Ukraiiny (Naftogaz group) in prevailing on jurisdiction and liability issues at the first phase of international arbitration against the Russian Federation in a dispute over breach of the Ukraine-Russia bilateral investment treaty (BIT) by expropriating the Naftogaz group’s assets in Crimea.
In its partial award the arbitral tribunal confirmed its jurisdiction to hear the Naftogaz group’s claims against the Russian Federation and concluded that Russia had unlawfully expropriated assets owned by Naftogaz group in Crimea and breached its obligations under the Ukraine-Russia BIT to protect investments in Crimea.
The amount of damages will be ruled upon at the next stage of the arbitration. Naftogaz experts estimate the value of Naftogaz group’s assets as expropriated by Russia in Crimea at around USD 5 billion plus interest.
“It is a great honour for us to assist our client in prevailing on the principal issues (such as jurisdiction and liability) in the investment arbitration vs Russia. Importantly, we were able to prove that under the Ukraine-Russia BIT Russia is liable for expropriation or loss of Ukrainian investments in Crimea since its occupation. This historic victory is of great significance to Ukraine further empowering other Ukrainian and foreign investors to protect their interests and assets targeted by the Russia’s occupation of Crimea", comments Pavlo Byelousov, partner and head of Aequo’s International Arbitration group.
Denis Lysenko, Aequo’s managing partner, further underlines that “it is a hard-fought win for Naftogaz given the complex nature and factual circumstances of this dispute. We are delighted that a strategy developed and successfully implemented by the joint legal team of Covington & Burling and Aequo resulted in Naftogaz’s victory on the major points and in Russia’s liability for expropriation of the Naftogaz group’s assets in Crimea”.