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Naftogaz files 2.6bn dollar lawsuit against Russia over Crimean assets

The company refers to the Russian-Ukrainian investment agreement.

Naftogaz files 2.6bn dollar lawsuit against Russia over Crimean assets
Photo: Photo: EPA / UPG

National Joint Stock Company Naftogaz Ukrayiny and its six subsidiaries on 17 October initiated arbitration proceedings against the Russian Federation with the requirement to compensate damages caused by the illegal capture of the group's assets in Crimea.

The press service of the state holding said in a Wednesday, 19 October release that Naftogaz has initiated proceedings in accordance with the agreement between the Cabinet of Ministers of Ukraine and the Government of the Russian Federation on promotion and mutual protection of investments, better known as the Russian-Ukrainian Bilateral Investment Agreement. Naftogaz has previously estimated the damage to the group at 2.6bn dollars.

"After the illegal invasion of Crimea and the occupation of the peninsula in 2014, the Russian Federation has adopted a massive and well-coordinated scheme of deprivation of Ukrainian companies of their assets without compensation. In Crimea, Naftogaz has several valuable energy assets, the seizure of which by the Russian side violates a bilateral investment agreement, in which the Russian Federation undertook to respect and protect Ukrainian assets, including those located in Crimea," Naftogaz reminded.

The release does not specify which court will review the claim, but earlier Oschadbank and a number of companies by Ihor Kolomoiskyy filed similar claims about the loss of assets in Crimea to the Arbitration Court in The Hague.

In February, Naftogaz has initiated negotiations regarding the loss of its assets in Crimea by sending the RF a notice of investment dispute within the framework of a bilateral agreement on mutual protection of investments between the two countries.

The six-month period of negotiations expired in August, the negotiations ended without result, which is a prerequisite for the commencement of arbitration proceedings against the Russian Federation with respect to the investment agreement.

Naftogaz Ukrayiny hired Covington & Burling LLP (New York, USA) for the protection of their interests in the litigation over the lost Crimean assets.