Oleksiy Chernyshov: The court in The Hague ordered Russia to pay $5 billion in compensation to Naftogaz
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5 billion US dollars – this is the compensation the Russian Federation is obliged to pay to Naftogaz for the losses caused by the seizure of the assets of Naftogaz Group companies in Crimea in 2014. This decision was made by the Arbitration Tribunal at the Permanent Chamber of the Arbitration Court in The Hague on April 12, 2023.
“The Naftogaz team has a victory on the energy front. Despite Russia’s efforts to obstruct justice, the Arbitration Tribunal obliged the Russian Federation to compensate Naftogaz for damages in the amount of 5 billion US dollars. This is about the consequences of Russia’s seizure of our assets in Crimea in 2014. Now Russia must fulfill this decision in accordance with its obligations under international law,” commented Oleksiy Chernyshov, head of the Naftogaz Group.
The arbitration tribunal confirmed that Russia must fully compensate Naftogaz for its losses caused by Russia’s illegal seizure of the assets of Naftogaz Group companies in Crimea.
Arbitral awards can be enforced through an enforcement mechanism. Therefore, in the event of Russia’s refusal to voluntarily comply with the court decision, in accordance with the New York Convention of 1958, Naftogaz has the right to start the process of recognition and admission to the enforcement of the decision on the territory of those states where the assets of the Russian Federation are located.
The court found that the amount of such compensation should be equal to the fair market value of Naftogaz assets before their expropriation. Despite Russia’s insistence that Naftogaz is not entitled to any compensation for the expropriation of its assets, the Arbitral Tribunal disagreed with this claim.
The amount of compensation established by this decision is the largest amount awarded by an international arbitration tribunal as compensation for Russia’s expropriation of assets in Crimea.
In addition, the court ruled that Russia should compensate Naftogaz for the costs associated with this arbitration proceeding.
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