“Ukrnafta” after PrivatBank failed to prove the jurisdiction of the Hague arbitration in the dispute with Russia over Crimea

The international court of arbitration in the Hague (Permanent Court of Arbitration) issued a decision on jurisdiction and admissibility in the two disputes initiated by “Ukrnafta” and 11 other companies and persons against Russia in connection with the annexation of Crimea.

“On June 26, 2017, following deliberations, the arbitration panel unanimously ruled on jurisdiction in the above two cases. Further, in the near future the Tribunal will give the procedural instructions for the next phase of the proceedings”, – is spoken in the publication of arbitration on Tuesday.

This is the third such decision: the previous two were taken in February and March, two other types of arbitration in other disputes against the Russian Federation, in particular, on claims of PrivatBank and its former owner, Igor Kolomoisky.

Luke Eric Peterson (Luke Eric Peterson) in the edition of Investment Arbitration Reporter noted at the time that these decisions mean that Russia should carry obligations to protect the Ukrainian investors in Crimea after its annexation in accordance with bilateral Russian-Ukrainian agreement on investment protection.

As reported, the first such proceedings against the Russian Federation was initiated on the claim of the former owner of PrivatBank Igor Kolomoisky and “the Airport “Belbek” 13 Jan 2015 under the rules of UNCITRAL (United Nations Commission on International Trade Law, UN Commission on international trade law) and the agreement between the governments of Russia and Ukraine from 27 November 1998 on the protection of investments. The plaintiffs said that the Russian Federation violated its obligations arising from said contract, by taking from February 2014 actions deprived plaintiffs of property rights, contractual and other rights in the operation of the passenger terminal for commercial flights of the airport “Belbek” in Crimea.

I. Kolomoisky said about the presence of his 2020 contract management of passenger terminal of airport “Belbek” (Sevastopol), nationalized by Russia after the annexation of Crimea. He demanded that Russia compensate losses in potential income from the terminal. We are talking about $15 million.

Then, 13 APR 2015, similar arbitration proceedings against the Russian Federation initiated PrivatBank and OOO “Financial company “Vinylon” since Russia’s annexation of Crimea did not allow the plaintiffs to continue their banking business in the Crimea. And in June 2015 such lawsuits were filed by “Ukrnafta” and other related to the former owners of PrivatBank, the company has lost in the Crimea, the oil business and assets in real estate.

Ukrnafta is the largest oil producer in the country. “Naftogaz of Ukraine” owns 50%+1 share “Ukrnafta” group of companies linked to former shareholders of PrivatBank – about 42% of the shares.