Ukraine’s Naftogaz says Russia was ordered to pay $5 bln in arbitration case

An arbitration court in The Hague has ordered Russia to pay Ukraine's state-owned gas company, Naftogaz, $5 billion in compensation for unlawfully expropriating its assets in annexed Crimea in 2014. This ruling is a significant victory for Ukraine, which has been locked in a long-standing dispute with Russia over the annexation of Crimea.

The Hague's Arbitration Tribunal at the Permanent Court of Arbitration issued the ruling on Wednesday, describing Russia's actions as unlawful and demanding that it compensate Naftogaz for its losses. Naftogaz's CEO, Oleksiy Chernyshov, described the ruling as a "key victory on the energy front" and expressed his belief that more favorable rulings would follow in Ukraine's favor.

Despite Russia's attempts to obstruct justice, the Arbitration Tribunal ordered Russia to comply with the decision in accordance with its obligations under international law. Russia launched a full-scale invasion of Ukraine in February 2022, seizing the peninsula of Crimea in 2014, drawing a wave of sanctions from Western governments.

Naftogaz initiated arbitration proceedings with six other companies within Naftogaz Group in October 2016. The arbitration award was made after hearings to determine the amount of compensation, which ended in March 2022.

There has been no immediate comment from Russia's Gazprom on the ruling, but analysts have hailed the decision as a "huge legal win for Ukraine." Tim Ash, an analyst at BlueBay Asset Management, said that he believed there would be more favorable rulings for Ukraine in the future.

In addition to the legal victory, Naftogaz has been in discussions with investors about debt restructuring to help bring the company out of default. The company has been struggling with financial difficulties for some time, and this ruling could help it to stabilize its financial position.