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Hague court orders Russia to pay 4.5 bln euros in compensation to Naftogaz for seizure of Crimea assets

Russia must pay Naftogaz five billion US dollars (4.5 billion euros) for losses caused by the seizure of Naftogaz Group’s assets in Crimea in 2014, according to a ruling by the Hague’s Arbitration Tribunal at the Permanent Court of Arbitration on Wednesday (12 April).

“The Naftogaz team has won a key victory on the energy front. Despite Russia’s attempts to obstruct justice, the Arbitration Tribunal ordered Russia to compensate Naftogaz for losses of five billion US dollars. This relates to the seizure of our assets in Crimea by Russia in 2014. Russia must now comply with this decision in accordance with its obligations under international law,” said Oleksiy Chernyshov, CEO of Naftogaz.

The court found that compensation should be equal to the fair market value of Naftogaz assets before expropriation. The court rejected Russian claims that Naftogaz is not entitled to any compensation for the expropriation of its assets. 

The compensation established by this decision is the largest awarded by an International Arbitration Tribunal as indemnity for the expropriation of assets by Russia in Crimea. In addition, the court ruled that Russia must reimburse Naftogaz for costs associated with the arbitration proceedings.

Arbitration awards can be executed through an enforcement mechanism. Therefore, if Russia refuses to voluntarily execute the decision, pursuant to the 1958 New York Convention, Naftogaz has the right to initiate the process of recognition and admission to enforce the award in the territory of those states where Russia’s assets are located.

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