Ukrainian energy company Naftogaz has won a ruling from the International Court of Arbitration ordering Russia to pay $5 billion in losses related to the seizure of natural gas and oil assets in Crimea.
“Russia must now comply with this decision in accordance with its obligations under international law,” Oleksey Chernyshov, CEO of Naftogaz, said in a statement Thursday.
Ukraine has filed dozens of lawsuits against Russia seeking damages related to its aggression, starting with the annexation of Crimea in 2014.
The court found that compensation should be equal to the fair market value of Naftogaz’s assets prior to forfeiture. The court rejected Russian claims that Naftogaz is not entitled to any compensation for the confiscation of its assets.
The decision is the largest by an international arbitration court regarding the seizure of assets by Russia in Crimea.
In addition, the court ruled that Russia must reimburse Naftogaz for the costs associated with the arbitration proceedings.
The Kremlin said it would analyze the ruling before deciding on next steps. “This litigation has taken place and it is not new. The decision is new and must be analyzed,” Kremlin spokesman Dmitry Peskov told reporters on Thursday.
However, it was not immediately clear how Ukraine would implement the Hague court’s decision, more than a year after the outbreak of all-out war with Russia.
In the statement, Naftogaz said that “arbitral awards can be enforced through an enforcement mechanism,” which would allow the freezing of Russian assets abroad. But with Western sanctions already freezing the assets of Russia’s central bank, among other things, it is unlikely that Ukraine’s gas company will be able to recover the full amount awarded by the arbitration court.
Timothy Ash, emerging markets strategist at BlueBay Asset Management, called the ruling a “huge legal win for Ukraine,” adding, “I’ll be considering more in the future.”
“Ultimately, Putin’s war in Ukraine will bankrupt Russia,” he added in the note to investors.
Additional reporting by Anastasia Stozhny in Riga
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