Ukrnafta awarded USD 44 mln compensation for assets lost in Crimea

Ukraine’s leading oil producer Ukrnafta (UNAF UK)
reported on Apr. 16 that the U.N. arbitration court (UNCITRAL) has ordered the
Russian government to pay USD 44.4 mln in compensation for the company’s
property illegally seized in Crimea. Following the illegal annexation of Crimea
by Russia in 2014, Ukrnafta lost there an administrative building and 14
gasoline stations, the company clarified. In June 2015, Ukrnafta initiated
litigation against Russia for violating its agreement with Ukraine on mutual
protection of investments. On Apr. 12, 2019, the court awarded the compensation
to Ukrnafta, as well as USD 5.5 mln in accumulated interest and USD 3.5 mln in
coverage of arbitration costs, the company reported.

Alexander Paraschiy: This is
another victory of Ukrainian business against economic damages inflicted by
Russia in occupied Crimea, after a USD 1.3 bln compensation award to
state Oschadbank (OSCHAD) and USD 130 mln award to private companies related to Igor
Kolomoisky. Other claims of Ukrainian companies
are still in courts, totaling more than USD 5 bln in damagesbeing sought.

Unfortunately, we see no implications for the winning
companies from such court awards (except high litigation-related costs) as the
Russian side is ignoring them. The only implication from such cases was an
attempt by Kolomoisky to freeze the assets of Russian state banks in Ukraine,
which triggered the bankruptcy of VTB Bank’s Ukrainian subsidiary in late 2018. But such attempts clearly add to the image of
Ukraine as a victim of Russian aggression, which might have some geopolitical
(and hopefully economic) implications in the future.