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Russia not immune in Ukrainian arbitration case, rules US federal judge

11 Ukrainian gas retailers secured a favorable ruling in a DC court to enforce $34 million arbitration award against Russia following a dispute related to Moscow’s Crimea invasion.

byYuri Zoria

17/12/2024

2 minute read

Exterior view of the historic E. Barrett Prettyman Federal Courthouse, which houses the US District Court and US Court of Appeals for DC Circuit, and the US Foreign Intelligence Surveillance Court in Washington, DC. 2016. Photo: US Library of Congress

Russia not immune in Ukrainian arbitration case, rules US federal judge

US District Judge Trevor N. McFadden ruled that Russia must face a lawsuit from 11 Ukrainian gas companies seeking to enforce a $34 million arbitration award, Law.com reported.

Last week, Naftogaz, Ukraine’s largest national oil and gas company, reported that the Dutch Supreme Court dismissed Russia’s appeal to overturn the Partial Award by The Hague’s Permanent Court of Arbitration regarding compensation for Naftogaz Group’s expropriated assets in Crimea. This marked Dutch courts’ second and final confirmation of the award’s legality and validity.

In his opinion rejecting Russia’s motion to dismiss the lawsuit, McFadden wrote:

“Russia has made its bed and now must lie in it.”

The case, heard at the US District Court for the District of Columbia (DC), centers on the enforcement of an arbitration award stemming from Russia’s 2014 invasion and the subsequent annexation of Ukraine’s Crimea. According to McFadden’s decision on 12 December, the Geneva-based Permanent Court of Arbitration issued a final judgment in 2019 finding Russia liable for seizing gas stations in Crimea.

The multinational law firm Hughes Hubbard & Reed, representing Stabil LLC and 10 other Ukraine-based gas stations, filed a petition in April 2022 requesting the DC federal court to confirm their damages award. The New York-headquartered Curtis, Mallet-Prevost, Colt & Mosle LLP International Law Firm represented Russia in the case.

In his memorandum opinion filed on 12 December, McFadden stated that the arbitration exception to the Foreign Sovereign Immunities Act “strips Russia of immunity.” He added, “And because the Court has subject matter jurisdiction and Russia does not dispute service, the Court also has personal jurisdiction over Russia.”

The judge also denied Russia’s request for an indefinite pause in the litigation, ordering the case to proceed with further briefings on the merits. However, he noted that “Though a stay is unwarranted, so too is immediate confirmation of the award.“

Russia occupied Ukraine’s Crimean Peninsula in 2014. SInce then, it functions as Russia’s military base, and was used as a springboard for Russian offensives into Ukraine’s southern mainland starting 2022.

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