Ukraine 'Celebrates' Stockholm Award Anniversary

A year after the Stockholm arbitration tribunal ruled in favour of Naftogaz Ukrainy, its counterparty, the Russian gas giant Gazprom, still owes it $2.56bn as well as interest on this debt, the victor said March 1. The award related to gas transit and gas supply agreements and had Naftogaz lost, it would have faced damages up to $94.7bn.

But so far, it has only been able to claw back a few million dollars that Gazprom had left it in various accounts for forward services that were not used. Gazprom refused to pay, claiming the award was asymmetrical and political rather than commercial in nature, and it challenged the verdict with the Svea Court of Appeal.

The hearing on the merits and the decision of the Court of Appeal is expected in 2020 but Naftogaz says that challenging an international arbitration award does not prevent its automatic enforcement until the decision on appeal.

Naftogaz has begun debt enforcement procedures against Gazprom in several jurisdictions including the Netherlands, the UK, Switzerland, the US, and most recently in Luxembourg. Similar proceedings may also start in other countries in the near future.

These proceedings require the identification of assets directly owned by Gazprom along with application to the relevant national court for enforcement. Naftogaz also solicits to attach these assets in order to prevent Gazprom from moving them outside the country.

In the Netherlands and the UK, where Naftogaz succeeded in identifying Gazprom assets, they have been attached by courts in response to Naftogaz requests. In the UK, Gazprom has committed itself not to withdraw those assets. The courts in both countries are considering when it would be possible to start debt enforcement procedures against Gazprom through the sale of its assets. Naftogaz said it continues to search for Gazprom assets in other jurisdictions.

Meanwhile, Gazprom representatives have attempted to blackmail Naftogaz, insisting that the Ukrainian company should reject its arbitration victory, Naftogaz claims.

"Naftogaz is not submitting and will never submit to this blackmail. We will make Gazprom comply with the transit award and pay us $2.56bn with nearly $200mn in interest for the past year," said Naftogaz executive Yuriy Vitrenko.

Both companies are state-owned, which has made it harder for either side to move from its position, given the tensions over the Crimea, the Kerch region and in eastern Ukraine.