The most high-profile and large-scale cases between Ukraine and Russia in international courts

Two large-scale lawsuits in The Hague, five interstate cases, about a dozen commercial arbitrations - this is the list of cases that are being considered by international legal authorities regarding the Russian annexation of Crimea and the conflict in Donbass. Edition Air force collected information on the main ones.

Фото: Depositphotos

International Court of Justice

In January, 2017 Ukraine filed a lawsuit against the Russian Federation with the United Nations International Court, citing Russia's violation of two conventions: the International Convention for the Suppression of the Financing of Terrorism and the International Convention on the Elimination of All Forms of Racial Discrimination.

For violation of the Convention on the Financing of Terrorism, Ukraine asks the court to oblige Russia to stop transferring funds and weapons to “terrorist groups” in the so-called “DPR” and “LPR,” as well as to compensate for moral and material damage to Ukraine and the affected citizens.

For violation of the Convention on Racial Discrimination, Ukraine demands to restore the rights of the Mejlis of the Crimean Tatars, to ensure the right to education in the Ukrainian language in Crimea and to pay compensation to victims of discrimination.

The Ukrainian Memorandum presented to The Hague “weighs about 90 kg, consists of 17 pages of text and is contained in 500 volumes,” Ukrainian Foreign Minister Pavlo Klimkin wrote on Twitter.

In March 2017, when the court considered Ukraine’s request for interim measures, the court satisfied the discrimination claims, but not regarding the financing of terrorism, due to the lack of sufficient evidence. The court ordered Russia to refrain from restricting the Crimean Tatars in representing their interests, in particular, to resume the activities of the Mejlis, and also to ensure the restoration of education for minorities in the Ukrainian language.

Currently, the Russian side disputes jurisdiction, that is, the law and competence of the International Court of Justice of the United Nations to consider this case.

Moscow believes that under the guise of claims of financing terrorism and discrimination, Ukraine is trying to “punish Russia for Crimea,” and the conflict in Donbass is generally called an internal military conflict in Ukraine, and not terrorist activity.

After determining the jurisdiction of the dispute, the court should proceed to consider the content of the case.

On the subject: In the Russian edition of the famous historian’s book, the chapter on Putin’s lies and the Crimea was replaced by the Trump chapter.

Maritime Arbitration

In 2016, Ukraine initiated a case at the arbitration tribunal for the law of the sea, accusing Russia of violating the UN Convention on the Law of the Sea.

Ukraine initiated this arbitration proceedings “in order to protect its rights as a coastal state in the waters adjacent to Crimea in the Black Sea, the Sea of ​​Azov and the Kerch Strait.”

Russia's main objection in this matter is that Ukraine’s claims do not relate to the UN Convention on the Law of the Sea, but is an attempt to obtain a decision confirming Ukraine’s sovereignty over the Crimean peninsula.

In August of the 2018, the court in The Hague decided to consider the objections of Russia, postponing the trial.

Both cases are overseen by the Ministry of Foreign Affairs. In June, 2019 during a hearing regarding jurisdiction, the position of Ukraine was represented by Deputy Minister Elena Zerkal.

She said that the Ministry of Foreign Affairs expects a decision on maritime arbitration “in September - October at the most”, and in the International Court of Justice - by the end of the year.

“That is, the last months of this year will be decisive in terms of how we passed the first stage - jurisdiction,” Zerkal said.

She also noted that Ukraine’s appeal to these international bodies is “a response to hybrid threats and the use of international conventions as one of the possible mechanisms for responding to hybrid aggression.”

On the subject: Down with the State Department ban: journalist Los Angeles Times called on Americans to go to Crimea

Human Rights Cases

During 2014-2019, the Ukrainian government filed several interstate applications against the Russian government with the European Court of Human Rights (ECtHR) “in connection with the Russian aggression against Ukraine, which entails massive violations of human rights” in Crimea and the eastern regions of Ukraine. They are supervised by the Ministry of Justice.

According to the Ministry of Justice, these statements cover Ukraine’s complaints about violations of such rights:

• the right to live;
• prohibition of torture;
• the right to liberty and security of person;
• freedom of thought, conscience and religion;
• freedom of expression;
• prohibition of discrimination;
• boundaries of application of restrictions on rights
• trial;
• protection of property rights;
• right to free elections.

There are currently five interstate cases pending before the ECHR. Two of them – “Ukraine against Russia (in Crimea)” and “Ukraine against Russia (in Donbass)” – concern human rights violations in the annexed Crimea and in the territories of Donetsk and Lugansk regions not controlled by Kyiv.

Others relate to the facts of the abduction of orphans and children with disabilities in the Donetsk and Lugansk regions and their illegal or actual transfer to the territory of Russia, violation of the rights of Ukrainian political prisoners and captured Ukrainian sailors.

All these cases are now at the stage of considering the admissibility, or whether the ECHR can consider them.

Hearings on the “Crimean” case are scheduled for September, and on the Donbass - at the end of 2019 - beginning of 2020.

On the subject: Russia will assess the losses inflicted by Ukraine to the Crimea after the collapse of the USSR

Investment Arbitration

These cases relate to independent or class actions of Ukrainian state and private companies to compensate for the value of property lost in the Crimea through the Russian annexation. In general, there are up to 10 such cases, both from state and private companies, as well as from private investors. However, by decision of the National Security and Defense Council of Ukraine (NSDC) of 2015, they are also overseen by the Foreign Ministry.

PrivatBank and the financial company Finilon, Oschadbank, Ukrnafta, Igor Kolomoisky and Belbek Airport, Stabil LLC, Everest estate LLC, NJSC Naftogaz, NJSC Ukrenergo, Donbass Fuel have already resorted to investment arbitration -energy company (DTEK). These cases are heard by arbitration courts in the Netherlands, France and Switzerland.

In theory, such cases are considered on the basis of international agreements on the protection of investments made by an investor from one country in another. Ukrainian companies appeal to the 1998 intergovernmental Ukrainian-Russian agreement on the promotion and mutual protection of investments.

But in the case of Crimea, Ukrainian companies made investments in Ukraine, however, their assets were expropriated by Russia after the annexation of Crimea. Therefore, immediately after the presentation of the first claims, the question arose: does their consideration mean recognition that Crimea is the territory of Russia. Secondly, is it not a prerequisite for arbitration that investments are initially made in Russia.

It is precisely these arguments that Russia relies on, arguing that international arbiters cannot resolve disputes regarding Ukrainian investments in Ukrainian (at that time) Crimea.

However, as Deputy Foreign Minister Elena Zerkal notes, so far “all arbitrations have come to the conclusion that Russia exercises effective control in Crimea with the help of its authorities, and not a single arbitration has recognized that this is Russian territory.”

In several cases, arbitrators have already confirmed that such cases are within their jurisdiction. For example, the Supreme Court of Switzerland did not agree with the arguments of the Russian side regarding the lack of jurisdiction of international arbitration in the Ukrnafta case, and therefore, consideration of this case continues.

In addition to the fact that these cases give Ukrainian companies the opportunity to recover billions of assets lost in Crimea, these cases are precedent-setting - for the first time in the history of commercial arbitration, the issue of protecting investments in illegally controlled territories is considered.

According to Deputy Foreign Minister Elena Zerkal, at the initial stage - in 2015 - few believed “that this mechanism could work.” But the first decisions showed that this is not the case, and more and more people want to turn to arbitration.

However, according to Zerkal, state-owned companies immediately encounter a rather complex mechanism of tenders for the purchase of legal services, especially with regard to the services of foreign companies, without which it is quite problematic to win such cases. While NJSC Ukrenergo has gone through this procedure, the Seaports Administration is next in line.

Private companies are afraid of significant financial costs for the arbitration process, which, according to Elena Zerkal, can cost millions of dollars. However, the first decisions showed that in case of a win, the other party to the dispute reimburses these costs.

There are final decisions so far in two cases.

The first arbitration award was made in the summer of 2018 following a claim by a group of private companies led by Everest Estate LLC and other companies associated with the Privat group. The arbitrators decided that the Russian Federation should compensate them $159 million for the property lost in Crimea.

And at the end of 2018, Oschadbank became the first state-owned company to win investment arbitration through the Russian annexation of Crimea.

On the subject: 'Carried in cattle cars, dying families': how in May 1944 deported Crimean Tatars

Example of Oschadbank

On November 26, 2018, the Arbitration Court in Paris sentenced Russia to pay Oschadbank $1,3 billion in compensation, along with interest that accrues from the moment the decision is made until the actual compensation—about $100 thousand per day.

The volume of Oschadbank's statement of claim in Russia amounted to more than 30 sheets.

The bank stated that it will actively seek compliance with the arbitration award around the world, and is also “ready to provide advice to those organizations that will follow the path of Oschadbank and will apply to international judicial institutions and arbitrations against the Russian Federation regarding losses due to aggression in Crimea.” .

As Oschadbank reported, after receiving the arbitration decision, it, as required by Ukrainian laws, filed a claim with the Kiev Court of Appeal for recognition and permission to enforce the decision of the International Arbitration. And on July 17, the court granted Oschadbank’s application.

But Russia has already appealed the arbitral award in French courts, categorically refuting the competence of arbitrators to consider such cases.

Features of PrivatBank

In February 2019, the Permanent Court of Arbitration in The Hague announced a partial decision in favor of PrivatBank in the case against the Russian Federation.

As stated in the bank's press service, in this decision the arbitrators recognized that they have jurisdiction over all of the plaintiff's claims, that the Russian Federation violated its obligations under the bilateral agreement on the promotion and mutual protection of investments by illegally expropriating the assets of PrivatBank in Crimea, and that the bank is entitled to compensation for such expropriation in full.

However, the amount of compensation will be determined at the second stage of the case. PrivatBank itself estimated its losses at more than $1 billion

The peculiarity of this case is that PrivatBank’s lawsuit was filed back in 2015, and since then this bank has turned from private to state-owned. In addition, the financial company Finilon is also involved in the lawsuit.

As stated by the deputy head of the NBU, Ekaterina Rozhkova, at the time of nationalization of the bank it had no Crimean assets on its balance sheet; all of them were sold to the Finilon financial company, which is associated with the Privat group, and with which the National Bank itself continues its own legal history.

On the subject: “What should we hold on to?”: How Crimea lives through 5 years after the referendum

Naftogaz arbitration

In February 2016, Naftogaz officially informed Russia about an investment dispute over the “illegal seizure of the company’s assets in Crimea.” In September 2017, NJSC Naftogaz and six subsidiaries filed a claim with the tribunal at the Permanent Court of Arbitration in The Hague for damages from the seizure of the company’s assets in Crimea.

The arbitrators decided to divide the case into two parts: first, decide on the jurisdiction of the case, and only then - on the amount of compensation.

On February 22, 2019, the Permanent Court of Arbitration in The Hague admitted that Russia violated the investment protection agreement by expropriating the assets of Naftogaz and its subsidiaries in Crimea. The amount of damages must be determined at the second stage of the process. Naftogaz itself estimates its losses at at least $5,2 billion.

According to Naftogaz, the Court will make a decision on compensation no earlier than the end of 2020.

The case of Naftogaz is particularly interesting because it began to lose its assets in Crimea even before Russia officially recognized its control over the peninsula by concluding the Treaty on the Admission of Crimea to Russia.

Naftogaz has already won a large-scale arbitration with Russia in Stockholm under a contract for the supply of Russian gas to Ukraine and the transit of Russian gas to Europe through Ukraine. And, this case is not directly related to the annexation of Crimea and the conflict in eastern Ukraine, but it began against the backdrop of a dramatic deterioration in relations between Kiev and Moscow, a sharp increase in the price of Russian gas for Ukraine in the spring of 2014, and finally, Ukraine’s refusal to import Russian gas and reorientation to supplies from Europe.

After winning in Stockholm, Naftogaz began a new arbitration against Gazprom - to revise the transit tariff, estimating its claims at more than $11,5 billion.

Gazprom is challenging the first arbitration award.

Is it possible to get compensation?

There is the New York Convention of the 1958 of the year, which provides for the forced recognition and enforcement of international arbitral awards in 159 countries of the world. Implementation of decisions is possible through the seizure of property unprotected by sovereign immunity.

At the same time, according to lawyers, the recovery of property of state-owned companies is quite problematic, because they are separate legal entities and are not responsible for the activities of the state.

Russia has consistently challenged the competence of arbitration tribunals to decide on the issue of Ukrainian investments in Crimea, as well as the arbitral awards themselves at the place of their decision. However, it depends on the particularities of the national judicial system whether it is possible to appeal the jurisdiction of the arbitration court after its completion or during the arbitration itself.

For example, in the case of the Everest case, Russia appealed the jurisdiction only after the final arbitration decision in The Hague. This does not mean that an ordinary court in the Netherlands can reconsider the decision of the arbitrators, but it can check whether they had the right to consider such a case.

In the case of the claims of Ukrnafta and Stabil LLC, the Supreme Court of Switzerland confirmed the powers of the arbitrators and refused to recognize Russia’s lack of jurisdiction over Ukrainian assets lost in Crimea annexed by Russia at the initial stage of the case.

Where there are already final decisions of international arbitrations, Ukrainian courts also support them. However, there are problems with their practical implementation.

In September 2018, the Kyiv Court of Appeal recognized the arbitration award in the Everest Estate LLC case and allowed its execution, which, in particular, occurred due to the seizure of shares of Russian banks with state capital - Prominvestbank, VTB and Sberbank.

In response, the Russian Vnesheconombank, which owns shares in Prominvestbank, applied to arbitration in Stockholm in June 2019, also on the basis of a violation of the investment protection agreement between Ukraine and Russia. In addition, Russia announced that it would appeal this decision at the place of arbitration, in the Netherlands.

There is a similar appeal regarding arbitration decisions in favor of the Oschadbank case in Paris.

On the other hand, the list of companies seeking to obtain compensation for losses from the annexation of Crimea is constantly updated.

At the end of 2018 - beginning of 2019, they were joined by DTEK (the energy division of the financial and industrial holding SCM, controlled by Rinat Akhmetov) and NJSC Ukrenergo. DTEK estimates its losses in Crimea at $500 million, and Ukrenergo at about $1 billion. At the same time, in the DTEK case, for the first time, the Russian side initially decided to take part in arbitration, whereas in all previous cases it refused.

On the subject: How Crimea was annexed: March of 2014 in the eyes of Moscow, Kiev and Sevastopol

Where are judged for aggression?

However, despite the fact that the Russian annexation of Crimea is called the first case of border violations in Europe after the Second World War, winnings in international courts and arbitrations will not allow Russia to be called an aggressor, as Ukraine did at the legislative level.

Does such a body exist in the world?

“Yes, this is the UN Security Council, where Russia is a permanent member with the right of veto,” answers Deputy Foreign Minister Elena Zerkal.

“We proceed from the fact that we are raising the issue of Russia’s violation of many norms of international law in the courts, on various international platforms... And we are putting together this puzzle from various possible pieces. All this comes together to form a picture and is called aggression. We cannot now use the UN platform, which is provided for this. But this does not mean that we will never have such an opportunity. The situation is changing, it is dynamic,” she adds.

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