Ukraine defended arbitration decision in courts of Sweden on claim of Ukrnafta shareholders

On January 31, 2025, the Svea Court of Appeal (Stockholm) made an important decision in favor of Ukraine, rejecting the appeal of three Cypriot companies to cancel the arbitration decision in the Ukrnafta case of February 4, 2021.

This is announced in a statement by the Ministry of Justice, Ukrainian News Agency reports.

The statement states that in 2015, the Cypriot companies Littop Enterprises Limited, Bordo Management Limited and Bridgemont Ventures Limited (hereinafter collectively referred to as the plaintiffs), which jointly own 40.1009% of the shares of PJSC Ukrnafta, initiated arbitration proceedings against Ukraine, demanding compensation in the amount of more than USD 6 billion with interest.

It is noted that the plaintiffs' claims were based on several key aspects: the withdrawal of gas by Naftogaz of Ukraine from Ukrnafta's gas storage facilities at low prices or free of charge for the needs of the population; failure to comply with the decisions of Ukrainian courts on the return of the withdrawn gas; an increase in the rate of rent for the use of subsoil and legislative changes to reduce the quorum for holding general meetings of joint-stock companies.

The court agreed with Ukraine's key argument that the plaintiffs did not make an actual contribution to the authorized capital of PJSC Ukrnafta, and therefore did not make an investment in accordance with the Energy Charter Treaty and did not have the right to file an arbitration claim.

Thus, according to the court's decision, the plaintiffs are obliged to compensate Ukraine: costs of the arbitration proceedings: USD 18,927,177.62, as well as interest in accordance with Article 6 of the Swedish Interest Act from February 4, 2021 until the moment of payment; legal costs in the case (regarding jurisdictional proceedings): USD 2,669,131, plus interest in accordance with Section 6 of the Swedish Interest Act, from January 31, 2025 until payment and legal costs in the case (regarding legal costs proceedings): USD 549,674 and SEK 2,800 plus interest in accordance with Section 6 of the Swedish Interest Act from January 31, 2025 until payment.

Ukraine is represented in this case by Latham & Watkins (London) LLP (foreign counsel), Westerberg & Partners (Swedish counsel) and Sayenko Kharenko Law Firm (Ukrainian counsel).

As Ukrainian News Agency earlier reported, businessman and former shareholder of PrivatBank and Ukrnafta Ihor Kolomoiskyi considers the alienation of shares from private shareholders of Ukrnafta in November 2022 to be an abuse of power by the authorities.