Ukrnafta’s $ 6 billion case: Ukraine wins Stockholm arbitration against Kolomoisky

The Stockholm Arbitration Court acknowledged the lack of jurisdiction in a lawsuit filed by Ukrnafta’s minority shareholders (three offshore companies linked to Igor Kolomoisky) who wanted to collect more than $ 6 billion from Ukraine and interest accrued on that amount.

This was announced on Facebook by the Minister of Justice of Ukraine Denys Malyuska.

“Messrs. Kolomoisky, Bogolyubov and Palitsa wanted to collect more than 6 billion US dollars from Ukraine and filed a lawsuit with the Stockholm Arbitration. After almost six years of litigation, the arbitration denied them today. It refused completely,” the minister stressed.

Back in 2015, three Cypriot offshore companies (Littop Enterprises Limited, Bridgemont Ventures Limited and Bordo Management Limited), the ultimate beneficiaries of which are Kolomoisky, Bogolyubov and Palitsa, filed a lawsuit with the Stockholm Arbitration Tribunal against Ukraine.

All three plaintiffs are shareholders of PJSC Ukranft and own 40.1009% of the shares of this company. The plaintiffs demanded, to put it mildly, a lot to collect from the state: more than 6 six billion US dollars and interest accrued on this amount, “Malyuska recalled the course of the process.

According to him, the decision of the Stockholm Arbitration Court was postponed several times.

“It was felt that the plaintiffs suspected something and delayed the process. But today it happened – the arbitration acknowledged the lack of jurisdiction. Kolomoisky, Bogolyubov and Palitsa received zero US dollars, not 6 billion,” he said.

Naftogaz Ukrainy owns 50% + 1 share of Ukrnafta. A group of companies related to former shareholders of Privatbank, including in particular Igor Kolomoisky – about 42% of shares.

People’s Deputy and colleague of oligarch Igor Kolomoisky Igor Palitsa confirmed that the Privat group has been managing Ukrnafta since 2003 (Palitsa was the chairman of the company’s board in 2003-2007).

We will remind:

In June 2015, minority shareholders of PJSC Ukrnafta (Cypriot Littop Enterprises, Bridgemont Ventures, Bordo Management, owned by the Privat group of Igor Kolomoisky and Gennady Bogolyubov) filed a lawsuit with the Stockholm Arbitration Court against the state of Ukraine.

As of the summer of 2016, the amount of the lawsuit consisted of: $ 2.063 billion, which Ukrnafta’s minority shareholders demand due to the loss of dividends; Minorities demanded $ 932 million in fines; $ 1.679 billion due to the loss of share value.

Kolomoisky’s and Bogolyubov’s Cypriot offshore companies argued that, in their view, there were four main reasons for the lawsuit against Ukraine:

1) Expropriation of gas produced by Ukrnafta or purchase of such gas at reduced prices by NJSC Naftogaz of Ukraine for several years;

2) Change in the corporate structure of PJSC “Ukrnafta” as a result of a change in the quorum for the General Meeting of Shareholders from 60% to 50%;

3) Removal of persons appointed by investors from Ukrnafta’s management;

4) Increase in rent for the use of subsoil.

The legal grounds for the lawsuit were called by the Cypriot companies the violation by the state of Ukraine of its international legal obligations to investors, which are a consequence of the Energy Charter.

The Ministry of Justice of Ukraine has involved the British law firm Latham & Watkins in the case against Ukrnafta’s minority shareholders .

In January 2018, the claims of minority shareholders of PJSC Ukrnafta to Ukraine increased to $ 5.439 billion.

In November 2020, the Verkhovna Rada passed a law on mutual settlements between Naftogaz, the budget and Ukrnafta for more than UAH 40 billion, which was held in December.

In December 2020, the head of the Ministry of Justice  Denis Malyuska stated that the Arbitration Institute of the Stockholm Chamber of Commerce in February 2021 may make a final decision on the lawsuit.

(c) Economic truth

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