Russia won’t have to pay over $1.3 billion in compensation to Oschadbank for the loss of the bank’s assets due to Russia’s illegal seizure of Crimea, the Paris Court of Appeals ruled on March 30.
Oschadbank – Ukraine’s second-largest state-owned bank – plans to appeal the decision in France’s highest court.
“The Paris Court of Appeals did not take into account the specifics protecting the rights of foreign investors in accordance with international agreements,” the bank’s press release said.
The latest ruling overturned a 2018 decision by the International Court of Arbitration in Paris, which settles international commercial disputes, that the Russian Federation has to pay Oschadbank $1.3 billion plus interest for the losses that resulted from Russia’s occupation of Crimea.
This was the first victory of a Ukrainian state enterprise in a 30,000-page case against Russia for the losses incurred from Russian aggression on Ukrainian soil.
Back then, Russia refused to recognize the Court’s ruling “due to the lack of jurisdiction of the Permanent Court of Arbitration over Oschadbank’s claim.”
Russia’s Ministry of Justice released a statement on March 30, 2021, reiterating its belief that “arbitration tribunals have no jurisdiction to consider the ‘Crimean’ cases in accordance with the norms of international law.”
According to the ministry, “the Crimean branch of Oschadbank was created before January 1, 1992, that is in the Soviet period, which means it is not subject to the Agreement on the Encouragement and Mutual Protection of Investments”.
The agreement, which Oschadbank used to sue Russian Federation, applies only to investments made in Ukraine since January 1, 1992. The bank, however, started functioning in Ukraine right after the collapse of the Soviet Union in 1991.
Nevertheless, the bank says it is “confident that the judgment of the Court of Appeals will be overturned in the next instance”.
In May 2018, The Permanent Court of Arbitration in The Hague ordered Russia to pay $159 million in compensation to 18 Ukrainian companies, including companies tied to the notorious Ukrainian oligarch Ihor Kolomoisky.
Read more: Russia ordered to pay $159 million in compensation to Ukrainian companies in Crimea
Kolomoisky is the former co-owner of PrivatBank – Ukraine’s largest bank, which had 39 branches, 359 ATMs and 557 payment terminals on the Crimean peninsula.
In February 2019, the Hague court recognized that Russia has indeed violated its obligations under the bilateral agreement by illegally expropriating PrivatBank’s assets in Crimea. The court also ruled that PrivatBank is entitled to compensation in full.
The sum of the compensation is yet to be determined. PrivatBank is hoping to receive over $1 billion from the Russian Federation.
