Ukraine finally wins multibillion-dollar case against Ukrnafta in Swedish courts
The Supreme Court of Sweden has put an end to the long-running international dispute over Ukrnafta, confirming the rightness of the state of Ukraine. The court refused to open appeal proceedings on the complaint filed by Cyprus-based companies Littop Enterprises Limited, Bordo Management Limited and Bridgemont Ventures Limited, which sought to overturn the 2021 award of the Stockholm Arbitration Court.
According to the Ministry of Justice of Ukraine, the decisions of the Svea Court of Appeal in Stockholm and the arbitration tribunal, which had previously recognised that it lacked jurisdiction to consider the claim of minority shareholders against the state of Ukraine, have thus come into force.
The LBB companies, which owned 40.1009 per cent of Ukrnafta shares, initiated the arbitration in 2015, claiming over USD 6 billion in compensation with interest. They referred to the provisions of the Energy Charter Treaty. However, the tribunal concluded that these companies had not made an actual contribution to the charter capital of the company, and therefore had not made an investment within the meaning of the international treaty and had no right to apply to arbitration. This position was confirmed by all courts in Sweden, including the Supreme Court of Sweden.
In addition to losing the dispute, the Cypriot companies are obliged to compensate Ukraine for more than USD 22 million in court and arbitration costs. Of these, almost $18.93 million are arbitration costs, and over $3.2 million are related to court proceedings in Sweden. These amounts additionally bear interest in accordance with Swedish law.
The Ministry of Justice emphasised that this decision is of fundamental importance for the protection of the state's interests in international investment disputes and minimises the risks of multi-billion dollar claims against Ukraine.
