After Russia snatched the Black Sea peninsula of Crimea from Kiev the new authorities installed by Moscow set about taking over one of Ukraine’s largest banks as well as shipyards and hotels.
The state lender has now fired back by filing a massive claim with a court in The Hague — one of the multiple cases being fought by Kiev on a new legal front as a war with pro-Russian separatists in the east of the country drags on.
The various lawsuits add up to tens of billions of dollars (euros) and may take months or years to resolve.
But the ex-Soviet state is certain it will win back at least some of the money to help fill its shallow state coffers at a time when IMF aid remains suspended over Ukraine’s perceived failure to properly tackle graft.
Ukraine’s Justice Minister Pavlo Petrenko added fuel to the fire by warning that even more cases against Russia linked to its seizure of Crimea and alleged invasion of the east were in the works.
“We are preparing another lawsuit together with the foreign ministry that we plan to submit to the (UN) International Court of Justice,” Petrenko told Ukraine’s private 112 news channel on August 27.
– ‘Total destruction of investment’ –
The case of the State Savings Bank of Ukraine (Oschadbank) is of particular importance to Kiev because it may boost the pro-Western authorities’ hand in winning back other properties from Russia.
It has hired the Quinn Emanuel Urquhart & Sullivan LLP global law firm to represent its case at the Permanent Court of Arbitration in The Hague.
An August 26 hearing boycotted by Russia heard that Oschadbank was seeking more than $1 billion (0.9 billion euros) in compensation “for the total destruction of its investment in Crimea”.
Quinn Emanuel Urquhart & Sullivan LLP partner Alex Gerbi said that “if Russia continues with this stance, the claim shall proceed through an accelerated timetable to a final hearing scheduled for the end of March 2017.”
Gerbi told media that a judgement in favour of Kiev would not necessarily set a precedent for similar disputes.
But he added that “investment treaty awards typically may be used as persuasive… authority in other cases under appropriate circumstances.”
PrivatBank — Ukraine’s largest private lender with branches stretching from Italy to China — is also seeking compensation for losses suffered when Crimea was swarmed by Russian troops and then staged a referendum to join Ukraine’s eastern neighbour.
The UN General Assembly condemned the vote as ‘illegal” by a nearly-unanimous margin.
Evghenia Sleptsova of the Oxford Economics forecasting and analysis centre said that “Russia would never pay” the huge state claim mentioned by the justice minister because Moscow “considers that Crimea joined Russia voluntarily.”
“However, it does make sense for individual Ukrainian enterprises to pursue these cases, not to leave those losses simply pending in the air,” Sleptsova told media.
– From Stockholm to London –
The two sworn foes have further been duking it out in the Arbitration Institute of the Stockholm Chamber of Commerce over natural gas bills that add up to more than $65 billion.
Russia has cut off the flows to Ukraine — one of its most important transport routes to central and southern Europe — on four occasions in the past decade over price disputes.
Ukraine is now buying more gas from its European allies than Russia in order to eliminate what it sees as a political weapon wielded by the Kremlin each time Kiev looks to establish closer links with the West.
The February 2014 pro-EU revolution that finally pulled Ukraine out of Russia’s orbit has resulted in all the pent-up resentment over the gas spilling over into one giant headache for the judges in Stockholm.
Ukraine’s state energy company Naftogaz is seeking $26.6 billion from its Russian counterpart for its alleged failure to pay the required sums for transits and billing Kiev for gas it never bought.
Russia’s Gazprom energy giant is demanding $38.7 billion from Naftogaz for what it sees as non-payment on contracted gas.
Yet the English High Court of Justice in London may be dealing with an even more explosive issue relating to a $3-billion euro bond Russia bought from Ukraine in December 2013.
Kiev views that money as a bribe paid to then-president Viktor Yanukovych — now living in self-imposed exile in Russia — for his surprise November 2013 decision to ditch a landmark EU deal.
The Moscow-backed president’s about-face sparked three months of protests that ousted Yanukovych and was followed by Russia’s seizure of Crimea and the onset of the eastern separatist war.
Ukraine’s decision not to pay back the money by the loan’s December 2015 deadline prompted the IMF to bend its rules and continue its programme with a nation that is technically in default.
