Tatneft v Ukraine: court enforces $144 million award despite Moscow court’s findings on immunity of Ukraine’s property (Stavropol Court)

by Maxim Kulkov (Managing Partner), Kristina Aleksa (Associate), KK&P

In Case No. A40-67511/2017 (Moscow), A63-15521/2018 (Stavropol), the Stavropol Commercial Court granted Tatneft’s application to recognise and enforce an investment award.

On 11 March 2019, the Stavropol Commercial Court granted enforcement of an investment award against Ukraine in favour of Russian oil company Tatneft. The case was initiated by Tatneft’s application in 2017 and was first

considered by the Moscow courts, and then transferred to Stavropol due to the lack of Ukrainian assets available for enforcement in Moscow.

In contrast to the Moscow courts, the Stavropol Commercial Court ruled that the particular status of Ukraine’s assets should not be examined in the enforcement proceedings.

Prior to that, on 2 August 2018, the Moscow Cassation Court upheld the first instance court’s opposite approach that further enforcement directly depended on the status of Ukrainian property. The first instance court had held that such property should be suitable for foreclosure and thus free of state immunity. The Moscow Cassation Court had confirmed that Ukraine’s diplomatic premises and the Ukrainian Cultural Centre in Moscow were immune and that the case should be transferred to Stavropol so as to ascertain whether the alleged Ukrainian assets situated in Stavropol were similarly covered by the immunity.

The Stavropol Commercial Court was expected to first decide on the status of certain Ukrainian assets, namely a former USSR sanatorium complex founded in 1945, which is state owned. The court requested financial documents

from the sanatorium, but at the final hearing on 28 February 2019, the court denied Ukraine’s motion to recognize the Sanatorium complex as unsuitable for further enforcement and thus terminate the proceedings.

The court held that the aim of proceedings to enforce an arbitral award is simply to recognise the award, irrespective of whether the state has any assets suitable for enforcement in the relevant state.

Case: Case No. A40-67511/2017 (Moscow), A63-15521/2018 (Stavropol) (11 March 2019).

You can find the link to the full text of the article here (reproduced from Practical Law with the permission of the publishers).