Naftogaz wins $1.37 billion arbitration against Gazprom
Naftogaz of Ukraine has won an international arbitration case against Russia’s Gazprom, the company’s CEO, Serhiy Koretsky, announced.
A Swiss arbitration tribunal ordered Gazprom to pay $1.37 billion to the Ukrainian company for violating the "take-or-pay" principle outlined in their gas transit contract.
The dispute stems from Gazprom’s suspension of payments for the transit of Russian gas through Ukraine, starting in May 2022. At that time, Ukraine ceased transporting gas through a pipeline segment located in the Russian-occupied part of Luhansk Oblast. However, Naftogaz did not refuse to provide transit services altogether—it proposed rerouting the gas via the Sudzha entry point in Sumy Oblast.
Gazprom declined to switch the transit route and stopped paying for the contracted volumes, prompting Naftogaz to initiate arbitration proceedings in Switzerland under Swedish law.
"In September 2022, Naftogaz launched arbitration, which Gazprom unsuccessfully tried to block via Russian courts. Now we have a final ruling: the tribunal, composed of arbitrators from Sweden, Switzerland, and Israel, has fully sided with Naftogaz," Koretsky wrote on Facebook.
- This is not the first such case. In 2018, Naftogaz won an arbitration award against Gazprom over shortfalls in gas transit volumes. Gazprom complied with the ruling by paying $2.9 billion to Naftogaz at the end of 2019, before signing a new transit agreement.
- However, under the terms of a Ukrainian-Russian intergovernmental protocol, Naftogaz subsequently declined to pursue another arbitration it was entitled to and likely would have won.
- In a separate case, on April 12, 2023, an arbitration tribunal in The Hague ordered Russia to pay Naftogaz $5 billion in compensation for assets illegally seized in Crimea. Russia has refused to recognize or enforce that ruling.
