Case Law (#10 October 2016)

Update on JKX vs. Ukraine “Saga”

Yaroslav A. Pеtrov

The Ukrainian “saga” on the enforcement of the SCC emergency arbitrator’s award continues, as the case is pending the second round of cassation review.

Arbitration proceedings were initiated by Dutch and English investors Oil&Gas PLC and Poltava Gas B.V. (JKX or Claimants) on 7 January 2015. The case concerns the alleged Ukraine’s failure to comply with its obligations under the Energy Charter Treaty, the UK-Ukraine BIT (1993), and the Netherlands-Ukraine BIT (1994). On 28 December 2014 Ukraine enacted the Act of Ukraine on Tax Reform Amendments to the Tax Code of Ukraine and Other Legislative Acts. This Act provides for an increase in royalty payments on gas production from the previously applicable 28% to 55%. According to JKX, these provisions conflict with Ukraine’s obligations to ensure fair and equitable treatment of investments. JKX claims it has suffered losses resulting from these violations and demands compensation of USD 270 million...

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