Ukraine’s state-owned gas company, Naftogaz Group won $1.37 billion in arbitration against the Russian gas giant Gazprom, Chief Executive Officer of the Naftogaz Group Sergii Koretskyi reported on Facebook.
An arbitration tribunal, made up by members from Sweden, Switzerland and Israel, completely sided with Naftogaz in its final ruling.
Koretskyi wrote: “This is an important victory. The next step is to ensure the enforcement of the ruling – and that is exactly what we will focus on. Step by step.”
Naftogaz was represented during the hearing by a legal team provided by Wikborg Rein, a Norwegian full-service international law firm with over 230 lawyers.
The Ukrainian company will now submit a payment demand to Gazprom for the full amount in accordance with the Final Award decision given in Zurich on June 20, 2025, its press release stated.
This amount was made up of the principal debt for gas transit services provided under the 2019 agreement, penalties for failing to pay, and full reimbursement of legal costs incurred by Naftogaz.
If Gazprom refuses to comply voluntarily, Naftogaz seek to enforce recovery through the seizure of Russian company assets, the press release added.
On Dec. 30, 2019, Ukraine and Russia signed a five-year contract for gas transit to Europe.
Since May 2022, three months after Russia’s full-scale invasion of Ukraine, Gazprom has violated its contractual obligations under the “take or pay” principle by halting payments. This means that the buyer is obliged either to take the agreed volume of goods (for example, gas) or to pay for it, even if the goods are not physically received.
In September 2022, Naftogaz filed its arbitration lawsuit in respect of unpaid and overdue fees for natural gas transit services through Ukraine provided to Gazprom – which the Russian company tried to block through Moscow’s courts – an attempt that failed, Koretskyi wrote.
On Jan. 1 this year, Ukraine halted the transit of Russian gas to Europe through the Druzhba, Soyuz and Yamal-Yevropa pipelines.
According to Gazprom, they reject all the demands of the Ukrainian side. Gazprom also stated that “services not provided by the Ukrainian side should not and will not be paid for,” The Page reported in September 2022.
Russia claimed that Naftogaz allegedly refused to fulfill its transit obligations via the Sokhranivka entry point without justification.
However, Naftogaz explained that due to Russia’s full-scale war, part of the gas transmission system is located in temporarily occupied territory, making it impossible for Ukraine’s Gas Transmission Systems Operator (TSO) to maintain control.
Gazprom called the arbitration initiated by Naftogaz an “unfriendly step” and a continuation of the Ukrainian company’s “bad faith conduct.”
Now, the Naftogaz Group is also pursuing a separate enforcement process relating to a separate arbitration award –$5 billion compensation for the unlawful Russian expropriation of assets in Crimea following its 2014 annexation.
According to the company, enforcement proceedings are ongoing at various stages in ten jurisdictions. There have already been initial results in Finland and France, where Russian assets have been seized.
“Work continues in other countries. For legal strategy reasons, further details are not being disclosed at this time,” the Natfogaz Group press service told Kyiv Post.