On July 29, 2014, an arbitral tribunal issued a lengthy award in favor of Cleary Gottlieb’s client OAO Tatneft in an arbitration against Ukraine for violation of the Russia-Ukraine Bilateral Investment Treaty. Tatneft’s claim arose out of the taking of its interest in the largest oil refinery in Ukraine by Igor Kolomoisky, and the Privat Group that he heads. Utilizing as a pretext a dispute with the former Chairman of the Management Board of the refinery and an ex parte Ukrainian court order purporting to reinstate him years after his dismissal, a Ukrainian state bailiff caused the forcible seizure of the refinery, which was then occupied by Ukrainian Ministry of the Interior Troops paid by Privat Group, which installed its lawyer on the premises to supervise them. A series of judicial proceedings brought by Ukrainian prosecutors followed that resulted in the systematic stripping of all of the shareholdings of Tatneft and the other Tartarstan shareholders in the joint venture company that owned the refinery, and their transfer to Privat Group and its associates.
The Tribunal, after denying Ukraine’s jurisdictional objections in 2010 conducted a two week hearing on the merits in March 2013. The Tribunal decided that Ukraine’s actions in providing indispensable judicial and administrative assistance to Privat’s takeover violated its obligations under the BIT to provide fair and equitable credit to Tatneft’s investment, and awarded damages of $112 million, which with pre-award interest currently totals approximately $131 million.
