The KWM team drew lawyers from across its London, Dubai and Shanghai offices to score a major victory for Ukraine in a US $270 million investment arbitration case brought by JKX Oil & Gas Plc relating to oil and gas taxation. The Tribunal ordered Ukraine to pay JKX just US $11.8 million in relation to what JKX described as its “subsidiary claims”.
JKX Oil & Gas Plc is a UK-based oil and gas company listed on the London Stock Exchange. JKX’s claim focused on an asserted breach of the fair and equitable standard by reason of Ukraine imposing allegedly “excessive” production taxes on oil and gas. The claimants filed their claims against Ukraine as three separate arbitrations in early 2015: (i) in proceedings under the Rules of Arbitration of the Arbitration Institute of the Stockholm Chamber of Commerce under the Energy Charter Treaty; (ii) in ICSID proceedings under the Dutch-Ukraine bilateral investment protection treaty (“BIT”); and (iii) in UNCITRAL proceedings under the UK-Ukraine BIT. The three proceedings were subsequently consolidated. However, by the end of the proceedings, the only claimant which remained was JKX pursuing the UNCITRAL proceedings under the UK-Ukraine BIT. Acting as Ukraine’s counsel in the JKX case, the Tribunal ordered Ukraine to pay JKX just US $11.8 million as its “subsidiary claims”. Those smaller claims included arose from Ukrainian rules compelling private companies to buy gas solely from the state-owned suppliers and imposing restrictions on transferring dividends abroad.
The KWM team was led by partners Andrei Yakovlev and Dorothy Murray and included associates Wilson Antoon, Holly Blackwell, Alexis Namdar, Dina Suliman, Marco Toracca and Edmund Northcott. In addition to this case, KWM has been defending Ukraine against a US $120 million ICSID claim brought by a UK real estate developer Krederi Ltd under the UK-Ukraine BIT, as well as Ukraine’s national petroleum company Naftogaz Ukrayiny in a LCIA dispute over control of Ukraine’s largest oil company Ukrnafta, with three companies linked to oligarch Ihor Kolomoisky on the other side.