As we anticipated in January 2015, arbitrations have arisen against Russia due to its annexation of Crimea.
After months of threats and announcements by the Ukrainian Ministry of Foreign Affairs, a new investment treaty case against Russia in relation to annexation of Crimea is about start. The first case, Ukrnafta v. Russia, PJSC Ukrnafta v. Russia was filed in 2015 at the PCA and concerns the alleged illegal expropriation of petrol stations in Crimea following 2014 annexation.
The new case is a maritime claim filled under Annex VII of the UNCLOS Convention and relates to potentially oil-rich waters in the Black Sea, the Adjacent Sea of Azov, and the narrow Kerch Strait that links the two seas. This part has been controversially annexed by Russia in March 2014, and Ukraine is now bringing claims stating that Russia’s illegal acts have “usurped and interfered” with Ukraine’s maritime rights. In the statement announcing the new claim, Ukraine’s ministry emphasized that when joining UNCLOS both Ukraine and Russia agreed to settle disputes though binding arbitration and not though ICJ or ITLOS. However, Ukraine will face jurisdictional issues since it needs to find a way to avoid Russia’s Article 298 declaration which excludes jurisdiction relating to sea boundary delimitations.
The Statement of Claim is still not available online. Ukrainian ministry claims that Russia, amongst other, seized oil and gas mineral fields in the seas, prevented Ukrainian vessels from fishing, and seized both fish catch and the power to regulate fish catch, constructed a gas pipeline, and explored archaeological and historical sites in the Black Sea bed, all without Ukrainian consent. A battle on jurisdictional issues will most certainly follow, in case Russia decides to respond to this arbitration at all or decides to boycott the entire process. The Arbitration will most likely be hosted by the PCA. It will be interesting to see how the Tribunal approaches these legally complex and politically-sensitive issues.