Stabil LLC v The Russian Federation - United States District Court for the District of Columbia Case no 1-22-cv-00983 - Petition to Confirm Arbitration Award - 9 April 2022
Country
Year
2022
Summary
PETITION TO CONFIRM ARBITRATION AWARD
Petitioners Stabil LLC, Rubenor LLC, Rustel LLC, Novel-Estate LLC, PII Kirovograd-Nafta LLC, Crimea-Petrol LLC, Pirsan LLC, Trade-Trust LLC, Elefteria LLC, VKF Satek LLC and Stemv Group LLC (collectively, "Petitioners"), by and through their attorneys, Hughes Hubbard & Reed LLP, state as follows:
NATURE OF THE PROCEEDING
1. Petitioners are Ukrainian companies seeking confirmation of an arbitral award (the "Award") awarding them compensation for the Russian Federation's seizure of their assets after its 2014 invasion of Crimea. The Award was rendered on April 12, 2019, by a distinguished three- member arbitral tribunal ("Tribunal") sitting in Geneva, Switzerland under the auspices of the Permanent Court of Arbitration ("PCA"). See Declaration of James Boykin dated April 9, 2022 ("Boykin Decl."), Exh. A. The arbitration was commenced pursuant to a bilateral investment treaty between Ukraine and the Russian Federation, entitled the Agreement between the Cabinet of Ministers of Ukraine and the Government of the Russian Federation on the Encouragement and Mutual Protection of Investments of November 27, 1998 (the "Treaty"). See Boykin Decl., Exh. B.
In the Treaty, the Russian Federation undertook binding obligations towards Ukrainian investors with investments in its territory, see id. Arts. 1-7, and made a standing offer to arbitrate any disputes that might arise with such investors with respect to their investments, see id. Art. 9. The Petitioners filed a Notice of Arbitration on June 3, 2015, in which they accepted the Russian Federation's standing offer to arbitrate. See Boykin Decl., Exh. C. The Tribunal, consisting of Professor Gabrielle Kaufmann-Kohler, Presiding Arbitrator, Mr. Daniel M. Price, and Professor Brigitte Stern, was constituted on October 7, 2015. See Award ¶ 16.
2. The arbitration arose out of breaches of the Treaty by the Russian Federation in the Crimean Peninsula after the Russian occupation and annexation of that territory in 2014. On June 26, 2017, after briefing and a hearing, the Tribunal issued an award on jurisdiction ("Award on Jurisdiction") in which it unanimously found that the Tribunal had jurisdiction over the dispute.
Boykin Decl., Exh. D, Award on Jurisdiction; Award ¶ 40. On August 14, 2017, the Russian Federation, which had theretofore refused to participate in the arbitration, filed an action for annulment of the Award on Jurisdiction before the Swiss Federal Supreme Court, which is the court with original jurisdiction to rule on awards issued in international arbitrations seated in Switzerland.
Id. ¶ 44. Following a public deliberation held on October 16, 2018, the Swiss Federal Supreme Court denied the Russian Federation's request for annulment, holding that the Tribunal had correctly interpreted the Treaty and declared itself to have jurisdiction over this dispute. Id. ¶ 45; Boykin Decl., Exh. E, 2018 Swiss Court Judgment. The Court issued a reasoned judgment on November 15, 2018.
3. On April 12, 2019, following further proceedings and a hearing on the merits, and another hearing on damages, the Tribunal issued its final Award in which it unanimously found that the Russian Federation breached Article 5 of the Treaty when it expropriated the Petitioners' investments located in the Crimean Peninsula. Award ¶¶ 259, 430. The Tribunal awarded Petitioners compensation for the business properties taken, plus interest from April 22, 2014 until payment in full, at the rate of LIBOR for three month deposits in U.S. dollars, plus 1%, compounded annually, in the following principal amounts:
a. to Stabil LLC: USD 2,964,057;
b. to Rubenor LLC: USD 534,105;
c. to Rustel LLC: USD 2,403,473;
d. to Novel-Estate LLC: USD 1,068,210;
e. to PII Kirovograd-Nafta LLC: USD 801,158;
f. to Crimea-Petrol LLC: USD 267,053;
g. to Pirsan LLC: USD 267,053;
h. to Trade-Trust LLC: USD 10,280,111;
i. to Elefteria LLC: USD 14,234,000;
j. to VKF Satek LLC: USD 871,478;
k. to Stemv Group LLC: USD 871,478.
4. The Tribunal also ordered payment to Stabil LLC for compensation for the expropriation of a residential apartment, in the amount of USD 27,238 plus interest from September 3, 2014 until payment in full, at LIBOR for three month deposits in U.S. dollars, plus 1%, compounded annually. Id. The principal amounts of compensation awarded by the Tribunal add up to USD $34,589,414.
5. In addition, the Tribunal fixed the costs of the arbitration at EUR 687,085.01 and ordered that the Russian Federation bear 75% of the costs of arbitration plus the Petitioners' costs of legal representation and assistance, thus ordering the Russian Federation to pay EUR 46,846.71 and USD 363,621.88 to each Petitioner, plus interest from the date of the Award until payment in full, at LIBOR for three month deposits in U.S. dollars, plus 1%, compounded annually. Award ¶¶ 424, 429, 430.
6. On May 28, 2019, the Russian Federation filed an application to set aside the Award in the Swiss Federal Supreme Court. On Dec. 12, 2019, following several rounds of written submissions and two months after ordering the proceedings closed, the Swiss Federal Supreme Court issued its judgment dismissing Russia's application, ordering it to bear all court expenses and Petitioners' legal costs. Boykin Decl. Exh. F, 2019 Swiss Court Judgment. That judgment is final and not subject to appeal.
7. The Award is subject to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958 (the "New York Convention"), in that it was made in the territory of a signatory of that Convention other than the United States. Art. I(1), 21 U.S.T. 2517, 330 U.N.T.S. 38; see also 9 U.S.C. § 201. Pursuant to Chapter 2 of the Federal Arbitration Act, which implements the New York Convention into U.S. law, "[t]he court shall confirm the award unless it finds one of the grounds for refusal or deferral of recognition or enforcement of the award specified in the said Convention." 9 U.S.C. § 207. No such grounds for refusal or deferral of recognition are present here. The Court, accordingly, should confirm the Award.
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OGEL:
- Stabil LLC v The Russian Federation - PCA Case No 2015-35 - Final Award - 12 April 2019
- Stabil LLC v The Russian Federation - PCA Case No 2015-35 - Notice of Arbitration - 3 June 2015
- Stabil LLC v The Russian Federation - PCA Case No 2015-35 - Award on Jurisdiction - 26 June 2017
- Letter from Hughes Hubbard to Prime Minister of the Russian Federation H.E. Dimitry A. Medvedev - 15 October 2014
TDM:
- Stabil LLC v The Russian Federation - PCA Case No 2015-35 - Final Award - 12 April 2019
- Stabil LLC v The Russian Federation - PCA Case No 2015-35 - Notice of Arbitration - 3 June 2015
- Stabil LLC v The Russian Federation - PCA Case No 2015-35 - Award on Jurisdiction - 26 June 2017
- Letter from Hughes Hubbard to Prime Minister of the Russian Federation H.E. Dimitry A. Medvedev - 15 October 2014