Oschadbank's Billion Dollar Lawsuit Against Russia, Explained

What You Need To Know:

✅ Oschadbank, a Ukrainian state bank, filed a $1 billion lawsuit against Russia in the International Court of Arbitration over its assets in annexed Crimea; 
✅  The court decided not to split the procedure into two parts but to hear the issues relating to the jurisdictional matters together with the issues on the merits;”
✅  The Russian Federation is disputing the jurisdiction of the tribunal stating that there is no basis to sue under the bilateral investment treaty;
✅  The latest law of the Russian Federation enables and authorizes its Constitutional Court to “ban any recognition and enforcement of foreign decisions provided they are contrary to the provisions of the constitution,” says Dobosh.

On August 26th, 2016, Oschadbank filed a one billion dollar lawsuit against Russia in the International Court of Arbitration over its assets in annexed Crimea. The sum includes the cost of assets loss, the loss of business costs, and the interests that will be credited before the final decision. While there are a number of investment disputes between Ukraine and Russia on the topic of jurisdiction, the Oschadbank case is different, explains Yuriy Dobosh, Associate at Vasil Kisil & Partners: “The court decided not to split the procedure into two parts but to hear the issues relating to the jurisdictional matters together with the issues on the merits.”

The Russian Federation is disputing the jurisdiction of the tribunal stating that there is no basis to sue under the bilateral investment treaty, says Dobosh. Furthermore, participating in the tribunal would pose a serious risk for the Russian Federation: “By participating in full it recognizes the jurisdiction and if the Russian Federation loses the proceedings it shall be bound to pay very significant compensations.”

While the court can still hear the case without the presence of the Russian Federation, Dobosh believes that Russia will challenge the arbitral word at the seat of the arbitration appeal, scheduled for March 2017 in The Hague. The latest law of the Russian Federation enables and authorizes its Constitutional Court to “ban any recognition and enforcement of foreign decisions provided they are contrary to the provisions of the constitution,” says Dobosh.

If the arbitration is in favor of Ukraine, Dobosh says that it will be a tough exercise for Ukraine to enforce the third jurisdiction: “It will cause significant expenses for the claimants to trace to seek the assets. They are perfectly aware of what’s at stake so it’s worth it.”

Freelance journalist Volodymyr Solohub spoke to Yuriy Dobosh, Associate at Vasil Kisil & Partners in September 2016 in Kyiv.