DC Circuit Affirms Decision in $34M Arbitration for Ukrainian Companies Against Russia

Hughes Hubbard successfully represented a group of 11 Ukrainian petrol companies, led by Stabil LLC, before the U.S. Court of Appeals for the District of Columbia Circuit, which affirmed the United States District Court for the District of Columbia’s decision that it had jurisdiction to consider the petition to enforce a $34 million arbitral award against the Russian government.

The companies, which owned and operated chains of gas stations that were seized by Russia after its 2014 invasion of Crimea, have been fighting for compensation for their seized assets since 2015. In 2019, the companies were awarded more than $34 million by an arbitral tribunal in Geneva. The Russian Federation refused to participate in the arbitration, but tried to set the award aside in the Swiss courts, which rejected the attempt.

In 2022, when Hughes Hubbard moved to enforce the award in federal court in Washington, DC, the Russian government moved to dismiss the enforcement lawsuit, claiming sovereign immunity under the Foreign Sovereign Immunity Act (FSIA).

Following a Dec. 12, 2024, ruling by the District that denied Russia’s motion and rejected its sovereign immunity defense, Russia appealed to the DC Circuit.

On Feb. 13, the DC Circuit affirmed the District Court’s decision that it had jurisdiction to consider the firm’s petition to enforce the $34 million award. The Circuit Court accepted Hughes Hubbard’s argument that the Ukraine-Russia bilateral investment treaty created an agreement to arbitrate, that the New York Convention arguably applied to that agreement, and therefore that the arbitration exception to the FSIA applied. The Court also rejected Russia’s argument that the exception did not apply because the award is “geopolitical.”

Law360, Global Arbitration Report and Investment Arbitration Reporter reported on the decision.

The Hughes Hubbard team representing Stabil and the other Ukrainian gas companies includes John Townsend, Eleanor Erney, Shayda Vance, Carter Rosekrans and Winthrop Jordan.