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    Court Upholds Gazprom's Arbitration Appeal


Swedish court says the implementation of the awards by the Stockholm commercial court must be suspended.

by: William Powell

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Court Upholds Gazprom's Arbitration Appeal

Sweden's Svea Court of Appeal has ordered that the decision by the Stockholm Chamber of Commerce regarding the Gazprom-Naftogaz transit dispute be not implemented, Gazprom said June 15.

The motion was filed by Gazprom on June 7, 2018, in connection with the appeal against the arbitration awards on the transit contract and the attempts by Naftogaz of Ukraine to enforce the awards in the Netherlands and Switzerland before the merits of the complaint could be considered.

In a statement, Gazprom said : "The Court of Appeal acknowledged that it had sufficient grounds to suspend the implementation of the awards issued by the Stockholm Arbitration Court. The Court of Appeal's order, inter alia, removes any justification for Naftogaz of Ukraine to attempt to arrest Gazprom's foreign assets. This fact will be used by Gazprom to challenge the actions of bailiffs in Switzerland and the Netherlands."

The Swedish Arbitration Act states that the determination of the Court of Appeal may not be appealed. Gazprom will continue to defend its rights in accordance with the applicable law, it said.

Gazprom said March 1 that there were significant procedural errors committed by the arbitrators, refused to accept it, and turned off the agreed supply to Ukraine that day. It filed a request with the Svea Court of Appeal on March 29, 2018, to contest and partially cancel the final award issued February 28. On May 28 it filed a motion for a complete reversal of the arbitration award.

From late May to early June 2018, reports emerged that Naftogaz of Ukraine was taking action in Switzerland and the Netherlands to enforce the Stockholm Arbitration Court's awards in the dispute related to the transit contract. Indeed Naftogaz was so confident of its ability to enforce the arbitration ruling that in late May it awarded its executives pay bonuses totaling tens of millions of dollars.

On June 7, Gazprom filed a motion with the Swiss court to be granted full access to the case materials and to subsequently appeal the actions of the court officers. It is also planned to file a similar motion with the Dutch court later.

Naftogaz said that it would request that the decision be reversed "based on decisive counter-evidence, and expects that its request will be granted shortly. The decision does not automatically reverse the enforcement actions which have already resulted in asset attachments, it said. It further said that the second ruling did not "affect the validity of the Arbitration Award on the transit case and does not annul the Tribunal’s decision to set-off the outcomes of the two cases whereby $2.1bn was owed to Naftogaz.