MV Professor Molchanov. Photo courtesy Naftogaz
Norwegian authorities have seized a Russian-owned expedition ship in Svalbard at the request of Ukraine’s Naftogaz Group as the company seeks to enforce a $4.22 billion arbitration award against Russia over assets expropriated following the annexation of Crimea.
The Governor of Svalbard confirmed Wednesday that it had seized the Professor Molchanov, which is docked in Barentsburg, following an order from the Nord-Troms District Court.
The court ruled August 31 that Naftogaz could seize the vessel as part of its effort to recover compensation from Russia. The Governor of Svalbard, acting as the local enforcement authority, carried out the seizure on September 2.
“The legal process and ruling are part of the company’s fight to recover funds that were expropriated by Russia in 2014,” the Governor’s office said.
The court has ordered the Professor Molchanov to remain at a location determined by the Governor. The vessel will remain in Barentsburg until either the Governor or the court decides otherwise.
The Governor said it is handling the crew and passengers aboard the vessel in cooperation with Trust Arktikugol, the Russian state-owned company that operates the Barentsburg settlement.
Naftogaz said the seizure is intended to secure enforcement of Russia’s outstanding obligations under an international arbitration award totaling approximately $4.22 billion, plus interest and costs. The award has previously been recognized as enforceable in Norway.
According to Naftogaz, the Professor Molchanov is owned by the Russian Federation and is commercially operated for expedition cruises, including voyages to Svalbard.
“This is another important step towards restoring justice for Russia’s unlawful seizure of Naftogaz assets in Crimea,” Naftogaz Acting CEO Sergii Fedorenko said.
“Russia cannot evade responsibility simply by refusing to comply with an international arbitral award,” he added. “We will continue to pursue Russian assets around the world until the compensation awarded to Naftogaz and other Naftogaz Group companies is paid.”
The dispute dates to Russia’s 2014 annexation of Crimea and the subsequent expropriation of assets belonging to Naftogaz and other companies within the Ukrainian state-owned energy group.
Naftogaz has since pursued Russian state assets internationally in an effort to collect on the arbitration award, making the seizure of the Professor Molchanov another test of Ukraine’s ability to turn international legal victories against Russia into actual recoveries.
Naftogaz is represented in Norway by Wikborg Rein, with Covington & Burling serving as international legal counsel.
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