On November 21, the Supreme Court upheld the Decision of Kyiv Court of Appeal on recognition and enforcement in Ukraine of the Arbitral Award of the Permanent Court of Arbitration in London dated 6 February 2017 on the recovery by Ukraine of losses exceeding $12 million in favour of JKX Oil & Gas Plc, thus dismissing the complaint from the Ministry of Justice.
According to BusinessCensor, the information was disclosed in the database on the court decisions.
“Since an appeal against this judgement has now failed, JKX is, therefore, now filing for enforcement of the award,” JKX stated in its communication at the London Stock Exchange. The company further declared, “No recognition will be made in the financial statements of any possible future benefit that may result from this award until there is further clarity on the likely success of this enforcement.”
It meant the payment of $11.8 million plus Libor interest rate at +1% (from February 2015 to February 2017) and at +2% (following February 2017), as well as costs of $0.3 million in relation to subsidiary claims.
Beginning in 2015, the Ukrainian and Dutch subsidiaries of JKX were reported to commence arbitration proceedings against Ukraine under the Energy Charter Treaty (ECT) and Ukraine’s bilateral investment treaties with (BITs) with the Netherlands and the United Kingdom for more than $180 million. The reason was a temporary increase in the Verkhovna Rada’s royalties on the company’s gas production from the rate of 28% to 55% (when extracted from up to five kilometres), and the practice continuance in 2015.
In February 2017, the international arbitration tribunal dismissed the main element of the company’s claim for payment of excessive rental fees in 2014 but awarded JKX damages of approximately $11.8 million.
The Ministry of Justice requested the High Court of Justice of England and Wales to reconsider the decision, but it was refused in late October 2017.
Then, the Ministry of Justice called the court decision favourable to Ukraine, as the judges of the Permanent Court of Arbitration in London rejected three out of four claims by JKX Oil & Gas Plc. Thus, the Ukrainian party had to pay just over $12 million instead of the plaintiff’s $247 million.
The JKX Group owns the Poltava Petroleum Company in Ukraine. The latter is producing at the Movchanivsky and Ignativsky fields.
As of March 29, 2019, JKX’s largest shareholders were Eclairs Group of Ihor Kolomoisky and Henadiy Boholyubov (27.54%); Cascade Investment Fund of Vitalii Khomutynnik (19.97%); Neptune Invest & Finance Corp (12.98%); Keyhall Holding Lts. (11.45%); and Interneft Ltd. (6.16%).