On 20 June 2025, the Arbitral Tribunal rendered a final award (National Joint Stock Company Naftogaz of Ukraine v. Public Joint Stock Company Gazprom (III), ICC Case No. 27245/GL), bringing the proceedings in another Naftogaz versus Gazprom dispute[1] to a close.[2] Attention now shifts to the next chapter, how the enforcement battle will unfold.
Factual Background of the Case
On 9 September 2022, the National Joint Stock Company “Naftogaz of Ukraine” submitted a Request for Arbitration to the International Court of Arbitration of the International Chamber of Commerce (ICC) in Paris, initiating proceedings against PJSC “Gazprom” of the Russian Federation.[3]
Naftogaz pursued compensation from Gazprom for services provided under a Swedish law-governed contract[4] related to the transit of natural gas through Ukraine.[5] Despite its contractual obligations, Gazprom failed to make complete or timely payments.[6] Naftogaz contended that Gazprom violated a “ship-or-pay” clause, which obligated the Russian company to pay for the transit of a minimum volume of gas, irrespective of actual shipment.[7]
The contract, concluded in late 2019, formed part of a broader settlement resolving prior SCC arbitration proceedings involving multi-billion-dollar claims.[8]
Additionally, Naftogaz invoked a force majeure clause regarding the Sokhranovka gas metering station, a key entry point for Russian gas into Ukraine, claiming that the facility had been rendered inoperable due to its occupation by Russian military forces.[9]
In response to the ICC arbitration, Gazprom sought injunctive relief from the Russian judiciary, invoking domestic legislation that grants Russian courts exclusive jurisdiction over commercial disputes involving sanctioned Russian entities.[10]
In early 2024, the Commercial Court of St Petersburg and the Leningrad Region granted Gazprom an injunction aimed at halting the ICC proceedings.[11] Subsequently, in April 2025, the court significantly increased the penalty imposed on Naftogaz for allegedly violating the injunction, from an initial sum of USD 150 million to over USD 1.3 billion.[12]
Just eleven days before the ICC tribunal was to deliver its final award, the Russian court issued interim measures forbidding Naftogaz from initiating enforcement actions against Gazprom’s assets in relation to the expected decision.[13] A final ruling on the requested injunction is still pending.[14]
Gazprom has maintained that its right to a fair hearing in the ICC arbitration was compromised,[15] citing the nationalities of two arbitrators, Swiss and Swedish, as grounds for concern, given that both countries have enacted sanctions against Russian entities.[16]
Enforcement and Its Anticipated Challenges
In the case at hand, the total amount awarded (USD 1.37 billion) comprises the unpaid principal for gas transit services stipulated under the 2019 agreement, together with accrued interest due to late payment and compensation for Naftogaz’s legal expenses.[17] Should Gazprom fail to comply voluntarily, Naftogaz has signalled its intention to initiate enforcement proceedings targeting Gazprom’s assets abroad.[18]
An enforcement campaign is underway across ten jurisdictions for a prior arbitration award against Gazprom.[19] Notable early results include the successful seizure of Russian assets in both Finland and France.[20] Proceedings remain ongoing in additional jurisdictions, though specific information is withheld due to legal sensitivities and confidentiality obligations.[21]
Enforcement, as a matter of course, follows a clear logic – assets determine the place of enforcement. However, when Russian entities are involved, this principle becomes significantly more complex.
The enforcement of an arbitral award involving a sanctioned Russian party, whether as claimant or respondent, in a jurisdiction that has imposed or upholds such sanctions, presents public interest considerations.[22] These include, on one side, the imperative to uphold and enforce the sanctions regime, and on the other, the principle of ensuring recognition and enforcement of arbitral awards, even against sanctioned entities.[23]
These challenges emerge within the complex framework of Russian measures that authorise domestic courts to assert jurisdiction over sanctions-related disputes and to issue anti-suit injunctions aimed at halting parallel proceedings in foreign jurisdictions.[24]
Existing Precedent
On 26 July 2024, the Russian Supreme Court delivered a decision that introduced a new legal position on the recognition and enforcement of foreign arbitral awards.[25] Marking a significant departure from previously arbitration-friendly jurisprudence, the ruling establishes additional hurdles for individuals or entities based in jurisdictions classified by Russia as “hostile” or “unfriendly” to have their claims heard in related disputes.[26]
The ruling is underpinned by a presumption that Russian parties may face systemic bias in jurisdictions that have imposed sanctions against Russia.[27] The case originated from a dispute concerning a 2020 grain supply contract between a Russian seller and a German buyer, governed by English law.[28] Following the seller’s refusal to comply with an arbitral award rendered in the buyer’s favour, the matter escalated to the Russian Supreme Court.[29]
In its decision of 26 July 2024, the Russian Supreme Court overturned the judgment of the lower courts and remanded the case for further consideration.[30] It held that enforcement of the arbitral award would contravene Russian public policy on several grounds, including:[31]
- a presumed bias and lack of impartiality among arbitrators from so-called “unfriendly” States;[32]
- an infringement of the Russian seller’s right to due process in foreign arbitration proceedings; and[33]
- the failure to account for the seller’s broader economic and social significance within Russia.[34]
Presumption of Bias
A central element of the ruling was the Russian Supreme Court’s position that arbitrators from jurisdictions designated as “unfriendly”, including the United States, United Kingdom, Ukraine, Denmark, and other States that have imposed sanctions on Russia, should be presumed to lack impartiality and independence.[35] Although the Supreme Court cited the general principle of judicial neutrality and referenced relevant case law from the European Court of Human Rights, it concluded that the existence of sanctions justifies a reversal of that presumption.[36] The lower courts, it held, had erred in failing to address the potential partiality of the arbitrators.[37]
The Supreme Court further found that the Russian seller’s right to a fair hearing had been undermined.[38] Due to sanctions, the seller was allegedly unable to retain legal representation in the United Kingdom, as financial institutions refused to process payments for legal or arbitration-related services.[39] The Supreme Court ruled that these practical barriers should have been recognised as impairing the seller’s effective participation in the arbitration.[40]
Finally, the Russian Supreme Court emphasised the broader significance of the Russian seller, highlighting its role in the regional economy and its importance to local employment and social stability.[41] It concluded that enforcing the award could inflict disproportionate harm, both financially and socially, which the lower courts had failed to consider.[42]
Conclusion
As Naftogaz moves to recover the awarded sum through international enforcement efforts, it does so against the backdrop of a fragmented legal landscape, where geopolitics and public policy frequently intersect with principles of commercial arbitration. Russia’s judicial pushback, particularly its stance on arbitrator impartiality and due process, highlights a trend: arbitral enforcement involving sanctioned entities is becoming less a matter of black-letter law and more a question of State policy and judicial discretion in certain jurisdictions.
Given the approach reflected in the Russian Supreme Court’s recent ruling, the enforcement of the Naftogaz award is likely to be protracted.
This case exemplifies the growing intersection of international arbitration, geopolitical conflict, and sanctions law, underscoring the challenges of upholding arbitral awards involving sanctioned Russian entities. Whether the rule of law can remain insulated from global political frictions will depend, in large part, on the willingness of national courts to honour their commitments under international conventions, even when enforcement targets lie at the intersection of diplomacy, energy politics, and war.
[1] National Joint Stock Company Naftogaz of Ukraine v. Public Joint Stock Company Gazprom (III), ICC Case No. 27245/GL, Final Award, 20 June 2025.
[2] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025).
[3] Naftogaz of Ukraine, Naftogaz initiates new arbitration proceeding against Gazprom, 9 September 2022, https://www.naftogaz.com/en/news/new-arbitration-proceeding-against-gazprom (last accessed 11 July 2025).
[4] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025).
[5] Naftogaz of Ukraine, Naftogaz initiates new arbitration proceeding against Gazprom, 9 September 2022, https://www.naftogaz.com/en/news/new-arbitration-proceeding-against-gazprom (last accessed 11 July 2025).
[6] Naftogaz of Ukraine, Naftogaz initiates new arbitration proceeding against Gazprom, 9 September 2022, https://www.naftogaz.com/en/news/new-arbitration-proceeding-against-gazprom (last accessed 11 July 2025).
[7] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025).
[8] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025).
[9] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025).
[10] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025).
[11] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025). Commercial Court of St. Petersburg and Leningrad Region, Case No. А56-124094/2023, Decision, 22 January 2024, https://jusmundi.com/en/document/decision/ru-national-joint-stock-company-naftogaz-of-ukraine-v-public-joint-stock-company-gazprom-iii-opredelenie-arbitrazhnogo-suda-goroda-sankt-peterburga-i-leningradskoi-oblasti-a56-124094-2023-monday-22nd-january-2024#decision_58807 (last accessed 11 July 2025).
[12] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 10 July 2025). Commercial Court of St. Petersburg and Leningrad Region, Case No. А56-124094/2023, Decision, 17 April 2025, https://jusmundi.com/en/document/decision/ru-national-joint-stock-company-naftogaz-of-ukraine-v-public-joint-stock-company-gazprom-iii-opredelenie-arbitraznogo-suda-goroda-sankt-peterburga-i-leningradskoj-oblasti-a56-124094-2023-thursday-17th-april-2025#decision_80012 (last accessed 11 July 2025).
[13] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025). Commercial Court of St. Petersburg and Leningrad Region, Case No. А56-52159/2025, Decision, 9 June 2025, https://jusmundi.com/en/document/decision/ru-national-joint-stock-company-naftogaz-of-ukraine-v-public-joint-stock-company-gazprom-iii-opredelenie-arbitrazhnogo-suda-goroda-sankt-peterburga-i-leningradskoj-oblasti-a56-52159-2025-monday-9th-june-2025#decision_81402 (last accessed 11 July 2025).
[14] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025).
[15] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025). Commercial Court of St. Petersburg and Leningrad Region, Case No. А56-124094/2023, Decision, 22 January 2024, https://jusmundi.com/en/document/decision/ru-national-joint-stock-company-naftogaz-of-ukraine-v-public-joint-stock-company-gazprom-iii-opredelenie-arbitrazhnogo-suda-goroda-sankt-peterburga-i-leningradskoi-oblasti-a56-124094-2023-monday-22nd-january-2024#decision_58807 (last accessed 11 July 2025).
[16] S. Moody, Naftogaz declares billion-dollar win against Gazprom, Global Arbitration Review, 24 June 2025, https://globalarbitrationreview.com/article/naftogaz-declares-billion-dollar-win-against-gazprom (last accessed 11 July 2025).
[17] Naftogaz of Ukraine, Naftogaz moves to enforce $1.37 billion arbitration award against Gazprom, 24 June 2025, https://www.naftogaz.com/en/news/naftogaz-pochynae-protses-vykonannya-arbitrazhnogo-rishennya-proty-gazpromu-na-1-37-mlrd-dolariv (last accessed 11 July 2025).
[18] Naftogaz of Ukraine, Naftogaz moves to enforce $1.37 billion arbitration award against Gazprom, 24 June 2025, https://www.naftogaz.com/en/news/naftogaz-pochynae-protses-vykonannya-arbitrazhnogo-rishennya-proty-gazpromu-na-1-37-mlrd-dolariv (last accessed 11 July 2025).
[19] Naftogaz of Ukraine, Naftogaz moves to enforce $1.37 billion arbitration award against Gazprom, 24 June 2025, https://www.naftogaz.com/en/news/naftogaz-pochynae-protses-vykonannya-arbitrazhnogo-rishennya-proty-gazpromu-na-1-37-mlrd-dolariv (last accessed 11 July 2025).
[20] Naftogaz of Ukraine, Naftogaz moves to enforce $1.37 billion arbitration award against Gazprom, 24 June 2025, https://www.naftogaz.com/en/news/naftogaz-pochynae-protses-vykonannya-arbitrazhnogo-rishennya-proty-gazpromu-na-1-37-mlrd-dolariv (last accessed 11 July 2025).
[21] Naftogaz of Ukraine, Naftogaz moves to enforce $1.37 billion arbitration award against Gazprom, 24 June 2025, https://www.naftogaz.com/en/news/naftogaz-pochynae-protses-vykonannya-arbitrazhnogo-rishennya-proty-gazpromu-na-1-37-mlrd-dolariv (last accessed 11 July 2025).
[22] P. Sandosham and T. Forge, The effect of Russian sanctions on international arbitration, 8 July 2024, https://www.cliffordchance.com/insights/resources/blogs/arbitration-insights/2024/07/effect-of-russian-sanctions-on-international-arbitration.html (last accessed 11 July 2025).
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[24] P. Sandosham and T. Forge, The effect of Russian sanctions on international arbitration, 8 July 2024, https://www.cliffordchance.com/insights/resources/blogs/arbitration-insights/2024/07/effect-of-russian-sanctions-on-international-arbitration.html (last accessed 11 July 2025).
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[28] V. Strizh and P. Sizikova, Russia limits enforcement of international arbitration awards rendered by ‘unfriendly’ arbitrators, LawFlash, 26 September 2024, https://www.morganlewis.com/pubs/2024/09/russia-limits-enforcement-of-international-arbitration-awards-rendered-by-unfriendly-arbitrators (last accessed 11 July 2025). C. Thywissen GmbH v. JSC Novosibirskhleboproduct, Award, 16 November 2022, https://jusmundi.com/en/document/decision/en-c-thywissen-gmbh-v-jsc-novosibirskhleboproduct-award-wednesday-16th-november-2022 (last accessed 11 July 2025).
[29] V. Strizh and P. Sizikova, Russia limits enforcement of international arbitration awards rendered by ‘unfriendly’ arbitrators, LawFlash, 26 September 2024, https://www.morganlewis.com/pubs/2024/09/russia-limits-enforcement-of-international-arbitration-awards-rendered-by-unfriendly-arbitrators (last accessed 11 July 2025).
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