On 26 October 2026, the United States District Court for the District of Columbia (the “Court”) issued a memorandum opinion and order (the “Decision”) denying the Russian Federation’s (“Russia”) motion to dismiss proceedings brought by NJSC Naftogaz of Ukraine and other Ukrainian oil and gas companies (the “Companies”) seeking confirmation of an arbitral award exceeding USD 4.2 billion.[1]
The dispute arose from Russia’s seizure of control over Crimea in 2014 and the resulting expropriation of the Companies’ investments in the oil and gas sector.[2] The Court held that it had subject-matter jurisdiction under the arbitration exception to the Foreign Sovereign Immunities Act (the “FSIA”), rejecting Russia’s objections concerning the existence of an arbitration agreement and the applicability of the New York Convention.[3]
Significantly, the Court also rejected Russia’s argument that only private parties could invoke the FSIA’s arbitration exception, holding that the state-owned status of the Companies did not preclude them from seeking confirmation of the award.[4] The Decision therefore clarifies the application of sovereign immunity rules to the enforcement of investment arbitration awards obtained by state-owned enterprises, while leaving the ultimate confirmation of the award unresolved.[5]
Facts
The dispute concerned substantial investments maintained by the Companies in Crimea before Russia seized control of the territory in 2014, including natural gas reserves, pipelines, infrastructure, equipment, permits and other rights relating to the exploration, production, storage and distribution of natural gas.[6]
In 2016, the Companies commenced arbitration against Russia pursuant to the dispute resolution provisions of the bilateral investment treaty between Russia and Ukraine (the “BIT”), alleging that Russia had breached its treaty obligations by expropriating their investments without compensation.[7]
In 2019, the arbitral tribunal (the “Tribunal”) issued a partial award (the “Partial Award”) finding that it had jurisdiction over the Companies’ claims and that Russia had committed several violations of the BIT.[8] Russia subsequently challenged the Partial Award before the Hague Court of Appeal (the “Hague Court”), which upheld it in substantial part but limited the Tribunal’s jurisdiction to investments made on or after 1 January 1992.[9] Russia appealed that judgment to the Supreme Court of the Netherlands, while the Companies filed a cross-appeal, but both appeals were dismissed.[10]
In April 2023, the Tribunal issued its final award (the “Final Award”), ordering Russia to pay USD 4,222,875,858.81, plus interest, as compensation for the fair market value of the Companies’ expropriated investments.[11] Russia subsequently initiated proceedings before the Hague Court seeking to set aside the Final Award.[12]
In June 2023, the Companies commenced proceedings before the Court seeking confirmation of the Final Award pursuant to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”), which is implemented in the United States through Chapter 2 of the Federal Arbitration Act (the “FAA”).[13]
Russia moved to dismiss the proceedings for lack of subject-matter and personal jurisdiction, relying principally on sovereign immunity under the FSIA.[14] Following the parties’ joint request, the Court stayed the proceedings until 1 April 2026 in anticipation of a decision by the Hague Court concerning the Final Award.[15] When that decision had not been issued, Russia sought a renewed stay, which the Court denied before proceeding to consider the jurisdictional objections.[16]
Issues
The principal issue was whether the Court had subject-matter jurisdiction to entertain the Companies’ application for confirmation of the Final Award under the arbitration exception contained in Section 1605(a)(6) of the FSIA.[17]
In particular, the Court had to determine whether the Companies had established the existence of an arbitration agreement, an arbitral award and an international treaty potentially governing its enforcement, and whether the dispute arose from a commercial legal relationship within the meaning of the New York Convention.[18]
A further question was whether the FSIA’s arbitration exception could be invoked by state-owned enterprises, given Russia’s argument that the statutory reference to an agreement made with or for the benefit of a private party restricted its application to proceedings initiated by private claimants.[19]
The Court also had to consider Russia’s objection that exercising personal jurisdiction over a foreign sovereign would violate the Due Process Clause of the Fifth Amendment to the United States Constitution.[20]
Holding
The Court held that it had subject-matter jurisdiction under Section 1605(a)(6) of the FSIA because the Companies had established the existence of a qualifying arbitration agreement, the Final Award, and a treaty potentially governing its recognition and enforcement.[21]
It further held that the BIT created a legal relationship between Russia and the Companies and that the underlying investments were commercial in nature, bringing the Final Award within the scope of the New York Convention.[22]
Regarding the Companies’ state-owned status, the Court determined that the FSIA did not require the party seeking confirmation of an arbitral award to be a private party, provided that the underlying agreement to arbitrate was made with or for the benefit of private parties.[23]
The Court also rejected Russia’s personal jurisdiction objection, finding that binding precedent of the United States Court of Appeals for the District of Columbia Circuit (the “D.C. Circuit”) established that foreign sovereigns were not entitled to the constitutional due process protections invoked by Russia.[24]
Accordingly, the Court denied Russia’s motion to dismiss but did not determine whether the Final Award should ultimately be confirmed and enforced.[25]
Reasoning
The Court began by considering the framework established by the FSIA, under which foreign states are generally immune from the jurisdiction of United States courts unless a statutory exception applies.[26]
Section 1605(a)(6) removes that immunity in certain proceedings to enforce an arbitration agreement or confirm an arbitral award where the agreement or award is, or may be, governed by an international treaty providing for recognition and enforcement.[27]
Relying on NextEra Energy Global Holdings B.V. v. Kingdom of Spain,[28] the Court explained that the arbitration exception requires proof of three jurisdictional facts: the existence of an arbitration agreement, an arbitral award, and a treaty potentially governing enforcement of that award.[29] (For more on NextEra, see our previous blog.)
The Companies bore the initial burden of producing evidence of those facts, after which Russia was required to establish their absence by a preponderance of the evidence.[30]
The Court found that the Companies satisfied the first requirement by producing the BIT and their notice of arbitration, which established the existence of an agreement to arbitrate.[31] The second requirement was satisfied by the Final Award, which ordered Russia to pay more than USD 4 billion in compensation.[32]
The third requirement was satisfied by the New York Convention, which governs the recognition and enforcement of foreign arbitral awards and constitutes a qualifying treaty under the FSIA’s arbitration exception.[33]
The Court nevertheless examined whether the dispute arose from a legal relationship considered commercial, as required for the application of the New York Convention.[34]
Regarding the existence of a legal relationship, the Court observed that the BIT guaranteed protection to investments made by investors of either contracting State and established substantive standards governing their treatment.[35] Although the Companies were not themselves parties to the BIT, the treaty conferred benefits on qualifying investors and established a legal framework governing disputes between those investors and the host State.[36]
The Court therefore concluded that a legal relationship existed between Russia and the Companies and that the arbitration arose directly from that relationship.[37]
The Court also considered the commercial nature of the investments, which included pipelines, natural gas reserves, equipment, storage facilities and contractual rights connected with the Companies’ oil and gas operations.[38] It found that these activities were commercial for the purposes of the New York Convention, notwithstanding the geopolitical circumstances surrounding Russia’s seizure of Crimea.[39]
In reaching these conclusions, the Court relied heavily on the D.C. Circuit’s decision in Stabil LLC v. Russian Federation (the “Stabil Decision”), which involved comparable claims arising from the expropriation of Ukrainian investments in Crimea.[40]
In that case, the D.C. Circuit rejected Russia’s arguments that there was no arbitration agreement and that the awards fell outside the New York Convention because they concerned geopolitical rather than commercial matters.[41] In particular, it distinguished objections concerning the scope of an arbitration agreement from objections to its existence, holding that Russia’s arguments related to the former rather than the latter.[42]
The Court considered the Stabil Decision binding and noted that Russia itself acknowledged that several of its jurisdictional arguments had been foreclosed by that precedent.[43]
The central issue that remained unresolved by the Stabil Decision concerned whether state-owned enterprises could invoke the FSIA’s arbitration exception.[44]
Russia argued that Section 1605(a)(6) was available only where the party seeking confirmation was a private party and that the Companies did not meet this requirement because they were owned by Ukraine.[45]
The Court acknowledged that this issue presented a close question but ultimately rejected Russia’s interpretation after examining the statutory wording.[46]
Section 1605(a)(6) refers to actions brought to confirm awards made pursuant to agreements entered into by a foreign State “with or for the benefit of a private party” but does not expressly require the party bringing the confirmation proceedings to be private.[47]
The Court considered this distinction decisive because the statutory requirement concerns the nature and beneficiaries of the underlying agreement to arbitrate, rather than the legal status of the party subsequently seeking confirmation.[48]
Although the BIT was concluded between Russia and Ukraine, it was an agreement made for the benefit of investors, including private parties, and therefore satisfied the statutory requirement.[49]
The Court also rejected Russia’s argument that the subsequent reference to disputes arising “between the parties” demonstrated that only private claimants could seek confirmation.[50] Even if that expression referred to disputes between a foreign State and private parties, the Court reasoned that it limited the types of arbitration agreements covered by the exception rather than the identity of the party entitled to invoke it.[51]
This interpretation did not render the statutory reference to private parties redundant, since an arbitration agreement concluded exclusively between two foreign States without any intended benefit for private parties would not necessarily fall within the exception.[52]
The Court therefore concluded that the Companies’ ownership by Ukraine did not prevent them from invoking the arbitration exception to seek confirmation of the Final Award.[53]
The Companies had also argued, in the alternative, that Russia had impliedly waived its sovereign immunity by becoming a party to the New York Convention, potentially triggering the waiver exception under Section 1605(a)(1) of the FSIA.[54]
The Court noted that the D.C. Circuit had previously endorsed this theory in an unpublished decision without formally adopting it as binding precedent.[55] Because jurisdiction was already established under the arbitration exception, the Court declined to decide whether the waiver exception also applied.[56]
Finally, the Court addressed Russia’s argument that exercising personal jurisdiction would violate its constitutional right to due process under the Fifth Amendment.[57]
Relying on Price v. Socialist People’s Libyan Arab Jamahiriya[58] and the Stabil Decision,[59] the Court held that a foreign State is not a “person” within the meaning of the Due Process Clause and therefore cannot invoke those constitutional protections.[60]
As that precedent was binding, the Court rejected Russia’s objection and denied its motion to dismiss in its entirety.[61]
Conclusion
The Decision is significant for the recognition and enforcement of investment arbitration awards against foreign sovereigns because it clarifies that the FSIA’s arbitration exception does not necessarily require the party seeking confirmation to be privately owned.[62]
By distinguishing the identity of the applicant from the beneficiaries of the underlying arbitration agreement, the Court confirmed that state-owned enterprises may invoke the exception where the agreement was made with or for the benefit of private parties and the other statutory requirements are satisfied.[63]
The Decision also reinforces the approach adopted in the Stabil Decision, under which disputes arising from expropriation following geopolitical events may nevertheless concern commercial legal relationships falling within the New York Convention.[64]
Its significance should, however, be understood within the limits of the jurisdictional issues before the Court, since denying Russia’s motion to dismiss did not amount to confirmation of the Final Award or a determination of any available grounds for refusing recognition or enforcement under the New York Convention.[65]
For parties seeking confirmation of investment arbitration awards against foreign States in United States courts, the Decision highlights the importance of establishing the existence of an arbitration agreement, an arbitral award and a qualifying enforcement treaty, while demonstrating that the state-owned status of the award creditor does not necessarily prevent reliance on the FSIA’s arbitration exception.[66]
The ruling therefore represents an important jurisdictional development in the Companies’ efforts to enforce their arbitral award against Russia, although the ultimate question of confirmation remains to be determined.[67]
[1] NJSC Naftogaz of Ukraine et al. v. Russian Federation, Civ. A. No. 23-1828 (JDB), slip op. at 1, 11 (D. D.C. Oct. 26, 2026); NJSC Naftogaz of Ukraine et al. v. Russian Federation, PCA Case No. 2017-16, Award, 12 April 2023, ¶ 717.
[2] NJSC Naftogaz, slip op. at 1-2.
[3] Id. at 3-8.
[4] Id. at 8-10.
[5] Id. at 8-11.
[6] Id. at 1-2, 6.
[7] Id. at 1-2.
[8] Id. at 2.
[9] Id.
[10] Id.
[11] Id.
[12] Id.
[13] Id. at 3; 9 U.S.C. §§ 201-208.
[14] NJSC Naftogaz, slip op. at 3, 7-8.
[15] Id. at 3.
[16] Id.
[17] Id. at 3-4.
[18] Id. at 4-6.
[19] Id. at 8-10.
[20] Id. at 10-11.
[21] Id. at 4-6.
[22] Id. at 5-6.
[23] Id. at 8-10.
[24] Id. at 11.
[25] Id. at 1, 11.
[26] Id. at 3-4; 28 U.S.C. § 1604.
[27] NJSC Naftogaz, slip op. at 4; 28 U.S.C. § 1605(a)(6).
[28] NextEra Energy Global Holdings B.V. v. Kingdom of Spain, 112 F.4th 1088, 1100 (D.C. Cir. 2024).
[29] NJSC Naftogaz, slip op. at 4.
[30] Id.
[31] Id.
[32] Id.
[33] Id. at 5.
[34] Id. at 5-6; 9 U.S.C. § 202.
[35] NJSC Naftogaz, slip op. at 5.
[36] Id. at 5-6.
[37] Id. at 6.
[38] Id.
[39] Id. at 6-8.
[40] Id. at 3, 7-8; Stabil LLC v. Russian Federation, 167 F.4th 506 (D.C. Cir. 2026).
[41] NJSC Naftogaz, slip op. at 7; Stabil, 167 F.4th at 521-22, 524-26.
[42] NJSC Naftogaz, slip op. at 7; Stabil, 167 F.4th at 521-22, 521.
[43] NJSC Naftogaz, slip op. at 7-8.
[44] Id. at 8. The D.C. Circuit did not have the opportunity to resolve that question in Stabil because the companies at issue were “indisputably private parties.”
[45] Id.
[46] Id.
[47] Id. at 8-9; 28 U.S.C. § 1605(a)(6).
[48] NJSC Naftogaz, slip op. at 8-10.
[49] Id. at 9.
[50] Id. at 9-10.
[51] Id. at 10.
[52] Id.
[53] Id. at 8-10.
[54] Id. at 10; 28 U.S.C. § 1605(a)(1).
[55] NJSC Naftogaz, slip op. at 10-11.
[56] Id.
[57] Id. at 11.
[58] Price v. Socialist People’s Libyan Arab Jamahiriya, 294 F.3d 82, 85-86 (D.C. Cir. 2002).
[59] Stabil, 167 F.4th at 527.
[60] NJSC Naftogaz, slip op. at 11.
[61] Id.
[62] Id. at 8-10.
[63] Id.
[64] Id. at 5-8
[65] Id. at 1, 11; 9 U.S.C. § 207.
[66] NJSC Naftogaz, slip op. at 4-10.
[67] Id. at 1-3, 11.