JKX Oil and Gas has started arbitration proceedings against Ukraine under the Energy Charter Treaty for $180million in rental fees.
The company, and its wholly owned Ukrainian and Dutch subsidiaries, are seeking compensation for the losses they have suffered from the country’s “treaty violations”.
JKX Oil and Gas claims this includes Ukraine’s “failure” to treat JKX’s investments in a sufficient manner and “failing to comply” with commitments made by the country.
A spokesman said: “In particular, JKX is seeking repayment of more than $180million in rental fees that its Ukrainian subsidiary has paid on production of oil and gas in Ukraine since 2011.
“In support of JKX’s claims against Ukraine under the Energy Charter Treaty, an Emergency Arbitrator appointed under the Arbitration Rules of the Stockholm Chamber of Commerce has already issued an emergency award on 14 January 2015 ordering Ukraine to refrain from imposing royalties on the production of gas by JKX’s Ukrainian subsidiary in excess of the rate of 28% (as opposed to the 55% rate that is currently applicable under Ukrainian law).
“The Emergency Award is binding on Ukraine under international law; however, if Ukraine refuses to comply with the Award, JKX will seek to have it recognised and enforced by the Ukrainian courts.
“In addition, JKX will seek orders from the Tribunal constituted under the Energy Charter Treaty to compel Ukraine to comply with the Award.”
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