The Ukrainian crisis in 2014 and Russia’s annexation of Crimea significantly affected Ukrainian and as well as foreign investments made in Crimea. In particular, applicability of international investment agreements to Crimea brought about significant questions. Most of the bilateral investment  treaties protect investments made in the territory of contracting parties.  Thus, Crimea’s annexation as well as the territorial status of Crimea may significantly affect applicability of investment agreements.

   Against the background of the interstate territorial dispute between Russian Federation and Ukraine over Crimea, already eight investment claims over alleged breaches of investments in Crimea have been filled since 2014. In May 2018, the Permanent Court of Arbitration in the Hague (PCA) hold that  Russian Federation expropriated assets in Crimea – marking the first time the state has been held liable for the expropriation of an investment in the annexed territory. In the case Everest Estate LLC et al. v. the Russian  Federation, the PCA found the Russian Federation to be responsible for  violating its international obligations arising out of the Ukraine – Russia  bilateral investment treaty. Russia was ordered to pay a compensation of more  than US$159 million.

   The investment arbitration between Everest Estate LLC et al. and the Russian Federation was commenced pursuant to the Ukraine-Russia BIT and in accordance with the UNCITRAL Arbitration Rules 1976 on 19 June 2015. The investors contended that, as of August 2014, the Russian Federation interfered with and ultimately expropriated their investments in real estate located in Crimea (a number of residential and commercial properties including hotels, apartment  buildings, and individual residential apartments).

   The PCA confirmed its jurisdiction over property relations in Crimea in the summer of 2017. The hearing on the merits was held from 5 to 6 October 2017 and the Tribunal invited the Parties to file post-hearing submissions by 11 December 2017. Since, the Russian Federation did not file any post- hearing submissions, the Tribunal declared the hearing closed on 23 March 2018. On 2 May 2018, the Tribunal issued its unanimous award on the merits, addressing liability and damages (See the PCA Press Release dated 9 May 2018).

   The text of the award and the procedure remain confidential.