JSC CB PrivatBank v. The Russian Federation

At a glance

Parties

PJSC (JSC) CB PrivatBank and Finance Company Finilon LLC (Ukraine) v. the Russian Federation

Case no.

PCA Case No. 2015-21

Forum and rules

Ad hoc arbitration under the UNCITRAL Arbitration Rules 1976, administered by the PCA; seat The Hague, the Netherlands

Treaty

Russia–Ukraine BIT of 27 November 1998

Tribunal

Prof. Pierre-Marie Dupuy (Presiding Arbitrator), Sir Daniel Bethlehem, Dr. Václav Mikulka

Sector

Banking (bank branch network in Crimea)

Outcome

Interim Award (2017): the BIT binds Russia in respect of Crimea from 21 March 2014. Partial Award (4 February 2019): jurisdiction over PrivatBank's claims and breach of Article 5 found; Finilon's claims fall outside jurisdiction. The quantum and illegality phase was closed on 27 July 2026. The published documents do not include a final award.

The dispute

PrivatBank, a Ukrainian commercial bank, and Finilon, a Ukrainian financial services company, claimed that measures taken by the Russian Federation in 2014–2015 deprived them of their banking network in the Crimean Peninsula. They argued that these measures breached Articles 2, 3 and 5 of the 1998 Russia–Ukraine BIT. Russia did not take part in the first phases of the case. Its letters of 16 June and 1 July 2015 said that Crimea forms part of Russian territory and that its conduct there could not be regulated by the Treaty. The Tribunal treated these letters as an objection to jurisdiction and admissibility. Ukraine filed a non-disputing party submission arguing that the Treaty applies to Crimea. From 2019 Russia took part in the case. It raised an "Illegality Objection": that PrivatBank obtained its investments through corruption, fraud and violence. It also challenged the Partial Award in set-aside proceedings in the Dutch courts.

Key holdings

1. On 21 March 2014 the Treaty became opposable to the Russian Federation as regards Ukrainian investors in the Crimean Peninsula. From that date Crimea is treated as part of "the territory of the Russian Federation" for the Treaty. The 21 March 2014 date is when Russia's Incorporation Law was enacted, signed and entered into force; the Tribunal held that settled, long-term Russian control crystallised on that date. The Tribunal expressly took no view on the legality of the incorporation or on sovereignty. Interim Award ¶¶ 144, 194–195
2. The case is not one of State succession under the "moving treaty frontiers" rule (Article 15 VCST), and Crimea's 'juridical space' under the Treaty has not changed. Under Article 29 VCLT and the principle of pacta sunt servanda, "territory" in Article 1(4) includes territory over which a State exercises settled jurisdiction or control and for whose international relations it has assumed responsibility. Interim Award ¶¶ 171–173, 185–187
3. The 27 February 2014 date proposed by the Claimants was rejected. The presence of troops exercising de facto control does not trigger a BIT ("Soldiers do not carry BIT obligations in their backpacks"). What matters is settled, long-term control. Interim Award ¶¶ 191–193
4. Investments made in Crimea before 21 March 2014 are not excluded. Read in its Russian and Ukrainian texts, its context and its object and purpose, Article 1(1) contains no temporal limitation. It is enough that a Ukrainian investment remained in Crimea after 21 March 2014. Interim Award ¶¶ 238–239
5. A dispute exists, and the Claimants satisfied the notice and six-month negotiation requirements of Article 9. The question whether the Claimants are investors (including in light of PrivatBank's nationalisation by Ukraine in December 2016), and the remaining issues of investment and connection, were joined to the merits. Interim Award ¶¶ 247, 252; Decision
6. The Partial Award of 4 February 2019, as quoted in Procedural Order No. 7, held that the Tribunal has jurisdiction over PrivatBank's claims, that they are admissible, and that Russia breached Article 5 of the Treaty in respect of PrivatBank's investment. Finilon's claims fall outside the Tribunal's jurisdiction. PO 7 ¶¶ 1.25–1.26, 1.29
7. Russia asked to reopen jurisdiction and liability, or to stay the arbitration pending the Dutch set-aside proceedings. The Tribunal refused both requests. It allowed Russia to argue its Illegality Objection and to take full part in the quantum phase. PO 7 ¶¶ 2.13, 2.19, 2.25

Procedural history

1. 13 April 2015PrivatBank and Finilon commence the arbitration under Article 9(2)(c) of the Treaty.
2. 6 July 2015Tribunal constituted. The co-arbitrators select Pierre-Marie Dupuy as Presiding Arbitrator.
3. 19 March 2016Procedural Order No. 2: the proceedings continue despite Russia's default, and jurisdiction is bifurcated.
4. 12–14 July 2016Hearing on jurisdiction and admissibility in Geneva, held concurrently with the Belbek arbitration. Russia does not attend.
5. 27 March 2017Corrected Interim Award (first issued 24 February 2017): the Treaty applies to Russia in Crimea from 21 March 2014.
6. 4 February 2019Partial Award: jurisdiction over PrivatBank's claims and breach of Article 5 found; Finilon's claims are outside jurisdiction.
7. 12 September 2019Procedural Orders No. 6 and 7: Russia's counsel are confirmed; its requests to reopen jurisdiction and liability or to stay pending the Dutch set-aside proceedings are refused; the Illegality Objection is admitted into the quantum phase.
8. 10–13 October 2022Evidentiary hearing on quantum and the Illegality Objection at the Peace Palace, The Hague, after an opening hearing on 6–7 June 2022.
9. 11 June 2024Procedural Order No. 26: the Tribunal refuses to defer its award pending PrivatBank's English High Court proceedings against Kolomoisky and Bogolyubov.
10. 27 July 2026Procedural Order No. 30: proceedings declared closed under Article 29 of the UNCITRAL Rules. Earlier, by late 2025, the appointing authority had rejected a challenge to Sir Daniel Bethlehem.

Tribunal, counsel and experts

Decided by

• Pierre-Marie Dupuy President — chosen by the co-arbitrators
• Daniel Bethlehem Co-arbitrator — appointed by the claimant (challenge rejected by the appointing authority in 2025)
• Václav Mikulka Co-arbitrator — appointed by the appointing authority (appointed on 30 June 2015 by Michael Hwang as appointing authority)

For the claimant

Hughes Hubbard & Reed LLP · 3 Verulam Buildings · Avellum Law Firm · Thesis Law Firm

For the respondent

Houthoff · Ivanyan & Partners · 4DArbitration · Prosecutor General's Office of the Russian Federation · International Centre for Legal Protection

Experts

Anna Tsirat (tribunal) · Oleg Skvortsov (tribunal)

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Keywords

• Crimea
• Russia–Ukraine BIT
• territorial application of treaties
• effective control
• annexation
• State succession
• moving treaty frontiers
• Article 29 VCLT
• pacta sunt servanda
• pre-existing investments
• expropriation
• Article 5
• banking
• non-participating respondent
• non-disputing party submission
• illegality objection
• set-aside
• Kolomoisky

Summary generated with AI from the published documents — refer to the award for the authoritative text.