Three Cypriot companies purporting to hold a minority stake in Ukrnafta, Ukraine’s largest oil and gas company, alleged that their minority stake had been expropriated or deprived of value as a result of Ukraine’s gas-pricing regulation regime, and changes to its corporate governance laws. The claimants alleged this was a violation of the Energy Charter Treaty (ECT) in a claim brought under the auspices of the Stockholm Chamber of Commerce (SCC).

The SCC arbitration tribunal dismissed the claim for over US$ 6 billion, upholding Ukraine’s jurisdictional objections that the claimants had not proved their investment, the alleged investment was tainted by bribery and corruption, and that Ukraine had not denied the advantages of the ECT to the claimants.

The now available redacted award is of general interest, in particular for its trenchant defence of the right and duty of arbitral tribunals to decline to hear claims tainted by corruption, and its acceptance that there is a general principle of ‘unclean hands’ in international law.

Bankim Thanki QC, James Duffy and Giles Robertson acted for Ukraine, instructed by Latham & Watkins LLP (Sebastian Seelmann-Eggebert, Charles Claypoole and Thomas Lane), alongside Tim Otty QC of Blackstone Chambers and Guglielmo Verdirame QC of 20 Essex Street.