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Ukraine's Naftogaz to proceed with Gazprom asset seizures after court ruling

London — Ukraine's Naftogaz is to proceed with legal action to seize Gazprom assets in Europe after a Swedish appeals court lifted its suspension of the enforcement of its Stockholm arbitration award.

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The Svea court decision on Thursday means Naftogaz can move forward in its attempts to claw back a net $2.6 billion -- its $4.6 billion transit arbitration award minus the court's earlier $2 billion ruling in Gazprom's favor over gas supply.

It is the latest twist in the long-running dispute between the two companies over their 10-year gas supply and transit agreement that began in 2014, one which again could see tensions raised between the two sides -- both crucial for the supply of Russian gas to Europe.

The Svea court in June ruled to suspend enforcement of the Stockholm arbitration court's decision from the end of February to award Naftogaz compensation for Gazprom's underuse of the Ukrainian gas transit system.

But now the court has lifted the suspension. "Therefore this obstacle to the enforcement of the $2.6 billion award against Gazprom has been eliminated," Naftogaz said.

"Naftogaz proceeds with its enforcement efforts in all relevant jurisdictions. Gazprom can avoid this process if it finally chooses to pay voluntarily," it said.

Gazprom in a statement said it would "continue to protect its rights by all available means under applicable law."

COURT PETITIONS

Naftogaz has applied to courts in the Netherlands, Switzerland and the UK to enforce the arbitration award.

A court in the Netherlands already approved a petition filed in late May by Naftogaz to seize assets owned by Gazprom in the Netherlands as part of its bid to recover the sum owed by its Russian counterpart.

A UK court also approved a Naftogaz petition to freeze Gazprom assets for further enforcement, though Gazprom said late Thursday that this had been overturned.

It is thought all the legal proceedings across Europe were on hold pending the Svea court of appeal ruling.

In its brief reasoning Thursday, the Svea court said the grounds for stay of enforcement "no longer exist."

Naftogaz said this decision cannot be appealed.

Gazprom has, however, appealed against both the supply and transit arbitration awards themselves, with those appeals still ongoing.

In its appeal against the transit award, Gazprom said the arbitration court was guilty of "double standards" in its arguments -- taking into account Ukraine's economic difficulties as a reason for under-buying Russian gas but not taking the European economic downturn into account when ruling on Gazprom's underuse of the Ukrainian transit network

--Stuart Elliott, stuart.elliott@spglobal.com

--Edited by Alisdair Bowles, alisdair.bowles@spglobal.com