Emergofin B.V. and Velbay B.V. v. Ukraine

Emergofin B.V. and Velbay B.V. (Dutch holding companies with Russian shareholders) brought an investment claim against Ukraine over control of the Zaporizhzhia Aluminum Plant (ZALK). In a 2021 decision on jurisdiction and liability and a 2026 award on damages, the ICSID tribunal dismissed a claim of about $1B relating to electricity tariffs. The arbitrators also found that the Ukrainian deprivatization proceedings amounted to a denial of justice and that Ukraine’s sanctions against the claimants breached the investment protection agreement, because Ukraine had not proved that the claimants posed a threat to its security. The arbitrators awarded $71M in damages, mainly in connection with the deprivatization, also relying on grounds related to the Ukrainian sanctions.

An investment arbitration tribunal found Ukraine’s sanctions against Russia-linked shareholders to be a breach of an investment protection agreement. The arbitrators held that sanctions cannot be imposed without a proven threat to national security.