Volodymyr Yaremko: the enforcement of the SCC emergency award is a great step forward

The SCC emergency award delivered in the JKX Oil and Gas Plc against Ukraine proceedings has been enforced. Ukraine is ordered to refrain from increasing royalties on the company’s local gas production above a rate of 28 per cent.

A respective ruling was delivered by the Kyiv Appellate Court. Volodymyr Yaremko, a Counsel at Spenser and Kauffmann, Attorneys at Law, comments out the emergency award for Global Arbitration Review.

According to him, this is a ‘great step forward’. V Yaremko notes that the court rejected the ‘most popular’ arguments used by parties resisting enforcement, more specifically, improper notice and non-compliance with public policy. The attorney also points out that under Ukrainian procedural law the appeal court’s decision comes into force immediately, though it can be suspended if Ukraine seeks a cassation appeal.

The periodical recalls that London-listed energy company JKX Oil & Gas obtained the award in January 2015 under the Stockholm Chamber of Commerce’s emergency arbitrator procedure, which allows parties to seek urgent interim relief before a tribunal has been formed.

The relief was in support of an Energy Charter Treaty claim in which JKX is challenging legislation adopted in 2014 that raised the royalty rate to 55 per cent, among other state measures.

The Pechersk District Court in Kiev enforced the award in June last year, but that decision was overturned last September by the appeal court, which held that enforcement would breach the fundamental principles of the country’s tax system and pose a threat to Ukraine’s interests.

In February this year, Ukraine’s Higher Specialised Court for Civil and Criminal Cases upheld a further appeal by JKX, ordering the appeal court to reconsider its finding that the award altered the country’s tax system.