Law360 (June 20, 2018, 8:48 PM EDT) -- An English court has frozen assets belonging to Russia's Gazprom as Ukraine's national oil and gas company looks to enforce a $2.6 billion arbitral award against the natural gas giant, a move that comes less than a week after a Swedish court suspended the Ukrainian company's enforcement efforts, according to a Tuesday statement.
Naftogaz said that the Commercial Court in London issued the freezing order on Monday. Gazprom must now maintain assets within the jurisdiction that are sufficient to satisfy the award and is obligated to provide Naftogaz with a list of its assets in England or Wales that exceed $50,000, according to the statement. A copy of the order was not immediately available on Wednesday.
The underlying award was issued earlier this year by a Swedish tribunal to resolve a dispute arising from Gazprom's alleged failure to deliver a minimum volume of gas to Naftogaz between 2009 and 2017 under a 10-year gas purchase agreement.
Naftogaz said on Tuesday that the Commercial Court was aware of the last week's decision by the Svea Court of Appeal in Stockholm suspending enforcement of the award. The Ukrainian company said it has already challenged that decision.
“Naftogaz is confident that the Stockholm court will rescind its suspension decision in light of our submission," said Naftogaz CEO Andriy Kobolyev. "Despite media reports to the contrary, the Swedish court ruling does not suspend the award itself, it only suspends enforcement in Sweden."
Gazprom had a different take on the impact of the Swedish court ruling on Wednesday, saying on its Twitter page that the English court's decision "contradicts" the Svea court's order.
"Gazprom will only be able to provide detailed comments on the matter upon a close review of the corresponding documents as soon as they are officially received by the company," according to its statement. "Gazprom will continue to defend its rights in accordance with the applicable law."
The Russian company is seeking to have the underlying $2.6 billion arbitral award set aside, arguing before the Swedish court last month that a globally recognized expert linguist had determined that a "considerable portion" of the award was written by a third party and not by the arbitrators.
In its set-aside petition, Gazprom argues that the award violates Swedish law and the rules of the Stockholm Chamber of Commerce, and that it must be overturned. Naftogaz disputes this, saying on Tuesday that it had submitted evidence refuting Gazprom’s allegations that the award had not been drafted in a proper manner.
The award was issued by an SCC tribunal in February as part of a larger dispute between the two energy giants involving two parallel SCC claims.
Naftogaz's claim focused on recouping an alleged $6 billion overpayment for gas supplied by Gazprom to Ukraine since 2010 and on establishing a fair price for gas supplies. Gazprom's claim, meanwhile, centered on Naftogaz's alleged failure to comply with its obligations under the 10-year gas purchase contract running from 2009 until 2019 and the Ukrainian company's "considerable" outstanding debt for natural gas Gazprom had already supplied.
Naftogaz's award in February was more than $4.6 billion, but it was offset in part by an award of $2.03 billion plus interest in the parallel arbitration, in which a tribunal ordered Naftogaz to pay Gazprom for certain allegedly unpaid gas deliveries in 2014.
--Editing by Peter Rozovsky.