Norwegian authorities have seized a Russian-owned vessel in the Arctic as part of efforts to enforce a $4.22bn compensation award won by Ukrainian energy company Naftogaz over assets confiscated by Moscow following Russia’s annexation of Crimea in 2014.
The Professor Molchanov was seized off the Norwegian Arctic archipelago of Svalbard after a 24-hour standoff with the Norwegian Coast Guard, according to Covington, the US law firm representing Naftogaz.
The move marks an escalation in Naftogaz’s efforts to enforce an international arbitration award against Russia, which has refused to pay the sum ordered by a tribunal in The Hague.
Russia’s state news agency TASS quoted a Foreign Ministry spokesperson as describing the Norwegian action as “piracy”.
Naftogaz has pursued compensation from Moscow since 2016 over the expropriation of its assets in Crimea.
A tribunal in The Hague ruled in April 2023 that Russia should pay Naftogaz $4.22bn, in addition to interest and legal costs. Moscow has not complied with the award.
“Russia cannot evade responsibility simply by refusing to comply with an international arbitral award,” said Naftogaz acting chief executive Sergii Fedorenko.
Covington said it had tracked the Professor Molchanov, a Russian-owned vessel used for commercial cruises, for several months.
Anticipating the ship’s arrival in Svalbard while travelling to Barentsburg, a Russian mining settlement, Naftogaz’s lawyers applied to a Norwegian court to have the vessel arrested and ultimately subjected to a compulsory sale.
The Nord-Troms and Senja District Court approved the application on Monday.
Its ruling instructed the governor of Svalbard to enforce the order, supervise the vessel and ensure that it was not moved.
The governor’s office confirmed that the ship had been seized and would remain in Svalbard.
Naftogaz said it was pursuing enforcement action across several jurisdictions, including the US, France, the UK and Finland, where Russian assets have been frozen.
Russia is appealing the proceedings and has argued that it was not given notice of the action.
The seizure highlights the growing use of courts and national enforcement mechanisms to pursue Russian assets overseas as Ukrainian companies seek to turn international arbitration awards into recoverable compensation.
For Naftogaz, the dispute is part of a wider effort to establish that Russia cannot avoid financial liability for assets seized during its 2014 annexation of Crimea simply by refusing to recognise arbitration rulings.
“We will continue to pursue Russian assets around the world until the compensation awarded to Naftogaz and other Naftogaz Group companies is paid,” the Ukrainian company said.