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Lawyers, other representatives, expert(s), tribunal’s secretary

Award on the Merits

GLOSSARY OF DEFINED TERMS
9 November 2004 Judgment Judgment by the Avtozavodsky District Court to reinstate Mr. Ovcharenko as Chairman of the Management Board
26 September 2007 Decisions Interim Measures and Supplementary Decision issued by the Kriukivskiy District Court on 26 September 2007
26 September 2007 Interim Measures Interim Measures issued by the Kriukivskiy District Court on 26 September 2007
26 September 2007 Supplementary Decision Supplementary Decision issued by the Kriukivskiy District Court on 26 September 2007
1965 Hague Convention on Service Abroad Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, adopted on 15 November 1965 in The Hague
1995 Incorporation Agreement Agreement on the Creation and Operation of Ukrtatnafta Transnational Financial and Industrial Petroleum Company of 1995 signed on 27 July 1995
AinRuz AmRuz Trading AG, a Swiss company, admitted as Ukrtatnafta shareholder on 10 June 1998
Answer The Claimant’s Answer to the Respondent’s Objections to Jurisdiction and Admissibility dated 29 June 2009
Article 293 Investigation Investigation pursuant to Article 293 of the Criminal Code initiated by the Deputy Head of the Investigation Division—Head of the Investigation Unit of Kremenchug City Department of the Ministry of Interior on 19 October 2007
Article 357 Investigation Investigation pursuant to Article 357 of the Criminal Code initiated by the Deputy Head of the Investigation Division-—Head of the Investigation Unit of Kremenchug City Department of the Ministry of Interior on 24 October 2007
BIT or Russia-Ukraine BIT Agreement Between the Government of the Russian Federation and the Cabinet of Ministers of the Ukraine on the Encouragement and Mutual Protection of Investments done on 27 November 1998
Claimant (or Tatneft) OAO Tatneft, a publicly traded open joint stock company incorporated in accordance with Russian law with its registered office at Lenin St. 75, Almetyevsk, Republic of Tatarstan, 423400, Russian Federation
Claimant’s Memorial Claimant’s First Memorial on the Merits dated 15 June 2011
Claimant’s Second Memorial Claimant’s Second Memorial on the Merits dated 10 August 2012

CMU Cabinet of Ministers of Ukraine
Counter-Memorial Respondent’s First Counter-Memorial on the Merits dated 13 December 2011
Decree No. 704/94 Decree of the President of Ukraine No. 704/94 "On the Establishment of Transnational Financial and Industrial Oil Company Ukrtatnafta" dated 29 November 1994
Decree on Foreign Jurisdictional Bodies Decree of the President of Ukraine "On the Procedure for Representing the Rights and Interests of Ukraine During Dispute Resolution, Adjudication of Disputes Involving Foreign Subjects and the State of Ukraine in Foreign Jurisdictional Bodies" No. 581/2002 of 25 June 2002
ECHR European Convention of Human Rights
ECT Energy Charter Treaty dated 17 December 1994
First Baker & O’Brien Report Expert Report of Baker & O’Brien, Inc. dated November 2011
First Bezant Report Expert Report of Mark Bezant of FTI Consulting dated 15 June 2011
Jacobs Report Expert Report of Jacobs Consultancy Limited dated 10 August 2012
Joint Factual Chronology Chronology of Facts jointly submitted by the Parties on 19 February 2013
Kremenchug refinery JSC Kremenchugnefteorgsintez oil refinery in Kremenchug
NAFTA North-American Free Trade Agreement signed on 17 December 1992
Naftogaz Ukraine’s state-owned energy company
Partial Award on Jurisdiction Partial Award on Jurisdiction dated 28 September 2010
PCA Permanent Court of Arbitration
Reply Respondent’s Reply on Jurisdiction dated 30 September 2009
Resolution 528 Resolution of the Cabinet of Ministers of Ukraine No. 528 "Rules of Issue and Use of Promissory Note Forms" dated 10 September 1992
Seagroup Seagroup International Inc., an American parent company of AmRuz, admitted as Ukrtatnafta shareholder on 10 June 1999
Section 129 Section 129 of the Resolution of the Cabinet of Ministers of Ukraine, No. 1155 of 17 August 2002

Second Baker & O’Brien Report Second Expert Report of Baker & O’Brien dated 14 December 2012
Second Bezant Report Seem el Expert Report of Mark Bezant of FTI Consulting dated 10 August 2012
Second Counter-Memorial Respondent’s Second Counter-Memorial dated 16 December 2012
SPFU State Property Fund of Ukraine
Statement of Defense Respondent’s Statement of Defense and Objections to Jurisdiction and Admissibility dated 20 February 2009
Taiz Taiz LLC, a Ukrainian intermediary
Technoprogress Technoprogress Research and Production, a Ukrainian intermediary
UK-Ukraine BIT Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of Ukraine for the Promotion and Reciprocal Protection of Investments dated 10 February 1993
Ukraine (or Respondent) Ukraine, a sovereign State, successor to the United Soviet Socialist Republic, acting in these proceedings through the Ministry of Justice
Ukrtatnafta (or "the Company" or "UTN") Ukrtatnafta
UNCITRAL Arbitration Rules United Nations Commission on International Trade Law Arbitration Rules, adopted in 1976
VCLT Vienna Convention on the Law of Treaties, adopted on 23 May 1969 in Vienna

DRAMATIS PERSONAE
Mr. Yury Bergelson Lawyer representing Mr. Pavel V. Ovcharenko
Mr. Yuri Boyko 2001: Successor of Mr. Matytsin, former manager of Ukrtatnafta Former Minister for Energy and Coal Industries in the Ukraine
Mr. Vladimir A. Fedotov 1997-2000: Ministry of Finance of Tatarstan 1998 2000: Board of Directors of Tatneft
Mr. Sergey Glushko 2004: Chairman of UTN and successor of Mr. Ovcharenko between 2004 and 2007
Mr. Igor V. Grafsky 2000-2001: Deputy Head of the Financial Department of Zenit Bank 2001: Member of Tatneft’s Strategic Planning Department 2002—2003: General Director of UTN-Center 2005-2010: Deputy Trade Representative of the Republic of Tatarstan in Ukraine 2010: head of Tatneft’s representative office in Ukraine
Mr. Igor Kolomoisky Current head of the "Privat Group"
Mr. Ruslan V. Liapka 1999-2011: occupied several positions in Ukrtatnafta, the latest being Member of Ukrtatnafta’s Board
Mr. Igor O. Mityukov 1994—1995: Vice Prime-Minister of Ukraine on Financial Issues and Banking
Mr. Pavel V. Ovcliarenko January 31.2003-September 21.2004; November 11, 2004-November 12, 2004; October 19, 2007-date: Chairman of Ukrtatnafta’s Management Board
Mr. Sergei Pereloma 2002: Acting chairman of Ukrtatnafta’s Management Board
Mr. Yuryi Pocheptsov Authorized representative of Mr. Ovcharenko
Mr. Yevhen M. Pryshchepa 2003—2009: Ministry of Justice of Ukraine, State Executive Officer
Mr. Oleg V. Savchenko 2007: Head of the Investigation Unit of the Kremenchug City Department of the Poltava Regional Department of the Ministry of Internal Affairs
Mr. Nurislam Z. Syubaev 1995—2001: First Deputy Chairman of the

Management Board of Zenit Bank 2001 date: Chief of the Strategic Planning Department of Tatneft 2003-2006 Member of the Board of Directors of Amrez
Ms. Tamara M. Vilkova 1993-1995: Senior State Tax Inspector in the State Tax Inspectorate of the Republic of Tatarstan Since 1995: Deputy Head of Tatneft’s Finance Department, later Head of Tatneft’s Tax Department 1998-2012: Tatneft’s Deputy Chief Accountant 2012-date: Tatneft’s Chief Advisor to the Accounting and Reporting Division

LIST OF WITNESSES AND EXPERTS

Claimant

Witnesses

Mr. Vladimir Alexandrovich Fedotov (First Witness Statement dated 14 June 2011 and Second Witness Statement dated 10 August 2012)

Mr. Igor Viktorovich Grafsky (Witness Statement dated 9 August 2012)

Mr. Oleg Vitalievich Savchenko (Witness Statement dated 7 August 2012)

Mr. Nurislam Zinatulovich Syubaev (Witness Statement dated 10 August 2012)

Ms. Tamara Mikhailovna Vilkova (Witness Statement dated 3 August 2012)

Experts

Mr. Bate C. Toms (First Expert Report dated 15 June 2011 and Second Expert Report dated 31 July 2012)

Mr. Mark Bezant (First Expert Report dated 15 June 2011 and Second Expert Report dated 10 August 2012)

Jacobs Consultancy Limited (Export Report dated 10 August 2012)

Dr. Olexander Martinenko, LL.M. (Expert Report dated 10 August 2012)

Respondent

Witnesses

Mr. Ruslan Vladimirovich Liapka (First Witness Statement dated 8 December 2011 and Second Witness Statement dated 12 December 2012)

Mr. Igor Oleksandrovych Mityukov (Witness Statement dated 5 December 2011)

Mr. Yevhen Mykoalyovych Pryshchepa (First Witness Statement dated 5 December 2011 and Second Witness Statement dated 10 December 2012)

Experts

Baker & O’Brien (First Expert Report dated November 2011 and Second Expert Report dated 14 December 2012)

Professor M. Buromenskiy (First Expert Report dated 8 December 2011 and Second Expert Report dated 20 November 2012)

Mr. Vadyrn Eduardovych Belyanevych (First Expert Report dated 9 December 2011 and Second Expert Report dated 14 December 2012)

Tribunal’s Witnesses

Mr. Yury Bergelson Mr. Igor Kolomoisky

I. INTRODUCTION

1.
This is the second and Final Award in an arbitration between OAO Tatneft (the "Claimant") and Ukraine (the "Respondent"). The dispute arises out of certain events in the period between 2004 and 2007 that resulted in the Claimant’s loss of shareholdings in the company Ukrtatnafta—as the Claimant contends, in violation of Ukraine’s obligations under the Russia-Ukraine BIT. In a Partial Award on Jurisdiction dated 28 September 2010 (the "Partial Award on Jurisdiction"), the Tribunal affirmed jurisdiction over the Claimant’s claims. The present Final Award addresses the merits of the case, in respect of both liability in principle and quantum,
2.

The Claimant is OAO Tatneft, a publicly traded open joint stock company incorporated in accordance with Russian law and lias its registered office in the Republic of Tatarstan,1 a constituent republic of the Russian Federation, under the address of Lenin St. 75, Almetyevsk, Republic of Tatarstan, 423400. Tatneft is one of the largest producers of crude oil in Russia and produces 80% of the crude oil in Tatarstan.2 The Government of the Republic of Tatarstan holds a 36% interest and special voting rights in Tatneft,3 with its remaining shares being held by other investors.4

3.
The Claimant is represented in these proceedings by:

Mr. Jonathan I. Blackman, Cleary Gottlieb Steen Hamilton LLP

Ms. Claudia Annacker, Cleary Gottlieb Steen Hamilton LLP

4.
The Respondent is Ukraine, a sovereign State formerly a member of the Union of Soviet Socialist Republics.5 The Respondent acts in these proceedings through the Ministry of Justice, 13 Horodetskogo St., Kiev 01001, Ukraine.
5.
The Respondent is represented in these proceedings by:

Mr. Eric A. Schwartz, King & Spalding LLP

Mr. James Gastello, King & Spalding LLP

Mr. Dmitri Grischenko, Grischenko & Partners

Mr. Sergiy Voitovich, Grischenko & Partners

II. PROCEDURAL HISTORY

6.
On 11 December 2007, the Claimant sent a Notice of Dispute to the Respondent requesting that they open negotiations pursuant to Article 9(1) of the Agreement Between the Government of the Russian Federation and the Cabinet of Ministers of the Ukraine on the Encouragement and Mutual Protection of Investments ("Russia-Ukraine BIT").6 As the Parties were unable to settle the dispute, the Claimant served on the Respondent a Notice of Arbitration and Statement of Claim dated 21 May 2008 under the United Nations Commission on International Trade Law Arbitration Rules, adopted in 1976 ("UNCITRAL Rules"), in accordance with Article 9(2)(c) of the Russia-Ukraine BIT.
7.
In its Statement of Claim, Tatneft alleged that certain "actions and omissions of [the] Respondent constitute[d] violations of its obligations to Tatneft under the Russia-Ukraine BIT, in particular Articles 2, 3(1), and 5 [,..]"7 and requested that the Tribunal order, inter alia, the Respondent to pay upwards of US$ 520 million for unpaid oil deliveries and upwards of US$610 million for the loss of the management rights of the Claimant and its shareholding interest in Ukrtatnafta.8
8.
Also in the Statement of Claim, the Claimant appointed Professor Rudolf Dolzer as arbitrator. On 26 June 2008, the Respondent appointed The Honorable Marc Lalonde, P.C., O.C., Q.C. as arbitrator. On 24 July 2008, the co-arbitrators appointed Professor Francisco Orrego Vicuña as the presiding arbitrator. Professor Orrego Vicuña accepted this appointment on 29 July 2008.
9.
The Respondent challenged Professor Dolzer on 27 October 2009. The Secretary-General of the Permanent Court of Arbitration ("PCA"), who the Parties had designated as the appointing authority to decide the challenge, sustained the challenge on 19 December 2008. On 16 January 2009, the Claimant appointed The Honorable Charles N. Brower as arbitrator.
10.
On 20 February 2009, the Respondent submitted a Statement of Defense and Objections to Jurisdiction and Admissibility ("Statement of Defense").
11.
On 12 March 2009, the Tribunal decided that jurisdiction would be addressed as a preliminary matter.
12.
On 23 March' 2009, the Parties and the Tribunal signed the "Terms of Appointment and Procedural Order No. 1."
13.
On 29 June 2009, the Claimant filed its Answer to the Respondent’s Objections to Jurisdiction and Admissibility ("Answer"). On 30 September 2009, the Respondent filed its Reply on Jurisdiction ("Reply"), and on 14 December 2009, the Claimant filed its Rejoinder on Jurisdiction ("Rejoinder"),
14.
On 17 February 2010, the Tribunal issued Procedural Order No. 2 concerning the organization of the jurisdictional hearing.
15.
From 29 March to 31 March 2010, the hearing on jurisdiction was held at the Peace Palace in The Hague, the Netherlands.
16.
On 28 September 2010, the Tribunal issued its Partial Award on Jurisdiction.
17.
Following the invitation of the Tribunal for the Parties to agree on a procedural calendar for the succeeding merits phase, the Parties proposed their respective procedural schedules on 25 November and 26 November 2010.
18.
On 29 November 2010, the Tribunal issued a procedural schedule for the merits phase.
19.
On 7 April 2011, the Respondent requested the Tribunal to extend the deadline for its first memorial by three months and to adjust the succeeding deadlines accordingly. On the same day, the Claimant proposed the alternative of extending all deadlines by two months.
21.
On 15 June 2011, the Claimant submitted its First Memorial ("Memorial") accompanied by exhibits and legal authorities.
22.
On 5 October 2011, the Respondent requested a further extension of the deadline for its first memorial and submitted an amended draft procedural schedule. The Claimant objected to tire Respondent’s request on the same day.
23.
On 6 October 2011, the Tribunal invited the Claimant to comment on the request of the Respondent and its proposed amended schedule. On the same day, the Claimant reiterated its objection to the requested extension and provided further reasons for it.
24.
On 12 October 2011, the Tribunal extended the deadline for the Respondent’s first memorial and proposed a revised procedural schedule, which assigned 5 to 15 March 2013 as contingency dates for the hearing on the merits.
25.
On 19 October 2011, the Claimant requested that the hearing be scheduled for March 2013 to allow for sufficient preparation time. The Respondent confirmed its availability for this month on the same day. The Tribunal proceeded to fix a new procedural schedule on 20 October 2011.
26.
On 28 November 2011, the Tribunal requested the Parties to reserve 18 March to 28 March 2013 for the merits hearing.
27.
On 13 December 2011, the Respondent filed its First Memorial ("Counter-Memorial").
28.
On 24 January 2012, the Parties exchanged requests for documents. On 21 February 2012, they submitted disputed document production requests to the Tribunal, followed shortly by each Party’s comments on the other’s Redfern Schedule.
29.
On 6 March 2012, the Tribunal issued its decision on the Parties’ document requests and requested the Parties to complete document production by 17 April 2012.
30.
On 28 March 2012, after consultation with the Parties, the Tribunal definitively scheduled the merits hearing for 18 March to 28 March 2013.
31.
On 10 August 2012, the Claimant submitted its Second Memorial ("Second Memorial").
32.
On 16 December 2012, the Respondent submitted its Second Counter-Memorial ("Second Counter-Memorial").
33.
On 8 January 2013, the Tribunal sent the Parties a draft of Procedural Order No. 3 on the organization of the hearing. The Tribunal and the Parties discussed this draft during the second Procedural Meeting held on 6 February 2013. On 12 February 2013, the Tribunal issued Procedural Order No. 3.
34.
On 18 February 2013, each Party notified the other Party and the Tribunal of the witnesses it intended to cross-examine at the hearing.
35.
On 19 February 2013, the Parties submitted a joint Chronology of Facts ("Joint Factual Chronology").
36.
On 25 February 2013, in accordance with Procedural Order No. 3 Section 7.2, the Parties informed the Tribunal of the translation needs of certain of its witnesses and experts who would be testifying at the hearing. On the same day, and in accordance with Section 3.4 of Procedural Order No. 3, the Parties proposed a joint hearing schedule, keeping 28 March as a reserve date.
37.
On 28 February 2013, in accordance with Procedural Order No. 3 Section 4.4, the Tribunal requested the Parties to use their best efforts to secure the appearance and testimony of Mr. Igor Kolomoisky and Mr. Yury Bergelson, whom neither Party had presented as witnesses, at the hearing. It also noted that it would conduct expert conferencing for the Parties’ experts.
38.
On 4 March 2013, the presiding arbitrator (on behalf of the Tribunal) and the Parties participated in a telephone conference. Pursuant to this discussion, the Tribunal sent the Parties a letter the next day that expounded on its request that Mr. Kolomoisky and Mr. Bergelson testify at the hearing, clarified the process of expert examination, and discussed possible adjustments to the hearing schedule.
39.
On 6 March 2013, the Respondent informed the Tribunal and the Claimant that Mr. Kolomoisky was willing to testify at the hearing and had requested copies of the submissions. It also noted that it would inform Mr. Kolomoisky of the Tribunal’s instructions on the disclosure of case-related materials.
40.
On 8 March 2013, the Respondent informed the Tribunal and the Claimant that it had received no further information on the attendance of Mr. Kolomoisky and Mr. Bergelson at the hearing.
41.
On tl March 2013, the Respondent noted that it had not received word from Mr. Kolomoisky and Mr. Bergelson regarding their attendance. The Respondent also proposed a revised hearing schedule on which both Parties had agreed.
42.
On Í4 March 2013, each Party submitted draft topics for the expert testimony. On 15 March 2013, tire Tribunal provided the Parties with a consolidated draft and invited the Parties to discuss this matter at the beginning of the hearing.
43.
From 18 March 2013 to 27 March 2013, the hearing on the merits was held at the premises of the PCA in the Peace Palace, The Hague, the Netherlands, and was attended by the following:

Tribunal

Professor Francisco Onego Vicuña

The Honorable Charles N. Brower

The Honorable Marc Lalonde, P.C., O.C., Q.C.

For the Claimant

Ms. Maria Savelova

Mr. Peter Gloushkov

OAO Tatneft

Mr. Jonathan Blackman

Mr. Jeffrey Rosenthal

Dr. Claudia Annacker

Mr. Cameron Murphy

Mr. Aren Goldsmith

Dr. Enikó Horváth

Mr. Lorenzo Melchionda

Ms. Laurie Achtouk-Spivak

Ms. Ann Nee

Mr, Yury Babichev

Ms. Marina Akchurina

Ms. Marina Weiss

Ms. Estefanía Ponce Durán

Ms. Aija Lejniece

Ms. Antonina Vykhrest

Mr. Christopher Fleming

Cleary Gottlieb Steen & Hamilton

Ms. Tetyana Yaremko Ms. Anna Vlasyuk B.C. Toms & Co.

Mr. Sergiy Grishko CMS Cameron McKenna

Mr. Igor Nazarchuk Vasko & Nasarchuk

Mr. Richard Edwards Mr. Tigran Ter-Martirosyan FTI Consulting

Mr. Konstantin Golola . Translator

For the Respondent

Mr. Eric Schwartz

Mr. James Castello

Mr. John Gaffney

Ms. Lorraine de Germiny

Mr. Cedric Soule

King & Spalding

Mr. Sergei Voitovich

Ms. Iryna Glushchenko

Mr. Maksym Makhyna

Mr. Sava Poliakov

Mr. Dmitri Shemelin

Grischenko & Partners

Ms. Olena Trapeznikova

Ms. Alona Pryguza

Ms. Nataliya Party

Ukrainian Ministry of Justice

Fact Witnesses

Mr. Nurislam Syubaev

Mr. Vladimir Fedotov

Mr. Oleg Savchenko

Mr. Igor Mityukov

Mr. Yevhen Pryshchepa

Mr. Ruslan Liapka

Mr. Yury Bergelson

Mr. Igor Kolomoisky

Expert Witnesses

Mr. Bate Toms

Dr. Olexander Martinenko

Mr. Mark Bezant

Mr. Alvin Hill

Mr. Kevin Waguespack

Prof. Mykhaylo Buromenskiy

Mr. Vadim Belyanevych

For the PCA

Mr. Dirk Pulkowski

Ms. Camille Ng

Ms. Ina Giitzschmann

Ms. Ji Chen

Court Reporter

Mr. Trevor McGowan

Interpreters

Mr. Evgeny Elshov

Mr. Sergei Mikheyev

Mr. Oleks Nesnov

Mr. Victor Shevchenko

Mr. Yuri Somov

44.
On the second day of the hearing, 19 March 2013, the Respondent informed the Tribunal that Mr. Bergelson was willing to testify. The next day, the Respondent informed the Tribunal that Mr. Kolomoisky would be in The Hague on 21 March 2013 and was willing to testify then.
45.
On 21 March 2013, Mr. Bergelson testified before the Tribunal.
46.
On 22 March 2013, the Tribunal scheduled the testimony of Mr. Kolomoisky for 25 March 2013. He testified on that date.
47.
Following the conclusion of the hearing, via letter dated 28 March 2013, the Tribunal instructed the Parties on arrangements for transcript corrections and the filing of post-hearing briefs and cost submissions, among others.
48.
On 30 May 2013, the Parties filed their respective Post-Hearing Briefs ("Claimant’s Post-Hearing Submission" and "Respondent’s Post-Hearing Memorial").

III. THE PARTIES’ REQUESTS

49.
In its Memorial, the Claimant requested the Tribunal to render an award:9

a) Declaring that Respondent has violated its obligations under the Russia-Ukraine BIT;

b) Ordering Tatneft’s direct and indirect shareholdings in Ukrtatnafta be returned to it and Tatneft be compensated for any loss in value of the shareholdings compared to what they would have been worth if Tatneft had been able to exercise its management rights;

c) Ordering Respondent in the alternative to pay compensation for the losses incurred by Tatneft in an amount in excess of US$ 741 million to 824 million;

d) Ordering Respondent to pay the fees and expenses of this arbitration, including legal fees;

e) Ordering Respondent to pay interest on any amount awarded to Claimant;

f) Granting any further or other relief to Claimant that the Arbitral Tribunal shall deem appropriate.

50.
In its Second Memorial, the Claimant modified the amount of its alternative claim for compensation from "US$ 741 million to 824 million" to "an amount in excess of US$ 1,073 million."10
51.
In its Post-Hearing Brief, the Claimant withdrew its request for the restitution of its UTN shareholdings and the management rights associated with this,11and estimated the losses arising from Ukraine’s breaches of the Russia-Ukraine BIT, with interest, as follows:

a) US$ 917 million and US$ 1,144 billion if interest is calculated using the returns on US$ denominated 9Ukrainian government bonds;

b) US$ 881 million and US$ 1,084 billion if interest is calculated using the returns on US$ denominated Russian government bonds;

c) US$ 820 million and US$ 984 million if interest is calculated using the interest earned on US$ denominated deposits in the Russian Federation.12

52.
In the same submission, the Claimant clarified that it was maintaining its request that the Tribunal order the Respondent to pay the costs of the arbitration, including the Claimant’s legal fees, and that it grant the Claimant any relief deemed appropriate.13
53.
In its Counter-Memorial, the Respondent made the following request:14

a) An order dismissing the Claimant’s claims in their entirety.

b) An order directing the Claimant to discharge in full the costs of the arbitration it has commenced, including payment of all of the Respondent’s costs in the arbitration.

54.
In its Second Counter-Memorial, the Respondent reiterated its request in the same terms.15

IV. STATEMENT OF FACTS

55.
As previously indicated, the Parties submitted a Joint Factual Chronology in advance of the hearing, and indicated that this was without prejudice to their respective positions and to disputed facts that may not have been included therein. The Tribunal includes this Joint Factual Chronology as Appendix I, and refers to it when necessary below.

A. EVENTS UP TO THE REINSTATEMENT OF MR. OVCHARENKO

1. The Creation of Ukrtatnafta

56.
The present arbitration concerns the lawfulness under the Russia-Ukraine BIT of measures undertaken by the Respondent in relation to CJSC Ukrtatnafta ("Ukrtatnafta"). The creation of Ukrtatnafta is best understood against the background of the dissolution of the Soviet Union in 1991.
57.
During the days of the Soviet Union, the highly viscose and sulphurous oil extracted in Tatarstan16 was delivered to a refinery in Kremenchug (the JSC "Kremenchugnefteorgsintez" or the "Kremenchug refinery") through a direct pipeline from Tatarstan to Ukraine.17 As the dissolution of the Soviet Union caused Tatarstan and Ukraine to become separate States, the governments of these countries entered into the Ukrtatnafta Treaty in 1995 and established Ukrtatnafta,18 a joint venture that was to own and operate the Kremenchug refinery and supply refined oil products to Ukrainian and international markets.19
58.
The Ukrtatnafta Treaty was signed by representatives of both Tatarstan and Ukraine.20 It was not, however, ratified by the Ukrainian Parliament21 in light of the Ukrainian legal regime that differentiates between treaties and international agreements, as further explained below. There is no information on the record as to whether the Treaty was formally ratified in Tatarstan.
59.
Ukrtatnafta was registered as a Ukrainian closed joint stock corporation22 and intended to represent Tatarstan and Ukrainian interests on a 50/50 or parity basis.23 As set out in the Ukrtatnafta Incorporation Agreement,24 the share of Ukraine was mostly allocated to the State Property Fund of Ukraine ("SPFU")25 while the share of Tatarstan was split between the government26 and the Claimant.27
60.
Both the Ukrtatnafta Incorporation Agreement28 and the related Presidential Decree No. 704/94 ("Decree No. 704/94")29 of the President of Ukraine indicated that Ukraine would contribute the Kremenchug refinery to Ukrtatnafta, which the SPFU did in 1996.30
61.
While the Annex to the Ukrtatnafta Incorporation Agreement stated that the Claimant would contribute fixed assets for the operation of specified oil wells to Ukrtatnafta,31 the Ukrtatnafta shareholders, in a General Shareholders Meeting held on 10 June 1998, authorized the Claimant to contribute US$ 31 million instead.32 This had the effect of reducing the Claimant’s stake in Ukrtatnafta to 8,613% from the approximately 20% share contemplated in 1995.33 Zenit Bank transferred US$ 30 million to Ukrtatnafta,34 and was replaced by the Claimant as a shareholder on 19 July 2000, as authorized by a General Shareholders Meeting held on 23 May 2000.35 The Claimant paid the remaining US$ 1 million directly to Ukrtatnafta on 11 August 2000.36
62.
AmRuz Trading AG ("AmRuz"), a Swiss company, was admitted as a shareholder in Ukrtatnafta during a General Shareholders Meeting held on 10 June 1998.37 0n 1 June 1999, Ukrtatnafta, AmRuz, and Seagroup International Inc. ("Seagroup"), the American parent company of AmRuz, executed share purchase agreements in which AmRuz and Seagroup used promissory notes to obtain a collective 18% share in Ukrtatnafta.38 Specifically, AmRuz tendered 30 promissory notes and Seagroup tendered 35 promissory notes for their shares at US$ 1 million per note and, in the case of Seagroup, one more promissory note at US$ 845,132.’39 These share purchase agreements were approved in the 10 June 1999 General Shareholders Meeting,40 winch is also when Seagroup was admitted as a shareholder in Ukrtatnafta.41 These share purchase agreements were amended in May 2000 to give AmRuz and Seagroup four years to redeem the promissory notes.42 In December 2007, the Claimant acquired an interest in 100% of Seagroup and 49.6% of AmRuz.43, for a total price of US$ 81 million. Roughly at the same time (April 2009), Korsan acquired a 1.15% interest in Ukrtatnafta for the sum of US$ 2 million.

2. The Dismissal of Mr. Pavel Ovcharenko in 2004

(a) Undisputed Facts

63.
On 21 September 2004, the Supervisory Board—which was tasked with overseeing the activities of the Management Board, the implementation of shareholder resolutions, and the protection of shareholder rights44—dismissed Mr. Pavel Ovcharenko as Chairman of the Management Board and replaced him with Mr. Sergei Glushko.45 Mr. Glushko was the appointee of Naftogaz to the Management Board, and his appointment was specifically proposed by Mr. Yuri Boyko, the head of Naftogaz who later become the Minister of Fuel and Energy of Ukraine.46
64.
Mr. Ovcharenko filed an application for reinstatement on 4 October 209447 on the basis that Ukrtatnafta had breached Article 159 of the Civil Code and Articles 40 and 41 of the Labor Code.48 The Avtozavodsky District Court granted this application on 9 November 2004 ("9 November 2004 Judgment")49
65.
Mr. Ovcharenko was reinstated as Chairman of the Management Board on 11 November 2004. In the General Shareholders Meeting that was held the next day, the Ukrtatnafta shareholders approved the Supervisory Board’s 21 September 2004 dismissal of Mr. Ovcharenko, and instructed the Management Board to consider the reinstatement of Mr. Glushko.50
66.
Three years later, on 5 September 2007, Mr. Ovcharenko applied to the Kriukivskiy District Court for interim measures and a "supplementary decision" in connection with the 9 November 2004 Judgment, which he alleged did not specify the necessary enforcement actions.51
67.
On 26 September 2007, the Kriukivskiy District Court issued the requested interim measures ("26 September 2007 Interim Measures") and supplementary decision ("26 September 2007 Supplementary Decision", and together with 26 September 2007 Interim Measures, "26 September 2007 Decisions")52 Noting that the 9 November 2004 Judgment had not yet been enforced, the Court issued the interim measures pursuant to Article 151 of the Civil Procedure Code, and authorized Mr. Ovcharenko to proceed with its enforcement53 The Court further noted that the enforcement of the 9 November 2004 Judgment was rendered impossible by the absence in this judgment of the necessary actions for an enforcement, and thereby found "lawful grounds" for issuing a supplementary decision. The supplementary decision authorized Mr. Ovcharenko to perform the functions of the Chairman of the Management Board, to access the Ukrtatnafta premises, and to remove obstacles to his resuming control.54
68.
It was allegedly pursuant to the 26 September 2007 Decisions that the activities of 19 October 2007 took place.

(b) Disputed Facts

i. The Legal Validity of the 11 November 2004 Reinstatement of Mr. Ovcharenko and His Subsequent 12 November 2004 Removal

The Claimant’s Position

69.
The Parties do not dispute the occurrence of the events recounted above, but do characterize and contextualize them differently. According to the Claimant, this case exemplifies a "raider" action, which it defines as "the combination of a criminal seizure of property by an organized group and the involvement of the State through the issuance of unlawful court decisions, the assistance of enforcement officers of the State and the support of the State actors in the illegal acts."55 The Claimant identifies "Privat Group," a company headed by the Ukrainian businessman Mr. Kolomoisky, as the corporate raider56 It notes that Privat Group, through its affiliate Korsan LLC, acquired a "toehold" in Ukrtatnafta in late 2006, in the form of a 1% shareholding interest that "g[a]ve [Mr. Kolomoisky] a little foot in the door [... to] systematically take over the Tatarstan side of the company."57
70.
Noting that Article 99(3) of the Civil Code gives Ukrtatnafta shareholders the unqualified right to determine the management of the company,58 the Claimant contends that there was no basis to reinstate Mr. Ovcharenko as Chairman of the Management Board once the shareholders had decided against him in the General Shareholders Meeting held on 12 November 2004.59 In view of this, the Claimant contends that the theories of labor law on which the Respondent relies for its argument on the invalidity of the removal of Mr. Ovcharenko are irrelevant.60 The Claimant further alleges that this removal by the shareholders supersedes Mr. Ovcharenko’s dismissal by the Supervisory Board on 21 September 2004 and the 9 November 2004 Judgment ordering his reinstatement.61 The Claimant rejects the Respondent’s argument that Article 99(3) of the Civil Code relates only to the "temporary suspension" of employees,62 and identifies the "temporary suspension" provision to which the Respondent refers as Article 46 of the Labor Code.63 It stresses that Article 99(3) of the Civil Code refers to the fundamental power of a company to remove and permanently terminate the mandate of the Chairman of the Board of Management,64

The Respondent’s Position

71.
As a preliminary point, and as will be discussed in further detail below, the Respondent contends that Mr. Ovcharenko’s reinstatement is irrelevant to the Claimant’s case in this arbitration. It also notes that the Claimant has "failed to show that [Mr. Ovcharenko’s] reinstatement was illegally facilitated by Ukraine in any way."65
72.
The Respondent alleges that the Ukrtatnafta shareholders could not have dismissed Mr. Ovcharenko during the General Shareholders’ Meeting on 12 November 2004 because his "reinstatement" the previous day was a "sham."66 First, the reinstatement did not fulfill the requirement in Article 77 of the Ukrainian Law on "Executive Proceedings" and in the then Charter of Ukrtatnafta that the Supervisory Board cancel its own dismissal order.67 Second, Mr. Ovcharenko was impeded from assuming his position as Chairman, given that he was not notified of his reinstatement, which in any case lasted for only a day.68 Third, Mr. Glushko was referred to as "chairman" several times during the 12 November 2004 General Shareholders Meeting.69 And, fourth, no bailiff had issued a resolution confirming the reinstatement as was the usual and proper practice.70 The Respondent further posits that Ukrtatnafta’s Supervisory Board, Management Board (save for Mr. Glushko), and shareholders may not even have known about the 9 November 2004 decision of the Avtozadovsky District Court at that time.71
73.
But even assuming the validity of the 11 November 2004 reinstatement of Mr. Ovcharenko, the Respondent argues that the Ukrtatnafta shareholders’ dismissal of Mr. Ovcharenko on 12 November 2004 violated provisions of the Ukrainian Labor Code.72 First, in violation of Article 36(8), the shareholders dismissed Mr. Ovcharenko without cause—that is, without indicating a ground under the Labor Code or the contract for his dismissal. Instead, the shareholders merely approved the Supervisory Board’s 21 September 2004 termination decision, which the 9 November 2004 Judgment had established to be inadequate.73’ The Respondent further states that the Claimant conflates the proposition that the shareholders can dismiss the chairman of the management board, with which the Respondent agrees,74 with the separate notion, which is inapplicable in this case, that such dismissal does not require a showing of good cause.75 And second, Mr. Ovcharenko was dismissed before his term expired, thereby violating Article 36(2), which authorizes the dismissal of an employee once his or her employment contract ends.76 Moreover, the courts could not have confirmed the (re-)dismissal of Mr. Ovcharenko as lawful on grounds other than those initially advanced to justify his termination.77
74.
The Respondent reiterates that Article 99(3) of the Civil Code, which it stresses is a "sufficiently unclear and ambiguous" provision because it was newly passed then,78 does not authorize tire permanent dismissal of employees and relates only to their temporary suspension.79 Alternatively, the Respondent contends that this provision requires the dismissal of an employee to be predicated on a finding of cause, which was not the case here.80 The Respondent further points out that there is no evidence that Ukrtatnafta ever presented arguments based on this provision in prior court proceedings.81
75.
From all of the above, the Respondent concludes that "Mr. Ovcharenko had, at the very minimum, a tenable claim to reinstatement...."82

ii. The Kriukivskiy Court’s Decision to Proceed Ex Parte

The Claimant’s Position

76.
The Claimant alleges that the decision of the Kriukivskiy Court to proceed ex parte on the basis of Article 76 of the Code of Civil Procedure was invalid.83 It argues that the Court disregarded the requirement in Section 129 of the Resolution of the Cabinet of Ministers of Ukraine, No. 1155 of 17 August 2002 ("Section 129") that the signature of an authorized representative of Ukrtatnafta establish proof of service process, permitting this to be established by an unsigned postal note instead.84 The Claimant recalls that the resolutions to enforce the 26 September 2007 Supplementary Decision Were sent by ordinary mail and posits there was no attempt to verify their delivery because "the goal was to create a legal pretext to physically take over the refinery."85 The Claimant also alleges that the Court must have known that raiders frequently use postal notes to fabricate receipt of service of process.86
77.
The Claimant notes that a further violation of process occurred when the Court, in its 26 September 2007 Supplementary Decision, authorized remedies that Mr. Ovcharenko had not originally raised in pleadings leading to the 9 November 2004 Judgment.87
78.
In its analysis of this court decision and all others, the Claimant highlights the corruption of the Ukrainian judicial system and notes that to "do a theft by law," one would "classical[ly]" apply for an ex parte order in Ukrainian courts which would be enforced against the absent party.88

The Respondent’s Position

79.
As a preliminary point, the Respondent distinguishes between the general assertion that the Ukrainian judicial system suffers from instances of corruption (which the Respondent does not directly reject)89 and specific allegations of corruption in respect of the judicial decisions involved in the present case.90 It stresses that the Tribunal should focus on the latter and not the former.91 Moreover, the Respondent characterizes as "staggering" the degree of corruption that would have had to take place to support the Claimant’s position that a majority of the judicial decisions underlying this case, many of which were the focus of public interest and scrutiny,92 were wrongly decided.93 It further remarks that the Claimant seems to take the position that any decision favoring it was rightly decided, whereas those that go against its interests were influenced by corruption and therefore wrong.94 In response, the Respondent points out that the issues that were the subject of the relevant court decisions were susceptible to different resolutions, and the fact that different resolutions were reached highlights the independence of the judiciary.95 It states that "there was no presentation during the hearing and there is no evidence in the record of specific corruption infecting any of these particular court decisions, except to the extent that Tatneft says that it doesn’t like the reasoning in some of the decisions, and it finds that circumstantial evidence."96
80.
The Respondent rejects the Claimant’s argument that the Kriukivskiy District Court should have required the signature of an authorized representative of Ukrtatnafta to prove service of process, on the basis that Section 129, on which the Claimant relies,97 is overridden by the more specific Article 76(8) of the Code of Civil Procedure, which contains no such requirement.98 Section 129 would, moreover, allow representatives of companies to stall court proceedings indefinitely by refusing to sign the service of process.99 It also notes that the Claimant’s allegation that raiders frequently fabricate postal notes to prove service of process is unsubstantiated.100
81.
Stating that the 26 September 2007 Supplementary Decision simply identified attributes of the position of Chairman of the Management Board, the Respondent points out that the Claimant never identified which new powers the 26 September 2007 Supplementary Decision allegedly granted Mr. Ovcharenko and claimed only that Mr. Ovcharenko had no authority to reassign, unilaterally, responsibilities to himself and his allies, which (according to the Respondent) the Supplementary Decision did not authorize him to do.101

iii. The Issuance of Interim Measures under Article 151 of the Code of Civil Procedure

The Claimant’s Position

82.
The Claimant argues that the Kriukivskiy Court had no plausible basis for issuing the 26 September 2007 Interim Measures because, in violation of Article 151 of the Code of Civil Procedure, the difficulty or impossibility of enforcing the 9 November 2004 Judgment ordering the reinstatement of Mr. Ovcharenko was not established.102 In the Claimant’s view, Mr. Ovcharenko was reinstated on 11 November 2004.103 The Claimant also points out that the 9 November 2004 Judgment had become binding only on 29 August 2007, as it had been subject to numerous retrials before then.104 From this, the Claimant notes that Mr. Ovcharenko waited just weeks before the 26 September 2007 decisions to enforce the judgment.105
83.
But even assuming that the enforcement of the 9 November 2004 Judgment was difficult or impossible (which the Claimant denies), the Claimant posits that Mr. Ovcharenko deliberately chose not to request assistance from the district court in enforcing this decision, as would have been proper, and instead applied for interim measures to bypass procedural protections.106
84.
The Claimant alleges that the misapplication of the Kriukivskiy Court of Article 151 of the Code of Civil Procedure violated Articles 212 and 213 of the Code of Civil Procedure, which require courts to subject the existing evidence to a full and objective analysis and to issue decisions that are properly motivated or supported by an investigation of the circumstances underlying the parties’ claims.107

The Respondent’s Position

85.
The Respondent maintains that the protracted failure of Ukrtatnafta to comply with the 9 November 2004 Judgment—from either its issuance date, which is when it became enforceable, or from 29 August 2007, which is when it became binding108—justified the issuance of the 26 September 2007 Interim Measures under Article 151 of the Code of Civil Procedure.109 The Respondent alleges that Mr. Ovcharenko had twice been unsuccessful in his attempts to enforce this judgment, which, among other things, justified the Kriukivskiy Court’s decision to grant provisional relief.110 The Respondent also points out that decisions by more than half a dozen courts evaluating the lawfulness of the reinstatement of Mr. Ovcharenko preceded the 26 September 2007 Interim Measures, and that the Claimant has not alleged that it was precluded from participating in these proceedings.111 Hence there is no evidence that the 26 September 2007 Interim Measures were not reasonably tenable under Ukrainian law or otherwise issued in bad faith.112
86.
The Respondent also points out that the 26 September 2007 Supplementary Decision had the same legal consequences for Ukrtatnafta as the 26 September 2007 Interim Measures, which means that the latter could not have caused harm to the Claimant if the former was a tenable application of Ukrainian law, which the Respondent argues was the case here.113

iv. The Interim Measures As a Form of Post-judgment Enforcement Order

The Claimant’s Position

87.
The Claimant alleges that the 26 September 2007 Interim Measures were inappropriate and were used to enforce the 9 November 2004 Judgment that, after three years, had become moot.114 By issuing the interim measures decision as an ex parte order and by declar ing it immediately enforceable, the Kriukivsky Court deprived the Claimant of the opportunity to resist its enforcement.115 The Court thus negated the due process protections that the Claimant would have enjoyed had this judgment been enforced according to Articles 24 and 25 of the Ukrainian Enforcement Law.116 The Claimant also submits that the court decision granting the 26 September 2007 Interim Measures was materially unfair and inequitable since the only stated reason for its issuance was that the 9 November 2004 Judgment had not yet been executed.117

The Respondent’s Position

88.
The Respondent explains that the 26 September 2007 decision on interim Measures was issued as a form of provisional relief to secure the enforcement of the 26 September 2007 Supplementary Decision, which was issued half an hour after the 2007 Interim Measures even if the 2007 Supplementary Decision did not mention it by name.118

v. The Proportionality of the 26 September 2007 Decisions

The Claimant's Position

89.
Even assuming that Mr. Ovcharenko’s rights had been violated (which the Claimant denies), the Claimant alleges that the 26 September 2007 Decisions were disproportionate to any such violations, in contravention of Article 152(3) of the Code of Civil Procedure. The 2007 Supplementary Decision placed Mr. Ovcharenko in a position to make far-reaching decisions in relation to Ukrtatnafta’s operational activities, including decisions that were reserved for the Management Board and that required the approval of the Supervisory Board under Ukrtatnafta’s constituent instruments.119 In the Claimant’s view, there was no legal basis for the Kriukivskiy Court, in its 26 September 2007 Decisions, to expand Mr. Ovcharenko’s powers, as a monetary remedy could have made Mr. Ovcharenko whole and he could have returned to the court for assistance in the enforcement of such remedy.120

The Respondent ’s Position

90.
The Respondent alleges that the 26 September 2007 Supplementary Decision was authorized by Article 220(l)(2) of the Code of Civil Procedure, because the 9 November 2004 Judgment did not specify the necessary orders for the reinstatement of Mr, Ovcharenko.121
91.
As previously stated, the Respondent points out that the Claimant never identified which new. powers the 26 September 2007 Supplementary Decision allegedly granted Mr. Ovcharenko, and observes that this decision only identified basic attributes of the position of Chairman of the Management Board122 and spelled out the legal consequences of Mr. Ovcharenko’s reinstatement, which is precisely the relief that Mr, Ovcharenko had sought.123

3. Events of 19 October 2007

(a) Undisputed Facts

92.
Following the proceedings before the Kriukivskiy Court, Mr. Ovcharenko sought enforcement of the 26 September 2007 Decisions,
93.
To that end, on 12 October 2007, Mr. Yevgeniy Pryshchepa, a bailiff employed by the State Executive Office within the Ministry of Justice,124 sent Ukrtatnafta by ordinary mail three resolutions that initiated the process for enforcing writs of execution connected with the 26 September 2007 Supplementary Decision and imposed a deadline of 18 October 2007 for compliance with them.125 - On 18 October 2007, Mr. Pryshchepa sent a fourth resolution to implement the 26 September 2007 Interim Measures ruling.126
94.
On 19 October 2007, Mr. Pryshchepa and Mr. Ovcharenko (who was accompanied by other persons) entered the premises of Ukrtatnafta. While the Parties dispute the precise nature of what occurred during the course of this day, it is clear that the reinstatement of Mr. Ovcharenko as Chairman of the Management Board was accomplished by that afternoon.
95.
On 22 October 2007, Mr. Glushko commenced a lawsuit, which would later become Case 2-336/2008, against Mr. Ovcharenko and Ukrtatnafta before the Avtozavodsky District Court of Kremenchug, to request that Mr, Ovcharenko be ordered to cease exercising the functions of the Chairman of the Management Board and that Mr, Glushko be reinstated in this position,127 on the basis that Mr. Ovcharenko had allegedly taken control of Ukrtatnafta through an illegal attack premised on a court judgment that had already been complied with.128 Finding that the reinstatement of Mr. Ovcharenko was lawful, the Court dismissed this lawsuit on 18 January 2008.129 On 19 March 2008, the Poltava Region Court of Appeal dismissed the appeal of Mr. Glushko.130 The Supreme Court of Ukraine rejected his cassation appeal on 5 November 2008.131

(b) Disputed Facts

96.
As a general matter, the Parties disagree on the significance of the events of 19 October 2007. While the Claimant considers these events leading to the reinstatement of Mr. Ovcharenko to be central to its claim, the Respondent characterizes them as peripheral and irrelevant to the main issues in the case132 and argues that the reinstatement of Mr. Ovcharenko did not cause any of the losses for which the Claimant claims compensation.133 In this regard, the Respondent points out that the Claimant’s direct shareholdings had been invalidated by Ukrainian court decisions134 before Mr. Ovcharenko was reinstated, which was not in any case the proximate cause of the share invalidation;135 that the Claimant did not have any indirect shareholdings in Ukrtatnafta (through AmRuz and Seagroup) at the time that Mi’. Ovcharenko was reinstated, as the Claimant had acquired an interest in them only in December 2007;136 and that the Claimant’s claim for lost payments for oil deliveries were based on the actions of Taiz and Technoprogress in 2009 and unrelated to the events of 19 October 2007.137
97.
The Respondent also highlights that Privat Group and the Respondent are distinct entities,138 giving as an example the fact that in the only shareholder meeting that took place after 19 October 2007, Ukraine-controlled Naftogaz voted contrary to the interests of Mr. Ovcharenko and his management team.139 It states, indeed, that "Naftogaz and Privat Group ' 3 are not blood brothers; they distrust each other intensely."140
98.
The Parties’ disagreement on the events of 19 October 2007 principally concerns the circumstances of Mr. Ovcharenko’s reinstatement on that day and the legality under Ukrainian law of the conduct of the bailiff, Mr. Pryshchepa.

i. The Circumstances of Mr. Ovcharenko’s Reinstatement

The Claimant's Position

99.
In the Claimant’s view, the events of 19 October 2007 confirm that Ukrtatnafta was the target of a corporate raid. The Claimant describes the events of this day as a forcible takeover of Ukrtatnafta, carried out by the private security forces of Privat Group with the assistance of Ukrainian government officials, including Mr. Pryshchepa.141
100.
Relying on video recordings of security cameras (excerpts of which are submitted as evidence in this arbitration), the Claimant presents the following account of what had occurred:

As seen in tire security camera footage, at 9:26am on October 19 approximately 25 men dressed in plain clothes stormed the third floor of the Ukrtatnafta administrative building, carrying tools to break through the door to the management offices if necessary. After those 25 men entered the hallway on the third floor, at 9:28am 20 different men wearing unifoms hurried up the stairs to the third floor of the administrative building, paving the way for 21 more men who followed a minute later, including Mr. Ovcharenko and the bailiffs. In total, between 9:26 and 9:30am, 66 men, some carrying weapons, were involved in the takeover of the administrative building at Ukrtatnafta.142

101.
The Claimant further contends that locks were broken to enter the premises of the refinery.143
102.
To support its characterization of the events as a forcible seizure of Ukrtatnafta, the Claimant cites various statements by Ukrainian politicians and refers to scholarly writings, press reports, and reports of NGOs decrying this event.144
103.
The Claimant concludes more generally that the Ukrainian State did not merely turn a blind eye to the events of 19 October 2007 but actively supported them by its courts’ decisions and enforcement orders, by sending bailiffs as well as Ministry of Interior troops, and by conducting "bogus legal proceedings".145

The Respondent's Position

104.
Referring to the video recordings produced by the Claimant, the Respondent denies that there was any violence or physical confrontation on the Ukrtatnafta premises on 19 October 2007.
105.
The Respondent alleges that Mr. Pryshchepa had no connection with the groups of men in plain clothes or camouflage seen on the video recording and in fact assumed that they were Ukrtatnafta security guards.146 Mr. Pryshchepa—so the Respondent alleges—accompanied Mr. Ovcharenko onto the Ukrtatnafta premises for the sole purpose of fulfilling his obligation under Article 30(1) of the Law on Enforcement Procedure of Ukraine to verily that Ukrtatnafta had received a copy of the resolution initiating enforcement proceedings and that it had not voluntarily implemented the judgment that was to be executed.147 The Respondent also points out that there was a second bailiff, Mr. Sergey Kruhovyi, who had gone to Ukrtatnafta on 19 October 2007 in order to enforce the decision of 9 November 2004. "148
106.
As a result of Mr. Pryshchepa’s visit, Mr. Ovcharenko was provided with the Ukrtatnafta documents, seals and stamps, and confirmed to Mr. Pryshchepa that Ukrtatnafta’s personnel had not prevented him from performing his duties as Chairman of the Management Board. The Respondent thus takes the position that Ukrtatnafta had "voluntarily reinstated Mr. Ovcharenko."149
107.
As to the statements by the Ukrainian politicians strongly criticizing the events of 19 October 2007, as adduced by the Claimant, the Respondent observes that these statements were made during a period in which the details of this day were yet unclear.150

ii. The Legality under Ukrainian Law of the Conduct of the Bailiff

The Claimant’s Position

108.
The Claimant argues that the manner in which Mr. Pryshchepa enforced the 26 September 2007 Decisions was contrary to Ukrainian law. First, Article 27 of the Ukrainian Enforcement Law required Mr. Pryshchepa to obtain the signature of the officials of Ukrtatnafta as proof that the enforcement resolutions had been properly delivered, which he failed to do.151 Instead, he sent the enforcement resolutions on Friday, 12 October 2007, by ordinary mail, which means that under normal circumstances they would be received after three to four days. According to the Claimant, there is no evidence in the records that the resolution was received any time prior to or after 18 October 2007, the due date for voluntary compliance.152
109.
Second, Article 10.2 of the Enforcement Law states that the sanction for a first instance of non-compliance with enforcement resolutions is a fine, which would be followed by a new time period for compliance; a second instance of non-compliance triggers a further fine and the option of initiating criminal proceedings. The law does not, however, authorize the bailiff to "forcibly enforce" the resolutions.153 Thus, on 18 October 2007, Mr. Pryshchepa would have been obliged to establish a new time period for voluntary compliance.154
110.
The strictures of Article 10.2 of the Enforcement Law apply especially in the case of the resolution related to the 26 September 2007 Interim Measures. That resolution was only issued on 18 October 2007, which made it unreasonable to fault Ukrtatnafta for its failure to comply voluntarily within one day.155 That said, the Claimant adds that this resolution was in fact never received by Ukrtatnafta but simply read out to its representatives on 19 October 2007 while the takeover was ongoing.156

The Respondent’s Position

111.
The Respondent alleges that the manner in which Mr. Pryshchepa enforced the 26 September 2007 Decisions was in accordance with Ukrainian law. Article 27(1) of the Ukrainian Enforcement Law specifies that resolutions initiating the enforcement of court decisions are to be sent by ordinary mail, with no further requirement that the signature of the company’s officials be obtained.157 Article 30(1) of the Law on Enforcement Procedure requires a bailiff to verify that the resolution initiating enforcement proceedings has been received and that the judgment has not been voluntarily implemented, which is why Mr. Pryshchepa visited the Ukrtatnafta facilities on 19 October 2007.158
112.
In response to the Claimant’s contention that the 18 October 2007 resolution should not have been enforced on the following day, the Respondent points out that Mr. Pryshchepa had determined that that resolution—which prohibited Ukrtatnafta and its employees from interfering with Mr. Ovcharenko’s entry on the premises or his carrying out his duties as Chairman of the Management Board—had not yet been received by Ukrtatnafta. Mr. Pryshchepa accordingly proceeded to read the resolution to the members of the Management Board.159 When he ascertained that Mr. Ovcharenko was provided with the company’s constitutive documents, seal, and stamps, Mr. Pryshchepa recorded the voluntary compliance of Ukrtatnafta with the 26 September 2007 Decisions.160 The Respondent therefore states that "Tatneft has not shown that Mr. Pryshchepa ‘forcibly’ enforced anything."161

4. Criminal Investigation of 19 October 2007

(a) Undisputed Facts

113.
On 19 October 2007, the Deputy Head of the Investigation Division—Head of the Investigation Unit of the Kremenchug City Department of the Ministry of the Interior, Mr. Oleg Savchenko, initiated an investigation on whether the events at the Kremenchug refinery of the same day violated Article 293 of the Criminal Code, which sanctions group disruptions of the public order ("Article 293 Investigation").
114.
On 24 October 2007, Mr. Savchenko initiated an investigation of the events of 19 October 2007, pursuant to Article 357 of the Criminal Code, in relation to an alleged misappropriation of the seal and stamp of Ukrtatnafta ("Article 357 Investigation").
115.
On 31 October 2007, the Avtozavodsky Regional Court quashed the Article 357 Investigation."162
116.
On 22 May 2008, the Article 293 Investigation was closed under paragraph 2, Article 6 of the Criminal Procedure Code "due to lack of corpus delicti."163

(b) Disputed Facts

i. The Claimant’s Position

117.
The Claimant attacks the legitimacy of the said criminal investigations.164 With regard to the investigation pursuant to Article 293 of the Ukrainian Criminal Code, the Claimant points to the testimony of Mr. Savchenko, its witness, who states that the investigation was passed from one department to the next, with no actual investigative activity being undertaken.165 According to Mr. Savchenko, on 29 October 2007, the Avtozavodsky Regional Court quashed the investigator’s decision to open the criminal investigation on the basis that the action by private security forces could not be considered "criminal" because they participated in the enforcement of a court decision.166 And when the investigation returned to Mr. Savchenko in late 2007, it became largely dormant due to the instruction of his superiors that the investigation proceed on a formal basis alone.167 As Mr. Savchenko explains, the investigation was officially and prematurely closed on May 2008, upon the orders of high-ranking government officials.168 Unusually, the case file was then physically transferred to the Main Investigation Unit of the Ministry of the Interior in Kyiv, which led Mr. Savchenko to conclude that a high-ranking official wanted to be sure that the investigation remained closed.169 Accordingly, the Claimant alleges that it was the absence of a meaningful investigation that allowed the Ministry of the Interior and the Prosecutor General’s office to conclude that insufficient evidence existed to bring criminal charges.170
118.
As to the investigation under Article 357 of the Ukrainian Criminal Code, the Claimant states that this was quashed by the Avtozavodsky Regional Court of Kremenchug within a week after it was brought171 and that the Kremenchug Prosecutor chose not to challenge this decision.172 It also claims that Mr, Yury Bergelson, a lawyer representing Mr, Ovcharenko, offered Mr. Savchenko employment and an outright bribe to assist the raiders, and conveyed to Mr. Savchenko that a substantial amount of US$ 25 million had been paid to the Prosecutor’s office to ensure the failure of the investigations.173

ii. The Respondent’s Position

119.
The Respondent points out that the Claimant relies exclusively on the testimony of Mr. Savchenko to discredit the investigations.174 It alleges that Mr. Savchenko’s characterization of the 19 October 2007 events as a raider attack is a personal view that conflicts with the official investigative findings.175 Moreover, in the Respondent’s view, Mr. Savchenko’s alleged encounter with Mr. Bergelson raises questions about the credibility of Mr. Savchenko, as he neither reported the encounter nor initiated criminal proceedings with regard to it.176
120.
The Respondent alleges that the testimony of Mr. Savchenko concerning the Article 293 Investigation is incomplete, as it does not include his interviews with the bailiffs present at Ukrtatnafta on 19 October 2007 and fails to mention his non-involvement in the investigation for a certain time.177 The testimony also misrepresents the facts, such as in its description of the instructions from the Kremenchug Prosecutor.178 Mr. Savchenko’s testimony, in the Respondent’s view, also contains unsubstantiated inferences regarding the alleged role of higher authorities in directing and closing the investigation,179 and is contradictory, in that it accuses Mr. Ovcharenko of trespassing on Ukrtatnafta although he was accompanied by a bailiff and authorized by the execution writs to be at the Ukrtatnafta premises at that time.180
121.
The Respondent alleges that the testimony of Mr. Savchenko on the Article 357 investigation is similarly unreliable, given that he neither addresses the 31 October 2007 Avtozavodsky Court Judgment stating that he had breached articles in the criminal code in initiating the investigation181 nor discloses that his conduct caused the cancellation of this investigation.182
122.
The Respondent concludes that the Claimant has not established that the above-mentioned investigations were terminated either improperly or without good reason, or that the said investigations uncovered actions that would be considered criminal under the Ukrainian Criminal Code.183

5. Presence of the Ministry of the Interior Troops at Ukrtatnafta

(a) Undisputed Facts

123.
It is undisputed between the Parties that the Kremenchug refinery was subject to special protection following the events of 19 October 2007. More specifically, on 24 October 2007, Military Unit 3059 of the internal Troops of the Ministry of the Interior of Ukraine began providing security services at the refinery.184

(b) Disputed Facts

i. The Claimant’s Position

124.
According to the Claimant, the Respondent installed members of the State security services in order to facilitate Mr. Ovcharenko’s reinstatement and to perpetuate the raiders’ occupation of the refinery. In the Claimant’s view, the presence of these troops is evidence of the Respondent’s active complicity in the illegal actions of the corporate raiders.185

ii. The Respondent’s Position

125.
The Respondent states that military forces and other military organizations—such as the Ministry of the Interior troops—are authorized to carry out commercial activities in Ukraine, which include the provision of security services, as was the case for Ukrtatnafta.186 Hence, the provision of security services to Ukrtatnafta in this case cannot be considered "irregular" or "abusive" conduct of the State.187

6. The Management at Ukrtatnafta after 2007

(a) Undisputed Facts

126.
Immediately after Mr. Ovcharenko was reinstated as Chairman of the Management Board on 19 October 2007, he issued an order physically banning Mr. Glushko from the Kremenchug refinery. In the following weeks, the management of the company was restructured under the leadership of Mr. Ovcharenko through various orders that he issued, and he retained numerous consultants and advisors to assist him in managing the company.188
127.
Following 19 October 2007, all four members of the Management Board who had been nominated by the Tatarstan shareholders were either dismissed or forced to resign.189 The Claimant declined to appoint their replacements.190 It appears (according to the Claimant’s submissions, which on this point were not contested by the Respondent) that key management roles, including those in the financial department, were reassigned either to Mr. Ovcharenko himself or to managers close to him.191
128.
In February 2010, the first and only General Shareholders Meeting since the events of October 2007 was held. The shareholders notably resolved to validate the share auctions at which the shares of the Tatarstan parties were sold; to confirm Mr. Ovcharenko as Chairman of the Management Board; and to elect Mr. Kolomoisky and his associates as members of the Supervisory Board.192 As a result of these resolutions, six of the eleven seats were held by individuals affiliated with the Privat Group, with the remaining members of the Supervisory Board being nominated by Naftogaz.193 Moreover, the shareholders approved dividends194 in an amount of UAH 85,165,600 for 2006, and UAH 40,757,200 for 2007.195
129.
To the Tribunal’s knowledge, Mr. Ovcharenko remains Chairman of the Management Board to the present day.

(b) Disputed Facts

i. The Claimant’s Position

130.
The Claimant accuses Mr. Ovcharenko of several misdeeds since his reinstatement in 2007. Specifically, the Claimant alleges that the 19 October 2007 order banning Mr. Glushko from the refinery deprived Mr. Glushko of the rights and benefits to which he was entitled as a full member (if not Chairman) of the Management Board.196 Moreover, ignoring the necessary Supervisory Board approval, Mr. Ovcharenko allegedly expanded his own power and assigned positions to his allies while marginalizing the other Management Board members and the employees loyal to Tatarstan.197 Finally, the Claimant alleges that Mr. Ovcharenko vested substantial executive powers in the newly hired consultants and advisors, which in turn caused the dismissal or forced resignation of the Management Board members nominated by the Tatarstan shareholders.198
131.
The Claimant rejects the Respondent’s allegation that the reallocation of management positions was either a normal reorganization following a change in management, or caused by the alleged lack of cooperation of the board members, and points out that this occurred within days of Mr. Ovcharenko’s reinstatement.199
132.
The Claimant also alleges that Mr. Ovcharenko mismanaged Ukrtatnafta’s assets to the point of putting the company on the "brink of financial and operational collapse,"200 and states that the financial results show that Ukrtatnafta was profitable before 2007 but not after Mr. Ovcharenko had taken over.201
133.
Lastly, the Claimant alleges that, under Mr. Ovcharenko’s leadership, Ukrtatnafta ceased to provide it with detailed financial reports on a monthly basis, as it had done since January 2003.202 The Trade Representation of the Republic of Tatarstan in Ukraine wrote letters to the Ukrainian government authorities on behalf of the Claimant and the Republic of Tatarstan to protest this situation, but to no avail.203

ii. The Respondent’s Position

134.
The Respondent disagrees with the Claimant’s depiction of post-2007 Ukrtatnafta. It criticizes the Claimant for its primary reliance on—and alleged misrepresentation of—the witness statement of Mr. Vladimir Fedotov, the Claimant’s nominee to the Management Board. Moreover, the Respondent observes that the Claimant did not complain to the relevant Ukrainian authorities at any point, despite its claims of illegal behavior.204
135.
The Respondent states that the initial lack of cooperation of Ukrtatnafta’s directors following the events of 19 October 2007 forced Mr. Ovcharenko to take on their management duties. He subsequently, however, enjoyed good working relationships with the other members of the Management Board, save for Mr. Fedotov, who kept to himself.205 While the members of the Management Board eventually all resigned, the Respondent points out that the Claimant could have appointed replacement members, but failed to do so.206
136.
The Respondent also rejects the Claimant’s allegation of Mr. Ovcharenko’s mismanagement of assets as unsubstantiated.207 Rather, the Respondent points out that it was the Claimant that cut off its oil supply to the Kremenchug refinery to retaliate for Mr. Ovcharenko’s reinstatement, and it was this that jeopardized the financial situation of Ukrtatnafta.208 The Respondent adds that Mr. Ovcharenko had found Ukrtatnafta in a financially desolate state at his reinstatement,209 specifically pointing to payables in excess of UAH 2.6 billion owed to Taiz and Technoprogress, the Claimant’s intermediary suppliers.210
137.
Lastly, the Respondent does not deny that Mr. Ovcharenko appointed consultants and advisors, but points out that the Claimant has alleged no wrongdoing on their part.211

7. The Tribunal’s Considerations Concerning the Facts of Mr. Ovcharenko’s Reinstatement and Related Events

138.
The Tribunal turns now to the discussion of the facts as alleged by the Parties with a view to establish which in its assessment has been the backdrop of the dispute submitted to its resolution.
139.
Like many projects of the kind characterizing the creation of Ukrtatnafta it is not difficult to ascertain that it started out in the best spirit of cooperation, as reflected in the Ukrtatnafta Treaty and the Incorporation Agreement, as well as in the respective decrees issued by the Tatarstan and Ukraine governments. The purpose of ensuring parity was quite evident in the arrangements concerning the distribution of shares and the contributions to be made by each party, in essence consisting of oil wells and production facilities in Tatarstan and the Kremenchug refinery in the Ukraine. This multinational arrangement was undoubtedly the best available option at the time following the dissolution of the Soviet Union and the separation of its constitutive territorial and political entities.
140.
In the short run, however, it appears that such purposes would not be easily attained. While it is quite probable that there were objective technical, economic and legal difficulties to contributing the Tatarstan oil wells as originally envisaged, it is also relevant to note that the alternative contributions that were finally authorized by the shareholders were in amounts that, given the magnitude of the business projected, were not very impressive. US$ 31 million for Tatneft, US$ 30 million for AmRuz and US$ 35 million for Seagroup are the figures in the record. Moreover, the arrangements leading to these contributions, notably the payment of US$ 1 million by Tatneft and the intra-group transfer of shares held by Zenit Bank valued at US$ 30 million, like the issuance of promissory notes by AmRuz and Seagroup and the extension of payment dates, are expressive of this difficulty. Questions also arose as to the valuation of the Kremenchug refinery.
141.
It can also be noted that during the start-up period intra-corporate relations appeared to be harmonious but this began gradually to change. The Tatar shareholders were more experienced in the oil business, as evidenced by the strong participation of Tatneft in the project, and as a result acquired greater influence in the management of Ukrtatnafta. Although Tatneft was nominally a minority shareholder, the incorporation of AmRuz and Seagroup and the strategic and voting alliance that ensued among the three shareholders led to greater influence in the decisions of the company. Also the Tatar Ministerial participation in the shareholding was quite naturally associated to Tatneft and its related companies.
142.
This situation could not be to the liking of the Ukrainian side, as a consequence of which a power struggle ensued within Ukrtatnafta that led to the appointment, dismissal, reappointment and reiterated dismissal of the Chairman of the Management Board, Mr. Pavel V. Ovcharenko, as well as to long-lasting lawsuits and court decisions examined above. This power struggle was at the heart of the events of 19 October 2007, which as noted the Claimant characterizes as a "raider" action and the Respondent as the peaceful reinstatement of Mr. Ovcharenko in compliance with court decisions. Scant reference to a letter of resignation of Mr. Ovcharenko in one testimony does not find support in the documents in the record of this case.212
143.
One other fact needs to be taken into account for the proper understanding of the dispute before the Tribunal. Beginning in 2007 a group of companies associated with the Privat Bank, which in turn were all directly or indirectly related to Mr. Igor Kolomoisky, an influential businessman with extensive interests in the oil industry and other business activities in Ukraine, developed an interest in gaining control over Ukrtatnafta, which had a central role in that sector. One company in that group by the name of Korsan acquired in 2007 a modest 1.15% of the shareholding. Following complex corporate arrangements and litigation, by 2010 Korsan had become the owner of 47.0S% of Ukrtatnafta’s shareholding, which together with other related interests attained up to 56% of the shareholding, with the State Property Fund of Ukraine holding 43.05%.213 The Tatarstan, Tatneft, AmRuz and Seagroup participation was gradually diminished until it became totally extinguished. These arrangements notwithstanding, the Respondent rightly points out that at no point has the Ukrainian State ceased to be a minority shareholder in Ukrtatnafta.214 Mr. Kolomoisky, as will be discussed further below, was called as a witness by the Tribunal at the oral hearing.
144.
At this point the original influence exercised in the company by the Tatarstan and related shareholders, including Tatneft, was reversed and it was the Ukrainian shareholding that acquired prominence in the control and management of Ukrtatnafta. Both Parties believe that Ukrtatnafta was badly mismanaged while under the control of the other party, an issue that was also at the heart of the confrontations between shareholders.215 These developments were quite naturally resisted by Tatneft.216 In fact, it is of interest to note, as the Respondent does, that it was Tatneft that first complained to Ukraine about AmRuz and Seagroup’s acquisition of shares in Ukrtatnafta because of having only nominally paid for them with unsecured notes and because of the effect this together with other factors had on the alteration of the parity principle, a view that later changed in light of its strategic alliance between Tatarstan entities and Amruz and Seagroup.217 The view has been expressed, however, that AmRuz and Seagroup were at least originally controlled by the Ukrainian side.218 What was at stake in these discussions was not the form of the capital contributions by different shareholders but how this would determine which side, Ukraine or Tatarstan, would control the company, which also explains why later Tatneft would support AmRuz and Seagroup so as to avoid a change of control.219
145.
As will be discussed further below, at this point as a consequence of the modification of the capital contribution the parity principle was reversed in favor of the Ukrainian shareholding, and such principle had thereby become defunct.
146.
It is against this complex background that the Tribunal must now turn to establish whether there was in fact a corporate raid and the inextricably related question of the dismissal and reinstatement of Mr. Ovcharenko.
147.
The Tribunal has carefully examined the evidence submitted and can conclude that the events of ' 19 October 2007 at the Kremenchug refinery were not that peaceful.220 Both witness statements and the video recording of the events show that in fact there was a forceful takeover of the Kremenchug refinery and the administrative offices. The not insignificant number of people appearing in those recordings forcing their way into the premises, some in uniform, is credible evidence that a physical occupation took place on that date. While it is not clearly established that weapons were available to such occupants neither can this feature be ruled out, and this was certainly the case when Ministry of the Interior troops were called to secure the refinery a few days later on 24 October 2007.
148.
The Tribunal has also noted the various statements submitted by the Claimant as to the existence of corporate raids and similar takeovers in Ukraine, including the statements of political and business leaders and international agencies.221 While this is undoubtedly a recurrent phenomenon it cannot be relied upon as evidence that every single corporate acquisition is the result of some form of wrongdoing either by private individuals and entities or entailing the connivance of State agencies and the judiciary. This can only be established on a case by case basis and the Tribunal will do so next in the context of the discussion about the dismissal and reinstatement of Mr. Ovcharenko and the courts’ decisions related thereto.
149.
The controversy relating to the dismissal and reinstatement of Mr. Ovcharenko as Chairman of Ukrtatnafta’s Management Board needs to be discussed in the context of the basic principles governing corporate management and their reflection in the applicable law. The Tribunal has no doubt that the dismissal of the Chairman of the Management Board is a decision that can be adopted without hindrance by the corporate governing bodies if for some reason they are unhappy about his performance. The fact that tire dismissal of Mr. Ovcharenko was decided in the first instance by the Supervisory Board on 21 September 2004 and ultimately endorsed by the General Shareholders Meeting on 12 November 2004 responds to this principle as it is expressly recognized in Articles 99 and 159 of the Civil Code.
150.
The choice of who is considered the most qualified Chairman of a company or its Chief Executive Officer is recognized by Article 99(3) of the Ukrainian Civil Code allowing for the suspension of members of the executive body of a company from their duties.222 While the Respondent has argued that such power relates to "temporary suspension" and not a permanent dismissal, the Claimant’s view that such temporary suspension is addressed by Article 46 of the Labor Code is convincing.223 In fact, this last Article addresses events such as coming to work intoxicated with alcohol and other such misconduct of an employee which is very different from a corporate decision concerning the performance of duties of its executive officers. But even if the general provisions on the termination of labor agreements embodied in Articles 40 and 41 of the Labor Code are taken into account, there is evidently a difference between the ambit of application of the civil code and that of labor legislation. Moreover, the dismissal of the Chairman of the Management Board by resolution of the Supervisory Board was explicitly included in Mr. Ovcharenko’s employment contract in accordance with Article 36 of the Labor Code.224
151.
Whether it might have been preferable for the decision to terminate Mr. Ovcharenko to have stated specific reasons is one thing, but the fact that even without this explanation dismissal is the exercise of a valid right is quite another. On the other hand, while the Respondent’s argument to the effect that Articles 99 and 159 of the Civil Code do not provide that compliance with the Labor Code is not required,225 it is also true that neither does the Civil Code provide that the subject matter of the Labor Code ought to prevail over essential provisions of contract law. The fact that Article 36(8) of the Labor Code is referred to by the Order to dismiss Mr. Ovcharenko does not alter the effects of the Civil Code.
152.
It has been noted that the Avtozavodsky District Court ordered the reinstatement of Mr. Ovcharenko on 9 November 2004. It was held by the Court that the power to order such dismissal was not within the competence of the Supervisory Board but of the General Shareholders Meeting and that further the Supervisory Board had been enjoined from making decisions concerning the appointment and termination of members of the Management Board, including its Chairman. Assuming that this was a defect of such dismissal, the fact that it responded to the company’s policy is not to be doubted as in fact was confirmed not long thereafter by the very General Shareholders Meeting held on 12 November 2004 where Mr. Ovcharenko was again dismissed following his reinstatement a day earlier.
153.
As the Court chose to base its decision on the Ukrainian Labor Code and not the Civil Code, it could not of course address the question of the powers of corporate governance found at the origin of the dismissal but only the grounds governing employment under the Labor Code, which as noted is a different matter. Even though the reasoning of the Court was not to the liking of Ukrtatnafta’s Management, the Management reinstated Mr. Ovcharenko as an employee on 11 November 2004 following the order of the Court to this effect. As also noted, the General Shareholders Meeting held on 12 November 2004 once again removed Mr. Ovcharenko and elected Mr. Glushko as the new Chairman. The Tribunal cannot fail to notice that there was in this sequence of events a kind of cat and mouse strategy, but in the end the Court’s decision was formally complied with, although whether Mr. Glushko, the Acting Chairman, duly discussed the implications of the litigation with the Management Board is subject to important doubt.226 The Respondent believes that the reinstatement was a "sham" and that it failed to comply with various procedural requirements of Ukrainian law.
154.
This corporate governance lasted in any event for the three years that followed until new court decisions intervened in the ongoing dispute between the main protagonists of the corporate struggle. Other interests also had a role to play in this process, this being in particular the case of Naftogaz, a Ukrainian State-owned company that in fact has resisted the efforts of the Privat Group to acquire control of Ukrtatnafta, as evidenced by the fact that Naftogaz voted against the appointment of Mr. Ovcharenko at the General Shareholders Meeting of 5 February 2010.227
155.
The next issue for the Tribunal to address is the question of the ex parte Supplementary Judgment and the ex parte interim measures issued by the Kriukivskiy District Court on 26 September 2007, both issued in the context of the Court’s understanding that the reinstatement of Mr. Ovcharenko, ordered on 9 November 2004, had not been implemented and that a Supplementary Judgment was required so as to indicate the specific measures to be taken to that effect. Both decisions were appealed by Ukrtatnafta and further proceedings were initiated by Mr. Glushko seeking protection of his rights as Chairman of the Management Board, but none of them succeeded.
156.
Such decisions were followed by four writs of execution issued by Bailiff Yevgeniy Pryshchepa initiating enforcement proceedings sent by ordinary mail giving a short delay for voluntary compliance and in one case for immediate enforcement. Whether the signature of an authorized representative of Ukrtatnafta was required or not as a matter for service of process to be legally valid, a point on which the Parties disagree, does not detract from the fact that Ukrtatnafta was not on notice of the ex parte proceedings taking place at this stage and that in any event the period granted does not appear to have been adequate for an orderly process of voluntary enforcement. The Tribunal cannot ignore the fact that service by means of an unsigned postal note, as pointed out by the Claimant, is not. conducive to certainty of notification.228
157.
The Supplementary Judgment, in addition to underlining Ukrtatnafta’s obligation to grant Mr. Ovcharenko access to the company’s premises, specifically included within his powers that of making decisions concerning the organizational, operational and economic, financial and other activities of the company. The Parties, as also noted above, have different views about whether this latter aspect of the decision granted Mr. Ovcharenko new remedies not discussed in the proceedings leading to the 9 November 2004 decision on his reinstatement and whether on the whole they might have entailed measures out of proportion in respect of the reinstatement issue and the possible remedies to such situation. In any event, the fact is that Mr. Ovcharenko’s reinstatement was inextricably associated with the aim of achieving a complete takeover of the company’s management, which in fact he proceeded to effect swiftly.229
158.
The discussion about the 26 September 2007 Supplementary Judgment and the decision on interim measures is essentially based on the issue of whether there was or not a valid enforcement of the 9 November 2004 decision ordering Mr. Ovcharenko’s reinstatement. While as noted the Claimant believes that this was positively the case, in the Respondent’s view, and as contained in the 26 September 2007 Decisions, there had been no such valid enforcement. The question was discussed at length during the litigation that followed Mr. Ovcharenko’s alleged reinstatement on 11 November 2004 that culminated on 29 August 2007 when the order became binding.
159.
The Claimant’s view that if there had been difficulties with or even the impossibility of carrying out such enforcement the proper procedure e would have been to apply to the District Court and not to request separate interim measures of an ex parte nature in violation of Article 151 of the Code of Civil Procedure is convincing. This is so, first, because as a matter of fact the reinstatement order had been enforced on 11 November 2004, even if on a purely formal basis as shown by the second dismissal of Mr. Ovcharenko the following day, and this again was a clear expression of the policy and decision irrespectively of whether the resolutions were issued by the Supervisory Board, the Chairman of the Management Board or the General Shareholders Meeting, a point also subject to much discussion between the Parties.
160.
Next, and more importantly, the Claimant’s view is convincing because under such procedure the Parties would have had the possibility of fully arguing their case even though this was done in prior litigation.230 In any event it is to be noted that in the Respondent’s view the 26 September 2007 Supplementary Judgment would have had the same legal consequences as the Interim Measures, but still this does not detract from the fact that ex parte decisions can only be justified on very exceptional bases and strictly following the requirements laid down under Article 151 of the Code of Civil Procedure, which does not appear to have been the case here. The chronology of these decisions, showing that the interim measures were issued thirty minutes earlier than the Supplementary Judgment they were supposed to enforce, does not help to explain a logical legal sequence of these acts, which is normally the other way around.
161.
It was the purported enforcement of the Supplementary Judgment and the interim measures of 26 September 2007 which led to the events described in connection with the occupation of the Kremenchug refinery. It is at this point that the role of the bailiff Mr. Yevgeniy Pryshchepa in these events becomes particularly relevant. If has been considered above that the various writs of execution issued in respect of that enforcement were not quite transparent and timely and did not follow the strict requirements of Articles 24 and 87 of the Ukrainian Law on Enforcement Proceedings.231 The Claimant has also noted that even a supplementary judgment is subject to strict requirements under Articles 11 and 220 of the Code of Civil Procedure, which again do not appear to have been duly observed in this case.
162.
It has also been considered that the occupation of the premises does not appear to have been as peaceful as described by the Respondent and the bailiff.232 While it is true that physical violence appears to have been used on the occasion of the events of 19 October 2007 in a limited way, concerning in particular security guards and breaking into the premises,233 the role of the bailiff was not as simple as providing for and verifying the enforcement in question.234’’ What has been described as the voluntary reinstatement of Mr. Ovcharenko by the Ukrtatnafta officials present during those events is not credible as it followed various measures of coercion, in particular preventing such officials from leaving the premises. The fact that a few days later the Minister of the Interior’s troops were called in does not corroborate that characterization of a voluntary reinstatement either, particularly in view of the fact that the units called were from a rather distant region.235
163.
The reinstatement of Mr, Ovcharenko was swiftly completed that very day and the lawsuits and appeals commenced by the departing Chairman Mr. Glushko were successively dismissed by the Avtozadovsky District Court of Kremenchug and the Poltava Region Court of Appeals. An unsuccessful takeover on the part of Mr. Glushko on 23 October 2007 has also been alleged by a witness for tire Respondent.236 As will be examined further below Ukrtatnafta’s management was completely reorganized following Mr. Ovcharenko’s reinstatement. It must also be noted that both the reinstatement of Mr. Ovcharenko and the reorganization of the company were closely linked to the interests of Korsan as explained in Mr. Kolomoisky’s statement at the hearing.237
164.
An issue related to these events is that concerning the criminal investigations that were initiated because of the complaints lodged about the alleged illegality of the enforcement proceedings, disruption of public order and misappropriation of Ukrtatnafta’s seal and stamp. The investigations discussed earlier were either quashed by the Avtozavodsky Regional Court or closed by administrative decision.
165.
Two key witnesses appeared in connection with these investigations, Mr. Oleg Savchenko, the investigation officer, on behalf of the Claimant, and Mr. Yuri Bergelson, a lawyer for Mr. Ovcharenko, who appeared as a witness called by the Tribunal. While the first was of the view that the investigations were impeded by the officers in charge of the intervening agencies so as to prevent the findings and completion, including allegations of the Prosecutor having been paid US$ 25 million,238 the second witness vehemently denies any such allegations239 and affirmed that Mr. Savchenko had misapplied the provisions of Articles 293 and 357 of the Criminal Code governing such investigations, which was the true reason for their termination,
166.
Besides the fact that the two witnesses do not appear to love each other, the Tribunal finds that their respective credibility is quite limited, Mr. Savchenko’s account of a meeting purportedly held with Mr. Bergelson is rather vague, and the allegations of the latter attempting to influence him and referring to bribes cannot be adequately established on this basis. Mr. Bergelson’s testimony is even less credible as he repeatedly offered contradictory versions of his role in these investigations and proceedings and how he became involved in them.240
167.
Be that as it may, the Tribunal cannot fail to notice that the investigations were not carried out in spite of the fact that the complaints about the occupation and taking over of the Kremenchug refinery offered enough elements that would justify the thoroughness of these proceedings,
168.
The facts discussed above show that immediately following his reinstatement Mr. Ovcharenko proceeded to the complete reorganization of Ukrtatnafta, both at the managerial level and as regards the composition of the governing organs of the company. While this fact has not been disputed, the reasons motivating such measures have been a matter of total disagreement between the Parties,
169.
Whether or not the company had been in a state of mismanagement under the former Chairman, Mr. Glushko, and whether there were serious financial consequences arising from such situation, or whether the reality was exactly the opposite,241 the measures taken in order to ban Mr. Glushko from the refinery do not help the Respondent’s argument that all decisions taken by the incoming Chairman were purely a matter of managerial reorganization. Besides his role as former Chairman of the Management Board, Mr. Glushko had nonetheless remained a member of such organ and was thus, as argued by the Claimant, deprived of his corporate rights and relieved of his duties.
170.
Moreover, it appears well established that the incoming Chairman considerably expanded Ins powers and proceeded to appoint a number of consultants and advisors responding to his authority,242 a plan that appears to have been prepared in advance of the 19 October 2007 events.243 The aggregate of such decisions led to the dismissal or resignation of the members of the Management Board nominated by the Tatarstan shareholders and a number of staff members related to the Tatarstan interests in the company.
171.
The Respondent’s argument to the effect that there was a lack of cooperation of such board members is credible as the confrontation and. corporate struggle between shareholders and management continued unabated during all this period, but remedying such situation should not have been achieved by measures of the kind discussed but by means of the mechanisms of corporate governance, including the Supervisory Board and ultimately the General Shareholders Meeting. Equally serious is the fact that the Claimant’s allegation that the new management ceased to provide it with the monthly financial reports appears not to have been contradicted, a decision which quite clearly interferes with essential corporate rights of shareholders. Whether the Claimant complained of this irregularity to the authorities or whether the Tatarstan Trade Representative in Ukraine protested does not detract from the fact that such irregularity existed.

B. ANNULEMENT OF SHAREHOLDINGS IN UKRTATNAFTA

1. Court Decisions on the Claimant’s Shareholdings in Ukrtatnafta

(a) Undisputed Facts

i. Case 32/1

172.
The events discussed were followed late in 2007 by proceedings before the Ukrainian courts concerning the Claimant’s legal position as a shareholder in Ukrtatnafta—and in particular the propriety of the Claimant’s acquisition of its Ukrtatnafta shares
175.
Several parties appealed this decision to the Kyiv Economic Court of Appeal, namely the Prosecutor, on 10 September 2008;252 Naftogaz, on 11 September 2008;253 the Cabinet of Ministers of Ukraine, on 12 September 2008;254 and the Claimant, also on 12 September 2008.255
176.

On 14 May 2009, the Kyiv Economic Court of Appeal confirmed the renewal of the limitation period; upheld the nullification of the 1997 and 1998 General Shareholders Meeting resolutions and all versions of the Incorporation Agreement that approved the modification in the form of the contribution of the Tatarstan shareholders; and reversed the order that Ukrtatnafta be cancelled from the trade register and liquidated.256 The Higher Economic Court confirmed this judgment on 20 August 20 09.257 On 27 October 2009, the Supreme Court of Ukraine upheld the 20 August 2009 judgment of the Higher Economic Court,258 and rejected the cassation appeal' filed by the Claimant on June 2009.259

177.
On 18 April 2011, the Kyiv Economic Court of Appeal dismissed the application for review of the case.260

ii. Case 17/178

178.
Before Case 17/178 is discussed in detail, it should be noted that Ukrtatnafta filed a similar claim—in what was to be Case 17/1—against the Republic of Tatarstan, Infosistema (the new share register of Ukrtatnafta that was controlled by the Privat Group), and ING Bank Ukraine (the nominal holder of the Republic of Tatarstan’s shares in Ukrtatnafta) on 18 December 2008 to invalidate the shareholdings of the Republic of Tatarstan based on the alleged illegality of the modification of its capital contribution to Ukrtatnafta from "[a] parcel of shares in economic entities of oil refining complex [...] the right to develop oil deposits, and other state-owned assets of enterprises and organizations of the Republic of Tatarstan"261 to shares in OAO Tatnefteprom, one of the founding Ukrtatnafta shareholders from Tatarstan.262
179.
The procedural history of Case 17/1 is as follows. On 13 March 2009, the Economic Court of the Poltava Region "decide[d] to reinstate the period of limitations for Ukrtatnafta," and invalidated the share purchase agreement for the purchase of 28% of Ukrtatnafta’s shares by the Republic of Tatarstan.263 The Kyiv Interregional Economic Court of Appeal reversed this decision on 22 July 2009.264 On 25 August 2009, the Higher Economic Court granted Ukrtatnafta’s cassation appeal and reversed the decision of the Kyiv Interregional Economic Court of Appeal.265 On 3 November 2009, the Supreme Court rejected the cassation appeal filed by the Republic of Tatarstan against the judgment of the Higher Economic Court.266 As the Respondent has pointed out, the Claimant does not make any claim in respect of Case 17/1,267 which is why it will not be discussed in further detail here.
180.
Case 17/178 was commenced on 31 August 2009, when Ukrtatnafta sued the Claimant and other parties before the Economic Court of the Poltava Region to seek invalidation of the Claimant’s purchase of Ukrtatnafta shares, based on the holding in Case 32/1.268 To establish that its claim was not barred by the applicable statute of limitations, Ukrtatnafta argued that it was unable to challenge the validity of the General Shareholders Meetings and share purchase agreements relating to the form of the contributions of the Tatarstan shareholders prior to the decision in Case 32/1,269
181.
On 29 October 2009, the Deputy President of the Economic Court of the Poltava Region dismissed the challenge that the Claimant had launched against one of the judges hearing the cases,270 in which the Claimant had alleged that the particular judge was manifestly biased against the Claimant as he had decided against the Republic of Tatarstan in Case 17/1,271
182.
On 3 November 2009, the Economic Court of the Poltava Region accepted Ukrtatnafta’s arguments on the statute of limitations and found that its claim was not barred by it; held that the shareholder resolutions accepting a modification of the Claimant’s contribution from fixed assets to cash were unlawful; and invalidated the Claimant’s share purchase and ordered the return of its shares to Ukrtatnafta.272
183.
Specifically, the Court found that the Claimant’s contribution of fixed assets relating to the operation of specified oil wells—like the stated and actual contribution by the SPFU of the Kremenchug refinery—was essential to establishing Ukrtatnafta and to fulfilling the objective for its establishment.273 The resolution during the General Shareholders Meeting dated 10 June 1998 that permitted a modification in the Claimant’s contribution to the authorized capital of Ukrtatnafta therefore violated the Ukrtatnafta Treaty, the Ukrainian Constitution, Decree No. 704/94, and the Resolution of the Cabinet of Ministers No. 487.274
184.
On the basis that the Claimant did not pay for its shares in the form specified by the above-mentioned authorities, the Court found that the Claimant had breached Article 8(3) of the Law of Ukraine "On Securities and Exchange," which conditions the transfer of shares on the full payment for them.275 It thus set aside Option Agreement No. 77 of 20 May 1998 between Ukrtatnafta and Zenit Bank, the 16 June 2000 Share Purchase Agreement between Ukrtatnafta and Zenit Bank, and the 15 August 2000 share transfer on the basis of which the Claimant had obtained its shares, and ordered the Claimant to return its shares to Ukrtatnafta.276
185.
The Kyiv Interregional Economic Court of Appeal affirmed this ruling on 23 December 2009.277 The Higher Economic Court dismissed the Claimant’s cassation appeal of this ruling to the Supreme Court on 10 February 2010.278 And on 26 May 2010, tire Higher Economic Court dismissed the appeal of the Claimant against its 10 February 2010 ruling.279

(b) Disputed Facts

i. The Courts’ Alleged Non-Application in Cases 32/1 and 17/178 of the Statute of Limitations

The Claimant’s Position

186.
The Claimant maintains that the claims in Cases 32/1 and 17/178 were time-barred under the applicable three-year statute of limitations under Ukrainian law.280 Specifically, the Claimant alleges that the limitation period commences when persons know or should have known of the violation of their rights;281 that the proposition stating that the statute of limitations can be disregarded for as long as the admission of a claim would vindicate a right is unsupported;282 and that, in deciding whether to set aside limitation periods, the Ukrainian courts may exercise "substantial discretion" but not unfettered discretion,283 with the former requiring the support of "material reasons,"284 such as "objectively insurmountable" obstacles that prevented a party from bringing a lawsuit to defend its rights.285 There were no "material reasons" nor "objectively insurmountable" obstacles in Cases 32/1 and 17/178.286
187.
Turning to Case 32/1, the Claimant alleges that, as several Ukrainian government officials attended the 1997 and 1998 General Shareholders Meetings, the approval of the shareholder resolutions authorizing the changes to the amendment documents triggered the running of the three-year prescription period.287 Moreover, the Claimant observes that the Prosecutor sought to annul Article 5 of Ukrtatnafta’s 1995 Incorporation Agreement in Case 8/604 which commenced in 2002; therefore, his statement that he learned of the relevant amendments to the Ukrtatnafta documents only in July 2007 was clearly and demonstrably false.288 Finally, the 5 August 2010 application of the Cabinet Ministers of Ukraine ("CMU") to reopen Case 32/1 stated that the Prosecutor "knew that [he] had valid reasons for filing a claim over violations of procedure of incorporation of [Ukrtatnafta] on 25 November 2003,"289 which was the date of a letter from the Prosecutor to the Ukrainian Parliament, in which the Prosecutor highlighted a resolution of the General Shareholder Meeting of 19 July 1997.290 Neither the Prosecutor nor the Ministry of Justice disclosed these facts, and the Kyiv Economic Court rejected an application by Seagroup that the Prosecutor be ordered to produce documents relating to the 2002 and 2004 inspections of Ukrtatnafta, which would have cast doubt on the Prosecutor’s claim that he had no knowledge of the relevant facts before 2007.291
188.
Turning then to Case 17/178, the Claimant states that there was no plausible basis for the Economic Court of the Poltava Region to have found that the Prosecutor had only learned of the source of the violation of Ukrtatnafta’s rights either when Case 32/1 was reviewed in 2008 or during a 2007 audit; it points out that Ukrtatnafta had known of its constituent documents, the relevant resolutions of the General Shareholders Meetings, the shareholder transactions it had entered into, and its shareholder contributions for years.292 The Claimant rejects the argument that the Respondent could not have sought the annulment of the share purchase agreements with Zenit Bank and Tatneft until Case 32/1 was decided293 by identifying the legal alternatives open to the Respondent that would have resulted in its desired outcome—the annulment of the share purchases—without the annulment of the General Shareholders Meetings’ resolutions.294

The Respondent's Position

189.

The Respondent alleges that the Prosecutor was only informed of the violations that were the subject of Case 32/1 when he received a letter from Mr. Boyko on 28 April 2007,295 after which he promptly launched an investigation and filed Case 32/1.296 It dismisses as irrelevant the Claimant’s speculation on Mr. Boyko’s motives for writing this letter.297 While the Prosecutor had investigated the 1998 General Shareholders Meeting, which amended the Ukrtatnafta constituent documents in a prior case, Case 8/604, as well as the devaluation of the Kremenchug refinery, that case had not involved the compatibility of the changes of the Claimant’s contribution with the Ukrtatnafta Treaty.298 Similarly, the 25 November 2003 letter of the Prosecutor to which the Claimant referred was written in response to a request that the Prosecutor investigate matters relating to the alleged privatization of the Respondent’s shareholding in Ukrtatnafta, which did not involve the change in the Claimant’s contribution and could not therefore support the contention that the Prosecutor examined the circumstances of Tatneft’s purchase of Ukrtatnafta’s shares at that time.299 Finally, the CMU had no basis to claim in its 5 August 2010 application to reopen Case 32/1 that the Prosecutor knew of the violations resulting from the change in the Claimant’s contribution as early as 2003.’300 There is as such no basis for the contention of the Claimant that the Court had accepted the Prosecutor’s representations even if suspecting them to be false.301

190.
Referring to Article 29(2) of the Economic Procedure Code, the Respondent argues that the knowledge of both the SPFU and other public officials could not be imputed to the Prosecutor because his function is to protect State interests without representing any State organ,302 which means that only the knowledge of the Prosecutor is relevant for the statute of limitations.303
191.
The Respondent concludes by stating that, given the discretion enjoyed by the Ukrainian courts in assessing time periods, the Prosecutor would have known that his initiation of Case 32/1 was at least reasonably tenable304 and maintains that the statute of limitations only commenced when the Prosecutor had completed his investigation and was satisfied that Ukrainian law had been violated.305
192.
As to the acceptance by the Kyiv Economic Court of Case 32/1, the Respondent maintains that there is no evidence that the belated filing of the Prosecutor was in bad faith;306 contends that the Court thoroughly considered but then rejected the arguments that the Claimant made on the conduct of the Prosecutor307 and notes that the Claimant ignores the discretion enjoyed by the courts in determining the application of the statute of limitations.308 The Respondent also contends that the exercise of judicial discretion must be assessed on a case-to-case basis, given that there is no statutory or jurisprudential definition of materiality—specifically, that a "material reason" to extend a prescription period does not translate to the impossibility of filing a case within the said period—and in this case, the discretion was properly exercised.309
193.
As to Case 17/178, the Respondent explains that the Economic Court of the Poltava Region extended the applicable prescription period based on the decision in Case 32/1,310 which established that Ukrtatnafta’s rights had been violated.311 Moreover, while Ukrtatnafta was not authorized to challenge resolutions passed at its own General Shareholders Meetings,312 it was obliged to challenge the validity of the share purchase agreements once Case 32/1 had nullified the underlying shareholder resolutions, in order to comply with the statute of limitations.313 Lastly, whether any legal alternatives to the invalidation of the relevant share purchase agreements were open to Ukrtatnafta (as the Claimant suggests) is irrelevant to the question of whether the Court had properly exercised its discretion with regard to the statute of limitations.314 The Respondent also points out that the Claimant does not adduce any authority for its contention that legal alternatives to the invalidation of the relevant share purchase agreements were open to Ukrtatnafta, which in any case would be irrelevant to an evaluation of the court’s factual determination, and notes that the Claimant never raised this argument in the Ukrainian courts.315

ii. The Merits of the Court Decisions

The Claimant’s Position

194.
As a preliminary matter, the Claimant alleges that the founding shareholders all agreed that it would be impracticable for the Tatarstan parties to contribute oilfields and oil-related assets due to high exploration and extraction costs, the Ukrainian economic crisis that affected the market for refined oil products, and potential problems posed by the legislation then in force; and thereby decided on other forms of contribution from the Tatarstan shareholders.316
195.
The Claimant then states that the court decisions annulling the shares of the Tatarstan parties due to the inadequacy of their asset contributions have little basis in Ukrainian law because neither the Ukrtatnafta Treaty nor any legal provision refers to the Tatarstan shareholders’ contributions or establishes "principles and rules" concerning them.317 Moreover, the Ukrtatnafta shareholders were empowered to amend the Incorporation Agreement and Charter without governmental approval.318
196.
With regard to the first point, the Claimant clarifies that Article 2 of the Ukrtatnafta Treaty did not define the nature and content of the "principles and provisions" to be adopted by the Governments or make these principles an integral part of the Ukrtatnafta Treaty or legislation319 and the Ukrainian Presidential Decree did not create obligations for the Claimant or any of the other Tatarstan shareholders.320 Moreover, Resolution No. 487 of 4 July 1995 of the CMU did not address the form of contributions of the Claimant.321
197.
The Claimant alleges that the fifteen-year life span of Ukrtatnafta and its profitability for a time rebut the argument that the change in the contribution from the Claimant and the Republic of Tatarstan made it impossible for Ukrtatnafta to achieve its objective322 or that the Claimant’s contribution of oil equipment was an essential condition for the creation of Ukrtatnafta.323’ It also points out that, if it were true that Ukraine would not have agreed to sign the Ukrtatnafta Treaty and the Incorporation Agreement had it known that the intended contributions of the Tatar parties would not be honored, then the Ukrtatnafta Treaty would have addressed this matter.324
198.
In support of its position that Ukrainian law allowed Ukrtatnafta’s shareholders to amend the company’s Incorporation Agreement and Charter without governmental approval,325 the Claimant refers to Article 12 of the Ukrtatnafta Treaty, which does not impose the requirement of governmental approval for the amendment of Ukrtatnafta’s constituent instruments326 and the Ukrtatnafta Treaty and Decree No. 704/94, which do not authorize the Ukrainian and Tatarstan Governments to approve Ukrtatnafta’s constituent documents or to veto the General Shareholders Meeting’s decisions amending them. At the same time, Article 8(5) of the Ukrtatnafta Treaty does empower the General Shareholders Meeting to approve the constituent documents.327 The Claimant further points out that neither the Ukrtatnafta Treaty nor Decree No. 704/94 contains "basic principles" concerning the required contributions of the shareholders or otherwise defines the content of Ukrtatnafta’s constituent documents.328 |
199.
The Claimant observes that the Respondent did in fact approve the 1997 and 1998 General Shareholders Meetings’ resolutions through the SPFU ’329 and high-ranking Government officials who attended them and/or served on the Supervisory Board at those times."330
200.
The Claimant also characterizes the Courts’ conclusions on Article 8(3) of the Law of Ukraine "On Securities and Stock Exchange" as "grossly inconsistent and completely divorced from the facts that the courts themselves [had] ascertained" because on the one band, the Courts acknowledged that the Claimant had paid US$ 31 million in cash as its contribution to Ukrtatnafta’s capital, while on the other hand, the plain language of Article 8(3) makes clear that its application could have been triggered only if the Claimant had made no contribution at all.331
201.
The Claimant’s expert on Ukrainian law confirms that, under Article 48(2) of the Ukrainian SSR Civil Code, the Ukrainian courts were obliged to grant restitution to Tatneft after invalidating its share acquisitions. According to the expert, courts had to apply the provision proprio motu, irrespective of whether any party actually requests restitution, as decided by the court in the Dekon case.332 Accordingly, a court that invalidates an agreement, should apply Article 48(2) of the Ukrainian SSR Civil Code and "return the property to the parties whose contract has been subject to invalidation."333 The Claimant highlights that the Economic Court of the Poltava Region in fact did not order Ukrtatnafta to return the cash payment the Claimant made, which amounted to US$ 31 million.334
202.
Lastly, the Claimant questions the entry into force of the Ukrtatnafta Treaty—on which the Ukrainian courts relied heavily—as a matter of public international law as well as Ukrainian law. First, under public international law, an international agreement is an agreement between two States which would not be the case when it comes to the Ukrtatnafta Treaty.335 Second, according to Article 13 of the Ukrtatnafta Treaty, it would enter into force as of the date of the last notification of compliance by the Parties with their domestic procedures. The Claimant notes that there is no evidence in the records that such notifications had been exchanged."336 Third, as a matter of Ukrainian law, it is undisputed that the Ukrtatnafta Treaty was never approved by the Ukrainian Council of Ministers under Article 9(b) of the (then applicable) 1993 Law on International Agreements.337
203.
Countering the Respondent’s position, the Claimant argues that, if the Ukrtatnafta Treaty had come into effect, the Ukrainian courts would not have been competent to address its alleged violations since Article 11 of the Ukrtatnafta Treaty provided that all disputes relating to its interpretation and fulfillment should be resolved by way of negotiations and consultations. Consequently, if Ukraine "really believed [that the Ukrtatnafta Treaty had been violated], it would have been required under Article 11 to address the matter with the Government of Tatarstan; not unilaterally through its own domestic judicial system".338
204.
However, the Claimant does not deny that the Ukrtatnafta Treaty was "de facto followed up to a point."339
205.
The Claimant adds that, in any event, it is immaterial whether the Ukrtatnafta Treaty became effective or not since it was superseded by the Incorporation Agreement and its subsequent amendments. It argues that the Tribunal has already decided that these later agreements are the decisive legal instruments in the present case. Relying on paragraphs 188 and 195 of the Tribunal’s Partial Award on Jurisdiction, the Claimant maintains that Ukrtatnafta’s shareholders unanimously decided that the Incorporation Agreement and its subsequent amendments would ultimately regulate the nature and size of the contributions to be provided by the Tatarstan shareholders.340 According to the Claimant, the Respondent has not shown any basis for revisiting the decisions made in the Partial Award on Jurisdiction.341

The Respondent’s Position

206.
The Respondent argues that the invalidation of the Claimant’s direct shareholdings in Case 17/178, as foreshadowed by Case 32/1, was reasonably tenable as a matter of Ukrainian law. It points out that there were seven court decisions on the merits in respect of Cases 32/1 and 17/178, and that tire judges involved in each decision took the position that the change in the Claimant’s capital contribution to Ukrtatnafta violated the Ukrtatnafta Treaty and Ukrtatnafta’s other founding documents.342
207.
As a preliminary point, the Respondent states that, while it had accepted the possibility that the specific details concerning the contribution of the Tatarstan shareholders may have been varied,343 it would not have agreed to sign either the Ukrtatnafta Treaty or the Incorporation Agreement had It known that the contribution of the Tatarstan shareholders would have been other than oil fields and fixed assets related to oil wells, as was the case here.344 This intention is refected in the provisions of the Ukrtatnafta Treaty that concern the contribution from the Tatar side.345 Stating that the fundamental purpose of Ukrtatnafta was "to serve as an inter-state economic complex with combined production and refining capabilities," the Respondent further alleges that it donated the Kremenchug refinery to Ukrtatnafta on the basis that it would receive oil ownership rights in Tatarstan oil deposits and related oil production equipment, which would have the effect of ensuring a minimum supply of oil to the Kremenchug refinery.346 In Case 32/1, the Kyiv Economic Court accepted this view.347
208.
As a further preliminary point, the Respondent discusses whether the Ukrtatnafta Treaty was effective under international law or whether it was incorporated into domestic Ukrainian legislation348
209.
The Respondent first clarifies that "under the Ukrainian regime, [the Ukrtatnafta Treaty] was effective as a matter of international law that binds the parties."’349 First, Article 13 of the Ukrtatnafta Treaty, which pegs the effective date of the treaty as the "date of the last notice of compliance by the Parties with their domestic procedures," is not clear about whether the treaty requires any further domestic procedure for it to take effect, but the Parties to the treaty did agree on immediate implementation without such a precondition."350 Second, while Article 2(3) of the Ukrainian Law on International Treaties assumes that international treaties are concluded on behalf of the Government of Ukraine, the Respondent explains that the distinction between those treaties and those that are concluded on behalf of Ukraine is merely internal and of no significance under international law.351 In any case, the CMU specifically cited Article 2(3) in their orders with regard to the Ukrtatnafta Treaty, which therefore places this treaty in the category of an international or intergovernmental treaty.352 Third, the CMU implemented the treaty, thereby signaling that the requirements of Article 13 of the Ukrtatnafta Treaty had been met from the Ukrainian side.353 The Respondent points out that the Republic of Tatarstan also considered the intergovernmental treaty to be effective and did not otherwise invalidate or withdraw from it."354
210.
The Respondent then argues that, even if the Ukrtatnafta Treaty is not considered effective under international law, it still forms an integral part of the domestic legal order of Ukraine through the "doctrine of reference."355 The Respondent cites to the decisions in Cases 32/1 and 17/178 that constantly upheld the proposition that the Ukrtatnafta Treaty was an integral part of Ukrainian legislation.356 It also points to several provisions in Ukrainian law that support this position, such as Article 4 of the Law on Enterprises, which states that "[i]f an international treaty or an international agreement to which Ukraine is a party establishes rules other than those set out in the Ukrainian legislation on enterprises, the rules of the international treaty or agreement shall apply," and which does not specify that the ratification of a treaty is a precondition to its incorporation into domestic law.357 While a separate provision, Article 17 on the Ukrainian Law on International Treaties, states that "[iInternational Agreements of Ukraine that are concluded and properly ratified constitute an integral part of the national legislation of Ukraine the Respondent clarifies that Article 17 refers to a category of intergovernmental treaties that is separate from the category covered by Article 4 of the Law on Enterprises.358
211.
As for Article 9 of the Ukrainian Law on International Treaties, which states that "[t]he international agreements of Ukraine which are not subject to ratification, but are subject to approval, are approved as follows...,’359 the Respondent makes the following points. First, it is not clear whether Article 13 of the Ukrtatnafta Treaty requires approval In the form of some domestic procedure in order for it to be effective.’360 Second, Article 9 does not Indicate that every treaty must be ratified or approved to be effective, and in fact, most of Ukraine’s treaties are not ratified or approved.361 Third, the CMU does not issue separate approvals of treaties that it has signed, which means that the category in Article 9 that actually requires a separate signature by the CMU after its approval signature is a "null set."362 And fourth, the approval for signature of the CMU of the Ukrtatnafta Treaty, in conjunction with the powers of the CMU under the relevant legislation, operate to make the Ukrtatnafta Treaty binding as part of Ukrainian domestic legislation.363
212.
Turning then to the relevant cases, the Respondent first states that the courts in Cases 32/1 and 17/178 applied the systemic method of interpretation that is recognized by Ukrainian law364 and not the "literal and fragmentary reading of the Ukrtatnafta Treaty and related governing documents" allegedly employed by the Claimant and its experts in their consideration of the Issue of the Claimant’s shareholdings.365 It then discusses the Ukrtatnafta Treaty and other related documents that governed the establishment and operation of Ukrtatnafta—which it stresses is not an ordinary Ukrainian joint stock company but is instead an inter-state economic complex that was established by a treaty366—to establish the importance placed on the form of contributions by the founding members, which support the necessity of requiring governmental approval for any material change to the company’s founding documents.367
213.
The Respondent also rejects the Claimant’s argument that the consent of the Ukrainian Government was indirectly given through SPFU.368 In the Respondent’s view, the SPFU’s approval at the 1997 and 1998 General Shareholders Meetings did not imply the approval of these changes under the Ukrtatnafta Treaty, and moreover, the SPFU exceeded its authority in approving amendments to the Ukrtatnafta founding documents.369
214.
The Respondent states that the Ukrainian courts’ analysis and application of Article 8(3) of the Law of Ukraine "On Securities and Stock Exchange" in Case 17/178 was reasonably tenable, in that it was the change in the form of the Claimant’s contribution to Ukrtatnafta that violated Article 8(3)’s requirement that it pay for its shares, as the said article requires proper—and not just any—payment, which translates to payment in the form prescribed in Ukrtatnafta’s governing documents.370
215.
The Respondent highlights the multiplicity of judges, at different courts, who considered the merits of both Cases 32/1 and 17/178.371
216.
The Respondent further clarifies that the Economic Court of the Poltava Region did not order the restitution of the cash payment made by Tatneft for its shares because Tatneft did not seek such restitution, for what the Respondent describes as strategic reasons.372 The Respondent rejects the reliance of the Claimant’s expert on the Dekon case as controlling authority for the proposition that courts should grant restitution even absent a request from the defendant that it do so, by explaining that Dekon contradicts the general trend of court decisions;’373 that the Claimant’s expert was only made aware of this case as a result of the Respondent’s expert report;374 that the Ukrainian system does not recognize precedent in court cases;375 and that a 2005 Supreme Court decision contradicted the position in Dekon.376 And lastly, the Respondent points out that Tatneft could have filed a counterclaim in the Ukrainian court proceedings to seek restitution, but failed to do so.377

2. The Tribunal's Considerations Concerning the Annulment of Tatneft’s Shareholding in Ukrtatnafta

217.
The Tribunal turns now to the discussion of the complex facts concerning the proceedings and decisions of the Ukrainian courts in respect of the validity of. the Claimant’s direct and indirect shareholdings in Ukrtatnafta as summarized above. This was yet another step in the process of corporate confrontation surrounding this case and one in which, besides the role of the courts, that of the Prosecutor, several government officials and the Korsan group becomes a salient feature of its developments. Although the Respondent is of the view that the events related to the reinstatement of Mr. Ovcharenko are peripheral to the main issues with which the arbitration is concerned in light of the evolution of the case, and that there is no proximate cause between such events and the alleged damages, the Tribunal tends to see a rather close link between all such events as they were a part of the corporate struggle described and the end goal of the control of Ukrtatnafta changing hands.

(a) The Issues Concerning the Amendment of Tatneft’s Capital Contribution

218.
Proceedings seeking the invalidation of Ukrtatnafta’s shareholders resolution approving the modification of the capital contribution of the Tatarstan shareholders and the valuation of Ukrtatnafta were commenced as it has been explained by the Prosecutor before the Kyiv Economic Court on 19 December 2007 giving birth to Case 32/1. The issue arose as a consequence of a letter addressed to the Prosecutor by the Minister of Fuel and Energy dated 28 April 2007 explaining that, in light of investigations carried out, the formation of the authorized capital of Ukrtatnafta was in violation of Ukrainian law. The said Minister believed that by revaluing the amount represented by Ukraine’s contribution of the Kremenchug refinery to a figure three times smaller, and increasing the value of the Tatarstan-contributed shares by means of a changed capital structure, the control of the company appeared to be the objective pursued.378 The Tribunal must also note in this respect the Claimant’s argument to the effect that the letter in question was sent by Minister Boyko, who prior to his ministerial position had been appointed Chairman of Ukrtatnafta’s Management Board in 2001, and was based on the alleged illegalities brought forward by a Member of Parliament whose identity is not disclosed379 and whose letter was not produced,380 aspects that cast doubt on the independence of the Ministry in the events that the letter triggered. Because of Mr. Boyko’s prior appointment as Chairman of Ukrtatnafta’s Management Board it is likely, as Claimant argues, that he knew long before he sent the ministerial letter about the alleged illegalities.381
219.
In considering the question of the invalidation of the shareholders’ resolution the Tribunal is mindful of two facts of importance. The first is that the Ukrtatnafta Treaty of Incorporation of 4 July 1995 had envisaged that the Tatarstan contribution to the company would consist of a guaranteed supply of oil with a certain minimum specified, just as the Agreement on Incorporation and Operation of Ukrtatnafta did. More specifically, the Presidential Decree of the Republic of Tatarstan dated 13 December 1994.382 envisaged as a capital contribution the shares it owned in certain economic entities concerned with oil production and the right to develop oil deposits, among other state-owned assets, so as to match the capital contribution of Ukraine, all of it in light of the concept of creating an integrated oil production and refining industry with the equal participation of Ukraine and Tatarstan. A number of other supplementary agreements and Orders had also relied on the equality of the contributions of the founding members, as the Kyiv City Economic Court concluded in its judgment of 4 September 2008 in Case 32/1 and as the Kyiv Economic Court of Appeals confirmed in its decision of 14 May 2009.
220.
The second fact that needs to be taken into account in the consideration of this issue is that in the end such form of capital contribution was changed because of various alleged technical, economic and legal difficulties and as it no longer appeared to respond to the intent of establishing a full cycle of oil extraction and processing extending from the oil wells in Tatarstan to the Kremenchug refining in Ukraine. As a result the Tatarstan shares in Tatneft and Tatnefteprom that were transferred were valued at US$ 103,575 million, the Tatneft contribution at US$ 1 million and the Zenit Bank shareholdings in trust for the latter company at US$ 30 million. In turn the supply of oil to Ukrtatnafta did not meet the amounts specified on a yearly basis.
221.
In spite of the resolutions in question having evidently departed from the original conception of the ’project, the Tribunal cannot fail to note first that such modifications were unanimously approved by the shareholders. More importantly, a number of high level officers of the Ukraine government were present at the General Shareholders Meetings held in 1997 and 1998 and concurred in the unanimous approval of the modifications introduced. Among such officials there was the Minister of Fuel and Energy, the Director of the State Property Fund and the Deputy Minister of Finance. A list of twenty-four Ukrainian officials participating in Ukrtatnafta’s Supervisory Board through 2007 was provided by the Claimant at the hearing during closing arguments.
222.
The Prosecutor’s statement of claim filed in Case 32/1383 explaining that the initiation of the proceedings found its justification in "the injury caused to the economic interests of the State by the inefficient use of state-owned assets" does not seem to find support in the facts noted. It is not quite credible that each and every State official participating in the approval of the resolutions would have been unaware of such inefficiency had that been the case. Although the view that there is no evidence of tire approval of the amendments in question by the Cabinet of Ministers of Ukraine or another authorized state agency has been put forth, the fact that all relevant ministries and agencies participated in the shareholders meetings noted appears as a sufficient manifestation of governmental authority to that effect. The Claimant argues with good reason that such official participation in the approval of the resolutions in question was enough to trigger the three-year prescription period that will be discussed below. The view expressed to the effect that such officials could only provide their comments in the pertinent meetings in a personal capacity is simply not tenable.384
223.
At this point the Tribunal must note two troubling points in the developments taking place in connection with the amendment of capital contributions. The first is that the Prosecutor had already investigated Ukrtatnafta’s foundation in the period 2002-2003, that is several years after the amendments had been introduced, but it was not until 2007 that proceedings were initiated on the argument that the letter to the Prosecutor by the Minister of Fuel and Energy following an audit control had prompted this action. While the delay might not be entirely unusual in a public service, this fact coincides with the second troubling point, namely that Korsan, the company controlled by the Privat Group, had acquired in January 2007 a 1% shareholding in Ukrtatnafta. From this point onwards the role of the Prosecutor in this case appears increasingly questionable and the relationship between the proceedings initiated and the interests of Korsan or related companies becomes significantly connected in their timing.

(b) The Issues Concerning the Statute of Limitations

224.
The arguments discussed became particularly relevant in the context of the discussion of the statute of limitations by the courts. The Prosecutor’s statement of claim in Case 32/1 affirmed that he had not been aware of the violations of Ukrainian law allegedly taking place in connection with the amendment of capital contributions until he received the letter noted of the Minister of Fuel and Energy in 2007, thus justifying the Prosecutor’s submission that the three-year limitation period established in Article 71 of the Ukrainian Civil Code should not apply. This statement of claim was promptly supported by Korsan in a submission to the Kyiv Economic Court. This Court concluded in its judgment of 4 September 2008 that it was "obvious" that the Prosecutor only learnt of such violations on the occasion of the Minister’s letter and a report from the Main Auditing Office.
225.
The Tribunal finds that the matter was less than obvious.385 This is so first because the Claimant has produced evidence to the effect that the Cabinet of Ministers in an application before the courts of 5 August 2010 concerning Case 32/1 stated that the Prosecutor General’s office knew all the circumstances relating to Ukrtatnafta’s authorized capital "back in 2003."386 The Tribunal cannot fail to note that the very fact that this application opposing annulment originated in the Ukrainian government is demonstrative of how the Respondent itself was not satisfied with the conclusions of the courts. It is also significant that the Kyiv Economic Court denied Seagroup’s petition for the production of documents concerning the inspections of Ukrtatnafta by the Prosecutor General’s office that were conducted during the preceding years. A letter from the Deputy Prosecutor General of Ukraine dated 25 November 2003,387 also submitted in evidence by the Claimant, shows that in fact the Prosecutor had been monitoring the process of capital contributions with anticipation, including the Prosecutor’s Claim filed in 2002 in Case 8/604, in which invalidation of the Ukrtatnafta Agreement was sought insofar as the procedure for the payment of shares was concerned.388 The Claimant convincingly explains that in seeking to annul Article 5(5) of the Incorporation Agreement in 2002 in respect of AmRuz and Seagroup, the Prosecutor necessarily knew then about the question concerning paragraph 3 of the same article authorizing Tatneft to pay in cash its capital contribution just as it authorized Tatarstan to pay its own contribution with shares in Tatneftprom.389
226.
In its judgment of 4 September 2008 the Kyiv Economic Court concluded that because the Prosecutor had only learnt in 2007 about the breach of Ukrainian law allegedly committed by the change in the capital contributions of tire Company the excuse invoked by the Prosecutor for missing the limitation period was admissible and the rights of the State were liable to protection. This Tribunal does not sit as a reviewer of the decisions of Ukrainian courts but it must nonetheless examine the merits of those excuses in light of their relevance to the resolution of the instant dispute.
227.
Article 71 of the Ukrainian Civil Code provides unequivocally for a general limitation period of three years for the protection of infringed rights. In accordance with Article 76 of that Code such period begins from the date the right to claim comes into existence, with specific reference to the right of action beginning from the date that person is aware or should have known of the violation of its rights. It is only when the limitation period is missed for a material reason that the action may he admissible and the right in question shall be entitled to protection, as provided for under Article 80(2) of the Civil Code.390
228.
The Claimant has convincingly explained in this context that the late letter of the Minister of Fuel and Energy to the Prosecutor is not a material reason justifying the dispensation of the limitation period because it does not show that there could have been an "objectively insurmountable" obstacle preventing a party from bringing an action in defense of its rights. The Respondent’s argument to the effect that there is no need to show objective impossibility as a ground for the renewal of the limitations period391 is at odds with the specific provisions of the Civil Code on this matter. While the Respondent rightly points out that a material reason is not the same as impossibility and that the two should not be equated, as Mr. Toms states in his reports and testimony392 it does not appear to be enough that a court will consider itself satisfied that there is a valid excuse for failing to file on time as this is an entirely discretionary appreciation that cannot be reconciled with the need to apply a legal standard. This could lead to the extreme view that the protection of rights does not require the affected person to comply with any formal condition, including compliance with the limitations period.393’ whereas total discretion of the courts, as a legal expert maintains,394 is incompatible with a legal standard.
229.
The Tribunal considers, moreover, that it is the duty of the Prosecutor General to keep abreast of situations which have been the subject of an investigation and in this case the evidence adduced to the effect that he had investigated the capital contributions as early as 2002-2003 is demonstrative of the fact that such officer knew, or should have known, of the alleged problems subject to a late claim in 2007.
230.
The Respondent’s argument to the effect that the knowledge of public officials could not be imputed to the Prosecutor because his function is to protect State interests without representing any State organ, and consequently only his knowledge is relevant for the purposes of the statute of limitations,395 does not appear to be in accordance with the institutional role of public officers whose duties go far beyond any question of personal knowledge, particularly in view of the broad role the Prosecutor has under Ukrainian law.396 Moreover, when the Prosecutor is acting on behalf of a claimant there would be no reason for granting that officer a more privileged role.397 The legal experts, Mr. Toms and Mr. Belyanevich, have debated the issue of whether there is in Ukraine legal support for the concept of imputed knowledge,398 but this is a question that is closer to a factual determination than to any legal standard.
231.
Neither is the argument that earlier investigations had not been concerned with the question of capital contributions under the Treaty and consequently that there could have been no knowledge at that time of the issues with which the Prosecutor was concerned as from 2007 any more convincing. In fact, while again it is true that the questions investigated in 2003 were not as complete as those prompting the 2007 investigation,399 it is also true that at that early stage the issue of amending the capital contributions was already quite prominent in the structure of Ukrtatnafta. The Prosecutor could not have ignored it or assumed that an oversight on his part would not have consequences.
232.
The Tribunal does not doubt that in assessing time periods the courts enjoy a measure of discretion but this has its limits as established by law.400 The statute of limitations is one such important limit and cannot remain open indefinitely as would be the consequence of requiring personal knowledge of the Prosecutor to trigger it as the Respondent believes to be the ease.401 Even less so could the application of the limitation period in cases filed by the Prosecutor in the interests of the State be treated with greater deference than in any other case,402 nor could it be treated in a privileged manner,
233.
If these were isolated cases one might consider that the interpretation of the courts is tenable as far as the limitation period is concerned, just like the Prosecutor must be presumed to act in good faith, but in the context of this dispute the facts and circumstances on which it rests show a string of actions seeking the same corporate objective within the struggle for the control of Ukrtatnafta that has been explained. In spite of there being no definition of materiality under the law or jurisprudence, as argued by the Respondent, it appears not to be unwarranted to conclude that the requirement of materiality was not strictly examined and that its normal legal meaning was certainly exceeded in the conclusions of the courts.
234.
Having declared the action admissible, the Court then proceeded to rule that the change in the capital contributions and the corresponding modification of Ukrtatnafta’s constituent documents were illegal, set aside the resolutions of the General Shareholders Meeting discussed, and ordered the cancellation of the company from the trade register to be followed by liquidation. The various appeals and other actions noted before the Kyiv Economic Court of Appeal, the Higher Economic Court and the Supreme Court did not change the essence of the decision of 4 September 2008, except that the order to cancel the Company from the trade register and to liquidate it was reversed.
235.
These judicial developments were followed soon afterwards by various other actions before the courts, all of them concerning different aspects of the changed capital contributions to Ukrtatnafta. Case 17/1 was filed by Ukrtatnafta on 18 December 2008 requesting the invalidation of the shareholdings of the Republic of Tatarstan in the Company in view of its contribution having been changed from Ukrtatnafta’s shareholdings in the economic oil refining complex of that Republic to shares in Tatneftprom. Mr. Ovcharenko signed this filing on behalf of Ukrtatnafta. The various court decisions concerning this claim that have been noted above again dealt with the renewal of the limitation period and the invalidation of the share purchase agreement of Tatarstan in Ukrtatnafta which, with the exception of one decision reversing prior findings, reiterated in essence the approach that had been followed in Case 32/1.
236.
The most prominent of the cases that followed was Case 17/178 where most of the issues discussed were again decided by the courts on grounds similar to those considered in Case 32/1. In this new case the Economic Court of the Poltava Region decided on 3 November 2009 that the actions brought by Ukrtatnafta against Tatneft seeking the invalidation of the latter’s purchase of shares were not time barred because the claimant did not have the power to seek the annulment of such purchase agreements until Case 32/1 was decided. This proposition is not supported in light of the facts of the case as Ukrtatnafta, even if it might not have been able to bring an action against its own shareholders, could have sought the protection of its rights at any material time following the share transactions believed to be in breach of the law and in particular could have challenged the contracts emanating from those resolutions.403
237.
The Tribunal cannot fail to note the Claimant’s argument to the effect that Ukrtatnafta, in seeking the invalidation of Tatneft’s share purchase agreement, ignored the resolutions passed by the General Meeting of its own shareholders, which is hardly credible and could thus not support the view that the company learnt of such an event years later.
238.
The Prosecutor’s arguments in justification of this late filing are identical to those made earlier in Case 32/1 insofar it affirms that it had only become aware of the breach of Ukrainian law in 2007. This argument was also accepted by the Economic Court of the Poltava Region which allowed the case to proceed. Again here, however, the Claimant in the instant case convincingly explains that the Prosecutor knew of the amendments as early as 2002 in the context of his initiation of Case 8/604 against AmRuz and Seagroup seeking to annul Article 5 of Ukrtatnafta’s 1995 Incorporation Agreement. This fact is clearly indicative that there could be no material reason to renew the limitation period as required under the Civil Code. The issue of a material reason and impossibility to file on time will be discussed further below in light of the expert legal reports of Mr. Toms and Mr. Belyanevich.

(c) The Discussion of the Alleged Illegality of Amended Capital Contributions and Invalidation

239.
The Court in Case 17/178 reached the conclusion that the shareholders’ resolutions accepting the modification that allowed Tatneft to substitute cash payments for the oil wells and supply originally envisaged by the Ukrtatnafta Treaty and other enactments was unlawful and consequently invalidated Tatneft’s share purchase, ordering the return of such shares to Ukrtatnafta. Contribution in kind, in the view of the Court, was as essential as the contribution of the Kremenchug refinery made by the SPFU in due course. In addition, the Court concluded that because the shares bought had not been paid in full, as required by Article 8(3) of the Law of Ukraine " On Securities and Exchange," this condition had also been breached and on this basis it set aside the 1998 Option Agreement between Ukrtatnafta and Zenit Bank and the transfers that led to Tatneft’s shareholding in Ukrtatnafta. The appeals and cassation that followed this decision were not successful.
240.
In deciding Case 17/178 the Economic Court of the Poltava Region enumerated the provisions that had in its opinion been breached by Tatneft’s share purchases. These provisions include those in the Ukrainian Constitution, the Civil Code, the Presidential Decree of 1994 on the establishment of Ukrtatnafta, the 1995 resolution of the CMU concerning the Treaty establishing Ukrtatnafta and the Treaty itself.'404 The Tribunal can only note in disbelief that if in fact all these violations had been committed no one, particularly no government service, had ever raised questions before judicial proceedings were commenced a decade later.
241.
The Tribunal cannot fail to notice that the sequence of court decisions concerning the question of capital contributions led with each step to a situation more unfavourable to Tatneft. While Case 32/1 in ordering to cancel Ukrtatnafta from the trade register and thereafter proceeding to the liquidation of the Company would have undone the venture altogether, this order was the only aspect of the judgment that was ultimately reversed on appeal, consequently allowing Ukrtatnafta to survive. Case 17/178, in invalidating the share transfers that had allowed for Tatneft’s participation and ordering the return of such shares to Ukrtatnafta, dramatically changed the shareholdings in the Company to the detriment of one party and the benefit of the other. This, however, as it will be seen, would not be the last step in the sequence.
242.
The Tribunal, while again not pretending to sit in review of the courts’ decisions, must reach its own conclusions as to whether the modification of the capital contributions was illegal as this aspect is of significant importance for the present dispute. The Parties do not dispute that the capital contributions were changed in light of the General Shareholders Meetings resolutions discussed. Cash was substituted for twenty-two oil fields and the supply of specific volumes of oil. The justification for such modification, related to problems concerning costs and the Tatarstan legislation in force at the time, does not appear to be quite convincing, at least in light of the substitute value that was contributed, but it is also a fact that such reasons were never questioned at the time and, on the contrary, the modifications were unanimously approved, including with the concurring vote of the Ukrainian public officials noted.
243.
Although the Tribunal can accept the Claimant’s argument to the effect that the specific wording of the Ukrtatnafta Treaty and Decree No. 704/94 of the President of Ukraine, like that of other related enactments, is not entirely clear as to the scope of the obligations it sets in connection with capital contributions, it is quite evident that the new scheme of capital contributions was not that originally envisaged in the establishment of Ukrtatnafta. Neither are these instruments entirely clear about which governmental bodies were entrusted with the responsibility of authorizing amendments to Ukrtatnafta’s constituent documents.
244.
Both the Cabinet of Ministers of Ukraine and that of Tatarstan, as stated by the Court in Case 17/178, were indeed entrusted with the establishment of the Company. The Court concluded in that case that any amendments to the constitutive instruments of Ukrtatnafta had also to be made in accordance with the agreement of the authorities whose acts established the Company. While approval of the constitutive instruments and decisions related thereto, like the initial capital contributions and the transfers of State assets, were indeed assigned to the respective Council of Ministers, the powers concerning corporate governance and administration did not necessarily follow the same route as they belong to the normal functions of a joint-stock company under their constituent documents.405 There was thus a dual authority governing the Company, one under the aegis of political bodies and the other under the powers of the organs of the corporate structure governing the Company.
245.
The Court in Case 17/178 appears to have taken into consideration just the first kind of powers but not the responsibility of the corporate organs in governing the Company. The Claimant points out in this respect that under Article 16.2 of the 1995 Agreement on the establishment of the Company it is the shareholders meetings that are empowered to modify and amend the Agreement and the Charter, with the sole requirement being that this be done in writing and sisned by the authorized representatives of each Founder, a provision which also accords with the 1991 Law on Business Associations of Ukraine which entrusts the general meeting of shareholders with modifications of the corporate charter.406 It is also argued in this respect that neither the Ukrtatnafta Treaty nor the 1994 Presidential Decree contained any prohibition or restriction of this power.
246.
It has now to be determined whether the amendment of capital contributions pertains to the powers of public bodies as held by the Court in Case 17/178, and hence can only be approved by such bodies, or whether the amendment ought to be considered an aspect concerning the powers of corporate governance and can thus be approved by the shareholders meetings as was done in the instant case. The Tribunal is mindful of the fact that capital contributions, while at their origins might be determined by the political bodies of the participating countries, in the course of events that follow in the life of a company might be a matter for decision of the corporate bodies, unless specific restrictions have been written in to this end. The Tribunal is mindful that in its Partial Award on Jurisdiction it decided that the relations between Ukrtatnafta and Tatneft were in the nature of business relations and this is the very rationale that determines that the issue now under consideration has to be decided under the rules of corporate governance.
247.
The fact that Ukrtatnafta was established by Treaty and conceived at its origins as a single interstate economic complex, as indicated by the Cabinet of Ministers of Tatarstan in its Resolution No. 05-39/4101407 and as the background of the creation of the Company clearly shows, does not detract from the fact that its general shareholders meetings were entrusted with the specific task of managing the company and this indeed includes the question of changes in capital contributions. If a shareholders meeting decides, for example, to increase the capitalization of the company to attain new corporate objectives this would fall squarely within such organ’s powers. The amendments concerning capital contributions are not in essence different, particularly if approved by the representatives of the founding members in the shareholders meetings so deciding, as was very much the case here.
248.
The Tribunal has carefully considered the Respondent’s views to the contrary but it is not persuaded that they can justify a different conclusion in this aspect of the dispute. Whether the Court’s interpretation in Case 17/178 is reasonably tenable as a matter of Ukrainian law might be true, but this is only so if the amendments concern an aspect of the Treaty that evidently pertains to the public aspects of the establishment of the Company, as would be the case, for example, if the shareholders were to decide to invite a third State to participate in Ukrtatnafta. But it is not quite so if the amendments concern other kinds of powers. Without meaning any criticism to the judgment in question, the conclusion that in the best of cases it is incomplete is inescapable. In any event, the Tribunal needs to be mindful of the Claimant’s argument to the effect that even if some acts might be in conformity with Ukrainian Law they cannot be invoked in justification of a failure to perform the BIT as a matter of principle under international law.
249.
Whether the Ukrainian government would not have signed the Treaty or the Incorporation Agreement had it understood that capital contributions could be later amended is a matter of speculation that cannot influence this Tribunal’s findings. The Tribunal does not disagree with the view that Ukraine’s contribution of the Kremenchug refinery was conceived as the counterpart of the Tatarstan’s contribution of the oil wells, but cannot ignore the fact that such understanding changed in light of the concurrence of representatives of all founding members in the shareholders meetings in approving the changes later perceived as necessary. Whether the SPFU exceeded its powers in so approving, as also argued by the Respondent, does not change this conclusion and it is a matter of internal responsibilities that cannot be imputed to the detriment of the Claimant’s rights under the BIT.

(d) Questions Concerning the Enactment of the Ukrtatnafta Treaty

250.
The Tribunal must discuss at this point one important aspect on which the Parties have relied in support of their respective arguments, namely the question of whether the Ukrtatnafta Treaty was in force. As noted above the Claimant believes that the Treaty was not in force and thus could not be the basis on which the courts grounded their conclusions to undo the share arrangements agreed by the investors and the corporate bodies that intervened in these capital restructurings.408 In the Claimant’s view, the "Treaty" was not an agreement between two States and therefore it does not qualify as a proper treaty under international law, and in any event the procedures provided under Article 13 of the Treaty for entry into force were not complied with as there is no record of a notification by the Parties in compliance with their domestic procedures, a situation which is also incompatible with the then applicable Ukrainian Law on International Agreements.
251.
Had the Treaty been in force, the Claimant further maintains, the courts of Ukraine would have lacked jurisdiction to deal with the disputes as they should have been submitted to the dispute settlement procedures of Article 11 of the Treaty. Although the Treaty could have been de facto followed in some respects, for all legal and practical purposes it was the Incorporation Agreement as amended that governed the powers and operations of Ukrtatnafta, with particular reference to the question of capital contributions, which in the Claimant’s view would mean that whether the Treaty was effective or not is immaterial.
252.
It has also been explained above that in the Respondent’s view the Treaty duly came into force as the Parties agreed on its immediate implementation thus making unnecessary any further domestic proceedings. The fact that the Ukrainian Council of Ministers implemented the Treaty is in itself, according to the Respondent, evidence that the Treaty was properly an intergovernmental agreement and there is no reason to distinguish this type of treaty from other categories which Ukrainian Law envisaged for domestic purposes that are of no relevance under international law. The Tatarstan Republic at all times also considered the Treaty to be an intergovernmental agreement.
253.
As also explained above, the Respondent also asserts that at all times it has considered the Treaty as a part of the domestic legal order and this would be the case even if the Treaty is not considered to be effective under international law. Article 4 of the Law on Enterprises also recognizes the prevalence of the provisions of international agreements over domestic law. A similar understanding is explained in connection with the reference that Article 17 of the Law on International Treaties makes to a different category of intergovernmental treaties as constituting a part of the national legislation. This last law distinguishes between treaties subject to ratification and others subject to approval; in practice most of Ukraine’s treaties do not follow either of these alternatives and are considered in effect after they have been signed.
254.
The Tribunal has no doubt about the fact that the Ukrtatnafta Treaty of 4 July 1995 was properly a treaty under international law, as has convincingly been explained by the expert opinion of Professor Buromenskiy.409 Mr. Toms’ legal assessment of this question is wrong under international law as the Respondent has pointed out.410 It is necessary to bear in mind in this respect that under Article 2.1(a) of the 1969 Vienna Convention on the Law of Treaties the definition of a treaty is a broad one, being required that it be concluded between States in written form and governed by international law, whether embodied in a single instrument or in two or more related instruments and "whatever its particular designation." The Ukrtatnafta Treaty was in fact concluded between States, Ukraine on the one hand and the Republic of Tatarstan on the other, and the fact that the latter is a Republic of the Russian Federation in no way detracts from its governmental character, as frequently autonomous republics within a federal State have the power to enter into treaties concerning their international relations in matters of their competence, as appears to be the case for the Republic of Tatarstan411 in spite of bow some uncertainty might exist in this respect.412 The status of Ukrtatnafta as a "single interstate economic complex" governed by the Treaty, as noted in the letter of the Tatarstan authorities to Ukraine of 3 August 2004,413 is the kind of competence that pertains to such autonomous Republic.
255.
At no point was the issue that the Republic of Tatarstan might not have qualified as a State for the purpose of the Treaty raised before this case was brought. The intergovernmental nature of this Treaty is accordingly well established and it is properly included in the list of treaties entered into by this Republic414 and, as the Respondent notes, no notice of termination has been issued.415
256.
The question discussed by the Parties as to whether the Treaty became effective as stipulated in its Article 13 on the date of the last notice of compliance by the Parties with theft respective domestic procedures is an aspect that in essence depends on domestic law rather than international law.416 Each Party is free to follow its own domestic procedures and for that matter its practice is particularly relevant in this connection.417 The Claimant’s view to the effect that Ukraine never gave notice of having complied with its procedures, just as it appears that Tatarstan also did not do, does not affect the binding nature of the Treaty if the intention of the Parties was so to be understood. The fact that the Cabinet of Ministers of Ukraine instructed a Vice-Minister to sign the Treaty on behalf of the government and issued the corresponding Resolution No. 487 of 4 July 1995 has been well established by Mr. Mityukov, the official entrusted with this task.418 More importantly, the government proceeded to implement the Treaty and comply with its provisions, including the nomination of the Supervisory Board, thus further evidencing the understanding that the Treaty was binding. The same holds true for the Ukrtatnafta Charter and its Incorporation Agreement of 23 July 1995, both of which are again founded on the Treaty.
257.
The meaning of the Ukrainian domestic legislation on treaties thus has a limited role in the context of this dispute, mainly related to the internal procedures to be followed in respect of some categories of treaties. Article 2(3) of the Law on International Treaties appears to address the question of executive agreements as it refers to international treaties on "economical, trade, scientific, technical and other matters belonging to governmental competence." which are to be concluded on behalf of the Government and which according to Article 9 of this Law are approved by way of a resolution, that is also a simplified procedure. Other kinds of treaties are also distinguished by Article 17 of this Law when referring to the international agreements of Ukraine that are concluded and properly ratified. As the Respondent has argued these distinctions are of interest only for domestic purposes and do not affect the status of the respective agreements under international law. In fact, while approval suffices for the first category, more formal procedures of ratification are eventually necessary for the second type of treaties. This situation is common to many countries and those procedures do not really change the nature of the treaty concerned.
258.
The practice in this respect is solely a domestic question. By its very nature the Ukrtatnafta Treaty can well be considered an executive agreement establishing the "single interstate economic complex" described above. It thus follows that the requirements for approval are entirely a choice for domestic law and practice, which may even dispense with any particular procedure as long as the intention to comply with the agreement is manifest, as is the case here. Interestingly, the Respondent has explained that in the Ukrainian treaty practice at least 85% of the treaties in effect are not ratified, many of which are not approved either.419
259.
An issue related to the effectiveness of the Treaty is whether the Ukrainian courts would be competent to deal with disputes under this instrument. As noted, the Claimant believes that if the Treaty is in effect, only the dispute settlement procedures of its Article 11 should govern and the Ukrainian courts would be incompetent in this respect. The Tribunal considers that there are two sides to this question. The first is that concerning intergovernmental disputes which are naturally governed by the Treaty. This also explains why finally this dispute has been brought under the Russia-Ukraine BIT, again an intergovernmental treaty under which investors have rights of action to protect their interests. The second side is that concerning the question of the implementation of the provisions of the Treaty under domestic law, which is an aspect related io the administration and operation of the company as a corporate entity.
260.
In spite of the issues of dual authority that have been discussed in respect of corporate governance, these properly belong to the implementation of the Treaty and disputes related thereto are thus subject to domestic judicial intervention, provided the guarantees of protection envisaged under the BIT are satisfied, which is the question that has been brought to this Tribunal. In this respect, the finding of the Ukrainian courts to the effect that the Treaty is a part of Ukrainian legislation is correct, as this will also be the normal consequence of an international legal obligation, including the prevalence of these obligations over domestic rules in case of contradiction, as Article 4 of the Law on Enterprises clearly establishes. Whether the treaty in question is brought into effect by means of approval, ratification or otherwise, the
261.

The question the Tribunal must still answer is whether the fact that the Treaty is in effect changes the Tribunal’s conclusions as to the meaning of the capital contributions originally envisaged and the powers to have these contributions changed as per the decisions of the company’s governing bodies, most notably through the General Shareholders Meeting. It has been explained above that the amendments introduced to capital contributions, while different from those originally envisaged, are of a kind pertaining to the administration of the company as a commercial entity and do not fall under the elements of the public governance of Ukrtatnafta as happens with other matters, such as would be the case explained of bringing in a State party not counted among the original parties to the Treaty. It follows that those conclusions stand and that accordingly the amendments introduced are not in breach of the Treaty or for that matter of Ukrainian legislation in view of how the original capital contributions were neither entirely clear nor understood to be permanent and not subject to amendment.420 On this point the Tribunal is also mindful of paragraph 188 of the Partial Award on Jurisdiction. In respect of this conclusion, the Tribunal does not agree with those arrived at by the expert international law report of Professor Buromenskiy, who believes that an amendment concerning the nature of contributions is contrary to the Treaty421 unless approved at an interstate level.422

(e) A Systematic Adverse Line of Decisions and the Role of the Prosecutor General

262.
The performance of the Company following the changes in capital contributions does not appear to have been affected by the amendments and would prove, as the Claimant argues in opposition to the Respondent, that the objectives of the Company could be achieved all the same and that the contribution of oil wells and equipment was not an essential condition for the creation of Ukrtatnafta.
263.
The Parties have argued about whether the systemic method of interpretation applied by the courts, which the Respondent considers appropriate, or the literary and fragmentary reading of the pertinent instruments, which it believes the Claimant to support, also justifies the conclusions of those courts. The Tribunal is all in favor of a systemic method of interpretation and it is precisely in this light that the aggregate of legal instruments relevant to this dispute show that one thing was the original intent of the parties and quite another was how perceptions changed in the course of events and materialized in agreements that responded to such perceptions, again with the feature of having been unanimously approved.
264.
It should be noted that arguments have also been made to the effect that the Courts’ interpretation of Article 8(3) of the Law "On Securities and Stock Exchange" is right or wrong. The Claimant believes that this provision could only have been triggered if no contribution had been made at all while the Respondent maintains that it was the change in the form of payment that violated the Article in question and not the issue of whether a contribution was made or not.
265.
The Tribunal is mindful of the fact that on many occasions national courts tend to take a position on given points of fact and law that are the most favorable to the national interest involved in a dispute. To the extent that this approach can be justified in light of its compatibility with the ordinary meaning of governing provisions it might be considered tenable and cannot be a point of criticism. When this exercise, however, results in systematic decisions against the rights of the other party, and the latter’s arguments might be considered equally tenable, there is reason to believe that the process might have run astray of due process and the necessary impartiality in delivering justice.
266.
The various cases that have been examined above show that the line of reasoning followed by the courts was, save for occasional exceptions, systematically adverse to the rights of the Claimant. The Tribunal has not ruled out that some aspects of those decisions might be tenable in light of the facts or the applicable law, but it also believes that a number of the arguments of the Claimant are also tenable and hence would have merited due consideration. This situation calls into question the independence with which the courts proceeded in such cases and casts a serious doubt about whether there was any intention to examine the rights claimed so as to impartially rule on their eventual merit.
267.
Had such decisions been the outcome of completely separate proceedings on issues of fact and law one could readily admit that the claimants in such proceedings were simply wrong. But as has been noted, almost every decision adopted resulted in a sequence that was with each step more adverse to the Claimant and directly leading to findings that would in the end deprive it of all rights in the Company. Furthermore, the Tribunal cannot ignore the fact that all such proceedings were linked by a common thread that found its origins in the systematic role of the Prosecutor in the unfolding of this dispute.
268.
All the relevant cases were initiated by requests that the Prosecutor brought to the courts, invariably seeking to reopen matters in respect of which limitation periods had long become applicable. In the view of this Tribunal, the arguments in support of such requests were for the most part unconvincing and on occasions contradicted by the Prosecutor’s own actions. Neither can the Tribunal overlook the fact that such requests acquired momentum immediately following the acquisition by Korsan of a 1% shareholding in the Company, a process which ended in the prominent role that Korsan has today in its shareholding composition. As in many countries, the Prosecutor performs an influential State service and has strong influence in the administration of justice.

C. ANNULMENT OF SHAREHOLDINGS IN AMRUZ AND SEAGROUP

1. Court Decisions on the Shareholdings of AmRuz and Seagroup.423

269.
The proceedings relevant to this dispute did not end with the decisions concerning Tatneft and followed earlier cases, and also were accompanied by later cases concerning the shareholdings of AmRuz and Seagroup in Ukrtatnafta. The facts relating to this other aspect of the dispute will be examined next.

(a) Undisputed Facts

270.
In August 2001, the SPFU filed a lawsuit against Ukrtatnafta and all of its shareholders before the Kyiv Economic Court to set aside the share purchase agreements entered into by each of AmRuz and Seagroup with Ukrtatnafta on the basis that the contracts violated the legal ' requirement that the shares of the founding shareholders be paid for within one year and that Ukrainian law barred the use of promissory notes to pay for these shares, in what were to become Cases 28/198 and 28/199, respectively.424 Tatneft entered the case as a third party in opposition to the claims.425
271.

The Kyiv Economic Court upheld the SPFU’s claims for both cases on 28 November 2001.426 The Court found that the use of promissory notes to purchase shares violated Article 13 of the Company Law,427 which excluded promissory notes from the kinds of assets that could be used to contribute to the charter capital of a company.428 ft also found that the addenda to the share purchase agreements that were entered into between Ukrtatnafta and AmRuz and Seagroup, respectively, had the effect of extending the deadline for AinRuz and Seagroup to make their capital contributions to Ukrtatnafta beyond that imposed by Articles 11 and 33 of the Company Law, as well as Ukrtatnafta’s Incorporation Agreement and Charter.429 The Court therefore nullified the share purchase agreements entered into with AmRuz and Seagroup, respectively, and ordered that AmRuz and Seagroup return their shares to Ukrtatnafta.430 The Kyiv Economic Court of Appeal affirmed this judgment on 14 March 2002.431

272.
On 29 May 2002, the Higher Economic Court reversed the judgments of 28 November 2001.432 It found that, when. AmRuz and Seagroup entered into their respective share purchase agreements, Ukrainian law did not forbid the use of promissory notes to purchase company shares because Article 13 of the Company Law authorized the use of securities to contribute to the share capital of a company, and Article 3 of the Securities and Stock Exchange Law defined securities to include "notes."433 It also held that the addenda to the share purchase agreements did not violate Article 33 of the Company Law or Ukrtatnafta’s Incorporation Agreement or Charter because the obligation of AmRuz and Seagroup to make their capital contribution to Ukrtatnafta was satisfied as soon as they transferred the promissory notes.434
273.
The Supreme Court of Ukraine dismissed the cassation appeals filed by the SPFU on 18 July 2002 and I November 2002, respectively.435
274.
At around this time, on 16 September 2002, the Prosecutor filed a lawsuit—in what was to become Case 8/604—before the Poltava Region Economic Court against AmRuz, Seagroup, Ukrtatnafta, and other Ukrtatnafta shareholders to set aside Article 5(5) of the Ukrtatnafta Incorporation Agreement, insofar as it authorized the use of "securities," including promissory notes, as payment for Ukrtatnafta shares on the basis that this was contrary to Ukrainian law.'436 Arguing that AmRuz and Seagroup merely contributed debt obligations to Ukrtatnafta, the Prosecutor alleged that the use of promissory notes by AmRuz and Seagroup to pay for their shares violated Article 31 of the Company Law, which stated that the shareholders should pay at least 50% of the nominal value of the share capital before the first shareholders’ general meeting.437 On 19 December 2002, the Poltava Region Economic Court dismissed the Prosecutor’s claim.438 Acknowledging the dismissal of the Higher Economic Court of Cases 28/198 and 28/199, it upheld the lawfulness of using promissory notes to purchase Ukrtatnafta shares,439 thereby concluding that Article 5(5) of the Incorporation Agreement complied with Ukrainian law.440
275.
In November 2004, Naftogaz, which is the state-owned energy company of Ukraine, filed a lawsuit against AmRuz, Seagroup, and Ukrtatnafta shareholders—in what was to become Case 15/559—to set aside Article 5(3) of the Incorporation Agreement, on the basis that this provision violated Articles 13 and 31 of the Company Law, because promissory notes were not "securities" within the meaning of Article 13, and both AmRuz and Seagroup did not make their contributions within the statutory period owing to the extension of the maturity date of the promissory notes.441 On 10 January 2005, the Kyiv Economic Court upheld the use of promissory notes; confirmed that AmRuz and Seagroup had paid for their Ukrtatnafta shares once they had transferred the notes; and thereby rejected Naftogaz’s argument that AmRuz and Seagroup had failed to pay half of their contribution before the first general shareholders’ meeting.442 On 1 April 2005, the Kyiv Economic Court dismissed the appeal of Naftogaz against this decision.443 On 6 September 2005, the Higher Economic Court, in considering the cassation appeal lodged by Naftogaz, rejected all but one of the grounds for appeal raised by Naftogaz,444 a decision which was later set aside by the Supreme Court of Ukraine on 18 April 2006, in response to a cassation appeal filed by AmRuz and Seagroup.445
276.
On 24 January 2008, the Prosecutor lodged an extraordinary cassation appeal with the Supreme Court of Ukraine to set aside the 29 May 2002 decisions of the Higher Economic Court and reopen Cases 28/198 and 28/199446—citing to Article 111(15) of the Code of Commercial Procedure then in force, which authorized the reopening of a case decided by the Higher Economic Court if that court had applied the same legal provision differently in similar cases447 —on the basis of Case 45/383 Northland Power Darnytia Inc. v. Ukrnaftogaz OJSC ^Northland Power'’) dated 14 November 2006.448 Because Article 111(16) of the Code of Commercial Procedure required the cassation appeal to be filed within a month from the relevant decision, the Prosecutor invoked Article 53 of the Code of Commercial Procedure, which allowed the filing of this cassation appeal beyond one month for "justifiable reasons."449
277.
On 21 February 2008, the Supreme Court of Ukraine, citing Article 111(15) of the Code of Commercial Procedure,450 accepted the extraordinary cassation appeal filed by the Prosecutor,451 and remanded Cases 28/198 and 28/199 for de novo review.452 On 18 March 2008 the relevant courts set aside the 2002 judgments of the Higher Economic Court as well as the other judgments rendered in Cases 28/198 and 28/199.453
278.
On 28 May 2008 for Case 28/198 and 2 June 2008 for Case 28/199, the Kyiv Economic Court, before which the aforementioned cases were retried, invalidated the share purchase agreements entered into between Ukrtatnafta and AmRuz and Seagroup, respectively, and ordered AmRuz and Seagroup to return their shares to Ukrtatnafta.454 In doing so, the Court held that AmRuz and Seagroup violated Article 8(3) of the Securities Law because they received their shares on 8 June 1999 in exchange for 65 promissory notes, of which only three were redeemed.455 The Court also held that AmRuz and Seagroup had breached Article 33 of the Law of Ukraine on Business Associations, which required shareholders to pay the full price of shares no later than one year after the registration of a joint stock company.456 Lastly, the Court referred to the Resolution of the Cabinet of Ministers of Ukraine No. 528, dated 10 September 1992 and entitled "Rules of Issue and Use of Promissory Note Forms" ("Resolution 528"), which allows promissory notes to be issued only for the payment of "delivered products, executed works and rendered services."457
279.
The Kyiv Economic Court of Appeal upheld these decisions on 7 August 2008 and 8 August 2008, respectively,458 as did the Kyiv Higher Economic Court on 24 September 2008.459 On 27 November and 11 December 2008, the Supreme Court of Ukraine rejected the cassation appeal filed by AmRuz and Seagroup.460
280.
In December 2008, Korsan filed a request before the Economic Court of the Poltava Region, in what was to become Case 17/60, against Ukrtatnafta, Mr. Ovcharenko, and other Ukrtatnafta officials seeking to obligate Ukrtatnafta to sell the shares that formerly belonged to AmRuz and Seagroup.461 The Court granted this request on 31 March 2009,462 without informing the Claimant or any other Ukrtatnafta shareholders of these proceedings.463 On 8 October 2009, the Higher Economic Court dismissed the Claimant’s and Naftogaz’s cassation appeal against the decision of the lower court,464 and on 4 February 2010, the Supreme Court dismissed the Claimant’s and Naftogaz’s cassation appeal against the decision rendered by the Higher Economic Court.465

(b) Disputed Facts

i. The Parity Requirement of the Ukrtatnafta Treaty

281.
As a preliminary matter, the Claimant alleges that the parity requirement imposed by the Ukrtatnafta Treaty did not prevent AmRuz and Seagroup from acquiring Ukrtatnafta shares. This principle was, in the Claimant’s view, not intended to extend beyond the incorporation of Ukrtatnafta.466 Hence, the purchase of Ukrtatnafta shares at a later point in time by AmRuz and Seagroup—both of whom were incorporated neither in Ukraine nor in Tatarstan—could not have breached this requirement.467
282.
For its part, the Respondent argues that the acquisition of AmRuz and Seagroup of Ukrtatnafta shares, which gave them an 18% collective interest in Ukrtatnafta, in addition to what it characterizes as their almost instant alliance with the Tatarstan shareholders, was a substantial breach of the parity principle, which was a fundamental basis of the Ukrtatnafta Treaty.468

ii. The Non-Application of the Statute of Limitations in, and the Merits of, Cases 28/198 and 28/199

The Claimant’s Position

283.
In filing his application to reopen Cases 28/198 and 28/199 six years after the adjudication of these cases and fourteen months after the allegedly inconsistent decision in Northland Power, the Prosecutor, according to the Claimant, made only a conclusory and unsubstantiated assertion that he was unaware of both the Higher Economic Court judgments and the Northland Power case469 which the Claimant states was a lie because the Prosecutor would have learned of Cases 28/198 and 28/199 as early as in 2002 through Case 8/604, which he had initiated to set aside AniRuz’s and Seagroup’s purchases of Ukrtatnafta shares, as these cases were relied on as precedent by the court in Case 8/6O4.470 Similarly, the Prosecutor allegedly became aware of the Northland Power case by participating in Case 17/34 State Property Fund of Ukraine v. CJSC Energy Generating Company Ukr-Can Power" (Kyiv) and others, which was litigated in parallel and, according to the Claimant, was strictly intertwined with the Northland Power case.471 The Claimant also adds that the Northland Power case was one of the most prominent cases in Ukraine at that time attracting wide coverage by the local press.472
284.
Turning to the Supreme Court proceedings resulting in the de novo review of Cases 28/198 and 28/199, the Claimant contends that these proceedings involved serious due process violations for three reasons. First, the Supreme Court proceedings were held ex parte and in camera.473 According to the Claimant, AmRuz and Seagroup had not been notified of the Prosecutor’s request to reopen Cases 28/198 and 28/199 prior to the Supreme Court’s acceptance of the request on 21 February 2008.474 Hence, the Respondent acted inconsistently with the provisions of the 1965 Hague Convention on Service Abroad.475 Second, even if AmRuz and Seagroup had been notified of the Prosecutor’s request, such notice would not be determinative in the present case since the Supreme Court did not allow AmRuz and Seagroup to submit any objections to the admissibility of the Prosecutor’s request.476 Third, when AmRuz and Seagroup were made aware of the Supreme Court’s decision to reopen Cases 28/198 and 28/199, which occurred after its issuance, they had no opportunity to challenge the decision, which was not subject to appeal.477
285.
From the foregoing, the Claimant concludes that the Supreme Court’s decision to grant the Prosecutor’s manifestly time-barred request to reopen Cases 28/198 and 28/199 without providing AmRuz and Seagroup an opportunity to be heard and to challenge the decision resulted in serious breaches of due process and the principle of res judicata.478
286.
The Claimant adds that the Supreme Court wrongly exercised its discretion to extend the statutory deadline in this case, as it did not meet the requirements that it base its decision on evidence of "material reasons" for the missed deadlines; account for the circumstances behind the failure to meet the deadline; and express the "material reasons" for a failure to act within the time period in a substantiated opinion.479
287.
The Claimant maintains that, if the unilateral assertion of ignorance (without more) sufficed to reopen final court decisions many years after they had been adjudicated, the res judicata effect of court decisions and the finality of judgments would be eviscerated.480
288.
The Claimant contends that the decisions to reopen Cases 28/198 and 28/199 lacked a colorable basis under Ukrainian law.481 Although Article 111 (15)-3 of the Ukrainian Code of Commercial Procedure then in force empowered the Supreme Court of Ukraine to reconsider judgments of the Higher Economic Court if the latter court had applied the same legal provision similarly in different cases,482 Cases 28/198 and 28/199, on the one hand, and Northland Power, on the other, could not have been inconsistent, because the latter was a case in which no contribution had been made for the cancelled shares483 and in which the lawfulness of promissory notes as a means of purchasing shares was not considered.484
289.
The Claimant notes that, in any event, if the decisions to reopen Cases 28/198 and 28/199 were warranted under Ukrainian law, which it denies, it would mean that Ukrainian law would allow for the reopening of court decisions any time after they had become final on the basis of a mere assertion of inconsistency.485 This again would contravene the principles of legal certainty and res judicata.486
290.

In the Claimant’s view, the key requirement under Ukrainian law for reopening proceedings— the inconsistency of two or several court decisions—was not satisfied in this case. Specifically, (he Claimant states that the courts in Cases 28/198 and 28/199, collectively, and Northland Power were not inconsistent in their application of Article 8(3) of the Securities Law and Article 33 of the Company Law because the courts in the former cases did not consider Article 8(3), having found that promissory notes could be used to pay for shares, and merely cited Article 33, as was also the case for the Northland Power decision.487 The Claimant further alleges that these decisions are highly questionable, given that the Ukrainian courts had previously stated that the use of promissory notes to pay for shares was permitted under Ukrainian law.488

291.
The Claimant’s expert confirms that, under Article 48(2) of the Ukr ainian SSR Civil Code, the Ukrainian courts were obliged to grant restitution to AmRuz and Seagroup after invalidating their shar e acquisition.489 However, the Kyiv Court of Appeal, while upholding the decision of the Kyiv Economic Court, did not order the return to AmRuz and Seagroup of the promissory notes that they had issued or the amounts that they had paid under the notes.490
292.
The Claimant’s expert admits that AmRuz and Seagroup were theoretically entitled to file a counterclaim for the return of their property or for a grant of compensation under Ukrainian law.491 However, as a matter of practice, one would never file such a counterclaim since Ukrainian courts would consider it to be a concession.492 In the expert’s opinion, the decision in the Dekon case corroborated its position that AmRuz and Seagroup should not have had to file a separate action for the return of their property.493

The Respondent’s Position

293.
The Respondent first points out that the SPFU prevailed in its claims against AinRuz and Seagroup in six out of the seven courts that reviewed this case on the merits,494 and that the only court that took the position of the Claimant was the Higher Economic Court, which the Respondent contends was mistaken in doing so.495
294.
The Respondent stresses that the Ukrainian President immediately ordered an investigation when he received a note on 2 July 2001 that advised him that AmRuz and Seagroup had obtained an 18% share of Ukrtatnafta in exchange for mostly promissory notes.496 It also states that Tatneft had initially expressed concerns about the unpaid shares of AmRuz and Seagroup, only to reverse its position later on497 for its own self-interest.498
295.
As a general matter, the Respondent notes that "it is staggering to consider the degree of corruption that would have had to have been perpetrated in this case at all levels of the judiciary, right up to the Ukrainian Supreme Court" in order to support the Claimant’s primary line of argument that the loss of shares of AinRuz and Seagroup resulted from corrupt legal proceedings.499
296.

The Respondent notes that the Prosecutor had moved to reopen the 2002 decisions of the Higher Economic Court on the shareholdings of AmRUZ and Seagroup once it learned of the later decision of the same court in Northland Power Daryntsia.500 It rejects the Claimant’s argument that the Prosecutor had acted wrongfully in filing the petition to reopen Cases 28/198 and 28/199. It states that the application to reopen the cases was based on the Northland Power decision, which rendered any prior knowledge by the Prosecutor’s office of Cases 28/198 and 28/199 immaterial.501 It also points out that the Prosecutor could not have been made aware of the Northland Power decision by its participation in the related Case 17/34 because this case predated Northland Power by four months502 and characterizes the argument that the Prosecutor would have been monitoring this case for fear of an appeal of Case 17/34 to the Supreme Court as weak.503 The Respondent explains that mere knowledge of Northland Power Daryntsia was insufficient to enable the Prosecutor to file an appeal and notes that the Prosecutor had to know, specifically, that this case and Cases 28/198 and 28/199 had relied on Article 33 of the Business Entities Law.504

297.
The Respondent lastly notes that there has been no evidence that the Prosecutor’s application and its acceptance by the Supreme Court was a pretext to benefit the raiders.505 The Respondent also points out that neither AinRuz nor Seagroup contradicted (whether by evidence or pleading) the Prosecutor’s explanation of how he had learned of the Northland Power case.506 Moreover, the explanation provided by the Prosecutor to support his application to renew the cassation term was typically accepted by courts in like matters.507 The Respondent further rejects the Claimant’s argument, made during the hearing, that the Prosecutor would have known about the Northland Power case merely because this case was famous, and reiterates that the factual record is silent on this matter.508
298.
The Respondent rejects the Claimant’s characterization of the Supreme Court decision on the cassation renewal as ex parte and in camera. First, the Respondent states that the decision was not rendered ex parte because the Prosecutor notified AinRuz and Seagroup of the cassation appeal, and both AmRuz and Seagroup could have made submissions on this proceeding, but did not.509 In fact, the Respondent points out that there is no evidence that either AmRuz or Seagroup had raised the objection that they had not been notified of the proceeding, and notes that the Claimant itself had not made this argument before the present proceedings.510
299.
The Respondent rejects the Claimant’s argument (which it characterizes as "belated") that the Prosecutor’s notice to AinRuz and Seagroup did not comply with the requirements of the 1965 Hague Convention on Service Abroad and argue that there is no evidence showing that AmRuz and Seagroup had alleged a Hague Convention violation when they appeared before the Supreme Court or that this Convention even applies to the matter at hand.511
300.
Second, the Respondent argues that the Supreme Court decision was not made in camera because decisions to grant cassation review are made at a conference of judges, based only on written submissions.512 Moreover, the consistent practice of the Supreme Court was not to provide reasons for its procedural decisions, as a result of which its decisions on the cassation appeal could not be considered "extraordinary" or "unjustified" just because they were unsubstantiated.513
301.
Maintaining that the Supreme Court had a material reason to extend the limitation period to enable the Prosecutor to apply for the reopening of Cases 28/198 and 28/199, the Respondent first clarifies that the test at the time of the Supreme Court’s decision to reopen Cases 28/198 and 28/199 was whether similar laws had been applied differently in the two cases at hand.514 It then rejects the Claimant’s allegation that the Northland Power case was not sufficiently similar to Cases 28/198 and 28/199 so as to give rise to any inconsistency.515 It states that at their core. Cases 28/198 and 28/199—as well as Northland Power —concerned the failure of the parties to pay for their shares.516 The Respondent specifically alleges that AmRuz and Seagroup not only tendered promissory notes instead of paying for their shares, but further failed to pay the amounts owed under the promissory notes.517 It further states that the ultimate outcome of both Cases 28/198 and 28/199 turned on the same legal provisions that were the subject of the court’s decision in Northland Power, namely Article 8(3) of the Securities Law and Article 33 of the Business Associations Law.518 It concludes by stating that "the decisions of both courts were consistent with the decisions in Northland Power and were entirely in accordance with Ukrainian law."519
302.
The Respondent further points out that neither AmRuz nor Seagroup requested that the Kyiv Court of Appeal order the return of the promissory notes or the amounts paid under them,520 and argues that the Court was therefore under no obligation to award them the said restitution,521 As in the context of its discussion of Cases 32/1 and 17/178 (discussed above), the Respondent rejects the Claimant’s expert’s reliance on the Dekon case as controlling authority for the proposition that courts should grant restitution even absent a request from the defendant that it do so, by explaining that Dekon contradicted the general trend of court decisions including a 2005 Supreme Court decision;522 that the Claimant’s expert was only made aware of this case by the reference of the Respondent’s expert to it;523 and that the Ukrainian system does not recognize precedent in court cases.524
303.
Lastly, the Respondent notes that both AmRuz and Seagroup could have filed counterclaims to seek restitution, but both failed to do so.525

iii. The Propriety of Procedure in Case 17/60

The Claimant's Position

304.
The Claimant argues that the failure of the Economic Court of the Poltava Region to notify the Claimant of Case 17/60 and the dismissal by the Higher Economic Court of the Claimant’s appeal with regard to this issue was wrong and violated the due process rights of the Claimant.526 It contends that this court decision affected the right of the Claimant to participate in the management of Ukrtatnafta, given that the authority to sell Ukrtatnafta’s unpaid shares was vested in the Supervisory Board and was subject to the approval of the General Shareholders Meeting and that the Claimant and the other shareholders had the right to establish the timing and modalities of the sale of the AmRuz and Seagroup shares.527

The Respondent’s Position

305.
The Respondent states that Ukrainian law does not require the Economic Court of the Poltava Region to notify the Claimant of the existence of the proceedings in Case 17/60, as the Economic Procedure Code only required the Court to notify the actual parties, meaning AmRuz and Seagroup, of the existence of the proceedings. While Articles 111-103(3) of the Economic Procedure Code provides that a court decision may be quashed on cassation if it "concerns" the rights and obligations of a non-party, the application of this provision is a matter of judicial discretion.528

2. The Tribunal’s Consideration of the Facts Concerning the Shareholdings of AmRuz and Seagroup

306.
In the view of the Ukrainian Ministry of Fuel and Energy, the two new shareholders were admitted as the need to attract new capital arose in connection with the purchase of oil that could no longer be available as a consequence of the change in the capital contribution of oil wells by Tatarstan.529 Although these other companies are not a party to the dispute before this Tribunal they have the working arrangements with Tatneft that have been described. Whether such arrangements have or have not an influence on the Claimant’s rights is a matter to be considered further below. But what is of importance at this stage of the analysis of the Tribunal is that such other proceedings, namely Cases 28/198 and 28/199, appear to have followed the same pattern considered above.
307.
On the ground that the use of promissory notes that intervened in the capital contributions of AmRuz and Seagroup had violated Article 13 of the Company Law, the lawsuits filed by the SPFU against Ukrtatnafta and all its shareholders seeking invalidation of such contributions were upheld by the Kyiv Economic Court on 28 November 2001. In the Court’s view, that provision excluded promissory notes from the kinds of assets that at the time could be used to contribute to the capital of a company and limited promissory notes to being used for payment for "delivered products, performed operations or rendered services." The outcome of these decisions was that the Court annulled the share purchase agreements entered into with AmRuz and Seagroup, respectively, and ordered that AmRuz and Seagroup return their shares to Ukrtatnafta.
308.
A related issue considered in these cases was whether the extension from 2000 to 2003 of the lime period for the payment of the promissory notes agreed to had breached Articles 11 and 33 of the Company Law and the Ukrtatnafta Incorporation Agreement and Charier, with the decisions in question so ruling.
309.
Although these decisions were affirmed by the Kyiv Economic Court of Appeal on 14 March 2002, they were ultimately reversed by the Higher Economic Court on May 29, 2002 on the ground that Articles 3 and 21 of the Law on Securities and Stock Exchange in conjunction with Article 13 of the Law on Business Companies considered promissory notes a security that can be contributed to the capital of a company. The Supreme Court in a series of decisions adopted in 2002 and 2006 upheld the validity of the use of promissory notes and the extension of the payment period as being compatible with the legislation in effect at the time and Article 5.3 of the Incorporation Agreement. The provisions of the Articles of the Company Law noted were thus held to have been satisfied as in force at the time of the transactions considered in these cases.
310.
Although the Respondent believes that the decisions of the Higher Economic Court on the acceptance of the promissory notes issued in payment of the capital contributions of AmRuz and Seagroup, and ultimately their confirmation by the Supreme Court, are legally incorrect,530 the interpretation of Ukrainian law on which they are based is tenable and cannot be disqualified because of being different from the interpretation advanced by other courts that intervened in this matter. That delivery of promissory notes constituted "payment" for the purposes of Ukrainian law was a tenable conclusion, just like the extension in the date for payment is. To take into account the law as it stood at the time, in view of amendments barring the use of promissory notes for founders’ capital contributions becoming effective later, is also tenable in spite of the Respondent’s belief to the contrary.531
311.
The fact that there were six out of seven Ukrainian courts at four judicial levels, with 21 out of 24 reviewing judges, that ruled against the use of promissory notes, which the Respondent invokes in support of its argument,532 does not mean that only one interpretation could be regarded as tenable, or that jurisprudence can be established by majority counting. The same holds true for the fact that all decisions that followed the Supreme Court’s reopening of Cases 28/198 and 28/199 were similarly adverse to the companies concerned.
312.
The decisions of the Higher Economic Court and the Supreme Court noted stand in contrast to the line of the Tatneft cases considered above and show that, at least with regard to the issue of promissory notes, there were tenable arguments on the side of the affected companies. This development, however, in spite of having provided the basis for a stable legal conclusion on the payment of capital contributions by means of promissory notes, was to be short-lived.
313.
Indeed, in 2002 the Prosecutor had initiated proceedings against AmRuz, Seagroup, Ukrtatnafta and other shareholders that led to Case S/604 before the Poltava Region Economic Court, asserting that Article 5(5) of the Ukrtatnafta Incorporation Agreement authorizing the use of securities, on the basis of which the promissory notes were issued, was contrary to Ukrainian law because the use of promissory notes merely contributed debt obligations and did not comply with the requirement of Article 31 of the Company Law insofar as it could not satisfy the obligation to pay at least 50% of the capital before the first General Shareholders Meeting. The Poltava Region Economic Court dismissed this claim relying on the prior decisions of the Higher Economic Court in Cases 28/198 and 28/199 noted above upholding the lawfulness of promissory notes to effect such capital contributions. Shortly afterwards, in 2004, Naftogaz filed new lawsuits based on the argument that promissory notes were not "securities" within the meaning of Article 13 of the Company Law, and also asserting that the extension of the payment date agreed to was contrary to Article 31 of this law. This other claim was also dismissed on appeal by the Kyiv Economic Court and, with the exception of one ground, by the Higher Economic Court,
314.
The Prosecutor, however, years later, in 2008, filed a Cassation Appeal against the decisions of the Higher Economic Court in respect of Cases 28/198 and 28/199, seeking to reopen such cases in spite of the lapsed appeal time period, on the ground that the Higher Economic Court had applied the same legal provision in a different maimer in Case 45/383, the Northland Power case of 2006. The Prosecutor asserted in particular that it had not participated in this case and was therefore unaware of the different interpretations made, a view which the Claimant believes is untrue in light of the various judicial proceedings in which this official had participated and which interlinked the various issues involved, including the Northland Power case.533 The Supreme Court then reversed its earlier understanding and ruled that contributing debt obligations was contrary to Article 13 of the Companies Law. It also decided that there were justifiable grounds for commencing cassation proceedings in spite of the missed cassation appeal period, and remanded the cases concerned for de novo review. The judgments of the Higher Economic Court and other courts in these cases were set aside.
315.
The Respondent sees no contradiction in these Supreme Court decisions based on the understanding that at first this Court did not deal with the merits of the case, which only came to be considered at the stage of the cassation appeal, opposing on this point the views of Mr. Toms.534 The scope of the decisions in question might be different but the fact that stands is that the whole issue was reopened and finally led to conclusions exactly contrary to those reached earlier.
316.
The Parties have disputed whether the Cassation Appeal was duly notified to AmRuz and Seagroup, a particularly important due process requirement as the appeal would be decided within one month as mandated by the Ukraine Code of Economic Procedure. In spite of the fact that procedural negligence on the part of these companies is invoked by the Respondent as the basis for having failed to oppose that application before the Supreme Court and resulting in an ex parte decision,535 there is no appropriate evidence that such application was properly served and just sending a copy of the cassation appeal is not the same as having duly serviced a proper notice, particularly if in the Claimant’s view the ensuing decision was not later subject to appeal.536 Although the Claimant invoked at the hearing the service requirements of the Hague Convention on Service Abroad this argument was not invoked before the courts nor well explained537 and will thus not be further discussed.
317.
As a result of these new developments the share purchase agreements entered into between Ukrtatnafta and AmRuz and Seagroup, respectively, were invalidated in 2008 and AmRuz and Seagroup were ordered to return their shares to Ukrtatnafta. It was held that Article 8(3) of the Securities Law had been breached because shares had been exchanged for sixty-five promissory notes of which only three had been redeemed. Article 33 of the Ukraine Law on Business Associations had also been breached because the shares had not been paid in full at least one year before the registration of the joint stock company. Such exchange was also held incompatible with the 1992 Resolution of the Cabinet Ministers of Ukraine on the use of promissory notes allowing their issuance for delivered products, executed works and rendered services. All these decisions were affirmed by the Kyiv Economic Court of Appeal, the Higher • Economic Court and the Supreme Court in the proceedings that followed.
318.
Not long afterwards, also in 2008, Korsan began proceedings in Case 17/60 against Ukrtatnafta and several of its officials seeking to compel the sale of shares formerly held by AmRuz and Seagroup, a request which was granted in 2009 without informing the defendants.
319.
The Parties have argued about whether the share purchases of AmRuz and Seagroup were contrary to the parity principle of the Ukrtatnafta Treaty, and in particular about whether the parity requirement was permanent or not intended to extend beyond the incorporation of Ukrtatnafta. The Tribunal has already discussed above that the question of the form of capital contributions does not relate to the public nature of the Treaty but rather to the governance of Ukrtatnafta. The situation here is not different. There is no reason to believe that the parity requirement was meant to be permanent as the governance of the company would have been placed in a strait jacket if that were the case. In the Tribunal’s Partial Award on Jurisdiction it was already established that parity had to be understood in a framework of flexibility. Reasons of legal interpretation aside, including the powers given to the company’s governing bodies by the Incorporation Agreement, the situation that followed these developments confirms that parity was not an essential element of the future structure of the company. In fact it will be explained further below that following the invalidation of Tatneft shares and the sale of those held by AinRuz and Seagroup, all shares are today in the hands of Ukrainian interests, public and private. The parity principle simply does not exist today.
320.
The Tribunal is not convinced either by the Prosecutor’s assertion that because of being allegedly' unaware of Cases 28/198 and 28/199 and the Northland Power decision there was cause to reopen the cases in question. The evidence introduced by the Claimant shows that in fact the Prosecutor had been a party to cases where the same cases and the Northland Power decision had been specifically discussed, notably Case 8/604 before the Economic Court of the Poltava Region and Case 17/34 in the Kyiv Economic Court of Appeal. The Prosecutor’s statements before the Supreme Court to the effect that he had only learnt of the events concerning Cases 28/198 and 28/199 when Ukrtatnafta had filed its claims before the courts and not earlier is therefore questionable,538 as is the view that such official had not been aware of Case 32/1 as it had been invoked in its own application in Case 8/604.539 Although differences in dates have been noted by the Respondent to argue that Northland Power had been issued four months later than the decision in Case 17/34 and hence could not be in the knowledge of the Prosecutor,540 this does not mean that the Prosecutor was unaware of what was being discussed in that other case as the Claimant believes.541
321.
The Tribunal is mindful of the fact that Article 111(15) of the Ukrainian Code of Economic Procedure provides as a ground for the Supreme Court’s reopening a resolution of the Higher Commercial Court that of when the latter has applied the same provision differently in similar cases. Again here the Parties hold different views. While the Respondent believes that the cases concerning AmRuz and Seagroup dealt with the same issue as Northland Power, namely the non-payment of capital contributions in light of Article 8(3) of the Securities Law and Article 33 of the Business Associations Law and thus that the cases were similar and justified their reopening by the Supreme Court, the Claimant is of the view that the cases were not similar as Northland Power was a case in which no contribution had been made for the cancelled shares and in which the lawfulness of promissory notes as a means of purchasing shares was not considered.
322.
When a court finds in one case that promissory notes could not be used for payment of capital contributions and in another that no capital contributions had been made at all, it is difficult to consider these cases as being similar, particularly in light of the earlier Supreme Court resolution accepting that defendants had discharged their obligations concerning equity contributions by providing the company with the promissory notes in question. If such payment is considered valid it cannot indeed be compared to a situation in which no payment exists. Furthermore, the Tribunal notes the Claimant’s argument to the effect that the Cabinet Ministers of Ukraine in an application for review of the decisions in Cases 28/198 and 28/199 recognized as recently as 2010 the validity of AmRuz’s and Seagroup’s share purchases on the ground that they were in accordance with the Ukrainian law in force in 1999.
323.
The Tribunal considers that the Respondent’s argument to the effect that at the time of the Supreme Court’s reopening of the cases there was a practice not to give reasons in justification of such outcome,542 and thus that unsubstantiated decisions could not be considered unjustified, is not likely to convince this Tribunal. Neither does the Tribunal find any more convincing the argument that a typical reason for reopening cases is the non-participation of the Prosecutor in the original litigation.543 The Claimant correctly points out that under Ukrainian law, as provided under Articles 71, 76 and 80 of the Civil Code and Articles 111-16 and 53 of tire Code of Economic Procedure, the extension of statutory deadlines requires evidence of "material reasons" that would so justify an extension544 a standard that cannot be met by unsubstantiated opinions, particularly when the cases involved entail important economic consequences for the defendants and a serious legal issue concerning the question of res judicata of judicial decisions. The Tribunal further notes that the Ukrainian law experts whose reports were produced in the instant case by both Parties are in agreement about such strict requirements for the courts to renew a limitation period, as the Claimant has maintained.545
324.
Neither can the Tribunal find convincing the Respondent’s view to the effect that there is a distinction to be made in respect of cases where the Prosecutor acts on behalf of another entity, in which it would be the date the Prosecutor learnt of the relevant violation, and not the date in which the entity so learnt, that would trigger the operation of the Statute of Limitation.546
325.
The Tribunal must thus conclude that the extension of a specific statutory deadline does not appear to be justified in this context. Neither is the fact that notifications were omitted in Case 17/60 in respect of Tatneft helpful to support the Respondent’s arguments in respect of compliance with due process of law. The Tribunal agrees with the Respondent’s views to the effect that not every allegation of due process violations can result in the breach of the fair and equitable treatment.547 as will be discussed further below, but in this case the questionable role of the Prosecutor that has been noted applies in similar terms to this other series of lawsuits directed to reopening past cases and it thus becomes not an isolated event.

D. THE ALLEGED DEBT FOR PAST OIL DELIVERIES

326.
The Claimant has also brought a claim for the question of alleged debt for past oil purchases. While intertwined with the claims examined above, this claim will be examined by the Tribunal further below.

V. TATNEFT’S CLAIMS UNDER THE RUSSIA-UKRAINE BIT

A. THE APPROACHES TO TREATY BREACHES CONTENDED BY THE PARTIES

327.
The first question the Tribunal has to examine in connection with the claims for liability is whether it is appropriate to follow a systemic approach calling for the assessment of the Respondent’s conduct as a whole, which is the position taken by the Claimant, or an approach calling for the examination of the facts individually, which is the position favored by the Respondent.
328.

The Claimant relies in support of its position on Rosinvest (¶ 410), Vivendi II (¶ 7.5.31) and Walter Bau (¶ 12.43), cases which have underlined the need to consider acts and omissions in a cumulative manner and not as isolated events incapable on their own of establishing liability. In the Claimant’s view, the cumulative acts to be assessed belong to four main categories, all of which have been factually examined above: the seizure of the Kremenchug refinery and the associated change in Ukrtatnafta’s management; the annulment of Tatarstan’s title to shares in the Company (Cases 32/1 and 17/178); the annulment of AmRuz’s and Seagroup’s title to shares (Cases 28/198 and 28/199); and the annulment of Tatneft’s title to shares (Case 17/178).

329.

The Claimant maintains that most of the investor’s rights protected under the Russia-Ukraine BIT and its interrelations with other treaties have been breached, with particular reference to the standards for fair and equitable treatment, complete and unconditional legal protection, full protection and security, effective means for assertion of claims and enforcement of rights, and expropriation.548 These claims will be examined below.

331.
As a point of fact, during his testimony at the oral hearing Mr. Kolomoisky explained that the original plans to create a vertically integrated company had not succeeded thus far because they needed the concurrence of Naftogaz as Ukraine’s most important shareholder, but efforts at trying to harmonize operations in the sectors in which the group operates are going on549 and that in any event the initial share purchase was conceived as an entry ticket to the prospect of further acquisitions.550 It is also of interest to note that of the US$ 720 million paid at this stage by Korsan for the shares in Ukrtatnafta, only US$ 200 million related to the assets bought and the balance was related to building up the company’s working capital and other needs.551
332.

The Tribunal is also mindful that cumulative and composite acts and omissions are a well established principle governing liability under international law as evidenced by Article 15 of the International Law Commission Articles on State Responsibility. The Claimant’s arguments to this effect are well supported by the jurisprudence of tribunals and writers.552

B. THE OBLIGATION TO PROVIDE "COMPLETE AND UNCONDITIONAL LEGAL PROTECTION"

333.
Article 2(2) of the Russia-Ukraine BIT requires the Respondent to provide "complete and unconditional legal protection" to qualifying investments, as follows:

Each of the Contracting Parties guarantees in accordance with its legislation the complete and unconditional legal protection of investments made by investors of the other Contracting Party.

1. The Claimant’s Position

(a) The Claimant’s Interpretation of Article (2) of the BIT