Exploration firm JKX Oil & Gas is seeking $180m (£116m) in compensation from Ukraine, claiming the country has violated international treaties.
The business, which is in talks over a possible buyout, said this morning that it had started arbitration proceedings against Ukraine under the Energy Charter Treaty between the UK and Ukraine and a parallel treaty between Ukraine and the Netherlands.
The $180m would be repayment for rental fees that JKX Oil & Gas' Ukrainian subsidiary has paid on production of oil and gas in the country since 2011. The company said Ukraine had failed to treat JKX's investments in a “fair and equitable manner”. It also accused the country of failing to comply with prior commitments regarding that investment.
An emergency arbitrator, appointed under the Arbitration Rules of the Stockholm Chamber of Commerce, issued an emergency award last month, ordering Ukraine to refrain from imposing royalties of more than 28 per cent on the production of gas by JKX's Ukrainian subsidiary.
Under Ukrainian law, that rate could rise to 55 per cent.
The emergency award is binding under international law, but if Ukraine refuses to comply with the Award, JKX will seek to have it recognised and enforced by the Ukrainian courts, it said in a statement.