Swiss court upholds Naftogaz's $1.3bn claim against Gazprom

A Swiss court upheld an arbitration ruling ordering Russia’s Gazprom to pay $1.3bn to Ukraine’s Naftogaz over a gas transit contract on March 12, rejecting the Russian company’s attempt to overturn the award.

The Swiss Federal Supreme Court backed a decision by an arbitration tribunal of the International Chamber of Commerce (ICC), which last year ruled in favour of Naftogaz in a long-running dispute over gas transit through Ukraine. The court dismissed Gazprom’s arguments that the tribunal lacked jurisdiction and was biased.

The decision was issued in January but published only recently, according to the court documents.

The dispute stems from a 2019 agreement between Gazprom and Naftogaz governing the transit of Russian natural gas through Ukraine. The contract stipulated that any disputes would be settled by ICC arbitration under Swiss law in Zurich.

Following Russia’s invasion of Ukraine on February 24, 2022, disagreements emerged between the two companies over the contract terms and payment obligations. Naftogaz launched arbitration proceedings in September 2022, seeking compensation for Gazprom’s failure to ship agreed volumes of gas through Ukraine. By December 2024, the Ukrainian company’s claims had risen to $1.31bn.

Gazprom contested the validity of the arbitration clause and argued that sanctions prevented the dispute from being handled by the Swiss-based tribunal. The Russian company also declined to participate in the proceedings.

In June 2025, the ICC tribunal ruled that it had jurisdiction and ordered Gazprom to pay more than $1.3bn plus interest to Naftogaz. The tribunal concluded that the contract included a “ship-or-pay” clause requiring Gazprom to pay for reserved transit capacity even if gas volumes were not actually transported. Arbitrators also found that Gazprom had failed to prove that Naftogaz had not provided the capacity required for transit.

Gazprom appealed the decision to Switzerland’s Federal Supreme Court, arguing that the tribunal had been biased because two of the arbitrators came from countries considered unfriendly to Russia. The company also said sanctions had prevented it from properly defending its case and claimed the tribunal had wrongly attributed the actions of the Russian state to the company, violating the principle that a legal entity is separate from its founders.

The court rejected all of Gazprom’s arguments. It ruled that objections to the arbitrators had been raised too late and that Gazprom had not demonstrated any genuine obstacles preventing it from participating in the proceedings. The judges also said sanctions did not prevent Gazprom from obtaining legal representation, noting that both European and Swiss rules allow legal services to be provided in arbitration cases involving sanctioned parties.

The court added that the tribunal had applied a standard analysis of risk allocation under a ship-or-pay contract structure.

As a result, the arbitration ruling remains valid and can potentially be enforced in Switzerland.

Gazprom declined to comment.