A federal appeals court on Friday dismantled Russia’s attempt to shield itself from more than $250 million in arbitration awards tied to the Kremlin’s 2014 seizure of Ukrainian energy assets in Crimea, allowing two Ukrainian companies to continue enforcement proceedings in U.S. courts.

In a significant ruling on sovereign immunity, the U.S. Court of Appeals for the District of Columbia Circuit rejected Moscow’s argument that it was immune from the enforcement fight, sending the case back to a lower court for further proceedings.

Sovereign Immunity Defense Rejected

The dispute stems from arbitration awards totaling roughly $250 million issued under United Nations Commission on International Trade Law rules. Ukrainian electricity distributor DTEK Krymenergo secured a $219 million award after alleging that Russia unlawfully seized its Crimean power distribution business. A separate group operating 31 petrol stations across the peninsula won more than $34 million.

Russia argued that the 1998 investment treaty between the two countries did not apply because the investments were made when Crimea was still Ukrainian territory. According to Moscow, the treaty was designed to protect cross-border investments — not assets that later became part of Russia following annexation.

Writing for the three-judge panel, U.S. Circuit Judge J. Michelle Childs rejected that framing, ruling that Russia was attempting to turn a merits defense into a jurisdictional challenge.

“Strip those points away, and nothing jurisdictional remains,” Judge Childs wrote, emphasizing that Russia did not dispute the existence of the treaty, the arbitration agreement, or the issuance of the awards.

Under the Foreign Sovereign Immunities Act’s arbitration exception, the court’s role at this stage was limited to determining whether an arbitration agreement existed and whether a treaty potentially governs enforcement — thresholds the panel found satisfied.

Commercial Dispute, Not Border Politics

Russia also contended that the arbitration awards were geopolitical in nature, arguing they centered on a border dispute rather than commercial conduct and therefore fell outside the New York Convention’s enforcement framework.

The panel rejected that argument, concluding that the dispute concerned commercial assets — including an electricity grid serving more than 780,000 customers — not sovereignty determinations.

“The dispute arises from investments planted squarely in commerce,” Judge Childs wrote, quoting prior D.C. Circuit precedent.

The arbitral tribunals, the court noted, deliberately avoided deciding whether Crimea legally belongs to Russia or Ukraine. Instead, they focused on Russia’s de facto control of the territory and its impact on commercial investments.

“They applied the Investment Treaty to commercial conduct occurring in territory under Russia’s de facto control,” the opinion states. “Nothing more — and nothing less.”

Enforcement Fight Moves Forward

Friday’s ruling does not itself confirm the awards, but it clears a major procedural hurdle and allows the enforcement battle to proceed before U.S. District Judge Carl J. Nichols.

The decision marks another legal flashpoint tied to the 2014 annexation of Crimea — a geopolitical conflict now spilling into U.S. courts through high-value commercial arbitration claims.

Representatives for the parties did not immediately respond to requests for comment.