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The dispute is set to move to a higher court next.

The Sevastopol court of arbitration ruled in favor of Palts' Kaskad Investments on March 7, with the text of the ruling published a week later.

"The main argument [against the Russian defense ministry] was that the limitation period for filing a claim had expired," Palts told Postimees on Wednesday. "The motive was that actual violations were nonexistent. While it was possible to find some formal nuances, the case was closed on grounds of expiration of the deadline."

Palts admitted that the ruling came as a surprise. "As far as we know, it is the first time anyone has achieved a victory over the Russian armed forces in Sevastopol's first tier court."

Palts is fighting the court battle over a 20-hectare piece of real estate in Balaklava, near the Crimean military port of Sevastopol. Palts bought the former military campus of nearly 30 buildings from the Ukrainian defense ministry for 10 mln hryvnia, or 1.65 mln euros at the time, in 2006. The site was a Soviet underground missile complex known as B-42, meant to protect the fleet based in Sevastopol. The complex was left idle after the collapse of the Soviet Union. Palts' company bought the land under and around the buildings from the town of Sevastopol.

Palts first ran into problems when Russia annexed Crimea in 2014. His property came to the attention of the Russian defense ministry that wants to reclaim all territories that used to belong to the Soviet ministry of defense. The Crimean media has reported that the ministry wants to retrieve 275 former military campuses.

The ministry sued Palts' company in January of last year, claiming that Kaskad Investments purchased the territory from Ukraine's defense ministry illegally. "The Russian ministry of defense demanded our right of ownership be found null and void," Palts said. "Simply by fishing for mistakes in the privatization contract from that time."

Palts admitted that because of past ambiguity in Ukrainian law it is generally possible to find holes in contracts of the sort. He claimed, however, that the contract between Kaskad Investments and the Ukrainian defense ministry signed 11 years ago was drawn up impeccably.

Palts spent 10 mln U.S. dollars on land for what will be a resort bordering a nature preserve. The detailed plan was completed in 2010, and Palts started looking for investors from Europe and Asia to contribute, along with himself, around 200 mln dollars to the project called Balaklava Blue. In his presentation, Palts promises to build the best wellness resort in the Black Sea region. The businessman said a year ago that he puts the value of his real estate and detailed plan in Crimea at 17 mln dollars.

The dispute with the ministry has made investors, who have already placed 2 mln dollars in the project, nervous. "Investors are very tired of this matter," Palts said. "Of course they will ask for their money back. We have extended debt instruments until now. However, everyone understands we're dealing with one of the best pieces of land on the southern coast of Crimea, and what has befallen us is just historical misfortune."