Fennovoima decided to cancel a deal with Rosatom for the construction of the Hanhikivi-1 nuclear power plant in May, weeks after Russia launched its Ukraine offensive.

According to Rosatom, a Dispute Review Board (DRB) -- an arbitration panel that settles international contract disputes -- ruled the Finnish termination to be "illegal".

The DRB considered it a "breach of contract", Rosatom said in a press release, welcoming what it called a "balanced and objective position".

According to Rosatom, the DRB said damage payments will be "determined in further proceedings".

Rosatom has claimed three billion dollars in damages.

Fennovoima, which has in turn claimed nearly two billion euros from Rosatom for delays in the project, said that DRB's ruling "is neither final nor binding."

"Both parties submitted notices of dissatisfaction shortly after it was issued," Fennovoima said in a statement on Thursday.

The plan to build a third nuclear power plant in Finland was one of the largest projects involving a Russian company in the European Union.

With an estimated cost of more than 7.5 billion euros by Fennovoima, the project sought to build a 1,200-megawatt reactor project in Pyhajoki on the northern end of the Baltic Sea.

Around 600 million euros had already been spent in recent years on the project, with major preparatory work already undertaken on the site.

Last year, Fennovoima, a consortium that brought together Finnish state-owned power and industrial companies plus Rosatom, said it expected construction to start in 2023 and for the reactor to begin functioning in 2029.