The multi-year lawsuit between the former shareholders of YUKOS and Russia has reached a new level.
The Hague Court of Appeal has sided with the former owners of what was once the largest Russian oil company, and upheld a ruling by the arbitration court in the Hague, which in 2014 ordered Russia to pay the plaintiffs $50 billion in compensation. A decision by the Hague District Court, which revoked the compensation, has now been annulled.
On Tuesday, the Hague Court of Appeals satisfied the plaintiffs’ demand, revoking the lower court’s decision and once again ordering Russia to pay $50 billion in compensation.
The original lawsuit was filed in 2005. In July 2014, the court ruled that the Russian government had deliberately bankrupted YUKOS in order to nationalize its assets and remove its head, Mikhail Khodorkovsky, from the public field.
After adjudging that Russia had violated the Energy Charter Treaty, which protects the rights of investors in energy assets, the court awarded three companies – YUKOS Universal Ltd., Hulley Enterprises Ltd, and Veteran Petroleum Ltd. – half of the $100 billion they demanded.
The Russian Justice Ministry managed to have the decision overturned in April 2016 at the Hague District Court. The country’s lawyers argued that the Energy Charter Treaty had not been ratified by the State Duma, and alleged that YUKOS had been laundering money through offshore accounts in Cyprus.
The company’s former shareholders immediately filed an appeal. “We really hope that the Dutch court will show wisdom and, being free from any political considerations, which our opponents have tried to use, will still make a just decision,” said Russian Deputy Justice Minister Mikhail Galperin the day before the proceedings.
However, the court found the Russian lawyers’ arguments unconvincing. The court of appeal’s decision is final, and can only be appealed in the Supreme Court, and only on procedural grounds, not on the facts of the case, said Anton Imennov, controlling partner of the Moscow office of KA Pen & Paper.
In other words, the ruling of the Court of Arbitration in the Hague from July 18, 2014, is taking legal effect, which means that “in the very near future, we can expect a series of arrests of Russia’s property and assets abroad,” he warned.
The compensation amount which Russia has been ordered to pay is equivalent to around 10% of its foreign currency reserves ($550 billion) and about a third of the National Wealth Fund ($145 billion).
“The Russian Federation will continue to defend its legitimate interests and, by way of cassation, will dispute the appellate instance’s verdict in the Supreme Court of the Netherlands,” said the Russian Justice Department on Tuesday.