Hague court quashed the decision to pay $50 billion to Yukos shareholders


District court of the Hague overturned the historic decision by the Permanent court of arbitration, in 2014, which obliged Russia to pay $50 billion to former Yukos shareholders Hulley Enterprises, Yukos Universal and Veteran Petroleum, according to Bloomberg.

It clarifies “Interfax”, the representative of the Russian authorities, the court also stated this. “Our complaint against the arbitration decision in the Hague on payment of $50 billion fully satisfied”, — he said. According to him, the appellate court found that the competence of the arbitration was not part of the consideration of claims of this kind. “Today’s decision leads to the cancellation of the requirement to pay Russia billions of dollars in compensation,” — said the Agency interlocutor.

However, litigation will continue: the former shareholders of the appeal against today’s decision in the Hague court of appeal (it is expected that they will announce it at a press conference at 12:30 GMT). Then the losing party will have another opportunity to appeal to the Supreme court of the Netherlands.

In November 2014, Russia filed in the district court of the Hague (the location of international arbitration) an application for annulment of the decision on the $50 billion compensation to Yukos shareholders. The local court could not and had to revise the arbitral award on the merits only on the basis of procedural and jurisdictional in nature. Protection of Russia, in particular, argued that the arbitration had no right to consider the claim of shareholders of Yukos under the Energy Charter Treaty (ECT), because Russia has signed the energy Charter Treaty (1994), but has not ratified, and because the company-the plaintiffs, from the outset of their investment in YUKOS was only a dummy offshore companies, which have always been Russian “oligarchs” (, Mikhail Khodorkovsky, Leonid Nevzlin and others), — in other words, were not genuine and bona fide foreign investors. Special attention is also paid to the fact that the arbitrators did not personally fulfill their mandate: according to the Russian defense, court assistant Martin Valasek actually played the role of the fourth referee, having written the bulk of the solution.

“This is a domestic matter: the Russian tax dispute between the Russian oligarchs and the Russian Federation concerning Russian tax measures against Russian companies”, — explains why the Hague Tribunal was not required to consider the Yukos affair, the lawyer of the Russian Federation Jan van den Berg at the hearing on 9 February.

While in the Netherlands, a local court reviewed whether a decision of the Hague arbitration, Yukos shareholders have launched processes in six countries — Belgium, France, the UK, Germany, USA and India, in order to forcibly exact from Russia $50 billion France and Belgium the local law allowed the shareholders to immediately arrest the Russian assets, but to take them and sell at public auction, and while it is impossible — go to the courts. The Hague arbitration case went on for almost 10 years, and the head of the GML (which owns the companies-plaintiffs) Tim Osborne expects that many more may take bringing in a verdict of execution, he told Forbes in August 2014. Theoretically GML to go with the arbitration decision in the courts of the 150 countries participating in the new York Convention.

Last year, the Russian foreign Ministry informed the governments of Belgium, France and the United States that Moscow can respond to possible confiscation of the Russian property in these countries, “proportional” measures in its territory.

If the court of the Netherlands will side with Russia, most countries will refuse to execute an arbitral award in favor of Yukos. Most, but not all. In some jurisdictions, in particular in France, the decision of the international arbitration is treated as “an act of international justice”, not be canceled by a local court of the country, where by coincidence located one or another international Tribunal. French courts did not take into account the process in a Dutch court, so the former Yukos shareholders were able to arrest the appropriate assets in France without regard to the Hague district court. In such countries as Belgium, USA, UK, local courts can permit the execution of an arbitration award annulled in the country of basing of arbitration, but rather in exceptional cases.