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The Moscow Times | 5 November 2021
Russia wins latest round of $50-bln Yukos case
By Danny Kemp for AFP
The Dutch supreme court on Friday overturned an order for Russia to pay $50 billion to former shareholders in dismantled oil giant Yukos, but shunted the lengthy legal saga back to a lower court for more hearings.
The ex-shareholders were awarded compensation in 2014 by a Hague-based arbitration tribunal for the break-up of Yukos after its former owner, the Kremlin critic and ex-tycoon Mikhail Khodorkovsky, was arrested in the early 2000s.
Russia has fought the case through the Netherlands’ legal system over the past seven years, and the Dutch appeals court last year upheld the original payout.
"Today the Supreme Court quashed the appeal court’s final judgment" backing the payout, the top court said in a statement.
The supreme court said it upheld Russia’s appeal that the appeals court had wrongly dismissed Moscow’s arguments that the shareholders had committed fraud during the arbitration.
"The case has been referred to the Amsterdam Court of Appeal for renewed judgment on this ground," it said.
But the court rejected Russia’s other arguments that it was not bound by an international energy treaty on which the original 2014 payout ruling by the Permanent Court of Arbitration was based.
There was no immediate reaction from Moscow or the shareholders.
Fall of the oligarchs
Yukos was Russia’s biggest oil firm, one of a number of companies formed as the Soviet Union crumbled in the 1990s when businessmen like Khodorkovsky scooped up former Soviet assets at knock-down prices.
Khodorkovsky’s arrest came after Russian President Vladimir Putin warned the growing class of so-called oligarchs against meddling in politics in the early 2000s.
After Khodorkovsky’s downfall, Yukos collapsed in the face of huge government tax demands and was sold off in opaque auctions to state companies led by Rosneft between 2004 and 2006.
State-owned Rosneft was then small, but has since grown into one of the world’s biggest listed oil companies by production volume.
The former majority shareholders in Yukos led by the GML financial holding company then sought compensation from Russia for what they say are their losses caused by the break-up of the company.
Khodorkovsky, who spent a decade in jail and now lives in exile in London, is not a party to the case.
The Permanent Court of Arbitration based in The Hague made the $50-billion award to the shareholders in 2014, the largest-ever sum for the tribunal, after nine years of hearings.
It based its ruling on a multilateral 1994 accord, the Energy Charter Treaty, which says a dispute between a member state and a foreign investor could be solved through arbitration.
But in a shock turnaround, a local Dutch court overturned the decision in 2016, saying the PCA was "not competent" to rule in the case as Russia had signed the treaty but not ratified it.
The Dutch appeals court in turn restored the initial award in 2020, leading to the Russian appeal to the supreme court.
Even if the shareholders eventually win, they would face a years-long battle to enforce the $50-billion award and seize Russian assets in several countries including the United States, Britain and the Netherlands.
This effort has already begun, with a Dutch court granting the shareholders local rights to two iconic vodka brands, Stolichnaya and Moskovskaya.
The Yukos decision comes against a backdrop of tensions between the Netherlands and Moscow, often fought out in Dutch courts.
Russia last month criticized a Dutch court’s ruling that a priceless collection of Crimean gold loaned to an Amsterdam museum must be handed back to Ukraine.
The Netherlands is also currently trying three Russians and a Ukrainian in absentia over the 2014 shooting down of flight MH17 over Ukraine, in which 298 people died, 196 of them Dutch.