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20 Feb, 2024 15:22

Dutch court denies Russia’s appeal of $50bn Yukos award

Moscow had insisted that foreign courts did not have jurisdiction in the case
Dutch court denies Russia’s appeal of $50bn Yukos award

The Amsterdam Court of Appeal on Tuesday dismissed Russia’s latest legal challenge in the high-profile Yukos case and upheld the enforcement of a $50 billion award to the former shareholders of the now-defunct oil company. 

Energy giant Yukos, once owned by ex-oligarch Mikhail Khodorkovsky, collapsed in 2006 after the company failed to pay billions of dollars in back taxes. The latest ruling concerns a decade-long trial at the International Court of Arbitration in The Hague, which, in 2014 ruled that Russia had violated its international obligations by taking steps to bankrupt the massive oil company in the early 2000s. Moscow has insisted that the dispute with the shareholders was outside the jurisdiction of any foreign court.

According to a statement on Tuesday by the Amsterdam court, Russia’s claim that the shareholders had committed fraud during the arbitration proceedings was made too late. It further said that even if the claim had been considered, it would not have changed the verdict on the arbitration award. “The conclusion is that the arbitration awards remain in force,” the statement reads.

Back in 2014, the arbitration tribunal ordered Russia to pay $50 billion in compensation to the former controlling shareholders of Yukos: Hulley Enterprises and Veteran Petroleum based in Cyprus and Yukos Universal based in the Isle of Man. The Dutch Supreme Court later overturned the ruling.

The ex-shareholders, who claim that the Russian government drove the company to bankruptcy for political reasons, later initiated proceedings in several jurisdictions, including the US.

The private company Yukos was formed after a controversial auction of state assets following the fall of the Soviet Union and quickly became one of the world’s most valuable companies.

The founder of the oil and gas giant, Mikhail Khodorkovsky, was once Russia’s richest man. However, he was arrested and charged with fraud in 2003 and was imprisoned until 2013. His claim that his arrest was politically motivated is widely accepted by the Western media.

Moscow denies the charges and says that foreign courts did not consider that national laws governing fraud and other wrongdoing might have been broken. In 2020, Russia’s Constitutional Court ruled that Russia could refuse to pay any settlement imposed by the Dutch judges. The basis for the arbitration is the terms of the Energy Charter Treaty, which Moscow signed but never ratified.

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