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Russia expects overseas state assets freed up after Dutch court Yukos verdict

Russia's Finance Ministry expects the country's overseas assets to be freed up after a Dutch court ruling in the Yukos case, Deputy Finance Minister Sergey Storchak said on Wednesday.

"Naturally, the process in courts will now proceed differently. I believe it will now be much easier for lawyers with the available ruling of an official, state court," Storchak said in response to a question about the prospects for unfreezing Russian state assets seized abroad under the Yukos case.

The district court of The Hague ruled on Wednesday that the panel of judges who had passed a $50 billion compensation judgment in favor of former Yukos shareholders had no right to review the dispute. As the Dutch district court ruled, the arbitration tribunal misinterpreted Europe's Energy Charter Treaty, which Russia signed but never ratified.

The district court of The Hague ruled to overturn six arbitration awards (three intermediate and three final judgments) passed by the Permanent Court of Arbitration in The Hague in 2014.

"The Russian Federation was not bound by the provisional application of the arbitration regulations," according to the ruling. "The Tribunal wrongly declared itself competent in the Arbitration to take cognizance of the claims and issue the ensuing award."

Yukos case

Yukos, once Russia's largest oil firm, was accused of tax crimes and declared a bankrupt by a Russian court ruling in 2006 while its assets were sold at auctions during the liquidation procedure.

In 2007, former Yukos shareholders filed a lawsuit with the Permanent Court of Arbitration in The Hague claiming that the Russian government had expropriated Yukos's assets and demanding compensation for losses under Article 45 of Europe's Energy Charter Treaty.

The ex-Yukos shareholders initially claimed $28.3 billion in compensation from Russia but the sum was subsequently increased to $103 billion.

The Permanent Court of Arbitration in The Hague passed a ruling in July 2014, obliging Russia to pay $50 billion compensation to former Yukos shareholders.

In its final awards, the arbitration tribunal unanimously ruled that Russia "had taken measures with the effect equivalent to an expropriation of claimants' investments in Yukos and thus had breached the Energy Charter Treaty."

After the verdict was announced, the Russian Finance Ministry said The Hague arbitration tribunal had no jurisdiction to consider the Yukos case and the dispute review was one-sided.

Russia subsequently appealed against The Hague Tribunal's ruling.

Russian Justice Minister Alexander Konovalov said on December 4, 2014 that in November Russia had challenged The Hague Tribunal's $50 billion ruling (the examination of Russia's appeal began on January 28, 2015).

Media sources have been reporting about the seizure of Russian state property and accounts abroad by former Yukos shareholders in various European countries since June 2015 as part of the arbitration ruling's enforcement measures.

Thus, in early April 2016, about $700 million worth of funds owed to Russia's Space Corporation Roscosmos and the Russian Satellite Communications Company were seized in France under a lawsuit filed by former Yukos shareholders to enforce The Hague tribunal's $50 billion ruling.

In all the cases, the assets and accounts were freed up soon after that.

Yukos former head Mikhail Khodorkovsky and his business partner Platon Lebedev were found guilty of embezzlement and tax evasion in May 2005 and sentenced to nine years in prison.

While serving their prison term, both Khodorkovsky and Lebedev were found guilty of embezzlement and money laundering in a second criminal case in December 2010 and sentenced to 14 years in prison, with account taken of the jail term they had served.

Khodorkovsky was pardoned by Russian President Vladimir Putin and left the prison in December 2013. Lebedev was released from the jail in early 2014.

[Source: Itar Tass, Moscow, 20Apr16]

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small logoThis document has been published on 21Apr16 by the Equipo Nizkor and Derechos Human Rights. In accordance with Title 17 U.S.C. Section 107, this material is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes.