The International Arbitration Court in the Netherlands has ended a decade long case brought by shareholders in the defunct Yukos oil company, and ordered Russia to pay about $50 billion in damages.
READ MORE: Hague court had no authority in Yukos
case, ruling politicized – Moscow
The official ruling published on Monday said
Russia violated the EU
Energy Charter when it redistributed the company’s assets and
“took steps equivalent to expropriation of the claimants’
investment in Yukos.”
The Hague’s Permanent Court of Arbitration ordered Russia to
compensate the plaintiffs with $50 billion – less than half the
initial $114 billion demanded by the former shareholders. Russia
has also been ordered to pay about $65 million in legal costs.
“This is the biggest arbitration award in history,” as
ITAR-TASS quotes Emmanuel Gilyard, a lawyer at the Shearman
Sterling bureau, who underlined that the case became a
‘mega-arbitration’.
As part of the case,
three separate lawsuits by former Yukos shareholders were filed
by Hulley Enterprises Limited (Cyprus), Yukos Universal Limited
(Isle of Man) and Veteran Petroleum Limited (Cyprus).
The court ruled that $39.97 billion of the compensation should go
to Hulley Enterprises, $1.85 billion to Yukos Universal and $8.2
billion for Veteran Petroleum Limited. The Veteran Petroleum fund
acts in the interest of former Yukos employees and should receive
another $8.2 billion.
The claim was lodged by Gibraltar-based Group Menatep Limited
(GML) – the company used by Russia’s once richest man Mikhail
Khodorkovsky to manage Yukos.
Russia has until January 2015 to pay the compensation; otherwise
it will start being charged interest. The country’s Finance
Ministry said it would appeal the decision in the Netherlands.
“I am delighted to confirm that those final awards, which
were unanimous, are very favorable to the claimants,” Tim
Osborne, director of the GML group of shareholders which brought
the action, told Reuters.
Former Yukos shareholders said on Monday they had not ruled out
the possibility of a lawsuit against Rosneft and its
shareholders, including BP, for their role in the redistribution
of Yukos’ assets. Osborne had previously said that if the Russian
state refuses to pay the compensation, then the shareholders
could file a lawsuit against BP as a Rosneft shareholder.
“There is no reason to think Russia will not fulfill its
international obligations. But if this were to happen, the New
York Convention, which obligates 150 signature states to work
together to ensure the arbitration ruling is upheld – would come
in effect,” said Osborne
Rosneft released a statement on Monday following the ruling,
saying that it does not consider itself liable in the Yukos case
as it acted in accordance with Russian law in its acquisition of
the company’s assets.
“Rosneft does not bear any responsibility in the published
ruling,” said the statement. “Rosneft believes that its
acquisition of Yukos’ assets was conducted in accordance with the
applicable laws.”
The Yukos saga
The downfall of Yukos began with the arrest of its CEO Mikhail
Khodorkovsky on fraud charges in 2003. The company’s assets were
frozen while the investigation was carried out.
Several months later, Moscow said Yukos owed the government $27
billion in tax. The oil giant’s shares plummeted and it was sold
off to other Russian companies. The decimated Yukos finally filed
for bankruptcy in July 2006.
Soon after the bankruptcy the company’s shareholders applied to
The Hague International Arbitration Court claiming $100 billion
in compensation.
With the bankruptcy of Yukos its assets were absorbed by the
state oil company Rosneft.
A year ago, the European Court of Human Rights ruled the case
against Mikhail Khodorkovsky and Yukos was not
politically-motivated.
Mikhail Khodorkovsky spent more than a decade behind bars before
President Putin granted him an early release.
READ MORE: Ex-oil tycoon Khodorkovsky leaves
prison after pardon
However, Eric Kraus, a political risk analyst, told RT The Hague
Court’s ruling appears biased.
“It strikes me as a very political decision. The West manages
to create this illusion of a fair play rule of law, of fairness
of judicial process and this is a bad joke,” he said.
Mr. Kraus said Khodorkovsky was found guilty by both Russia and
the European Court of Human Rights.
“It is outrageous that anyone should imagine that Russia is
going to pay $50 billion to these criminals,” Kraus said.
Article source: http://rt.com/business/176064-yukos-russia-50bn-damages/
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