Russia must pay Yukos investors € 1.9bn, court rules

‘Unprecedented’ award a new blow to Putin

EUROPE’S top human rights court awarded shareholders in Yukos 1.9 billion (R27bn) in damages yesterday, a new blow to Russia days after some of the former oil company’s shareholders won $50bn (R531bn) in The Hague.

The Strasbourg-based court found that Russia had failed to “strike a fair balance” in its treatment of Yukos, once run by former oligarch Mikhail Khodorkovsky, and had forced the firm to pay excessive fees.

While the 1.9bn awarded by the European Court of Human Rights is a fraction of the

38bn which Yukos had sought, it hits Russia hard at a time when the country is on the brink of recession and is reeling from tougher sanctions imposed by the West this week over its actions in Ukraine.

“We received the news with a great joy, this is an unprecedented decision, the court has never ever awarded such a big sum,” said Olga Pispanen, a spokeswoman for Khodorkovsky, who was arrested at gunpoint in 2003 and convicted of theft and tax evasion in 2005.

He was released last year after 10 years in prison.

Yukos, once worth $40bn, was broken up and nationalised a decade ago, with most of its assets handed to Rosneft, an energy giant run by an ally of President Vladimir Putin.

Russia’s Justice Ministry said the ruling was unfair and biased and said it could appeal within three months.

The court also ruled Russia should pay 300 000 in costs, plus tax. Yukos had requested £4.3 million (R77m) in legal fees, $174 000 for an expert report and $588 148 for other fees.

Yukos argued in court that Russia had unlawfully seized it after imposing bogus taxes and sold it via a sham auction.

An interim ruling by the court in 2011 found that Russia had not misused legal proceedings to destroy Yukos but ruled that enforcement proceedings used against Yukos had been disproportionate.

It invited a claim for “just satisfaction”, or compensation, from Yukos. The group had sought compensation of 38bn. This was based on a valuation by a specialist energy firm.

The damages were being sought on behalf of all Yukos shareholders. There are 55 000 named Yukos shareholders, some of which are funds representing a number of shareholders.

“This is another confirmation… that everything that Russia did against the oil company, was illegal,” Leonid Nevzlin, a former Yukos executive and top shareholder, told Echo Moskvy radio. He said this was a consequence of Russia’s refusing to seek a compromise with Yukos abroad. – Reuters