Court overturns $50B Yukos ruling
LONDON — In a major victory for the Russian government, a Dutch court Wednesday overturned an award of more than $50 billion to former shareholders of the defunct oil company Yukos that Moscow was ordered to pay in 2014.
The court, in The Hague, said the arbiters that had made the award, the largest in international arbitration, had “lacked jurisdiction” to do so.
While the court ruling is a blow to the former Yukos shareholders, it is unlikely to end the dispute that began when Russian authorities arrested Yukos’ chairman, Mikhail Khodorkovsky, in 2003 and sold off his company. Former Yukos assets are an important component of Rosneft, the state-controlled entity that is now the world’s largest publicly traded oil producer.
The Yukos shareholders have been trying to recover damages from Russia, claiming that Moscow expropriated Yukos’ assets for political reasons.
“We are quite taken aback by this,” said Tim Osborne, a British tax lawyer and director of GML, a company that controlled a majority of Yukos shares.
Osborne said that GML would appeal the case in The Hague.
Paying out $50 billion would be a strain for Russia, which has fallen into recession because of low oil prices and Western sanctions. Russia had revenue of $130 billion from oil exports last year, but the plunge in prices since mid2014 means the country might make even less from petroleum this year.
The Russian government voiced pleasure over the ruling Wednesday.
“If these men continue to try to exploit the international courts to take money from the Russian people, we will show Yukos engaged in massive tax fraud throughout its existence, and fight them in every court and every jurisdiction,” said Andrey Kondakov, director general of the International Center for Legal Protection, which the Russian government set up to fight the case.
The panel that ruled against Russia in 2014 had met in The Hague and had been chosen by Yukos and the Russian Federation. That is why the appeal was heard by the Dutch court that ruled Wednesday.