Russia ordered to pay €1.8bn by human rights court
The European Court of Human Rights Thursday (31 July) told Russia to pay €1.86 billion to the shareholders of the disbanded Yukos oil group.
“The court decided that this amount should be paid by the Russian Government to Yukos’s shareholders and their legal successors and heirs,” it said in a statement.
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The fine is the largest ever from the Strasbourg-based court, significantly more than its previous record of €90 million handed out in May against Turkey in case with Cyprus.
The court in September 2011 had already found Russia guilty for having violated rights in the European convention by imposing excessive penalties on Yukos and for not giving it enough time to mount a legal defence.
Thursday’s decision aimed only to fix the amount of the fine on the three-year old verdict.
The court also ordered Russia to pay a €300,000 lump sum on top to cover the costs and expenses of the Dutch-based Yuko International Foundation.
The decision comes at a sensitive geo-political moment.
Russia’s economy is already set to lose billions following Western-economic sanctions for its role in the conflict raging in eastern Ukraine.
Russia’s ministry of justice said it “does not view this ruling as an example of a fair and unbiased approach to the legal and factual circumstances of the case”.
It noted it could appeal the decision within three months.
Headed by former oligarch Mikhail Khodorkovsky, Yukos filed for bankruptcy in 2006 before being liquidated the following year.
Khodorkovsky, who now lives in Switzerland, spent nearly a decade in a Russian prison on charges of tax evasion.
Russian authorities said the former state-owned firm, which was privatised in 1995-6, was guilty of setting up sham companies to avoid paying taxes.
At the time, Yukos’ assets were seized pending litigation, preventing the company from repaying the debts.
Russian authorities seized and auctioned off Yuganskneftegaz, a Yukos production subsidiary viewed as the group’s only hope for survival.
When the group finally went bust in 2007, most of its assets were taken over by Rosneft, an energy giant run by an ally of President Vladimir Putin.
Lawyers representing Yukos had originally requested the Russian government pay €81 billion with daily interest but dropped it to €37.9 billion following the court’s 2011 judgement on the violations committed.
The Strasbourg court on Thursday dismissed the Yukos argument that the violations alone led to the company’s ultimate demise and confiscation of assets and so awarded them only €1.8 billon.
The decision comes on the heels of another much larger fine from an international arbitration court in The Hague earlier in the week.
In that case, Russia was fined €37 billion for having expropriated Yukos assets as part of a broader politically-motivated campaign of attacks against the company.