26th Jan 2021

Dutch ruling on Yukos was political, Khodorkovsky says

  • Khodorkovsky lives in exile in the UK and Switzerland (Photo: europarl.europa.eu)

A Dutch court has overturned a $50 billion award against Russia over its break-up of oil firm Yukos, prompting the company’s former CEO to accuse judges of playing politics.

The District Court in The Hague said on Wednesday (20 April) that the Permanent Court of Arbitration, also in the Dutch capital, was wrong when it ruled, in 2014, that former Yukos shareholders could seek damages under the Energy Charter Treaty.

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  • Yukos at its height controlled 20 percent of Russia's oil output (Photo: Flickr)

The treaty was designed to protect international investors in the former Soviet region.

Russia had signed and provisionally applied the pact but never ratified it, meaning, the district court said, that international arbitrators “lacked jurisdiction."

The district court did not comment on the substance of the arbitrators’ decision.

The arbitrators had said that Yukos “was the object of a series of politically motivated attacks by the Russian authorities” designed to “bankrupt" the company and to “incarcerate” its former head, Mikhail Khodorkovsky.

They said Russia did it because he “gave signs of becoming a political competitor” to Russian leader Vladimir Putin.

'Justice prevailed'

Khodorkovsky, who spent 10 years in prison and who now lives in exile in the UK and Switzerland, said on Twitter that the Dutch district court had acted under political instructions to improve relations with Moscow.

“West has decided to ease pressure,” he said. “My friends continue their efforts. I look for other ways to effect regime change.”

The former Yukos shareholders who brought the case also said they would challenge Wednesday's “surprise ruling” in a higher Dutch court.

Emmanuel Gaillard, a lawyer at Shearman & Sterling, representing the claimants, said: “The arbitral tribunal was composed of three international law experts of the highest calibre who were unanimous in their reasoning. I am confident that today’s decision will be reversed.”

But Putin's spokesman Dmitry Peskov “welcomed” the decision, adding: “We are talking about a judicial process. I wouldn’t want to politicise it.”

Andrey Kondakov, the head of the International Centre for Legal Protection, which coordinated Russia’s defence, said: “This is a victory for the rule of law and justice has prevailed.”

Other commentators highlighted the political meaning of the verdict.

“This will contain the movement in Russia to reject international law because it turns out that it can be beneficial … this solution should soften the image of a hostile West,” Gleb Pavlovsky, a former aide to Putin, told the Bloomberg news agency.

Evgeny Minchenko, the head of the International Institute for Political Expertise in Moscow, said the ruling “improves Russia’s image abroad as a whole”.

Political victories

The former Yukos shareholders said they would continue trying to snatch Russian state assets overseas in line with the 2014 ruling pending the outcome of their challenge in the Dutch Court of Appeal.

Shearman & Sterling's Yas Banifatemi said: “Claimants will continue moving forward with their worldwide efforts to enforce the Russian Federation’s international obligations, as recognised by the arbitral tribunal.”

She said that under the 1958 New York Convention, a UN accord, “enforcement courts will be at liberty to assess the award for themselves, irrespective of what the Dutch courts have to say”.

The lawyers said they were currently pursuing Russian assets in Belgium, France, Germany, India, the UK and the US.

They had already made headway in Belgium and France, but Andrey Kondakov said Russia would file cases to overturn the asset seizures.

Yukos was Russia’s largest oil firm at the time of its break-up in 2003 on grounds of tax crimes. Its main assets were handed out to Putin loyalists.

Russia has also filed charges against Khodorkovsky in absentia on allegations that he was involved in a contract killing in the 1990s.

The EU is currently considering whether to relax economic sanctions on Russia.

The Dutch ruling is the second time this month that the Netherlands handed a political victory to Moscow. A non-binding referendum on 6 April called on the government to scrap the EU association treaty with Ukraine.

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