30th Mar 2017

Lawsuit spotlights Russia energy politics

The European Court of Human Rights has agreed to hear a case brought against Russia by shareholders of former oil giant Yukos, which was forced into bankruptcy by the Kremlin and whose former CEO Mikhail Khodorkhovsky is still serving a jail sentence in Siberia.

"The admissibility decision has been pronounced and communicated to both parties," a spokesman for the Strasbourg-based court said.

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  • Yukos assets have been seized by the Russian state (Photo: Flickr)

The claimants allege that the Russian government illegally expropriated the company and is seeking compensation for shareholders, including Western investors.

The group is seeking more than €32.5 billion in damages, making it by far the largest suit heard in the history of the 59-year old European Court, where judgments rarely reach above the millions of euros.

A first hearing and a ruling are likely later this year, according to the judiciary's spokesman.

Former Yukos shareholders late last year also launched arbitration proceedings against the Russian state in The Hague, seeking at least €24 billion in recompense.

The Strasbourg decision also comes hot on the heels of the gas crisis, which saw some EU states raise fresh concerns about Russia using energy as a political tool against EU and NATO-aspirant Ukraine.

Yukos, once Russia's largest oil company, was forced into bankruptcy by a multibillion-dollar tax claim starting in 2004 and later saw its assets sold cheap at state-sponsoroed auctions, with state-owned firms Rosneft and Gazprom snatching up the largest parts.

Yukos' former CEO Mikhail Khodorkovsky, who in 2004 was Russia's richest man and had presidential ambitions rivaling Prime Minister Vladimir Putin, was convicted of fraud and is still serving a nine-year prison sentence in Siberia.

His stay in prison could be prolongued, as Mr Khodorkovsky awaits trial on new charges of embezzlement and money laundering, which could lead to a new sentence of up to 27 years.

The company's former chief financial officer, Bruce Misamore, welcomed the decision in Strasbourg as "excellent news" for all Yukos stakeholders. "This is an important step towards the vindication of the company's belief in the rule of law - something it never secured in Russia," he said.

Meanwhile, Russia's envoy to the European court, Georgy Matyushkin, said the claim actually breached the European Convention on Human Rights, because Yukos had not exhausted all other legal means before filing the suit.

"According to the case documents, the complaint was filed in spring 2004 when the Yukos case hadn't even been tried yet in the Moscow Arbitrary Court," Mr Matyushkin said.

Alexander Alekseev, Moscow's ambassador to the Council of Europe, the continent's human rights body which includes Russia, denounced what he called the "politicisation" of the court, which has repeatedly ruled against his country for rights abuses in Chechnya and Russian prisons.

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