Investors call for tough EU-Russia energy treaty

"The important thing for us is that Russia was bound by the ECT (Energy Charter Treaty)," he said.

"This shows it is imperative that the EU pushes for a robust, legally-binding agreement in the energy sphere, either through the ECT itself or under the terms of a new partnership agreement," he added. "Relying on warm and friendly language in the new agreement would be disastrous."

Mr Osborne's remarks come after an arbitration court in The Hague this week ruled that Russia is bound by the ECT, a 1994 pact on energy investments, because it signed the charter even though it did not complete ratification.

The ruling opens the door for GML to seek $100 billion (€66 billion) in compensation for what it says was a politically-motivated break-up of Yukos by the Kremlin in 2003 and 2004. The next round of the legal battle is expected to take two years.

The Hague decision may also embolden smaller ex-Yukos shareholders, such as Rosinvest and a group of seven Spanish businessmen, who are pursuing claims against Russia in Stockholm courts.

It is unlikely to help ex-Yukos chief, Mikhail Khodorkhovsky, who faces life in jail for embezzlement, however.

Russia withdrew its signature from the ECT in a move effective from October this year, blocking any new ECT-based law suits. It has also cast doubt on its bid to join the World Trade Organisation, another detailed rulebook on international trade.

Meanwhile, foreign investment in the country continues to dive as the business climate worsens.

Russia has slapped protectionist tariffs on a number of products in response to the economic crisis and it has bullied major Western firms, such as BP and Shell, out of lucrative energy deals. "Russia is essentially a criminal state now," US businessman Bill Browder told the BBC in November after a lawyer representing his firm died in a Russian prison.

The EU is currently negotiating a new, wide-ranging Partnership and Co-operation Agreement (PCA) with Moscow.

Brussels has abandoned its initial plan to make the ECT a part of the new pact and is instead seeking new energy rules based on ECT "principles."

"The PCA is a legally-binding agreement between two governments. Unless you [as a private company] specifically refer to the terms of the PCA in your contract, it could not be used as such," European Commission spokeswoman Christiane Hohmann said on whether the PCA could be used as the basis of any future legal claims.