Arbitration
+-The former majority shareholders of Yukos (Hulley Enterprises Limited, Yukos Universal Limited and Veteran Petroleum Limited) brought arbitration proceedings in 2004 against the Russian Federation under the Energy Charter Treaty (ECT) for the illegal and politically motivated expropriation of their investment. Those arbitration proceedings were seated in The Hague. In 2014, the independent Arbitral Tribunal hearing the claims awarded the former majority shareholders more than $50 billion in compensation for the expropriation of their investments in Yukos.
Final Award of The Hague Tribunal under Energy Charter Treaty Yukos International and Russia
July 18, 2014
The independent Arbitral Tribunal in The Hague concluded unanimously that “Russian courts bent to the will of Russian executive authorities to bankrupt Yukos, assign its assets to a State-controlled company, and incarcerated a man who gave signs of becoming a political competitor”, and awarded the former majority shareholders $50 billion in compensation.
Final Award of The Hague Tribunal under Energy Charter Treaty Veteran and Russia
July 18, 2014
The independent Arbitral Tribunal in The Hague concluded unanimously that “Russian courts bent to the will of Russian executive authorities to bankrupt Yukos, assign its assets to a State-controlled company, and incarcerated a man who gave signs of becoming a political competitor”, and awarded the former majority shareholders $50 billion in compensation.
Final Award of The Hague Tribunal under Energy Charter Treaty Hulley and Russia
July 18, 2014
The independent Arbitral Tribunal in The Hague concluded unanimously that “Russian courts bent to the will of Russian executive authorities to bankrupt Yukos, assign its assets to a State-controlled company, and incarcerated a man who gave signs of becoming a political competitor”, and awarded the former majority shareholders $50 billion in compensation.
Interim arbitral award on jurisdiction and admissibility Yukos Universal and Russia
November 30, 2009
The independent arbitral tribunal in The Hague rules that the dispute between former Yukos majority shareholder Yukos Universal and the Russian Federation is admissible and within its jurisdiction, and that the Tribunal has jurisdiction over the Russian Federation on connection with the merits of the dispute.
Interim arbitral award on jurisdiction and admissibility Veteran and Russia
November 30, 2009
The independent arbitral tribunal in The Hague rules that the dispute between former Yukos majority shareholder Veteran Petroleum Limited and the Russian Federation is admissible and within its jurisdiction, and that the Tribunal has jurisdiction over the Russian Federation on connection with the merits of the dispute.
Interim arbitral award on jurisdiction and admissibility Hulley and Russia
November 30, 2009
The independent arbitral tribunal in The Hague rules that the dispute between former Yukos majority shareholder Hulley Enterprises Limited and the Russian Federation is admissible and within its jurisdiction, and that the Tribunal has jurisdiction over the Russian Federation on connection with the merits of the dispute.
Set-Aside
+-The Russian Federation is permitted to challenge the Arbitral Awards rendered in favour of the former majority shareholders of Yukos before the Dutch courts and ask that the Awards be set aside as the arbitration was seated in The Hague. In 2016, before the District Court of The Hague, that challenge was successful and the Awards were set aside. On appeal, in 2020 the Court of Appeal of The Hague overturned that decision, rejected all arguments of the Russian Federation as to why the awards should be set aside and reinstated the Awards. The Dutch Supreme Court affirmed the substance of that ruling in November 2021, ruling in favor of the former majority shareholders on seven of the eight grounds pleaded by the Russian Federation. However, one ground was referred by the Supreme Court to the Court of Appeal of Amsterdam for further consideration. Those proceedings are ongoing.
Judgment of the Dutch Supreme Court
November 5, 2021
The Dutch Supreme Court affirmed the substance of the ruling of The Hague Court of Appeal, ruling in favor of the former Yukos shareholders on seven of the eight grounds.
Final judgment The Hague Court of Appeal
February 18, 2020
The Hague Court of Appeal rejected all Russian arguments and confirmed the $50 billion Arbitral Awards.Judgment The Hague District Court
April 20, 2016
The Hague District Court reverses the Arbitral Awards on appeal.
Enforcement
+-In order to enforce the Arbitral Awards against assets of the Russian Federation, the Awards must first be recognised as judgments in the jurisdiction in which those assets are based. The Russian Federation may resist such recognition on the basis that (i) it is a sovereign state and thus immune from the jurisdiction of the local courts and (ii) that one of the defences to recognition provided under Article V of the New York Convention 1958 applies. Once those challenges are dealt with, it is possible to enforce against and attach commercial assets of the Russian Federation. However, the Russian Federation may also challenge those attachments on the basis, for example, that the assets attached are not commercial in nature or are not its property but those of a separate entity. Only once those challenges have been disposed of can the assets be sold to recover sums due from the Russian Federation. Below are jurisdictions in which recognition and enforcement proceedings have been commenced.
Netherlands
On 28th April 2020, the District Court of The Hague granted the former majority shareholders leave to enforce the Arbitral Awards (an exequatur). In May 2020 the former majority shareholders levied attachments over certain trademarks and copyrights related to the production of Russian vodka held by FKP Sojuzplodoimport ("FKPS"), an entity controlled by the Russian Federation. Those attachments were lifted by the District Court of The Hague in October 2020 on the basis that the trademarks were the property of FKPS and not the Russian Federation. The Russian Federation subsequently brought proceedings in the Supreme Court to suspend the enforcement of that exequatur. That challenge was dismissed by the Supreme Court in December 2020. In June of 2022, the Court of Appeal in The Hague approved the seizure of the trademarks and copyrights.
England and Wales
The former majority shareholders commenced proceedings to have the Arbitral Awards recognised and enforced in England and Wales in January 2015. In September 2015, the Russian Federation opposed that application on the basis that, as a sovereign state, it is immune. In light of the decision of the District Court of The Hague in 2016 setting aside the Arbitral Awards, the proceedings were stayed by agreement between the parties in June 2016. Following the decision of the Court of Appeal of The Hague to reinstate the Arbitral Awards in 2020, an application was made to lift that stay. In April 2021, the High Court ruled that the stay should remain in place pending the decision of the Dutch Supreme Court. In March 2022, a renewed application was made to lift the stay of proceedings. In April 2022, the High Court ruled that the application should proceed with a hearing to be held in October 2022. On 26th October 2022, the High Court ruled that the stay of proceedings be lifted for the purposes of determining the Russian Federation's sovereign immunity challenge.
United States
In November 2014, the former majority shareholders initiated proceedings before the District Court of the District of Columbia to have the Arbitral Awards recognised and enforced in the United States. Following the decision of the District Court of The Hague in 2016 setting aside the Awards, the former majority shareholders sought a stay of the proceedings pending the outcome of the proceedings before the Court of Appeal of The Hague. That stay was granted in September 2016. When that stay lapsed, the Russian Federation sought a further stay pending the outcome of the proceedings before the Dutch Supreme Court. That stay was granted in November 2020. When that stay lapsed following the decision of the Dutch Supreme Court in November 2021, the Russian Federation sought a further stay of proceedings. This was refused and the District Court of the District of Columbia will now consider the Russian Federation's sovereign immunity challenge to the proceedings.
International treaties
+-Energy Charter Treaty (1994)
Signed in 1994, the Treaty declares that every participating state shall “encourage and create stable, equitable, favourable and transparent conditions for investors”. It explicitly guards against illegal expropriation: investments shall not be nationalised or expropriated except where such a measure is in the public interest, non-discriminatory, lawful and duly compensated.
Vienna Convention on Law of Treaties (1969)
United Nations Treaty which recognises the ever-increasing importance of treaties as a source of international law and as a means of developing peaceful cooperation among nations; and affirms that disputes concerning treaties should be settled by peaceful means and in conformity with the principles of justice and international law.
New York Convention (1958)
The Convention facilitates the cross-border recognition and enforcement of arbitral awards.