Search for justice

In 2005, after it became clear that the Russian Federation intended to expropriate Yukos, GML commenced independent arbitration proceedings, pursuant to the Energy Charter Treaty.

Signed by Russia in 1994, the Energy Charter Treaty protects investors by ensuring fair treatment, non-discrimination and due process. It provides explicitly for international arbitration. GML's arbitration was administered by the Permanent Court of Arbitration in The Hague.

From 2005 to 2014, three renowned arbitrators headed the tribunal. One was selected by the Russian Federation, one by GML, and one by the Permanent Court of Arbitration since it administered the proceedings.

The arbitrators examined more than 4,000 pages of evidence. They presided over ten days of hearings on jurisdiction and admissibility, and 23 days of hearings on the merits. They heard more than 20 witnesses give evidence. Although the Russian Federation participated fully in the ten-year arbitration, it put forward not a single factual witness, despite the tribunal suggesting this would be helpful.

In its Final Award of July 2014, the tribunal concluded that:

The Peace Palace in The Hague, home of the Permanent Court of Arbitration

The Peace Palace in The Hague, home of the Permanent Court of Arbitration

In its Final Award, the tribunal ruled that Yukos had been illegally expropriated as part of a premeditated, political strategy. It awarded compensation of more than $50 billion to GML's wholly-owned subsidiaries, Yukos Universal Limited and Hulley Enterprises Limited, and to Veteran Petroleum Limited, a pension fund for the benefit of former Yukos employees.

The Russian Federation refused to pay the awards, and instead launched legal proceedings in The Netherlands, seat of the arbitration, to set them aside.

In light of the Russian Federation's refusal to pay the awards, GML launched enforcement proceedings in Belgium, France, Germany, India, the United Kingdom and the United States. Immediately, the Russian Federation threatened the governments of Belgium, France and the United States that any decision of their courts to recognise or enforce the awards would have severe repercussions. Belgium and France promptly adopted so-called ‘Yukos laws’ that would make it more difficult for any person to attach the assets of any foreign state.

In April 2016, The Hague District Court did not challenge the merits of the 2014 arbitral ruling, but set aside the award of $50 billion, saying that the tribunal lacked jurisdiction. This judgment has received no independent support from any legal commentator, and GML is confident that it will be overturned. On 13 March 2017, the former Yukos majority shareholders submitted their Statement of Appeal to the Court of Appeal in The Hague, and you can read our summary of it here.

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