A Dutch court on Wednesday overturned a July 2014 ruling of the Permanent Court of Arbitration that ordered Russia to pay $50 billion in damages to former majority shareholders of the now-defunct Yukos oil company. However, the former shareholders, who have accused the Russian government of “devious and calculated expropriation” of Yukos’ assets, said they would appeal the decision.
“We will appeal this surprise decision by The Hague Court and have full faith that the rule of law and justice will ultimately prevail,” Tim Osborne, director of GML — the holding company belonging to four former Yukos owners — reportedly said.
Yukos was once Russia’s largest oil company and its former CEO Mikhail Khodorkovsky, an opponent of Russian President Vladimir Putin, was once one of the richest men in the country. In 2003, Khodorkovsky was arrested and imprisoned for 10 years on fraud and tax evasion charges — an allegation he denounced as being politically motivated.
Following his arrest, Moscow took control of Yukos and sold off its main assets to state-controlled Russian companies.
In July 2014, the Permanent Court of Arbitration in The Hague ruled that the Russian government owed the company’s former shareholders a compensation of $50 billion, stating that Yukos “was the object of a series of politically motivated attacks by the Russian authorities that eventually led to its destruction.”
However, on Wednesday, the Hague District Court overturned the decision, ruling that the arbitration court did not have the appropriate jurisdiction as the case was brought to it under the Energy Charter Treaty — an agreement Russia signed but never ratified.
“The Russian Federation was not bound by the provisional application of the arbitration regulations,” the court reportedly said in its ruling. “The Tribunal wrongly declared itself competent in the Arbitration to take cognizance of the claims and issue the ensuing award.”