Russia Wins Bid to Topple $50 Billion Yukos Award for Now

(Bloomberg) -- Russia succeeded in overturning part of a judgment for a record $50 billion to former shareholders of Yukos Oil Co., meaning the 16-year legal saga that raged between the Kremlin and the owners of what was once Russia’s biggest oil company is set to continue.

The ruling by the Netherlands’ highest court Friday overturned a prior opinion into the bankruptcy of Yukos. The Dutch Supreme Court said in a judgment that a lower court should review one ground of the case again.

The 2003 arrest of Russia’s richest man, Mikhail Khodorkovsky, and subsequent seizure of Yukos for back taxes marked a watershed in the early days of Vladimir Putin’s presidency as he sought to reestablish the Kremlin as the country’s undisputed center of power after the chaotic post-Soviet transition. 

After a Dutch arbitration court ordered Russia to pay the damages in 2014, former Yukos shareholders sought to seize assets in countries including France, Belgium, the U.S. and India. In Belgium and France, state assets that had been frozen were unblocked following Russian protests.

The Kremlin has said it isn’t bound to pay the largest arbitration award ever.

GML, a holding company belonging to former Yukos shareholders, has said the ex-owners may target state-owned Rosneft PJSC, which took over most of Yukos’ assets and operates globally, if they are successful.

GML initiated its case in 2005 under the Energy Charter Treaty, an international agreement that in part regulates investments in the energy industry. Russia signed but never ratified the treaty. 

The shareholders said they would study the ruling, insisting they were “confident that the Court of Appeal in Amsterdam will dismiss the baseless allegations raised by the Russian Federation.”

The Russian prosecutor general’s office said in a statement that the Dutch Supreme Court should have rejected the arbitration award in its entirety.

“The Russian Federation expects that the appeals court in Amsterdam will interpret the remaining arguments of the questions in accordance with international law,” the office said.

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