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Russia ordered to pay $50bn in Yukos case

Arbitration court in Hague says oil firm was forced into bankruptcy and its assets sold off for political purposes.

Last updated: 28 Jul 2014 11:29
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The claimants had wanted a total compensation package of $100bn from Russia's government [Reuters]

The arbitration court in The Hague has ordered Russia to pay shareholders of Yukos $50bn in compensation over its seizure of the one-time oil giant, according to the main shareholder GML Ltd.

The Permanent Court of Arbitration ruled on July 18 that Russia pay the claimants "in excess of $50bn" after finding it had forced Yukos into bankruptcy and sold its assets to state-owned businesses for political purposes, the claimant's lawyer Emmanuel Gaillard said.

Tim Osborne, director of the GML group of shareholders, which made the claim, said it was the largest arbitration award ever.

"The majority shareholders of Yukos Oil were left without compensation for the loss of their investment when Russia illegally expropriated Yukos," he said in a statement.

"It is a major step forward for the majority shareholders, who have been battling for over 10 years for this decision."

Mikhail Khodorkovsky, former chief executive, had built Yukos into Russia's largest investor-owned oil company after the unravelling of the Soviet Union.

Khodorkovsky spent ten years in prison before he was pardoned by Putin in December last year. Khodorkovsky has said he is not party to the case and is not interested in its outcome.

Russian Foreign Minister Sergey Lavrov, commenting earlier Monday, said Russia will be appealing the ruling.

"Authorities who are representing Russia in this trial will use all possible legal means to defend their position," Lavrov said.

Treaty violation

Dmitry Babich, a political analyst at the Voice of Russia radio station, told Al Jazeera that he thinks Russia would not be paying the compensation. He said that Yukos shareholders included convicted criminals.

"So even for the Russian public opinion, to give $50bn to these characters who made their money in the post-Soviet years, this is out of the question even from the political point of view, even for President Putin and the Russian state."

Leonid Nevzlin, the biggest ultimate beneficial owner expressed satisfaction with the court's decision. 

"I am very pleased the international tribunal in the Hague decided that Russia violated international laws and illegally expropriated Yukos," said Nevzlin.

GML sought relief from the international court under the Energy Charter Treaty, which creates the legal basis for an open international energy market. The holding company claimed that Russia violated the treaty, which requires swift and fair compensation if assets are expropriated.

GML says that even before Russia filed its tax claim against Yukos, the company had paid $15bn in taxes for the period on total income of $29bn.

According to GML, the government claimed the company owed an additional $27 billion, bringing Yukos' total tax liability for the period to $42 billion, which was more than the company's gross income.

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Source:
Associated Press
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