Daimler has plans to take…
As tensions between Qatar and…
Moscow says it will appeal a decision by the Permanent Court of Arbitration in The Hague ordering the Russian government to pay more than $50 billion in compensation to shareholders in the now-defunct oil giant Yukos because it seized the company's assets.
The Russian Finance Ministry issued a statement on July 28 saying it had found “serious flaws” in the decision, and called the ruling “politically biased.”
In 2006, Yukos went bankrupt after Moscow accused it of massive tax evasion and demanded that it pay $27.5 billion in alleged arrears. The company's former shareholders, in documents filed with the Hague court, have sought to recover at least $114 billion for what they called the Russian government's illegal dismantling of Yukos.
The entity that gained the most from Yukos' demise is Rosneft, which is owned by the Russian government and the country's largest oil producer.
Court documents show that in its ruling, the Hague court ordered Russia to pay the Yukos investors $50.02 billion and put up $60 million to cover legal costs.
Despite Russia's pledge to appeal, many observers say it has few options, especially because the charter of the Hague court says its decisions on compensation are “final and binding.”
Antonios Tzanakopoulos, a law professor at Oxford University, told Reuters that any appeal before the court would essentially turn into a new arbitration case, a process that must be approved by both sides. And even if the former Yukos shareholders agreed to such an appeal, the process would be a long and difficult case for Moscow.
Related Article: Russia’s Ambitious Energy Diplomacy in Latin America
In 2004, and again in 2007, the Russian government unilaterally auctioned off billions of dollars worth of Yukos' assets to satisfy its demand for alleged unpaid taxes. Meanwhile, in 2005, Mikhail Khodorkovsky, who founded Yukos and once was its leading shareholder, was sentenced along with his business partner, Alexander Lebedev, to eight years in prison on tax-fraud convictions.
In a subsequent case, Khodorkovsky and Lebedev were convicted of money laundering and embezzlement of oil, adding a year to each man's sentence. In December 2013, Russian President Vladimir Putin pardoned Khodorkovsky, who moved to Switzerland as soon as he was released from prison. Putin pardoned Lebedev the next month.
Khodorkovsky has given up his financial interest in Yukos. The current majority shareholder is the GML group, which issued a statement welcoming the award ordered by the Hague court as “the largest in international arbitration history.” It also said it was prepared to continue the fight if Moscow follows through on its intention to appeal.
Emmanuel Gaillard, the head of Shearman and Sterling's international arbitration group, which represents GML in courts, told a news conference in London that the majority investor is “fully confident” that the Hague court will uphold its decision.
By Andy Tully of Oilprice.com
Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com