Russia to appeal against ruling to pay $2.6 bln to Yukos Capital

MOSCOW, Jul 29 (PRIME) -- The Permanent court of Arbitration in the Hague has turned down the majority of claims of Yukos Capital, a company that unites former shareholders of oil company Yukos, against Russia, but obliged the country to pay U.S. $2.6 billion plus interest and costs, Moscow will appeal against it, the Prosecutor General’s Office said on Thursday.

Yukos Capital said in a statement that it won a case against Russia and that Moscow now has to pay around $5 billion to the company.

“The international arbitration court has denied satisfaction of the majority of claims of Yukos Capital against the Russian Federation. … The court decided to oblige the Russian Federation redeem $2.6 billion plus interest and arbitration costs by majority of votes. Here the final arbitration decision cannot be considered legal and grounded. The Prosecutor General’s Office will definitely challenge this decision,” the authority’s statement read.

The office said this arbitration case was part of a so-called second wave of suits of former Yukos’ owners and affiliates against Russia that was concluded on July 23. During the proceedings, Russia consistently challenged competence of the arbitration panel and legitimacy of claims. Russia’s arguments derailed the majority of claims of Yukos Capital.

The Prosecutor General’s Office said that the arbiters failed to reach a unanimous decision on the suit with two of the three arbiters preparing three special opinions on the case. The arbiters disagreed on whether they had jurisdiction to consider the suit and on the compensation that Russia now has to pay to Yukos Capital in spite of fictitious intra-corporate loans that were part of a larger illegal scheme of tax avoidance and money withdrawal done by Yukos shareholders.

In 2003, the Russian government accused the management of the then top oil company Yukos of economic crimes. Several company managers were sentenced to prison for fraud and tax evasion. Its core owner, Mikhail Khodorkovsky, was charged with several sequential sentences and spent 10 years in jail before he was pardoned by President Vladimir Putin. The company declared bankruptcy, and its assets were sold to state-owned oil major Rosneft.

In 2014, the Permanent Court of Arbitration in The Hague ruled that the Russian government must pay a $50 billion compensation to GML, which unites former Yukos owners. Russia refused, and the shareholders sent claims to several countries, asking them to help with fulfillment of the court order. Russian asset seizures began in France and Belgium, and the Russian government contested them.

The District Court of the Hague cancelled the lower court compensation decision in 2016 on the grounds that the case is beyond jurisdiction of the Permanent Court of Arbitration in the Hague, but the Hague Court of Appeal overturned the decision in February 2020. The Supreme Court of the Netherlands is still considering the now-$57 billion case, and it is to make a decision on September 24.

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