UPDATE 3: Crt allows Russia not to pay 2 bln euros to Yukos owners

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MOSCOW, Jan 19 (PRIME) -- The Russian Constitutional Court has allowed the government not to fulfill the European Court of Human Rights’ decision on a 1.86 billion euro compensation to shareholders of defunct oil company Yukos, according to information obtained by PRIME at court on Thursday.

The court said that the ruling contradicts the Russian constitution, and Moscow has the right to reject the liabilities imposed on it if this is the only way to not violate the constitution, Court Chairman Valery Zorkin said.

The relations of Russian and European legislation should not have a subordinate character, but be built in the form of a dialogue. “The European court should respect the sovereignty of Russian legislation,” he said.

The European court did not deny that Yukos used “large-scale schemes of tax evasion,” he said.

“In this regard, the payment of an unprecedentedly high amount of money contradicts the constitutional principles of equality and justice, as the system did not receive large sums of tax payment from the company which it needed to fulfill public liabilities to the citizens of Russia,” he said.

This means that the fulfillment of the decision of the European Court on Human Rights on payments to former Yukos owners cannot comply with the Russian constitution, and Russia does not have to fulfill it, he said.

Still, Russia has the right to carry out certain payments on its free will to former owners of Yukos that suffered losses due to illegal actions of the company’s management on the expense of property of Yukos, like funds on foreign accounts, according to a statement of the Constitutional Court. But Russia should not use spending and revenues of the budget or property of the country to conduct the payments, the court said.

Daniel Holtgen, a spokesman for the Council of Europe, said in a statement that the council was worried about with the decision. The European human rights intergovernmental organization is “examining” the decision and “will communicate our position in due course,” he said.

In 2003, the Russian government accused management of Yukos of economic crimes. Several company officials were sentenced to jail for fraud and tax evasion. Its core owner, Mikhail Khodorkovsky, spent 10 years in jail before he was pardoned by President Vladimir Putin in December 2013. The company was declared bankrupt, and its assets were sold to state-owned Rosneft.

In July 2014, the European court obliged Russia redeem 1.86 billion euros to former Yukos owners due to violation of their right for legal protection and fair trial. The court decided the company suffered losses due to retrospective 1.3 billion euro fines for tax violations in 2000–2001, a 7% enforcement fee, and a disproportionate character of proceedings.

Russia’s Justice Ministry said then that the Strasbourg court based its decisions on interpretations of the human rights convention that contradict the Russian constitution.

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