The appeals court upheld the decision according to which Russia must pay more than $50 billion to ex-YUKOS shareholders.

The appeals court upheld the decision according to which Russia must pay more than $50 billion to ex-YUKOS shareholders.


The Court of Appeal upheld the decision of the Hague Arbitration, which obliged Russia to pay more than $50 billion to the ex-shareholders of Yukos. According to the appeal, the Russian Federation was late in filing a statement about the plaintiffs’ deception of the arbitrators, but this information would still not have affected the outcome of the case. The allegation of fraud was the only one that could be tested; other grounds for reversal were rejected. The Russian Federation may again go to court with an argument about deception, but this will not stop the execution of the decision. Whether plaintiffs can recover assets of the Russian Federation frozen in connection with hostilities is a controversial issue that requires separate decisions by the states where the property is located. In addition, lawyers note, Ukraine also lays claim to it.

The Amsterdam Court of Appeal rejected Russia’s appeal against the decision to recover more than $50 billion from it in favor of former Yukos shareholders (Yukos Universal, Hulley Enterprises and Veteran Petroleum). It was issued in 2014 by the Hague Arbitration, which found that the Russian Federation should pay compensation for the illegal expropriation of the oil company’s assets. Russia appealed it in the Dutch state courts. In 2016, the District Court of The Hague overturned the decision, finding that the arbitration tribunal did not have jurisdiction to consider the claim because Russia had not ratified the Energy Charter Treaty.

The Hague Court of Appeal did not agree with him, which in 2020 recognized the decision to collect compensation as legal and enforceable. Russia challenged this in the Dutch Supreme Court, which considered only one argument important – about the alleged fraud and deception of the arbitrators on the part of the ex-YUKOS shareholders. To test its impact on the possibility of overturning the arbitration award, the case was sent in November 2021 to the Amsterdam Court of Appeal, which published its ruling on February 20.

Late Arguments

The Russian Federation asserted two main arguments about the plaintiffs’ fraud. Firstly, concealment of information that these companies are controlled by “Russian oligarchs”, who, according to the defendant, illegally purchased Yukos shares in 1995–1996. The appeal court considered that the statement was “too late”: Russia learned about this deception in 2015-2016 and could point to it in the trial court. In addition, the appeal decided that the issue of plaintiffs’ control was “irrelevant to the arbitrators’ decision.”

Secondly, the Russian Federation announced the affiliation of the Cato Institute, whose employee testified in the arbitration, with the structures of YUKOS. As it turned out after the arbitration decision, in the framework of an American trial, in 2013, YUKOS funds transferred $200 thousand to the institute. The Russian side called the arbitrators’ decision “largely based” on the testimony of an institute employee. But the Amsterdam court found that the witness’s statements were of “secondary importance” compared to other evidence and facts, so it was “unlikely that without these statements the result of the arbitration would have been different.”

As a result, the appeal court rejected the Russian Federation’s complaint, ordering it to pay legal costs in the amount of €121 thousand.

“It follows from the decision that Russia did not pass the test of compliance with due process because it could have raised arguments about deception earlier – either in the arbitration itself or at least in the court of first instance. Despite this, the appeal nevertheless considered the defendant’s arguments and considered that even if this information and documents were available, the arbitrators’ decision would have remained the same,” points out Ilya Rachkov, partner at the NSP law office.

Russian authorities did not comment on the court’s decision on February 20. “More than 20 years after the brazen expropriation of Yukos and more than 10 years after the largest damages award in the history of arbitration, more than $50 billion, was ordered, the Amsterdam court has rejected Russia’s last remaining legal excuse: time to pay,” said the director of GML (representing former majority shareholders of Yukos) Tim Osborne. “We will focus on ongoing enforcement proceedings against Russian state assets in the Netherlands, England and the United States and do not rule out that we will begin enforcement proceedings in other countries.”

Taking into account interest, the amount of payments now amounts to $57–58 billion. After winning the Hague arbitration, the plaintiffs began procedures for searching for assets of the Russian Federation and enforcing the decision in different countries. In Belgium and France, assets of institutions associated with Russia were arrested. But later, most of the arrests were lifted, since the property did not belong to the state, but to organizations controlled by it.

Consideration of requests to seize assets continues. Thus, in January 2024, the High Court of London arrested a land plot in Kensington owned by the Russian Federation, GML reported. According to the Irish Examiner, it was planned to build housing on the site for employees of the Russian embassy and a school for their children.

Misfortune hasn’t helped yet

Lawyers are confident that Russia will exercise its right to again file a complaint with the Dutch Supreme Court. “But it is impossible to predict how the new appeal to the Supreme Court will end,” says managing partner of Bartolius Bank, Yuliy Tai.

Denis Krauyalis, an adviser in the dispute resolution practice of Tomashevskaya & Partners, believes that “the chances of an appeal decision being overturned are quite small, unless the defendant proves that the fraud was significant and could have influenced the outcome of the original proceedings.” “The chances of replaying the case in the Dutch Supreme Court are low, given that new arguments cannot be presented at this stage without good reasons why they were not announced earlier,” adds Maxim Kulkov, managing partner of Kulkov, Kolotilov and Partners. In any case, such a complaint does not entail a mandatory suspension of processes for the enforcement of an arbitral award in other countries; each court will decide this issue independently, clarifies Ilya Rachkov.

You shouldn’t expect a quick recovery, lawyers say. “The former shareholders have not stopped trying to enforce the decision in the United States or Europe, but so far, obviously, without much success,” notes Andrey Panov, an adviser to the Allen & Overy law firm. Ilya Rachkov recalls that “state property abroad is generally protected by diplomatic immunity, but there are exceptions to this rule, for example, when the asset is used not for public functions, but for profit.”

Meanwhile, in the last two years, the situation with the protection of Russian assets abroad has seriously changed due to the consequences of military operations in Ukraine.

In particular, property worth hundreds of billions of dollars was blocked under the actual control of foreign states.

Lawyers have different assessments of the likelihood of foreclosure in the YUKOS case on the frozen assets of the Russian Federation in Europe and the United States. “The sanctions legislation does not currently provide for the possibility of recovering the country’s frozen assets as part of the execution of international arbitration decisions and other court decisions,” notes Denis Krauyalis. Yuliy Tai agrees that the plaintiffs cannot foreclose on the frozen assets of the Russian Federation: “There are no legal grounds for this – sanctions law and enforcement proceedings must not be confused.”

“Firstly, not everything frozen is the property of the state,” adds Andrey Panov. “Secondly, the freezing of assets due to sanctions restrictions does not make them a more convenient target for foreclosure under arbitration decisions, since sanctions do not cancel the state’s immunity from execution.”

Ilya Rachkov, on the contrary, considers this possible, especially in the current conditions: “It all depends on the good or bad will of a particular country, whether it wants, in principle, to foreclose on Russian state property on its territory or not.” Denis Krauyalis also “does not exclude such a risk in relation to federal property,” which, in his opinion, can include “frozen assets of the Central Bank.”

Maxim Kulkov emphasizes that “the fate of the frozen billions as a whole is still not determined,” adding that the EU recently approved only the reservation of profits from frozen assets for possible distribution to Ukraine. To seize the assets themselves, lawyers explained to Kommersant, most likely, a separate decision from each country will be required (see “Kommersant” dated December 24, 2023), and in addition to the range of assets seized from Russia, the purposes for which they can be transferred must also be determined.

Moreover, according to Ilya Rachkov, for former YUKOS shareholders, “the situation is complicated by the fact that the queue of those wishing to foreclose on Russian assets abroad has been supplemented by Ukraine with its huge demands.”

The lawyer believes “it is likely that foreign states will withhold payments from frozen assets until a settlement is reached on Ukraine, including compensation for damage caused by military actions.” In February, Advisor to the President of Ukraine Oleg Ustenko estimated direct and indirect damage to the country from the military conflict at $1 trillion.

In any case, “whether the frozen Russian assets will be withdrawn, whether they will go to help Ukraine or whether they will be given to creditors of the Russian Federation (including ex-YUKOS shareholders) is rather a political question” that can be resolved “for example, by the EU and the G7 together “Maxim Kulkov believes. According to Ilya Rachkov, it is also possible that each state on whose territory there is frozen property of the Russian Federation will be given “the right to independently decide” to whom and for what purposes these funds should be allocated.

“If we talk about Ukrainian entrepreneurs who are suing Russia in international investment arbitration, they have approximately equal rights with ex-YUKOS shareholders, they protect their investments. And the one who quickly manages to identify assets of the Russian Federation that are not protected by immunity will be the one who will foreclose on them,” explains Andrey Panov. In his opinion, “former Yukos shareholders may have more resources for disputes than many other investors, but even they have not yet managed to recover Russian property, and it is not a fact that they will succeed in the future.” However, Ilya Rachkov points out, “history knows of cases when debtor states still paid off their debts, but with a great delay, sometimes decades.”

Anna Zanina, Evgeniy Khvostik


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