Yukos shareholders claim $5bn appeal award from Russia

Yukos shareholders claim $5bn appeal award from Russia
A former Yukos building in Moscow.
By bne IntelliNews July 30, 2021

The Permanent Court of Arbitration in The Hague has awarded Yukos Capital $5bn in compensation in its case against Russia, including interest and legal costs, RBC business portal reported on July 29 citing an announcement from the shareholders of the dismantled Russian oil giant Yukos.

Reportedly, the case concerns the loans between Yukos Capital and Yukos, and is separate from the over $50bn case being pursued by former shareholders of Yukos, a more than decade-old legal battle followed by bne IntelliNews.

Initially Yukos Capital claimed $13bn in damages in the "second wave" of cases against Russia that followed the first cases in Dutch courts. Yukos Capital claims that loans issued to Yukos and its subsidiaries had not been repaid after the bankruptcy and the liquidation of the private oil major.

Yukos was once Russia’s biggest oil producer and briefly its most valuable company, having accumulated a number of major Siberian oilfields during privatisation deals in the 1990s, including the controversial loans-for-shares scheme. The company’s fortunes changed in 2003, when the government accused it of owing $27bn in back taxes. In October of that year its owner Mikhail Khodorkovsky, once Russia’s richest man, was arrested on charges of fraud and put in prison.

Moscow is widely seen as having instigated Yukos’ downfall in order to reassert its control over the oil industry. Specifically, the Kremlin objected to Khodorkovsky’s plans to build a privately owned oil pipeline from Siberia to northern China that the state considered the prerogative of the government and foreign policy. Khodorkovsky was also accused of bribing many deputies in the Duma and Federation council to give him influence over the political process.

The Permanent Court of Arbitration of The Hague in 2014 concluded that the Kremlin had staged a co-ordinated attack on Yukos in order to bring its assets back under state control, and ordered Russia to pay $50bn in compensation to shareholders. 

Two years later, the District Court of The Hague overturned this ruling, claiming the arbitration judges had no jurisdiction in the case, as Russia had never ratified the Energy Charter Treaty protecting international investment.