Our Knowledge

22.Feb.2017

Yukos saga continues as Russia bound by provisional application of Energy Charter Treaty

There is no end in sight to the ongoing Yukos saga.  Another arbitration against Russia is being heard with regard to the collapse of Yukos Oil Company. The latest award on jurisdiction conflicts with the ruling of a Dutch court which overturned an earlier award of US$50 billion in favour of the former majority shareholders of Yukos.

The latest claim has been brought by Yukos Capital SARL and administered by the Permanent Court of Arbitration in The Hague under UNCITRAL rules and heard by a tribunal seated in Geneva. Yukos Capital SARL was a former indirect subsidiary of Yukos which financed transactions prior to Yukos bankruptcy.  Limited information is publicly available about these proceedings, but the claims are believed to relate to finance transactions that preceded Yukos’ bankruptcy valued at between US$1.5 billion and US$15 billion.

The tribunal in this latest matter has made an award on jurisdiction holding Russia to be bound by provisional application of the Energy Charter Treaty, in contradiction of the ruling on 20 April 2016 by The Hague District Court which annulled an earlier Yukos award against Russia, holding that the Energy Charter Treaty had not been ratified by Russia and could not apply. As the tribunal has ruled on jurisdiction Yukos Capital SARL’s claim will now be heard and determined on its merits.

Further, the ruling of The Hague District Court annulling the earlier award made in favour of the majority shareholders of Yukos is being appealed and the former majority shareholders have until mid-March to file their appeal against the setting aside of the $50 billion award. Russia’s response is scheduled for September. Meanwhile court cases relating to attachments with regard to the award continue in many jurisdictions.

This will not be the last instalment in the Yukos saga, which despite years of arbitration and litigation across many jurisdictions seems far from reaching its final chapter.