Page 6 - FSUOGM Week 45 2021
P. 6
FSUOGM COMMENTARY FSUOGM
Dutch court overturns award to
Yukos shareholders
The Dutch Supreme Court overturned a decision forcing the Russian government
to pay a $50bn arbitration award to the former Yukos shareholders
RUSSIA THE battle between the Kremlin and former 2013, he moved to Germany and then the UK
Russian oil company Yukos took a new twist on where he has become an outspoken critic of the
November 5 when the Dutch Supreme Court Kremlin, funding several pro-democracy NGOs
overturned a decision forcing the Russian gov- including his own Open Russia foundation. The
ernment to pay a $50bn arbitration award to the Kremlin tolerated the criticism until the crack-
former Yukos shareholders and sent the case down on dissent began this year ahead of the
back to appeal, Reuters reports. September Duma election and declared Open
“Today the Supreme Court quashed the Russia as an “undesirable” organisation, and its
appeal court’s final judgment as well as the managers closed it in May this year to prevent
court’s preceding judgment,” a court statement the arrest of its members and management.
said as cited by Reuters. “The case has been The Dutch ruling on November 5 came after
referred to the Amsterdam Court of Appeal for seven years of legal wrangling in Dutch courts fol-
renewed judgment.” lowing an arbitration tribunal ruling in 2014 that
The Supreme Court judges accepted one of found Moscow had violated its international obliga-
the Russian government’s grounds of appeal. tions by taking actions designed to bankrupt Yukos.
“The Russian Federation’s argument that the The decision is the second time that Dutch
shareholders have committed fraud in the arbi- judges set aside the award after The Hague Dis-
tral proceedings has been wrongly dismissed by trict Court dismissed it in 2016, only to see it
the Court of Appeal on procedural grounds and re-imposed on appeal.
should have been judged with respect to con- The Russian authorities have been vigorously
tent,” it found. “Therefore the judgements of the defending their decision to bankrupt Yukos.
Court of Appeal cannot be upheld.” Despite its improved corporate governance, as
It rejected Russia’s other grounds of appeal, far as the shareholders were concerned the com-
including complaints that the court did not have pany continued to take advantage of Russia’s
jurisdiction. The judgment on that issue was chaotic regulations and managed to reduce its
final, it said. effective tax rate to around 5%, despite the head-
The decision will potentially add many more line rate of 24%.
years of legal wrangling in the already long-run- Khodorkovsky told this correspondent in an
ning dispute. Previously courts had awarded the interview in the early noughties that he had done
shareholders the $50bn award after deciding the nothing wrong and that he had hired a team of
Russian government had illegally appropriated lawyers to make sure all the company's decisions
Yukos’ assets. were legal, even if they were extremely advanta-
Yukos collapsed in 2006 after its owner geous for the company.
Mikhail Khodorkovsky was arrested in 2003 “It's the same thing any Western company
on fraud charges and jailed for a decade. As the would do. There is a whole industry in the USA
stock was widely held by international investors trying to work out how to optimise tax pay-
the case became a cause célèbre and the Kremlin ments,” Khodorkovsky said at the time.
was widely accused of jailing Khodorkovsky in a Former Yukos shareholders have sought to
state-sponsored asset grab. recover their assets by taking their case to the
The Yukos assets were then sold off in a highly Hague-based Permanent Court of Arbitration
controversial auction that was won by the state- (PCA), from where the case proceeded through
owned Rosneft and today form the basis of the the Dutch legal system.
company’s oil production, making it the biggest Legal proceedings seeking to enforce the
oil company in Russia. awards were subsequently lodged in the Nether-
Khodorkovsky is controversial figure and was lands, the UK and the United States by subsidiaries
called the “most corrupt oligarch in the most cor- of GML, formerly known as Group Menatep Ltd,
rupt country in the world,” in a New York Times which held around 70% of the shares in Yukos.
editorial in 1999, but after he cleaned up his cor- GML said in a statement it had won substantive
porate act in 2000 and began to promote good grounds of appeal and it was “confident that the
corporate governance the stock soared, making Court of Appeal in Amsterdam will dismiss the
him the richest man in the world under 40. baseless allegations raised by the Russian Feder-
After he was released from jail in December ation, and the arbitral awards will be upheld.”
P6 www. NEWSBASE .com Week 45 10•November•2021