Page 6 - FSUOGM Week 45 2021
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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
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