YUKOS Shareholders Hold Inappropriate “Seminars” Attempting to Influence the Dutch Supreme Court in Litigation Against the Russian Federation
On 18 February 2020, the Court of Appeal of The Hague issued a fundamentally flawed Judgment reinstating the annulled arbitration awards rendered in 2014 against the Russian Federation in favor of three YUKOS majority shareholders.
In reality, these three YUKOS majority shareholders are simply shell companies established by wealthy Russian oligarchs, who illegally acquired their YUKOS shares through bribery and fraud. The Russian Federation will appeal the Judgment to the Dutch Supreme Court, and is confident that it will prevail when an objective court applies the rule of law.
The Russian Federation has learned that the YUKOS shareholders are hosting “seminars” in multiple cities around the world in March and April 2020 as part of a public-relations campaign. The Russian Federation strongly objects to the YUKOS shareholders’ one-sided, self-promoting “seminars,” which are being held while the litigation remains ongoing and is subject to further appeal. Media events for the sole purpose of influencing a pending legal dispute are highly inappropriate and contrary to any adversarial system of justice. Notably, the Russian Federation did not organize any such inappropriate seminars following the YUKOS shareholders’ loss before the District Court of The Hague in 2016.
Moreover, the Judgment of Court of Appeal contains serious, fundamental flaws. Among other errors, the Court of Appeal entirely avoided a decision with regard to the significant and overwhelming evidence of corruption by the YUKOS shareholders—i.e., bribes paid by Yukos Universal Limited, which is one of the claimants in the arbitration—at the time that they allegedly made their (fake) investment. Under international law, these acts of corruption deprived the Arbitral Tribunal of its jurisdiction in the dispute and rendered all claims inadmissible. Moreover, the Court of Appeal’s Judgment effectively turned a blind eye to clear evidence of tax evasion and money laundering, which were the exclusive purposes for which the YUKOS shareholders were established as shell companies in known tax havens.
The Court of Appeal likewise ignored the fact that the YUKOS shareholders are sham entities controlled by Russian oligarchs—thereby allowing Russian nationals to pursue international arbitration against the Russian Federation itself. This is a flagrant abuse of the Energy Charter Treaty, which was designed to attract foreign investment, not to create a lopsided system of secret courts for wealthy elites. Significantly, “round-trip” or “U-turn” investments do not contribute anything to a host state’s economy. Neither the Russian Federation nor any other signatory to the Energy Charter Treaty intended to permit such abusive arbitrations. Indeed, the European Commission and many states within the European Union have directly rejected the approach adopted by the Court of Appeal.
Finally, the Court of Appeal erroneously found that the Russian Federation “unambiguously” consented to submit disputes to arbitration under the Energy Charter Treaty. The history of these proceedings, however, refutes any notion of an “unambiguous” consent to arbitration. As to how the Energy Charter Treaty and Russian law are to be interpreted, the District Court disagreed with the Arbitral Tribunal—and then the Court of Appeal disagreed with both the District Court and the Arbitral Tribunal. In other words, all three adjudicators interpreted the supposed arbitration agreement in completely different ways. Under such circumstances, it is obvious that the Russian Federation did not “unambiguously” agree to arbitration with the YUKOS shareholders (or any other claimants).
The Russian Federation is confident that the Dutch Supreme Court and other courts of competent jurisdiction will effect justice and reinstate the Judgment of the District Court upon appeal.