YUKOS Case Goes to European Court
The European Court of Human Rights (ECtHR) is due on to hear a $98 billion claim being brought against the Russian government by executives from YUKOS, for what they say was the unlawful expropriation of Mikhail Khodorkovsky's oil major.
The claim, which is the largest to be heard by the court in its 50-year history, more than five years after they first lodged the suit. The case has been delayed twice already due to Russian officials being unable to attend which, according to the Financial Times is an indication that Russia is taking the case seriously.
Headed by Steven Theede, the company's former chief executive, and Bruce Misamore, its former chief financial officer, YUKOS is claiming under several articles of the European Convention on Human Rights that the Russian Government unlawfully took YUKOS' assets as part of a politically motivated attack. The claim alleges that YUKOS' rights to a fair hearing in Russian courts were violated and that back taxes were selectively and retroactively applied against the company. The Financial Times explains that the claim's size is "based on an estimate from an independent assessor taking into account the size of the back-taxes claims and the lost profits incurred since the company's forced sale."
YUKOS Spokeswoman, Claire Davidson, said: "This is a real opportunity to demonstrate in an open and independent court what happened to YUKOS and show the series of actions that were to the detriment of YUKOS". Critics of Russia's actions believe former YUKOS head Mikhail Khodorkovsky's eight year sentence was driven by, then President, Vladimir Putin's bid to consolidate political and economic power.
The New York Times adds that, though "deeply entangled in politics and industrial policy, the YUKOS Case, the first of several instances in which petroleum assets were seized by the Putin government, also became a touchstone on fundamental issues of rule of law." Davidson commented: "The fact is, YUKOS was treated differently, separately and retrospectively."
Bloomberg quotes Lilia Shevtsova, a senior political analyst at the Carnegie Endowment for International Peace's Moscow Center, saying that YUKOS "is a Russian political hot potato." She added that should the government lose, it would be "painful," in terms of "international investors coming into Russia and the political standing of Russia."
The judges are expected to retire following the hearing on March 4, and could take several months to reach a verdict after considering more than four years of written submissions from both sides. Michael Smyth, Head of Public Policy at Clifford Chance is quoted in The Financial Times as saying: "even if the Yukos executives won their case, it would be an "exceptional outcome" for them to be given the size of award they are seeking ...This is not a court that is in the habit of awarding large sums of money - unlike national courts."
Bloomberg notes that former YUKOS controlling shareholder GML Ltd. is separately pursuing an arbitration claim for as much as $100 billion from Russia. GML claims the Energy Charter Treaty obliged the government to protect YUKOS investments.