Russia Faces $50 Billion Payout From Seizure of Oligarch Oil Assets
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Russia may have to pay a record $50 billion arbitration
ruling after a Dutch court ruled in favor of the former owners of Yukos Oil Co.
The ruling by The Hague Court of Appeal Tuesday reinstates
an award issued in 2014 by an arbitration panel and could set off a new wave of
efforts to seize Russian state assets around the world. The decision is the
latest twist in a 15-year legal saga that has raged between the Kremlin and the
owners of what was once Russia’s biggest oil company.
“We are ready for war, and a legal battle is better than any
other kind,” said Leonid Nevzlin, one of the former Yukos owners. “We can now
begin a full-scale seizure of assets that are recognized as the property of the
Russian state.”
The decision can be appealed to the Dutch Supreme Court.
Russia will continue to defend its interests in the case and
plans to appeal, the country’s Justice Ministry said in a statement.
Long-Running Conflict
The Yukos affair was a pivotal moment early in President
Vladimir Putin’s now 20-year rule that reestablished the Kremlin as the
ultimate power in Russia after the chaotic post-Soviet transition. The arrest
of Yukos’s founder Mikhail Khodorkovsky, Russia’s richest man at the time, on
the tarmac of a Siberian airport in 2003 sent a clear signal to other oligarchs
that their interests were now subordinate to those of the state.
The judgment could further strain relations between Russia
and the Netherlands, which accuses the Kremlin of involvement in the 2014
downing of Malaysia Airlines Flight 17 over eastern Ukraine, in which 298
people died. Putin has denied any Russian role.
In the wake of Khodorkovsky’s arrest, Yukos was dismantled
amid billions of dollars of tax claims that he described as revenge for his
funding of opposition parties. Putin issued a pardon to free Khodorkovsky in
2013 after a decade in prison on convictions for fraud and tax evasion linked
to Yukos. He now lives in London, where he campaigns in exile for an end of
Putin’s system.
Khodorkovsky sold his claims to Yukos to his former partners,
including Nevzlin, who argue that their property was expropriated by the
Russian state.
Kremlin Defiance
The Hague court found there was no conflict with Russian law
in regards to a treaty that Russia signed, but never ratified, according to a
copy of the ruling. In 2016, an appeals court had overturned the initial
ruling, citing the treaty.
The Kremlin has said it isn’t bound by the award, which
amounts to about 3% of Russia’s gross domestic product. Russia’s Constitutional
Court ruled in 2017 that the country wasn’t liable to pay billions of dollars
in Yukos-related damages ordered by the European Court of Human Rights. Putin
in January proposed amending the constitution to give Russian law precedence
over international obligations.
After the 2014 ruling, the former Yukos shareholders sought
to seize assets in countries including France, Belgium, the U.S. and India. In
Belgium and France, state assets that had been frozen were unblocked following
Russian protests.
Nevzlin Tuesday declined to comment on what assets the
shareholders might seek to seize. In 2014, a representative of the former
shareholders said they may target state-owned Rosneft PJSC, which took over
most of Yukos’ assets and operates in 25 countries around the world.
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