Netherlands Supreme Court overturns $50 billion ruling against Russia

The Supreme Court of the Netherlands overturned judgments of the The Hague Court of Appeal on Friday. The judgments — dated September 25 of 2018 and February 18 of 2020 — ordered Russia to pay $50 billion as part of an arbitration award to shareholders of Yukos.

Yukos was a Russian company engaged in oil production which was owned by Mikhail Khodorkovsky, a Russian oligarch. Khodorkovsky was imprisoned for 10 years in respect of his conviction for tax evasion and fraud. The Russian government seized Yukos’ assets to recover the dues owed by Khodorkovsky. Rosneft, another Russian oil company, absorbed most of these assets.

In 2005, shareholders of Yukos brought a case to the Permanent Court of Arbitration to recover these assets. The tribunal ruled in 2014 that Russia had breached its obligations under the Energy Charter Treaty by taking actions designed to bankrupt Yukos. The award was set aside in 2016 but was later accepted on appeal.

The Supreme Court accepted that the Court of Appeal had wrongly rejected the claim by Russia regarding shareholders committing fraud in the arbitral proceedings. The Supreme Court found that the claim should have been judged with respect to the content rather than procedural grounds.

The court has sent the case back to the Amsterdam Court of Appeal.