Final judgement in the Yukos case – triumph of erstwhile shareholders

On 17 October, the ultimate Court of the Kingdom of the Netherlands upheld an arbitration ruling in the ‘Jukos case’, yet ordering the Russian Federation to pay compensation to erstwhile shareholders of that no longer existing company. The charge plus interest is over $65 billion. The Dutch institution thus confirmed the ruling which Moscow had repeatedly challenged, in which the Permanent Court of Arbitration in The Hague found the actions of the Russian authorities towards Yukos, then the largest Russian oil company, to be illegal. From 2003 to 2006, Kremlin bankrupted the company after imposing multi-billion-dollar penalties on it for alleged taxation arrears. The case was political: it was a state-owned acquisition of Yukos assets and the punishment of Mikhail Chodorkowski's main shareholder for political activity and questioning Vladimir Putin's policy, which led to the conviction of an entrepreneur for 10 years imprisonment.

The ruling of the Dutch court yet ends the legal dispute in favour of erstwhile Yukos shareholders, closing the Kremlin's way to further attempts to challenge the judgment. Due to the nature of the verdict, the order for repayment was issued by the Permanent Court of Arbitration, whose decisions stay in force besides outside the Netherlands. It is besides crucial that the ruling besides accepts jurisdictions of another countries (e.g. France and Belgium). Jukosu shareholders focused on GML Limited’s financial holding will most likely intensify their efforts to get the claim. However, the chances of recovering the full amount are limited – mainly due to its size and the fact that Russia torpedoes attempts to confiscate its abroad assets.

Comment

• The decision of the Dutch court will have a affirmative impact on the enforcement proceedings already in place in favour of erstwhile Yukosu shareholders. In respective countries (including Belgium and France) GML Limited is seeking to frost and seize Russia's assets in order to recover the funds it has ordered. The erstwhile shareholders had already achieved 2 tangible successes – in 2024 in the Netherlands, trademarks (including Russian alcohols) belonging to FKP Soyuzpłodoimport related to the Kremlin were sold for EUR 1.6 million, and in the United Kingdom, on the basis of a court ruling, the land owned by the Russian State was seized in London. Importantly, the Kremlin had previously successfully held back akin verdicts. Following the intervention of the Russian authorities, the Belgian court in 2017 annulled an earlier decision to take over Russian real property and bank accounts at the request of 1 of the erstwhile Yukosu shareholders.
• The ruling of the Dutch court is simply a symbolic triumph of erstwhile shareholders over the Russian state. At the last instance, the institution concluded a long-term judicial battle, which took place in many jurisdictions, at both national and global level. The court ruling was positively commented by Mikhail Chodorkowski and Leonid Niewzlin – the second is inactive a organization to the dispute as it holds dominant shares in a company representing erstwhile shareholders, or GML Limited.
• The Yukosu Decision does not straight translate into the destiny of Russian assets frozen in 2022 in the G7 countries. Although GML Limited may apply for assets belonging to a Russian State in an effort to recover its claim under the law, it is contrary to the fact that the freezing of Russian reserves belonging to the Central Bank of Russia constitutes a political decision alternatively than a legal decision. This in turn prejudges that these assets should be dealt with differently. Moreover, the ownership of central banks is under peculiar protection, which makes any enforcement of these measures more difficult.