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Dutch Court Overturns $50 Billion Ruling Against Russia in Yukos Case

Dutch Court rules Hague Tribunal had no jurisdiction to hear Yukos case in significant legal victory for Russia

This post first appeared on Russia Insider

Russia has won a significant legal victory with confirmation that a Dutch court has accepted Russia’s appeal that the $50 billion ruling in favour of the Yukos shareholders by the Permanent Court of Arbitration in The Hague (“the Hague Tribunal”) was invalid.

I discussed the Hague Tribunal’s ruling in detail here. As I explained the ruling was flawed at every level.  

The Hague Tribunal assumed jurisdiction to hear the case on the strength of Russia’s signature to the EU’s Energy Charter - contrary to the advice of many of the legal experts it consulted - even though Russia has never ratified the Charter and even though both Russia and the EU say Russia is not bound by it.  

It retried the whole criminal case brought against Khodorkovsky and Yukos in Russia though doing so was a gross infringement of Russia’s sovereignty.  

It then acted with a degree of one-sidedness - accepting wholesale Khodorkovsky’s and Nevzlin’s account of the Yukos affair and ignoring its own finding that the arrangement of Yukos’s tax affairs Khodorkovsky set up was illegal - that frankly qualifies as bias.

The Dutch court that has set aside the Hague Tribunal’s ruling appears to have accepted Russia’s argument that the Hague Tribunal had no jurisdiction to hear the case because Russia’s never ratified the EU’s Energy Charter and is not bound by it.

This point ought to be so obvious it ought to be legally unanswerable. It is a sign of how politicised international judgments involving Russia have become that it was even up for discussion.

Whether the Dutch court made any other finding about the Hague Tribunal’s ruling we will have to wait and see when its full Judgment is published.

This is not the end of the affair. The Dutch court that has just set aside the Hague Tribunal’s ruling was what is called a first instance court.  

That may mean that the “Yukos shareholders” - behind whom almost certainly lies Khodorkovsky himself - may have a right of appeal. If so then the legal battle is not over.  

There is also an outstanding award of $1.9 billion in favour of the “Yukos shareholders” from the European Court of Human Rights.  

That award is however practicably unenforceable since it can only be enforced against Russia through the agencies of the Council of Europe.

Russia is refusing to recognise that award and there is nothing the Council of Europe will realistically do to enforce it.

Russia has anyway taken the first step to contain the European Court of Human Rights’s ability to interfere in its legal processes.

Russia’s Constitutional Court has reaffirmed that it is the only court with the jurisdiction to rule on questions involving the Russian constitution and that decisions of the European Court of Human Rights cannot be enforced in Russia if the Constitutional Court decides they should not be.

The Russian Constitutional Court has now for the first time exercised this power by ruling that a decision of the European Court of Human Rights granting prisoners in Russian prisons the right to vote does not apply.

Whilst the latest Dutch court decision is not the end of the Yukos affair it is nonetheless a significant legal victory for the Russians and one which brings the end of the affair a step closer.

One way or the other it is becoming increasingly unlikely the Yukos shareholders will see any money.

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