Dutch top court rules on $50 bn Yukos oil row with Russia

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Ex-shareholders were awarded compensation for the break-up of Yukos after its former owner Mikhail Khodorkovsky was arrested in 2003 (AFP/SERGEI SUPINSKY)
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The Dutch supreme court will on Friday hand down its judgment in a $50-billion battle pitting former shareholders of the dismantled oil giant Yukos against the Russian government.

Moscow was ordered to make the record payout by a Hague-based arbitration tribunal in 2014, but it has challenged the case for the past seven years through the Dutch courts.

The ex-shareholders were awarded compensation for the break-up of Yukos after its former owner, the Kremlin critic and ex-tycoon Mikhail Khodorkovsky, was arrested in 2003.

But even if they win on Friday, it could be difficult to enforce the judgment, with years more legal action around the world likely needed to seize Russian assets.

"We look forward to the ruling, confident in the outcome," Jonathan Hill, a spokesman for the former Yukos shareholders, told AFP.

The Russian government gave no comment before the verdict, which is due at 0930 GMT.

Yukos was Russia's biggest oil firm, one of a number of companies formed as the Soviet Union crumbled in the 1990s when businessmen like Khodorkovsky scooped up former Soviet assets at knock-down prices.

Khodorkovsky's arrest came after Russian President Vladimir Putin warned the growing class of so-called oligarchs against meddling in politics in the early 2000s.

- Record payout -

After Khodorkovsky's downfall, Yukos collapsed in the face of huge government tax demands and was sold off in opaque auctions to state companies led by Rosneft between 2004 and 2006.

State-owned Rosneft was then small, but has since grown into one of the world's biggest listed oil companies by production volume.

The former majority shareholders in Yukos led by the GML financial holding company then sought compensation from Russia for what they say are their losses caused by the break-up of the company.

Khodorkovsky, who spent a decade in jail and now lives in exile in London, is not a party to the case.

The Permanent Court of Arbitration based in The Hague made the $50-billion award to the shareholders in 2014, the largest-ever sum for the tribunal, after nine years of hearings.

It based its ruling on a multilateral 1994 accord, the Energy Charter Treaty, which says a dispute between a member state and a foreign investor could be solved through arbitration.

But in a shock turnaround, a local Dutch court overturned the decision in 2016, saying the PCA was "not competent" to rule in the case as Russia had signed the treaty but not ratified it.

The Dutch appeals court in turn restored the initial award in 2020, leading to the Russian appeal to the supreme court.

The shareholders got a boost in April 2021 when the top legal advisor to the supreme court recommended that Russia's appeal should be rejected.

- Dutch-Russian tensions -

But the Yukos legal saga may still drag on, as the supreme court could send the case to the European Court of Justice.

Even if the shareholders win, they face a years-long battle to enforce the $50-billion award and seize Russian assets in several countries including the United States, Britain and the Netherlands.

This effort has already begun, with a Dutch court granting the shareholders local rights to two iconic vodka brands, Stolichnaya and Moskovskaya.

The Yukos decision comes against a backdrop of tensions between the Netherlands and Moscow, often fought out in Dutch courts.

Russia last month criticised a Dutch court's ruling that a priceless collection of Crimean gold loaned to an Amsterdam museum must be handed back to Ukraine.

The Netherlands is also currently trying three Russians and a Ukrainian in absentia over the 2014 shooting down of flight MH17 over Ukraine, in which 298 people died, 196 of them Dutch.

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