30 Jul 2014

An Alarming Quotation

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The Financial Times reports that the Permanent Court of Arbitration in The Hague, after nine years of deliberation, made a record damages award of $50 billion to Yukos shareholders, finding that

Through inflated tax claims, the ruling said, senior officials set out to destroy Russia’s then biggest oil company, transfer its assets to a state-controlled competitor – Rosneft – and put Mr Khodorkovsky in jail. …

Collecting may not be easy.

Though Russia cannot appeal against the award, Moscow said it would pursue all legal avenues for trying to get it “set aside”. It can try to argue in a Dutch national court that – contrary to the tribunal’s findings – it was not bound by the Energy Charter Treaty, the agreement regulating cross-border energy business which Russia signed but never ratified, and withdrew from in 2009.

Even if the ruling stands, shareholders face a tortuous battle trying to enforce it. If Moscow refuses to pay, they must pursue Russian sovereign commercial assets in the 150 countries that are party to the so-called 1958 New York Convention on enforcing arbitration awards.

But the real kicker in the story is this:

One person close to Mr Putin said the Yukos ruling was insignificant in light of the bigger geopolitical stand-off over Ukraine. “There is a war coming in Europe,” he said. “Do you really think this matters?”

Hat tip to Vanderleun.


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