A Dutch appeals court has reinstated an international arbitration panel’s ruling that Russia should pay $50 billion in compensation to ex-shareholders of the defunct Russian oil giant, Yukos, overturning a previous court decision.
The Hague Court of Appeal ruled on Tuesday that the 2016 ruling cancelling the arbitration decision “was not correct,” meaning that “the arbitration order is in force again.”
The Russian Justice Ministry said immediately after the ruling that it would appeal the court’s decision. The Ministry of Justice said the court had ignored the fact that the former Yukos shareholders were not “bona fide investors.”
“Control over the assets of this company was obtained through a number of illegal actions, including conspiracy and bribery of officials,” said the ministry. “During the management of Yukos by the former majority owners, there was massive tax evasion, illegal withdrawal of assets abroad, money laundering, and other illegal actions.”
The arbitration panel had originally ruled that Moscow seized control of Yukos in 2003 by hammering the company with massive tax claims. It ordered Russia to pay former shareholders $50 billion in compensation.
Russia challenged the decision, sending a detailed response to the Hague Court of Appeal. It expanded on arguments about unlawful acts committed during and after the privatization of Yukos. It revealed examples of manipulation and collusion during mortgage auctions, bribing state managers, creating an extensive network of shell companies to minimize taxes, and exporting illegally acquired assets abroad, concealing the true beneficiaries of the supposedly foreign companies that filed lawsuits in The Hague against Russia.
In April 2016, the Hague’s District Court overturned a decision by the Permanent Court of Arbitration ordering Russia to compensate former shareholders of the company that was once owned by oligarch Mikhail Khodorkovsky.
In the summer that year, ex-shareholders appealed to the Hague Court of Appeal to reverse the district court’s decision and restore the arbitral awards.
A preliminary probe into the main Yukos case was opened in Russia in 2003. The oil company was accused of tax crimes and declared bankrupt by a Russian court in 2006 with its assets sold at auction as part of the liquidation process.
Former chairman of Yukos Mikhail Khodorkovsky and his business partner Platon Lebedev were found guilty of embezzlement, tax evasion and money laundering. According to the probe, Khodorkovsky scammed Yukos’ minor shareholders, siphoning $51 billion to offshore accounts.
The former oil tycoon was sentenced to nine years in prison in 2005 following a lengthy legal battle, which was increased to 11 years after a second trial ended in late 2010. He was pardoned by President Vladimir Putin in 2013 and left Russia for Germany, Switzerland, and then the UK.
In 2015, Russian prosecutors accused Khodorkovsky of ordering the murder of the mayor of Siberian city Nefteyugansk, Vladimir Petukhov, and an attempted assassination of businessman Evgeny Rybin. He was then placed on an international wanted list.
For more stories on economy & finance visit RT’s business section