Dutch court reverses 2014 ruling by international tribunal for Russia to pay $50 billion in damages to shareholders of Yukos oil company

Derricks at Yuganskneftegaz oil processing facility at Mamontovskoye oilfield outside the Siberian town of Nefteyugansk.
Derricks at Yuganskneftegaz oil processing facility at Mamontovskoye oilfield outside the Siberian town of Nefteyugansk.

A Dutch court on Wednesday reversed a 2014 ruling by an international tribunal which had ordered Russia to pay $50 billion in damages to the former shareholders of the bankrupt oil company Yukos.

Yukos, once Russia's biggest oil producer, was run by Mikhail Khodorkovsky, a businessman who used to be Russia's richest man but lost out massively when Russia's government seized the company's assets.

Russian authorities had subjected Yukos to politically motivated attacks when it was broken up and nationalised, with most assets handed to Russian oil producer Rosneft, an oil company mostly owned by the Russian government.

The Permanent Court of Arbitration ruled in 2014 that Russia had forced Yukos into bankruptcy with excessive tax claims and sold off its assets to state-owned companies.

Now the Hague district court ruled the Permanent Court of Arbitration was "not competent" to rule in the matter and therefore "the Russian Federation is no longer liable for paying compensation to these parties."

"The Hague District Court has reversed the awards of the international arbitrators on the grounds that they lacked jurisdiction to arbitrate the cases," it added in its written decision.

Khodorkovsky was arrested in 2003 shortly after President Vladimir Putin turned against some of Russia's growing class of oligarchs for meddling in politics.

Yukos was sold off in opaque auctions to state companies led by Rosneft between 2004 and 2006. State-owned Rosneft was then small but has now become a leading global player among the world's biggest listed oil companies by production volume.

The Permanent Court of Arbitration ruled unanimously that the international tribunal had expropriated the claimants' assets, ordering Moscow to pay in "excess of $50 billion" to the former shareholders.

But Moscow has long fought against the decision and a Russian official hailed Wednesday's ruling by the district court in The Hague.

"Our case about the arbitration in The Hague has been totally satisfied," the unnamed official told reporters by telephone.

"Today's decision means that the order demanding Russia pay several billions in compensation has been annulled."

The former shareholders are demanding that the Russian government cover their massive losses, blaming Moscow for driving Yukos into liquidation for political reasons before taking it over.

In a legal game of cat-and-mouse, the claimants led by GML, the main shareholder, have lodged cases in various European courts seeking the seizure of Russian assets abroad after Moscow refused to pay out.

Khodorkovsky, who is no longer a stakeholder, spent a decade in prison on charges of tax evasion, fraud and embezzlement.

He was suddenly pardoned by Putin in 2013 and flown out of the country.

Source: TRTWorld and agencies