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Former Yukos shareholders give up claims on Russian assets in Belgium

All the seizures of Russian assets of in Belgium will be finally invalidated, the head of the International Center for Legal Protection said

MOSCOW, November 2. /TASS/. The former shareholders of the now defunct oil giant Yukos have withdrawn their lawsuit on the seizure of Russia’s assets in Belgium, Head of the International Center for Legal Protection representing Russia in the Yukos case Andrei Kondakov told TASS on Thursday.

"Today, on November 2, 2017, the former Yukos shareholders have announced that the legal proceedings they initiated in June 2015 for recognizing and enforcing The Hague Arbitration Court’s rulings in Belgium have been fully terminated," he said.

As he explained, "all the seizures of assets of the Russian Federation in Belgium will be finally invalidated."

The Brussels Court passed a ruling back in June 2017 on invalidating the asset seizures but the Yukos shareholders refused to fulfil it and filed an appeal, he explained.

"Several months later, when they understood that their complaint held no prospects, they simply withdrew their lawsuit," the lawyer said.

Therefore, all the enforcement procedures initiated by ex-Yukos shareholders against the Russian Federation have been either terminated or suspended, he added.

"The main battle will now unfold around The Hague’s Court of Appeal which, as we expect, will uphold the verdict by the District Court of The Hague, which repealed the rulings by the Court of Arbitration in The Hague," Kondakov said.

2014 court rulings

The Permanent Court of Arbitration in The Hague passed a ruling in July 2014, obliging Russia to pay $50 billion compensation to former Yukos shareholders.

In its final awards, the arbitration tribunal ruled that Russia "had taken measures with the effect equivalent to an expropriation of claimants’ investments in Yukos" and thus had breached article 45 of the Energy Charter Treaty, which Russia signed but never ratified.

Attempts by former Yukos shareholders to seize Russia’s assets abroad

Former Yukos shareholders tried to use Russian assets abroad to enforce these arbitration rulings.

Media outlets had been numerously reporting since June 2015 that Yukos shareholders were seeking the seizure of the accounts of Russia and Russian companies in various European countries.

Specifically, Hulley Enterprises Limited representing the interests of former Yukos shareholders was seeking the termination of the construction of the Russian Spiritual and Cultural Center in Paris, threatening with penalties. However, the Paris court consistently declined to examine the claims of seizing this facility and suspending the works for the center’s construction.

In early April 2016, about $700 million worth of funds owned by Russia’s State Space Corporation Roscosmos and satellite communications operator Russian Satellite Communications Company (RSCC) were seized in France. The French court subsequently ordered to annul the seizure and unlock $300 million owed to Roscosmos. The court found that Roscosmos was a separate legal entity from the Russian government and its assets could not be qualified as the funds belonging to Russia.

The District Court of The Hague ruled in April last year that the panel of judges who had passed a $50 billion compensation judgment in favor of former Yukos shareholders had no right to review the dispute. As the Dutch district court ruled, the arbitration tribunal misinterpreted Europe’s Energy Charter Treaty, which Russia signed but never ratified.

Yukos case

Yukos, once Russia’s largest oil firm, was accused of tax crimes and declared a bankrupt by a Russian court ruling in 2006 while its assets were sold at auctions during the liquidation procedure.

In 2007, former Yukos shareholders filed a lawsuit with the Permanent Court of Arbitration in The Hague claiming that the Russian government had expropriated Yukos’s assets and demanding compensation for losses under article 45 of Europe’s Energy Charter Treaty.

The ex-Yukos shareholders initially claimed $28.3 billion in compensation from Russia but the sum was subsequently increased to $103 billion.

Russian Justice Minister Alexander Konovalov said on December 4, 2014 that in November Russia had challenged The Hague Tribunal’s $50 billion ruling (the examination of Russia’s appeal began on January 28, 2015).

Yukos former head Mikhail Khodorkovsky and his business partner Platon Lebedev were found guilty of embezzlement and tax evasion in May 2005 and sentenced to nine years in prison.

While serving their prison term, both Khodorkovsky and Lebedev were found guilty of embezzlement and money laundering in a second criminal case in December 2010 and sentenced to 14 years in prison, with account taken of the jail term they had served.

Khodorkovsky was pardoned by Russian President Vladimir Putin and left the prison in December 2013. Lebedev was released from the jail in early 2014.