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The Hague opens hearings on $50-bln lawsuit by former Yukos shareholders against Russia

The case will also be heard on September 24 and September 30

THE HAGUE, September 23. /TASS/. Hearings on a lawsuit filed by former Yukos shareholders to recover $50 bln from Russia began on Monday at The Hague Court of Appeal. The case will also be heard on Tuesday, September 24, and next Monday, September 30.

"This is the final round of the Hague Court of Appeal hearings," Head of the International Legal Protection Center representing Russia in the Yukos case Andrey Kondakov told reporters before the start of the session.

"In April 2016, the Hague District Court, which is a lower level court, quashed all the decisions of the tribunal (arbitration created through the Permanent Court of Arbitration - TASS)," he recalled. "Starting in April, Russia did not have to pay $50 bln to former shareholders of Yukos. I would like to mention a very interesting detail: The arbitration tribunal, in addition to deciding to pay $50 bln, decided that until the Russian side pays the sum, it will come with interest, so the $50 bln today is worth $64 bln. That is, we have sharply increased rates. In general, every day, the sum announced by the tribunal increases by $2 mln," he said.

"Naturally, former Yukos shareholders did not agree with this (decision made by The Hague District Court - TASS)," Kondakov continued. "They challenged this decision. For three years this final meeting was in preparation, there were several rounds of hearings, the parties filed appeals several times, where they set out their position in detail. Now the hearings have started, and today will be devoted to Article 45 of the Energy Charter Treaty. This article talks about the mechanism for putting this agreement into effect. Russia has signed, but not ratified the contract, therefore, the contract was applied to Russia partially, selectively, and only to the extent that it did not contradict Russia’s current legislation. This is the basis of our position, and the Dutch district court agreed and reversed the decision," Kondakov added.

Five years of litigation

The international arbitration created through the Permanent Court of Arbitration in The Hague in 2014 obliged Russia to pay about $50 bln to the companies associated with former Yukos shareholders - Yukos Universal Limited, Hulley Enterprises Limited and Veteran Petroleum Limited. The judges ruled that the actions of the Russian Federation with respect to Yukos violated Article 45 of the Energy Charter, which the country signed, but did not ratify. The Russian side appealed that a number of provisions of the treaty could not be applied to the Russian Federation without following the ratification procedure. On April 20, 2016, The Hague District Court declared the Permanent Court of Arbitration’s decisions invalid and dropped the obligations to pay $50 bln Russia.

However, in the summer of 2016, the ex-shareholders appealed to the Hague Court of Appeal to reverse the district court’s decision and restore the arbitral awards to pay $50 bln. At the end of 2017, the Russian party sent a memorandum to the Hague Court of Appeal with a detailed response to the appeal. It put forward the position that the contract could not be applied to Russia, therefore, the arbitration tribunal did not have the purview to consider the claims. In addition, the memorandum expanded the arguments about unlawful acts committed during and after the privatization of Yukos. In particular, 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 the Russian Federation are given.