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Yukos Case: The Latest Developments in the Never-ending Story

January 13, 2021

The Yukos case is widely known as one of the most high-profile, longest and most expensive arbitration cases of the 21st century so far. Recently, in the case between the Russian Federation and three former shareholders in Yukos Oil Company, the Supreme Court of the Netherlands dismissed the Russian Federation’s application to suspend enforcement of the arbitral awards given in 2014. The Supreme Court’s decision means that the former shareholders can continue to enforce the arbitral awards pending the final judgment. According to the Russian Ministry of Justice the overall damages now amount to $57 billion including interest.

However, the main problem for the Russian Federation is not the dismissal of its interim application to stop the enforcement of the biggest arbitration awards in history. In its ruling, the Supreme Court said the likelihood of Russia’s arguments succeeding in the case for cancellation of the awards are “not such as to warrant” suspending enforcement pending that decision and, therefore, may not be sufficient to overturn the appeal court judgment. Hearings in Russia’s appeal to the Dutch Supreme Court challenging the ruling of the Hague Court of Appeal are scheduled to begin early February 2021, with a final decision expected in the autumn.

After the earlier $50 billion damages ruling of the Hague Court of Arbitration in 2014, former Yukos shareholders sought to seize assets in countries including France, Belgium, the U.S. and India. In Belgium and France, state assets that had been frozen were unblocked following aggressive Russian political and legal protests. As a result, several states have amended their legislations, making it impossible to freeze assets without a prior court decision.

Two months ago, a federal court in Washington, DC accepted a Russian government motion to suspend a case for enforcement of the arbitral awards brought by the former Yukos Oil Company shareholders until its final resolution by the Supreme Court of the Netherlands.

All the mentioned actions connected to enforcement of the $57 billion arbitral awards demonstrate that the minority shareholders of Yukos, controlled by the GML (formerly MENATEP) Group, and the Russian Federation are using all possible means to secure an ultimate legal victory in their unprecedented 16 year fight.

Nevertheless, even if the aggrieved shareholders win the case in the Dutch Supreme Court, they will face another fight attempting to enforce the arbitral awards in various countries. This fight may last for many more years and costs tens of millions as the Russian Federation has no intention to pay a penny to the claimants or to negotiate a settlement seeing this move as a completely political stand with ‘the unscrupulous oligarchs from the 90s’.

The Russian Ministry of Justice declared the ongoing case with the GML Group a ‘legal war on Russia” in which Russia ‘has to strike back’. The recent amendments to the Russian Constitution and corresponding laws allow Russia to ignore foreign arbitration and state court judgements if they contradict Russian legislation.

A brief history of the case

Yukos Oil Company was one of the biggest oil and gas companies in the Russian Federation. In the 1990s, it was privatised as many other state-controlled enterprises were. Yukos was acquired from the state by the oligarch-controlled Bank Menatep, during the controversial “loans for shares” auctions of the mid 1990s, and allegedly for a fraction of its real value.

In the period from 2003 to 2006 the Russian Federation imposed several substantial tax demands on Yukos and, as a result, one of its main production companies was sold in a public tender to state-controlled Rosneft. Yukos was finally declared bankrupt in 2006.

Three major Yukos shareholders (Veteran Petroleum Ltd, Yukos Universal Ltd and Hulley Enterprises Ltd), controlled by the GML (formerly MENATEP) Group, then initiated arbitration proceedings against the Russian Federation. The arbitration proceedings were held in The Hague and lasted about 10 years. In its judgment of 18 July 2014, the arbitration tribunal ordered the Russian Federation to pay the three shareholders a total of USD 50 billion in compensation. The Russian Federation then applied to a Dutch district court to set aside the judgments. The court found in favour of the Russian Federation but, on appeal, the appeal court ruled that the district court’s judgment was incorrect. This meant that the arbitral award again took effect. The Russian Federation then lodged an appeal with the Supreme Court.

The claimants argue that the giant tax bills handed to Yukos Oil Company in 2004, as well as fraud charges against its top manages and core shareholders, amounted to politically motivated ‘expropriation.’ Russia claims that the investors are not ‘bona fide’ or foreign, and therefore are not covered by international treaties.

If you would like to discuss any issues regarding CIS practice that your business might be facing, then please contact the head of our CIS desk Dmitry Gololobov on 07921 160 108 or at

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