Russia ordered to pay USD 50 billion over Yukos

An international court today ordered Russia to pay over USD 50 billion in compensation to the former majority shareholder of now-defunct oil producer Yukos over the expropriation of the company more than 10 years ago.
In one of the largest arbitration cases ever, a subsidiary for GML Ltd., once the biggest shareholder in Yukos Oil Co., had sought USD 103.5 billion from Russia.
The Russian government under President Vladimir Putin in 2003 levelled massive tax claims against Yukos, then Russia's largest oil company owned by the country's richest man Mikhail Khodorkovsky. Russia imprisoned Khodorkovsky and seized the company's assets when they couldn't pay.

The move was widely seen as retaliation for Khodorkovsky's support for opposition political parties. Russia says it was merely seeking payment for back taxes and penalties that Yukos evaded in the period 2000-2003. Yukos shareholders received no compensation for that.
Khodorkovsky spent ten years in prison before he was pardoned by Putin in December last year. Khodorkovsky has said he is not party to the case and is not interested in its outcome.
GML, formerly Group Menetap Ltd., said the Permanent Court of Arbitration's ruling found Russia had sought to bankrupt Yukos and appropriate its assets and that it was determined to do whatever was necessary to achieve this purpose.

"The majority shareholders of Yukos Oil were left without compensation for the loss of their investment when Russia illegally expropriated Yukos," GML Executive Director Tim Osborne said in a statement. "It is a major step forward for the majority shareholders, who have been battling for over 10 years for this decision."

Russian Foreign Minister Sergey Lavrov, commenting earlier today, said Russia will be appealing the ruling.
"Authorities who are representing Russia in this trial will use all possible legal means to defend their position," Lavrov said.
The ruling adds to tensions between Russia and the international community at a time when relations are at their lowest ebb since the end of the Cold War.

Following the downing of Malaysia Airlines Flight 17 over eastern Ukraine, the US and European Union are debating further economic sanctions against Moscow because of its support for rebels suspected of launching the attack.
"It is GML's belief that the 'Yukos affair' was a major strand in the Russian government's strategy to bring Russia's natural resources under direct Kremlin control and to use those resources as a tool to reassert control over Russia's former sphere of influence," Osborne said in testimony before the US Helsinki Commission in 2009.
"It marked a turning point" as Russia moved away from its "commitment to the rule of law, property rights, and energy security.