The official Russian narrative is that Yukos was the victim of its own financial misdealing, including huge evasion of taxes owed to the country’s treasury. However, the company’s shareholders insist that the tax assessments were just a cover for a politically motivated nationalisation.

Ultimately, it will fall to a number of international courts and tribunals to have their say on the messy Yukos affair.


In January, the European Court of Human Rights heard arguments in a proceeding initiated by the former managers of Yukos. They allege that Russia breached the European Convention on Human Rights when it expropriated the company’s assets without providing adequate compensation to the shareholders. A ruling in that case could be a year or more away.

In the meantime, a string of international arbitrations, initiated by different blocs of Yukos shareholders, have been playing out with less publicity than the Strasbourg claim.

The largest of the pending arbitration claims is before a three-member tribunal sitting in The Hague. The former majority shareholders of Yukos are seeking tens of billions of dollars in compensation in this case. As was widely reported last December, the claimants have now cleared a major procedural hurdle: arbitrators have ruled that Russia is bound by its signature to the Energy Charter Treaty (ECT), a legal pact designed to protect investments in the former USSR and elsewhere.

The tribunal now turns to determine whether Russia’s treatment of the former oil company breached any of the protections contained in the ECT.

If arbitrators find that Russia or its courts acted without due process or effectively confiscated Yukos, the government could be subject to billions of dollars in liability payments.

However, any legal ruling against Russia could sorely test the effectiveness of the patchwork global legal system that protects crossborder investment flows. In theory, Russia would be bound to pay any arbitration award. However, officials could seek to ‘set aside’ the ruling, a ­process that usually fails, but does buy time.

Once the arbitrations are final, Yukos shareholders can take the verdicts to countries where the Russian government or its state-owned companies hold assets, and ask the local courts to attach those assets to satisfy Russia’s debts.

However, some courts may think twice – or at least drag their feet – before angering the Russian state by authorising the seizure of Russian assets. Therefore, even if Yukos shareholders should prevail in their international claims against Russia’s actions, they could be in for a protracted battle over enforcement of those judgments.

Of course, if the process drags on for many years, there is always the possibility that a more conciliatory Russian administration comes to power and seeks to draw a line under its battles with Yukos and its shareholders – perhaps by way of a global settlement.

However, for the near future, former Yukos investors just look set to expend many more millions on legal fees.

Luke Eric Peterson is editor of InvestmentArbitration, an online news service tracking and analysing crossborder investment lawsuits.