The two cases are unrelated, but both are being pursued under the arbitration provisions of the Energy Charter Treaty – a multi-party trade and investment agreement governing the energy sector.

Group Menatep, the majority shareholder of the embattled Yukos Corporation, initiated arbitration against Russia in 2005 in the hope of recouping billions of dollars said to have been lost after a Russian tax investigation pushed Yukos into bankruptcy.


Menatep claims that Russia’s actions amount to an expropriation, and that Russia’s signature on the Energy Charter Treaty obliges it to provide financial compensation.

Although Russia signed the treaty, the government maintains it never took steps to ratify the agreement and bring it into force.

The outcome of the arbitration could hinge on an unusual clause found in the Energy Charter which calls for the “provisional application” of the agreement from the moment that a party first signs on.

The two sides disagree sharply as to whether Russia’s signature on the pact obliges it to extend all of the treaty’s legal protections to Group Menatep.

However, legal developments in the ongoing arbitration under the Energy Charter between the Greek investor and Georgia over a pipeline project could be seized upon by Group Menatep in support of its claims.

This is because the pipeline case has issued the first known interpretation of the Energy Charter’s clause on provisional application.

The arbitrators in that case ruled that Georgia was legally obliged to apply the treaty from the moment

of signature – so long as this provisional application of the Energy Charter did not violate the domestic law of Georgia or Greece.

The ruling is likely to be raised in the Russia-Menatep arbitration, with Menatep arguing that Russia is similarly obliged by its own signature to apply the legal protections of the Energy Charter to foreign investors.

The arbitration – in common with most lawsuits under the treaty – takes place in an opaque fashion, with the parties declining to disclose information about the ongoing proceedings.

A closed-door hearing is scheduled for spring of 2008, where the parties will debate the tribunal’s jurisdiction over the lawsuit.

Recently, a member of the three-person arbitration tribunal, DC lawyer Daniel L Price, resigned as arbitrator so that he could take up a position as deputy US national security advisor for international economic affairs.

A replacement arbitrator is expected to be appointed this autumn.

Luke Peterson is a journalist and research consultant based in Ottawa, Ontario. He produces an investigative news bulletin on international investment treaties for a Canadian think tank. (