One of these arbitration cases has attracted some public attention: a claim brought by majority Yukos shareholder, Group Menatep Limited. In 2005, the Cypriot-based holding company sued for $30bn in compensation under the Energy Charter Treaty – a multi-country agreement which Russia signed but never ratified (see In Dispute, October/November 2007). The arbitrators hearing that particular claim will have to determine whether Russia is legally bound by the strictures in the Energy Charter Treaty, including the duty to provide full compensation for properties deemed to have been expropriated. At least two other Yukos-related arbitration cases have also been moving forward under the radar. Minority shareholders in the UK and Spain have filed expropriation claims, alleging that Russia violated investment protection treaties concluded with those two countries.

Recently, an arbitration tribunal hearing in the UK case ruled that it has jurisdiction to hear a $75m claim brought by RosInvest Ltd. In a ruling that only recently leaked into the public domain, arbitrators breathed new life into a largely symbolic treaty. Russian government lawyers had argued that the UK-Russia agreement permitted international arbitration only where a foreign investor and the government disagreed on the amount of compensation due in a confirmed case of expropriation. According to this interpretation of the UK-Russia treaty, arbitrators are not allowed to decide if an expropriation has taken place – they can only step in where some other court had found an expropriation had been committed and the two parties disagree as to the precise amount of compensation owed. However, in a notable jurisdictional ruling, arbitrators have now rejected such a limited reading.


Because the treaty promises to treat UK investors as favourably as investors from other (third) countries, the arbitrators reasoned that Russia should give UK investors the same wide-ranging rights to arbitration which Russia extends to investors from Denmark, which has a more investor-friendly treaty with Russia. Therefore, the arbitrators determined that they are empowered to review whether an expropriation has been committed by Russia.

Similar legal issues will confront a separate panel of arbitrators convened to hear a third Yukos-related arbitration claim against Russia, brought by the Spanish investment services firm Renta 4. It is unknown whether additional arbitration claims are pending against Russia as there is no requirement for such cases to be disclosed publicly or to the media. Yet foreign investors operating in the country may show renewed interest in these investment protection treaties if the early cases prove successful.

Luke Peterson is a journalist and research consultant based in New York City. He publishes an investigative news service, Investment Treaty News, for a Canadian think tank.