15 May 2020 15:30

Russia appeals Dutch court decision on $57 bln payment to former Yukos shareholders - Justice Ministry

MOSCOW. May 15 (Interfax) - Russia has appealed with the Supreme Court of the Netherlands the decision made by The Hague Court of Appeal on paying $57 billion to former Yukos shareholders, the press service for the Russian Justice Ministry said.

"Today, the Russian Federation has filed with the Supreme Court of the Netherlands a cassation appeal seeking a reversal of the decision made by the Court of Appeal in the Hague on the lawsuit filed by the majority of shareholders of the former oil company Yukos, which obligates Russia to pay $57 billion in compensation for the damages allegedly done to them," the press service said in a statement obtained by Interfax on Friday.

"The Russian Federation is convinced that the court of appeal's conclusions are illegitimate and unfounded," the statement said.

The Court of Appeal "disregarded numerous violations by the plaintiffs of anti-corruption and anti-money laundering regulations," it said.

"The former Yukos shareholders obtained control of the company's assets using a proven plot, fictitious trading, and bribery of officials in charge of its privatization," the statement said.

Moreover, the ministry said, "offshore dummy companies, controlled by Russian citizens, de facto did not pay for Yukos shares, and therefore did not make any contributions to the Russian economy."

"When managing Yukos, the former owners systematically evaded taxes, illegally withdrew assets abroad, and engaged in money laundering and other illegal actions. Therefore, the plaintiffs, who have 'dirty hands,' cannot be recognized as good investors in the sense of the Energy Charter Treaty, which they are citing," the statement said.

In addition, "evidence has been presented that Russian oligarchs bribed the main witness in the case," it said.

"During the arbitration proceedings, the plaintiff companies misled the arbiters regarding the end beneficiaries of three dummy companies that filed lawsuits against Russia. The plaintiffs were really Russian oligarchs, beneficiaries of the Yukos oil company," the statement said.

The statement also said that "irrefutable evidence of connections between Russian citizens and the plaintiffs were presented to the court, and therefore, the plaintiffs cannot be recognized as foreign investors."

"The court ignored the absence of clear consent from the Russian Federation to arbitration proceedings in the lawsuit filed by the former Yukos shareholders. The court incorrectly interpreted the mechanism of the temporary application of the Energy Charter Treaty envisaged by Article 45," it said.

The decision made by The Hague Court of Appeal contradicts the position of the European Court of Human Rights (ECHR).

"The latter in its decisions repeatedly rejected accusations made against Russia of 'political motivation' and the 'repressive nature' of the tax measures taken against Yukos. The ECHR confirmed that the Russian tax bodies acted legally when they ordered the company to pay more taxes," the statement said.

Also, the Justice Ministry believes that The Hague Court of Appeal disregarded Yukos's massive tax evasion, which was proven in said proceedings, and "practically fully ignored numerous evidence of the use by Yukos of fly-by-night companies in regions with preferential taxation, which were confirmed by said ECHR rulings."

"The Russian Federation will consistently defend its interests, both in the cassation court of the Netherlands and in other jurisdictions," the statement said.

According to earlier reports, on February 18, The Hague Court of Appeal obligated Russia to pay $50 billion to former Yukos shareholders. Russian Justice Minister Konstantin Chuichenko said Russia would definitely appeal the decision.

Russian Foreign Ministry spokesperson Maria Zakharova said the court decision was a politically biased act and Russia would seek its reversal.

In 2005, Hulley Enterprises (Cyprus) and Yukos Universal Ltd. (the Isle of Man), both subsidiaries of Group Menatep Limited, which jointly had a 51% stake in Yukos, filed a claim against Russia with The Hague court, demanding that $28.3 billion in damages be awarded. The total amount of claims against Russia, including the claim lodged by Yukos pension fund Veteran Petroleum Ltd., was $33.1 billion. The amount claimed increased as time passed.

The Permanent Court of Arbitration upheld those companies' claims in July 2014, and compelled Russia to pay $50 billion. Russia filed three appeals to overrule arbitration judgments with the District Court of The Hague in November 2014. Nevertheless, former Yukos shareholders refused to wait for a decision on the Russian appeal and initiated the enforcement of the ruling through courts of the United States, France, Belgium, Germany, and the United Kingdom in June-August 2015.

The District Court of The Hague repealed the arbitration rulings on April 20, 2016. It upheld Russia's appeal based on one out of six arguments: it believed that the argument sounded convincing and did not waste time on hearing the other five.

Afterwards, all lawsuits filed to seize Russian assets in Germany, India, France, and Belgium were either withdrawn by the plaintiffs or dismissed by judges in those countries.

Currently, the enforcement proceedings against Russia initiated by former Yukos shareholders have been either suspended or terminated.