Russia is trying in the US to challenge the Hague verdict on Yukos

Lawyers representing the interests of the Russian Federation appealed to the federal court of the American District of Columbia with two requests that he not recognize the decision of the Hague arbitration to recover from Russia over 50 billion dollars in favor of the former shareholders of the Yukos oil company.

This is Russia's response to the demand of ex-shareholders of YUKOS to recognize and execute in the United States the decisions of the Hague arbitration. Petitions together occupy more than 100 pages and are equipped with numerous applications a few hundred more pages long.

The decision that Russia should pay a little more than 50 billions of dollars to the ex-Yukos owners was made by the International Court of Arbitration in The Hague in July 2014. The process of reviewing this case took almost 10 years.

According to White & Chase, a Washington-based law firm whose lawyers represent Russia, the plaintiffs are Hulley Enterprises Ltd. (Cyprus), Yukos Universal Ltd. (Isle of Man) and Veteran Petroleum Ltd. (Cyprus) - they concealed from arbitration the fact that they are backed by six Russian oligarchs, headed by Mikhail Khodorkovsky, who completely control their actions.

This alone, the defendants argue, is enough to disavow Yukos shareholders and refuse to recognize and enforce the arbitration decision. According to them, the Hague Arbitration, moreover, was clearly guided by political considerations and the intention “not to compensate the plaintiffs for the loss of their share in Yukos, but to punish the Russian Federation.”

Russian lawyers also accuse the arbitration that it was not composed of the three judges, but involved another person who allegedly influenced the final decision process. They mean the lawyer Martin Valasek, who worked in the Montreal office of the Canadian arbiter Yves Fortier.

According to the respondents, Fortier, the chairman of this judging troika, involved Valasek in her work, while his colleagues, Charles Ponce, appointed by the YUKOS shareholders, and Stephen Schwebel, appointed by Russia and, ultimately, also voted against her, proceeded from the fact that Valasek would be perform mainly secretarial functions.

"Prejudice against Russia"

In fact, according to Russian lawyers, Valasek played the role of almost the fourth judge and took an active part in drafting the arbitration decision. They were not stingy to hire an expert, Dr. Carol Chasky, who, according to them, found obvious traces of Valasek's style in the text of the decision and concluded that the 71% of the compensation section was out of his pen.

Lawyers point out that, at the end, Valasek invoiced arbitration for more than a million dollars, saying that he worked 3006 hours for him. This is much more than the three official arbitrators recorded.

White & Case lawyers find it suspicious that the Hague Tribunal refused to provide them with information about what kind of work Valasek did, citing the confidentiality of the arbitration.

They call on the American court to invalidate the tribunal's decision because “the Russian Federation never agreed to arbitration with the Intercessors,” as they call Yukos shareholders in court documents.

Lawyers for the Russian Federation argue that recognition of the arbitration award “would be contrary to US public policy” because the Petitioners were not completely frank with the tribunal, and because payment of compensation would be “a punishment for the Petitioners for their gross fraud and illegal activities.”

As the defendant's lawyers write, "the compensation convincingly demonstrates the Tribunal's bias against Russia" and "punishes the Russian Federation for exercising police powers on its own territory."

According to them, the Hague Tribunal essentially punishes a sovereign state for ensuring compliance with its tax laws.

Arbitrary methodology

The petitions filed on behalf of the Russian Federation detail its version of the acquisition of Yukos by the “oligarchs” through rigged loans-for-shares auctions and the subsequent tax evasion for which they were convicted.

The defendant's lawyers argue that from the very beginning, the arbitration proceeded from the "unshakable conviction that Russia's actions against Yukos were politically motivated and aimed at destroying Yukos."

They write that the Tribunal's "prejudiced opinion" is in stark contrast to the conclusion of the European Court of Human Rights, which they say found no evidence that the cases against Mikhail Khodorkovsky and his colleagues were politically motivated.

Finally, lawyers in the Russian Federation claim that the amount of compensation (according to them, the largest in recent history) was determined by arbitration using an arbitrary methodology, and Russia was not given the legal right to comment on it.

Now it’s time for the shareholders of YUKOS, who will present their counter-arguments to the court.

In June in France and Belgium property was arrested, which the authorities of these countries consider to be Russian, pursuant to the decision of the arbitration court in The Hague under the suit of the former shareholders of YUKOS. This decision requires Russia to pay 50 billions in total to a number of companies that are former shareholders of Yukos.

"Forum" published earlier own investigation about the hotels of Yukos owner Mikhail Khodorkovsky in the United States.