Veteran Petroleum Limited (Cyprus) v. The Russian Federation, UNCITRAL, PCA Case No. AA 228, Writ of Summons (January 28, 2015)
I. INTRODUCTION
1. This case arises from a Russian tax dispute between Russian oligarchs and the Russian Federation concerning Russian tax assessments against a Russian company that the Russian oligarchs owned and controlled. That company, Yukos Oil Company (“Yukos”), evaded hundreds of billions of rubles in Russian corporate profit tax and other taxes, and then refused to pay the taxes that were predictably assessed against it by the Russian authorities when they finally uncovered the company‟s previously concealed tax evasion scheme. These same Russian oligarchs now control Claimants, and as matters stand today these oligarchs would receive more than USD 50 billion under the arbitral awards that are the subject of this Writ, even though the oligarch entitled to receive by far the largest amount – roughly USD 30 billion – has openly acknowledged that he paid nothing for his Yukos shares.1
2. Yukos‟ tax assessments were based on the application of fundamental principles of tax law that are commonly used to combat tax evasion around the globe, including in the Netherlands, and were upheld by Russia‟s first instance and appellate courts, and in unanimous rulings by two separate Chambers of the European Court of Human Rights (the “ECtHR”).
3. Despite the Russian authorities‟ collection efforts, Yukos continued to refuse to pay its tax liabilities. It also defaulted on its loan from a consortium of private banks. In due course, bankruptcy proceedings were commenced against Yukos, and its assets were sold at public auctions to partially defray its creditors‟ claims.
4. Even though this case concerns a Russian tax dispute, the Russian oligarchs contrived to transform their domestic dispute into three parallel international investment treaty arbitrations (the “Arbitrations”) under the Energy Charter Treaty (the “ECT”). These proceedings ultimately resulted in the awarding of damages unprecedented in their amount, exceeding by more than 20 times the amount of damages awarded in any prior international arbitration.