On July 18, 2014, the arbitrators (Tribunal) at the Permanent Court

of Arbitration in The Hague rendered a final award of

$51,600,000,000 to claimants, former shareholders of Yukos

Universal Limited (Yukos), against the Russian Federation (Russia)

as damages for Russia’s actions that rendered Yukos bankrupt.

 

 

 

Initially, Russia argued that the arbitrators had no jurisdiction to

hear this matter. The Tribunal deemed Russia’s assertions groundless

and dismissed them. Russia argued that it properly assessed taxes and

fines against Yukos, that the claimants were arguing about Russia’s

lawful activity in collecting the taxes and fines, and that Russia was

not responsible for Yukos’ bankruptcy. However, the Tribunal

concluded that Russia’s conduct was not driven by the genuine

exercise of its tax power and was not covered by any treaty exemption

precluding an action against Russia for collecting taxes and fines. 1

 

 

Russia asserted that, under Russian law, each action was proper and

should be viewed separately.2 However, the Tribunal concluded that

Russia’s efforts must be considered together and constitute gross

abuses. Furthermore, Russian law is not pertinent to the

determinations of the Tribunal. The Tribunal operates under

international law, and under its auspices, Russia’s actions must be

viewed as a series of related steps. Thus Russia was found to have

expropriated the assets of Yukos while also seeking to remove

Mikhail Khadorvsky from the political scene, which combined to
deprive the claimants of the value of their investment in Yukos.3 In