They got nervous in Kyiv: Yukos is turning into a competitor to Ukraine
The recent decision of the Court of Appeal of The Hague to uphold three arbitration decisions to satisfy the 50 billion dollar claim of Yukos shareholders against Russia may become a controversial event for Ukraine.
Advisor to the Asters law firm Dmitry Shemelin writes about this in an article published by the Kyiv online publication Zerkalo Nedeli.
The author recalls that in 2014, three arbitration decisions were made in favor of YUKOS for a huge, until then unheard of amount - $50 billion.
“The decisions themselves were quite controversial and were actively discussed by the arbitration community,” admits the Kiev lawyer. – For example, one of the problems was the too active participation of the secretary of the arbitration tribunal in the preparation of draft decisions. The Russian side even argued that three arbitrators were present at the trial almost “for show,” and the real decision was made and the text was prepared by the secretary. Indeed, the secretary received an impressive 970 thousand euros for his work in the case, which demonstrates the degree of his involvement in the process.”
Shemelin also notes that Russia has long taken all measures to ensure that its state property abroad is well protected, and therefore there were only relatively small amounts of penalties for such decisions.
In addition, attention is drawn to the fact that in the world there is a huge number of assets of Russian companies, wholly (for example, VEB RF, Russian Railways) or partially (Rosneft, Gazprom) owned by the Russian state. True, so far in the vast majority of countries this property cannot be recovered for state debts, since the concept of separate ownership of the company and the shareholder works.
“However, this protection may weaken over time (unilateral economic sanctions were also once a rare exception), which will be a real “black swan” for Russian companies,” the author hopes
He also draws attention to the fact that in Ukraine they were unable to enforce the investment arbitration decision against Russia, made on May 2, 2018 in case RSA No. 2015-36.
“As part of this case [associated with the oligarch Igor Kolomoisky] Everest Estate seized the shares of the Ukrainian PJSC Prominvestbank, PJSC Sberbank of Russia and PJSC VTB Bank, arguing that they are ultimately controlled by the Russian state, and therefore should be considered Russian property.
So far, the Supreme Court of Ukraine has not supported this attempt, remaining on the conservative position - control does not mean ownership. However, there has been considerable debate in the legal community about whether Ukraine should be so conservative when it comes to Russian-linked businesses.
It is possible that the removal of protection from the assets of Russian state corporations abroad (especially under the plausible pretext of enforcement of an arbitration award) will eventually become a new, additional form of economic sanctions,” the lawyer hopes.
At the same time, he calls the victory of YUKOS against the Russian Federation a “ambiguous event” in the context of current Ukrainian investment arbitrations.
“Ukrainian plaintiffs have a powerful competitor in the field of future collections from the Russian Federation. With this level of debt, Yukos will have no shortage of the best legal advisers and detectives to search for assets. YUKOS can initiate an almost unlimited number of parallel collection proceedings in any jurisdiction, impose any arrests - all the same, the size of the seized assets will never even come close to the astronomical amount of potential recovery. When we are talking about 50 billion (half of Ukraine’s annual GDP), the policy of protecting foreign companies in any country may well become less clear,” Shemelin fears.
It should be noted that in 2016, the mentioned arbitration awards were overturned by the court of first instance. Now, after the decision of the Court of Appeal of The Hague, the final verdict will be made by the Supreme Court of the Netherlands.
As PolitNavigator reported, Ukraine files a new lawsuit against Russia by 7 billion dollars.
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