On April 20, the Hague District Court set aside the historic $50 billion expropriation award that a Permanent Court of Arbitration panel ordered Russia to pay the former majority shareholders of OAO Yukos Oil Co. in July 2014. The ruling is subject to two full appeals in the Dutch courts.
Going back to basics, the court stressed that Russia had never ratified the 1994 investment protection treaty invoked by the Yukos investors. Differing with the arbitrators’ 2009 ruling on jurisdiction, the Hague district judges reasoned that the Energy Charter Treaty only binds a nonratifying nation “to the extent” it’s consistent with the nation’s laws; and Russia doesn’t allow arbitration of “public law” claims. In so doing, the judges embraced the arguments pushed by Russia’s lawyers at Cleary, Gottlieb, Steen & Hamilton, both in the tribunal and in Dutch court.
