Just days after the Hague awarded a 50 billion dollar payout to some of YUKOS shareholders, the EHCR (European Court of Human Rights) has decreed that the Russian government pay out an additional 1.9 billion euros to the company’s shareholders. This decision came as a result of the EHCR finding that Russia failed to “strike a fair balance” when it forced YUKOS to pay exorbitant penalties.
YUKOS former director, Mikhail Khodorkovsky, released a statement via his spokeswoman stating that the ruling was “an unprecedented decision.” He went on to say that, as the court had never awarded such a large sum in its history, the news of the decision was received with great joy. On top of the 1.9 billion awarded, the EHCR also found that Russia was liable for an additional 300,000 euros for expenses and court costs.
Before YUKOS was broken up and nationalized over 10 years ago, the company had been worth around 40 billion dollars. Upon the company’s dissolution, its assets were given to Rosneft, an energy conglomerate that is run by a friend of Russian President Vladimir Putin. To further cast a suspicious light on the Russian government’s actions, when YUKOS was dissolved, Mikhail Khodorkovsky was arrested at gunpoint. Two years later he was convicted for tax evasion and theft. Khodorkovsky was recently released from prison, having served a 10 year prison sentence.
In court, YUKOS made the claim that the Russian government had unlawfully seized its assets by imposing false taxes and liquidating the company’s assets in a fraudulent auction that had the ulterior motive of directly benefiting this political ally of President Putin.
Three years ago, in an interim ruling by the ECHR, the court found that although Russia had not failed to use the proper legal proceedings in the process, it had used excessive enforcement proceedings when targeting YUKOS. This finding resulted in an invitation to YUKOS to submit a claim for compensation, otherwise known as “just satisfaction.”
Basing the figures on expert valuations, YUKOS claim for compensation came to just under 38 billion euros, naming all of the 55,000 YUKOS shareholders as potential recipients, some of whom are funds representing groups. On top of that they asked for $174,000 to cover the expert report fees, 4.3 billion pounds for their extensive legal costs, and an additional $588,148 in miscellaneous fees and expenses.
Leonid Nevzlin, one of YUKOS’ top shareholders and a former executive of the company, appeared on a radio show soon after the decision was announced. In reference to the announcement of the ruling, he was quoted as saying that it was “another confirmation of the fact that everything Russia did against the oil company was illegal.”
While YUKOS is celebrating the decision, Russia’s Justice Ministry has gone on record stating that the court’s decision was a biased decision and, subsequently, an unfair ruling. The ministry went on to say that it is prepared to appeal the ECHR’s ruling within three months.