John J. Halloran, Jr., P.C.
Arbitral Tribunals in The Hague Render Final Awards in Important Cases Involving the Russian Federation
On 18 July 2014, arbitral tribunals convened under the auspices of the Permanent Court of Arbitration in The Hague rendered their final awards in three cases involving former shareholders of OAO Yukos Oil Company (“Yukos”) and the Russian Federation. Hulley Enterprises Limited (Cyprus) v. The Russian Federation (Read PDF>>); Yukos Universal Limited (Isle of Man) v. The Russian Federation (Read PDF>>); and Veteran Petroleum Limited (Cyprus) v. The Russian Federation (Read PDF>>). The arbitral tribunals were composed of The Hon. L. Yves Fortier PC CC OQ QC of Canada (as Chairman), Dr. Charles Poncet of Switzerland, and Judge Stephen M. Schwebel of the United States of America. In the final awards, the arbitral tribunals unanimously held that the Russian Federation had taken measures with the effect equivalent to an expropriation of claimants’ investments in Yukos and thus had breached Article 13(1) of the Energy Charter Treaty. As a result, the Russian Federation was ordered to pay damages to compensate claimants. At the same time, the arbitral tribunals found some contributory fault on behalf of claimants, leading them to reduce the amount of damages awarded. The Russian Federation announced its intention to seek to annul the three awards in the Dutch courts. (Read PDF>>).
On 20 April 2016, The Hague District Court (Chamber for Commercial Affairs) reversed the awards of the international arbitrators on the ground that they lacked jurisdiction to arbitrate the international investment arbitration proceedings brought before the Permanent Court of Arbitration in The Hague under the Energy Charter Treaty (ECT); the Russian Federation had signed the ECT, but never ratified it. (Read PDF>>). An appeal of the District Court’s judgment was filed in the Court of Appeal of The Hague.