A Dutch court has set aside the record $50bn arbitration award made against Russia in 2014 over its handling of Yukos in a decision that hands a huge victory to US firms White & Case and Cleary Gottlieb Steen & Hamilton.
The shareholders of defunct oil company Yukos were awarded $50bn in damages, 20 times bigger than any other arbitration award, after a tribunal found ‘Yukos was the object of a series of politically-motivated attacks by the Russian authorities that eventually led to its destruction’.
The District Court in the Hague held that the award could not stand on the ground that Russia was not bound by the provisional application of Article 26 of the Energy Charter Treaty containing the offer to arbitrate, despite Russia having consented to its provisional application pursuant to Article 45 of the Treaty.
The move is a huge victory for Cleary, which was lead counsel for Russia throughout the proceedings, White & Case, which has been leading Russia’s global defence against the award, and Belgium-based Hanotiau & van den Berg. The Cleary team was led by New York-based partners Larry Friedman and David Sabel, Washington DC-based Matthew Slater and Paris partner Claudia Annacker.
White & Case’s Washington DC-based arbitration partner Carolyn Lamm (pictured) has lead Russia’s defence in the US, with David Goldberg leading proceedings in London and Markus Burianski heading the defence in Germany. Renowned arbitration lawyer Albert Jan van den Berg, of Hanotiau & van den Berg, was instructed to have the award set aside at the seat of arbitration, The Hague.
However former shareholders of Yukos Oil Company have pledged to appeal the decision, which might free up accounts and property belonging to state companies abroad which were frozen when GML, a holding company belonging to four former Yukos shareholders tried to collect their reward.
GML director Tim Osborne said: ‘We fully stand by the unanimous award received in 2014 for the politically motivated destruction of Yukos. We will appeal this surprise decision by The Hague Court and have full faith that the rule of law and justice will ultimately prevail.’
GML instructed Amsterdam firm De Brauw Blackstone Westbroek, with a team led by Marnix Leijten. Shearman & Sterling head of arbitration Emmanuel Gaillard acted as lead counsel in the arbitration tribunal. Gaillard added: ‘The arbitral tribunal was composed of three international law experts of the highest calibre who were unanimous in their reasoning. I am confident that today’s decision will be reversed on appeal.’