The European Court of Human Rights Judgement
Full text of the ECtHR Judgement is available here.
On 20th September 2011, after seven years’ careful consideration the ECtHR issued its judgement in the case of Yukos Oil Company v Russia.
The Court found that the Russian Federation violated Yukos’ rights under the following articles.
The Court ruled that there had been a violation of Article 6 §§ 1 and 3 (b) (right to a fair trial) of the European Convention on Human Rights, concerning the 2000 tax assessment proceedings against YUKOS, imposed on the company suddenly in 2004.
It also ruled that in relation to the 2000-2001 tax assessments, their imposition and calculation of penalties, there had been a violation of Article 1 of Protocol No. 1 (protection of property) to the Convention and that this dealt Yukos a ‘fatal blow’.
The Court ruled that there was a violation of Article 1 of Protocol No. 1, ‘in that the enforcement proceedings were disproportionate’.
The Court found the crux of the case was the speed with which the Russian authorities demanded that YUKOS pay the taxes, despite the fact its assets were frozen, and the decision to choose to 'auction' OAO Yuganskneftegaz , its main production unit, to meet the asserted liabilities. The Court stated that the Russian authorities should have given very serious considerations to other options, "especially those that could mitigate the damage to YUKOS' structure".
Another factor which seriously affected YUKOS' position in the enforcement proceedings was the imposition of a 7% enforcement fee by bailiffs, amounting to 1.15 billion euros, the payment of which could not be suspended or rescheduled. This sum was "completely out of proportion" stated the Court and "because of its rigid application it contributed very seriously to YUKOS' demise". The Court emphasized that the Russian Authorities were "unyieldingly inflexible as to the pace of enforcement acting very swiftly and consistently refusing to concede YUKOS' demands for additional time". The authorities "failed to take proper account of the consequences of their actions" and so breached YUKOS' property rights (Article 1 of Protocol Number 1).
The ruling did not deal with the question of award of damages and costs.
The ECtHR ruling became final on 8 March 2012 when the European Court of Human Rights Grand Chamber did not accept the request of Yukos Oil Company to have its application to the court referred to the Grand Chamber. Yukos statement on this ruling is available here.