AMSTERDAM: Yukos won its 18^th ruling against Promneftstroy in The Netherlands: the Amsterdam District court denied Promneftstroy’s request for a new freezing order on the Yukos funds held in ABN AMRO and has ordered Promneftstroy to allow Yukos International the right to control its funds.

Supreme Court in The Hague overturns YUKOS freezing order

7 January 2011

AMSTERDAM: The Supreme Court today overturned a judgment of the Amsterdam Court of Appeal which created a freezing order on funds within Dutch bank accounts held by Yukos International UK B.V. in The Netherlands following the sale of assets in Lithuania and Slovakia.

The Supreme Court stated that when a court in regular proceedings has rendered a judgment, a court in subsequent summary proceedings must conform its decision to the judgment of the court in regular proceedings, safe for exceptional circumstances.

It went on to state that the court in regular proceedings had found that the Russian bankruptcy of YUKOS Oil Company could not be recognized in the Netherlands because it had come about in a way contrary to Dutch public order. The Supreme Court indicated considering that the Amsterdam court decided that the Russian bankruptcy is contrary to Dutch public policy, as it did in 2007, Promneftstroy did not acquire the Yukos Finance shares, as the Supreme Court could not see any exceptional circumstances.  The Supreme Court stated that the courts in summary proceedings that decided on the freezing order had to take as a starting point that Promneftstroy had not become a shareholder of Yukos Finance B.V., the parent company of Yukos International, and therefore had no standing to ask for a freezing order.

Commenting on the decision of the Supreme Court, Bruce Misamore, former CFO of YUKOS Oil Company said: “This ruling is another positive step toward the ultimate resolution of the false ownership claims of Promneftstroy. The Yukos International UK B.V. directors are committed to ensuring that stakeholders damaged by the illegal expropriation of Russia’s most successful oil company can some day benefit from the distribution of funds commensurate to their investment once final legal proceedings in Holland are concluded.

As a result of the judgment Yukos International will be better able to conduct more appropriate cash management with respect to the funds that were frozen until today. This is in the interest of the ultimate stakeholders of YUKOS Oil Company.

Stockholm tribunal obliges Russia to pay $3.5 mln to Yukos minority shareholder

23 December 2010

MOSCOW: The Stockholm arbitration tribunal has found Russia liable for expropriating the investment of a minority shareholder of the now defunct oil giant Yukos and obliged it to pay $3.5 million in compensation, the Investment Arbitration Reporter website said on Thursday.

The Stockholm arbitration tribunal has found Russia liable for expropriating the investment of a minority shareholder of the now defunct oil giant Yukos and obliged it to pay $3.5 million in compensation, the Investment Arbitration Reporter website said on Thursday.

The arbitrators ruled in September of this year that Russia breached the terms of a bilateral investment protection treaty between the United Kingdom and the Russian Federation and obliged it to pay the $3.5 million sum to RosInvestCo UK Ltd., an affiliate of the prominent U.S.-based hedge fund Elliot and Associates, the website said.

Russian business paper Vedomosti reported on Thursday that Russia's defeat in the lawsuit filed by the Yukos minority shareholder was admitted by the Russian Finance Ministry in its Eurobond issue prospectus dated November 29, 2010.

"The ruling marks the first instance where an international court or tribunal has ruled on the merits of an expropriation claim filed against Russia by former Yukos investors," the website said.

RosInvestCo UK Ltd. initially sought some $75 million in compensation and later claimed as much as $200 million in damages from Russia over the loss of investment after Yukos' expropriation, the website said.

Yukos formally ceased to exist in November 2007, after its assets had been sold off through a series of liquidation auctions to meet vast creditor claims. State oil company Rosneft bought up the lion's share of the production assets, becoming Russia's largest oil producer.

Yukos founder Mikhail Khodorkovsky was sentenced to eight years in prison for fraud and tax evasion. He has consistently denied all charges against him, saying he was punished for supporting the tiny pro-Western opposition, and that the liquidation of Yukos was engineered by corrupt government officials aiming to seize lucrative oil assets.

CREDIT: RIA Novosti

PROMNEFTSTROY RULED NOT A SHAREHOLDER IN YUKOS FINANCE B.V.

- Dutch Appeals Court rules that Promneftstroy is not a shareholder in Yukos Finance B.V.

- Final Yukos Finance ruling to await European Court of Human Rights decision anticipated in 2011

19 October 2010

The Amsterdam Appeals Court today ruled that Promneftstroy had not become a shareholder in Yukos Finance B.V., rejecting the Russian bankruptcy trustee’s claim that Promneftstroy had acquired shares in an auction held by the Russian administrator.

The Appeals Court also announced it was deferring its decision on the wider Yukos Finance case until after the European Court of Human Rights had delivered its ruling on the long-running legal affair.

Commenting on the rejection of Promneftstroy’s claim, the joint managing director of Yukos Finance and former CFO of YUKOS Oil Company, Bruce Misamore, said: “We have always maintained that the Russian bankruptcy administrator had no authority to transfer the shares of a Dutch company, Yukos Finance B.V., and are pleased that the Court agreed.  We are very happy with this element of the decision today”.

Commenting on the deferment, a spokesperson for Yukos Finance, Claire Davidson, said: “The hearing at the European Court of Human Rights occurred only recently, so it only makes sense that the Dutch courts would adjourn until that decision is made. It is however clear that the weight of judicial opinion in the Netherlands, and around the world, has always firmly supported the contention that the bankruptcy of YUKOS Oil Company in Russia was anything but legitimate. We therefore look forward to the decision from the European Court and have every confidence in a fair, reasonable and independent ruling.”

The Amsterdam District Court ruled in October 2007 that the bankruptcy of YUKOS Oil Company would not be recognised in the Netherlands, because the original bankruptcy proceedings in Russia did not follow due order of process, and were therefore in violation of Dutch public order.

In the summer of 2007, the Russian administrator purported to sell the shareholding of Yukos Finance B.V. to Promneftstroy. This transaction was not addressed in the 2007 ruling. However the decision today categorically rejected that Promneftstroy, who were represented by law firm Clifford Chance, had any claim whatsoever to Yukos Finance shares. This is a significant development and likely a terminal blow against Promneftstroy’s legal efforts.

Bruce Misamore further stated: “Once again, the Dutch courts have ruled on the side of judicial independence and the rule of law. This was not YUKOS Oil Company’s experience in Russia.  The management of Yukos Finance has steadfastly adhered to a difficult and long-term strategy of ensuring justice is finally done for Yukos stakeholders in the face of unrelenting attacks by the Russian government. The ruling today means that Dutch assets will continue to be protected from expropriation by Russia.  The ruling also makes it apparent to everyone in the world that the real thieves in this case are not Mikhail Khodorkovsky and Platon Lebedev, currently on trial in a political farce in Russia, but rather Vladimir Putin and the Russian Federation.”

ROSNEFT THROWN OUT OF BVI COURT

Yukos management endorsed by Judge
Requests for documents declined and Rosneft told to await the outcome of existing litigation in Holland
Monday, 9 August 2010 

In a complete legal victory issued in the British Virgin Islands (BVi) late on Friday, August 6, a court dismissed all efforts by Russian state oil company Rosneft to attempt to improperly take over assets in the BVi of indirect former subsidiaries of the now liquidated Yukos Oil Company. The judge threw out all of Rosneft’s claims to try to obtain control of the assets it alleges it owns as a result of ‘bidding ‘in fraudulent auctions conducted by the Russian Federation as a part of the expropriation of Yukos Oil Company.

The judge indicated his confidence in the former Yukos Oil Company management which has been battling attacks by the Russian Federation and Rosneft to try to expropriate r emaining Y ukos Oil Company international assets.  The judge also recognized the former management’s intentions to continue to act in the companies’ best interests and according to their fiduciary duties and rejected Rosneft’s completely untrue and scandalous allegations against Yukos management.  He accordingly refused to appoint a receiver, as was requested by Rosneft, as there were simply no problems with the current management. He also emphasized that he saw no risk of the management dissipating assets, as was also alleged by Rosneft.

Finally, as in previous jurisdictions where Yukos has seen off attacks by Rosneft, the Judge held that Rosneft had no right to ‘go fishing’ through Yukos’ corporate records.

This overwhelming victory for Yukos and its subsidiaries leaves little room for any appeal and further harassment of Yukos management by Rosneft in the BVi.  Rosneft was represented in the legal action by Harneys, a BVI based law firm and was also being represented by Houston, Texas-based Baker Botts.  The former Yukos management was represented by Byrne and Partners of London and Conyers Dill & Pearman in the BVi.

Former Yukos Oil Company Chief Financial Officer, Bruce Misamore, said: “Once again in an independent court, Yukos has been vindicated and seen off another unfounded, frivolous attack against our corporate governance, and our determination to ensure that the innocent victims of the Russian Federation’s expropriation eventually see justice done.  Rosneft, alongside its owner, the Russian Federation, were joint architects of the world’s largest and most scandalous expropriation. They have once again failed in their attempt to re-write history”.

The expropriation of Yukos was allegedly led for the Russian Federation by current Russian Deputy Prime Minister and Chairman of the Rosneft Board of Directors, Igor Sechin.  Rosneft purchased a Yukos Oil Company direct subsidiary named Yukos CIS, an Armenian company, in the fraudulent auctions associated with the Russian Federation’s expropriation of Yukos Oil Company.  Rosneft is trying to improperly get control of Yukos CIS and its subsidiary companies in order to obtain potentially billions of dollars of assets, most of which are defaulted loans owed by Rosneft and its subsidiaries to the former Yukos companies, for which the former Yukos management is pursuing legal actions against Rosneft to collect.

In pursuit of the case, the Russian Federation and Rosneft have brought tremendous political pressure on the Armenian government and judiciary to try to assert their fraudulent control over the assets.  Through political pressure in Armenia, Rosneft was able to install a puppet director in Yukos CIS, Nikita Tostikov, to try to obtain control of the assets. The former Yukos management is battling all of these attempts in the courts in Armenia and in Holland, in addition to the just concluded case in the BVi.  Also, the former Yukos management forced Rosneft through a final verdict in the Dutch Supreme Court in June to pay several hundred million dollars pursuant to loans for which Rosneft had defaulted, and Rosneft is trying to circumvent that decision to reassert control over the money it had to pay on that defaulted debt.  Claims which are being pursued against Rosneft by the former Yukos management are destined to be paid as recompense to former Yukos stakeholders for the expropriation of Yukos Oil Company by the Russian Federation.

Supreme Court of The Netherlands Denies Admissibility to Rosneft in Yukos Capital S.a.r.l. Case
25 June 2010

The Supreme Court of The Netherlands today denied Russian state oil company Rosneft ’s appeal to the Supreme Court relating to arbitral awards against Rosneft in favor of Yukos Capital s.a.r.l. (Yukos Capital). The case relates to over $400 million of arbitral awards secured by Yukos Capital in Moscow in September 2006 and concerns four loans for which Rosneft was in default. Rosneft used the Russian “judicial system” to annul the arbitral awards. In a decision of 28 April 2009, the Amsterdam Court of Appeals found that the Russian court decisions annulling the arbitral awards could not be recognized because they were the product of a judiciary that, in cases that pertain to the Yukos group and which concern interests that the Russian state considers its own, was not independent and impartial.

Yukos Capital, an indirect former subsidiary of the now liquidated Yukos Oil Company, had been seeking to enforce the arbitration awards against Rosneft it obtained in 2006.  The commercial awards relate to loans Yukos Capital made to Yuganskneftegaz (YNG) in 2004, which were subsequently defaulted upon.   YNG had been Yukos Oil Company’s principal production subsidiary, but it was acquired by Rosneft in a highly questionable forced auction in 2004, and then merged into Rosneft some eighteen months later.  The YNG auction was the first in a number of auctions undertaken by the Russian Federation of  Yukos Oil Company assets in what is generally regarded as the largest expropriation in history.

The ruling by the Supreme Court is significant. Although the Dutch Supreme Court does not comment in detail on the case, its ruling today means that Yukos Capital can now enforce the arbitral awards in The Netherlands. It also means that the decision of the Amsterdam Court of Appeals that the Russian judiciary is not independent and impartial in cases that pertain to the Yukos group and which concern interests that the Russian state considers its own, has now become irreversible between the parties.   Yukos Capital also has an ongoing case in the English courts for claims against Rosneft for the defaulted loans and arbitral award.

Commenting on the case, former Yukos Oil Company Chief Financial Officer, Bruce Misamore, said: “It has taken almost four years to contest this case.  It has wasted many hours of Russian and Dutch court time and for every ruling that was secured  Rosneft sought to annul it to avoid paying its legitimate debts.   This ruling is almost the last step in a long process, and Yukos Capital will now enforce this portion of the award.  The arbitration award was legally enshrined, the Russian courts and Rosneft acted in breach of international standards and their own laws, and Yukos Capital is owed an immediate payment of more than $400 million”.

Daniel Feldman, General Director, Yukos Capital s.a.r.l said of the ruling: “This is a great victory, justice has been done! We will now enforce the claim”.

Yukos Capital S.a.r.l. Obtains Security from Rosneft to Discharge Freezing Order
6 April 2010

Russian state oil company Rosneft has provided a mutually agreed security, in order to discharge a £425m freezing order of the English High Court obtained by Yukos Capital S.a.r.l (Yukos Capital) in March relating to unpaid Rosneft debt obligations.

Yukos Capital, an indirect former subsidiary of the now dissolved Yukos Oil Company, has been seeking to enforce arbitration awards against Rosneft it obtained in 2006.  The commercial awards relate to loans Yukos Capital made to Yuganskneftegaz (YNG) in 2004, which were subsequently defaulted on.   YNG had been Yukos Oil Company’s principal production subsidiary, but it was acquired by Rosneft in a highly questionable forced auction in 2004, and then merged into Rosneft.  The YNG auction was the first in a number of actions taken by the Russian Federation against Yukos Oil Company in what is generally regarded as the largest expropriation in history.

The freezing order granted by Mr. Justice David Steel on 11 March 2010 extended beyond Rosneft to affiliated special purpose vehicles forming part of its trade finance structure.  The order caught not only assets within the jurisdiction but trade debts cited in England.  Corresponding orders were obtained in New York, Ireland and Jersey (where the Rosneft affiliates were incorporated).

All this had the combined effect of trapping substantial Rosneft assets. Yukos Capital argued that any judgment it obtained would be essentially unenforceable without the injunctive relief of a freeze.

Yukos Hearing in the European Court of Human Rights
4 March 2010

The Hearing on the Merits at the ECtHR in Strasbourg took place on the morning of 4 March 2010.

A webcast of the session is available on the ECtHR website here:
http://www.echr.coe.int/echr/Homepage_EN

A press conference was held afterwards in Strasbourg, with former Yukos Oil Company officials participating via satellite from Houston and London.

Video of Strasbourg Press Conference 4 March 2010

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Audio of Strasbourg Press Conference 4 March 2010
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An online video stream of the press conference is available here.
Please click here for the footage of the press conference.

Photos from the Hearing and Press Conference in Strasbourg, 4 March 2010.

Piers Gardner, Barrister at Monckton Chambers, who presented the case for Yukos Oil Company

The press conference held after the hearing, with Mr. Gardner and Steven Theede and Bruce Misamore in Houston, and Yuri Beilin in London.