An arbitration tribunal has awarded more than $50 billion USD in favor of the owners of Yukos, in their long-running dispute against the Russian Federation.  The text the Yukos Award has been published and is available online.

The dispute began in 2003, when Russian authorities arrested Mikhail B. Khodorkovsky, Yukos’ founder, and began auctioning off Yukos assets.  In a scathing opinion, the arbitration tribunal stated that Russia’s seizure and sale of Yukos’ assets “was not driven by motives of tax collection,” but “by the desire of the state to acquire Yukos’ most valuable asset.”

“In short,” the tribunal stated, “it was in effect a devious and calculated expropriation.”

The arbitration was brought under the Energy Charter Treaty, which sets out rules for cross-border energy transactions between member states.

The owners of Yukos will now begin the process of enforcing the Award against Russian state-owned commercial assets.

The Award is a strong reminder that even powerful governments may be brought to heel for illegal acts such as expropriation, and that international arbitration (and more specifically, investment treaty arbitration) are powerful tools that give investors concrete protections against adverse government actions.


About the Author:

Eric Z. Chang, firm founder and Principal, has extensive experience practicing both in civil law and common law systems. He is a former French Avocat à la cour and a current member of the New York and California Bars. He has practiced in Paris, New York and California on cross-border matters involving parties and disputes in Africa, Europe, the United States, Latin America, Asia and the Middle East. His experience covers a wide range of issues and industries: he has represented commercial clients in cases dealing with construction delays and disruptions, finance, securities and accounting fraud, shareholder disputes, maritime attachments, oil and energy, banking and telecommunications. He also represents clients on investor-state disputes, including bilateral investment treaty (BIT) arbitration.