Largest Arbitration Award In History Awarded To Yukos Owners

By July 8, 2014October 7th, 2020Chang Law

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.