Monster Corporate Sovereignty Ruling Against Russia Overturned By Dutch Court, But It's Hard To Tell Whether It's Over Yet

from the plus-or-minus-$50-billion dept

By now, the theoretical risks of including corporate sovereignty chapters in TPP and TAFTA/TPP are becoming more widely known. But as Techdirt wrote back in 2014, there’s already a good example of just how bad the reality can be, in the form of the monster-sized case involving Russia. An investor-state dispute settlement (ISDS) tribunal ruled that Vladimir Putin really ought to pay $50 billion to people who were majority shareholders in the Yukos Oil Company. The Russian government didn’t agree, and so naturally took further legal action to get the ruling overturned. As The New York Times reports, it seems to have succeeded:

In a major victory for the Russian government, a Dutch court on Wednesday overturned an award of more than $50 billion to former shareholders of the defunct oil company Yukos that Moscow was ordered to pay in 2014.

The award was thrown out because of something mentioned in the earlier Techdirt article: the fact that the claim was brought under the Energy Charter Treaty, which Russia signed, but never ratified. Because the ISDS arbitration panel had met in The Hague, in the Netherlands, Russia took its case before Dutch judges, who agreed that Vlad need not pay in these circumstances.

But the ruling is unlikely to signal the end of this case — after all, some pretty serious sums of money are involved. According to The New York Times, the international arbitration practice representing the Yukos shareholders intends to make an appeal to higher courts in the Netherlands against the decision. And even if it fails to get the latest court ruling overturned, it’s still quite possible that GML, the company that controlled a majority of the Yukos shares, will be able to collect its $50 billion elsewhere. As the NYT says:

GML is pursuing legal efforts to collect the Russian money in a half-dozen other countries: Belgium, Britain, France, Germany, India and the United States. There have not yet been rulings in those cases, and it was not immediately clear on Wednesday how the decision in The Hague might affect them.

That lack of legal clarity underlines one of the worst aspects of ISDS: the fact that it does not sit neatly within traditional legal systems, but in many ways lies outside them. Far from helping to uphold the law, as supporters of corporate sovereignty like to claim, it makes it arbitrary and unpredictable. When you’re talking plus or minus $50 billion, that’s a pretty serious flaw.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

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Companies: yukos

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Comments on “Monster Corporate Sovereignty Ruling Against Russia Overturned By Dutch Court, But It's Hard To Tell Whether It's Over Yet”

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16 Comments
Richard (profile) says:

It can get worse

These cases are insane. To realise how insane this could get consider what has happened in Belgium.

Because it is clear that, in fact, the Russian government will never pay the 50 Billion the Yukos shareholders have made an attempt to recover the money from anyone in Belgium who has any link to the Russian state – however tenuous that might be.
For example the local branch of the Russian Orthodox Church, whose assets have been accumulated by donations from local people – mostly Belgian nationals with Russian ancestry- has been included on a list of organisations from which the shareholders could recover money.

http://www.interfax-religion.com/?act=news&div=12131

RussianLawyer says:

Vlad does not have to pay... for now

It’s not like Vlad was given this bill for nothing. We are talking here about him taking the third largest business in the world from its shareholders and passing it on to his friends while putting tens of people in jail in the process on dreamt up charges and destroying hundreds of thousands of jobs. It’s pretty damned egregious, and I sure hope Russia ultimately loses the case in Holland.

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