A big news item today – the Permanent Court of Arbitration located in The Hague, has just awarded $50 billion to former shareholders of Yokus for their claims against the Russian government for expropriation. The award is roughly half of the original demand. Russian foreign minister Lavrov says Russia will appeal. But there is a time bomb here – interest on the judgment begins to accrue early next year. Indeed, it is not clear what appeal rights Russia has — if any. One source on court procedure sets forth
Awards are final and binding, and there is no right of appeal.
This generally means that mistakes of fact and law are not subject to further review. Well, that would make winning an appeal challenging. A source said there may be some limited “technical grounds” for appeal to Dutch courts. These technical grounds are usually about jurisdiction, arbitrator misconduct — these types of things and they rarely succeed. That doesn’t sound very promising for Russia, but we can expect Russia to make the arguments to the dutch courts at least to buy some time.
Looking down the road, it will be more interesting to see what Russia may do to make enforcement difficult. Equally interesting, assuming that Russia will not just pay up or settle, what steps will be taken to execute on the award. $50 billion represents a big collection case. And I imagine that more than one global collection firm would love a piece of this action.
According to Bloomberg, Shearman & Sterling’s Emmanuel Gaillard is among the lawyers representing the shareholder group. Shearman’s Yas Banefatemi is also a member of the team. Claudia Annacker, a partner with U.S. law firm Cleary Gottlieb Steen & Hamilton was among those who represented the Russian government.
This comment from the Bloomberg article offered a few tidbits on the enforcement adventure that may be about to unfold
Russia will probably refuse to pay the damages, and seizing state assets abroad will be a difficult task, according to (former Yukos legal counselor Dmitry Golobov).
“Russia has the money to hire the best international lawyers, who won’t give up without a fight,” said Golobov by e-mail before the ruling was announced. “So the Yukos affair could easily go on for another 10 years.”
BTW, how many global collection specialists does your firm work with? Do you have a sense of how this market works? I will be following up on that here. Stay tuned. This matter may prove rather illuminating on how well private litigants are able to use the New York Convention to pursue assets located in diverse jurisdictions in enforcement proceedings against powerful defendants.
More on all of the above as news breaks. You can track this story in the “Russian arbitration award” category.