barely three days after an international arbitration panel’s ruling, the European Court of Human Rights has ordered Russia to pay $2.5 billion in damages to shareholders of the now-defunct Russian oil giant Yukos.
The latest ruling is the largest compensation award evermade by Europe’s top human rights court.
Russia owes $50 billion damages to Yukos’s shareholders
As reported earlier, the arbitration panel in The Hague ruled Monday that Russia owes former shareholders of the defunct Yukos oil company over $50 billion in damages for its seizure of the company. The oil giant was once Russia’s largest oil company, but was crushed with tens of billions of dollars in back-tax claims starting in 2004, and its main assets were eventually sold off to state-controlled Russian companies. The ruling mandates Russia to start paying the compensation by January 2 next year or face interest on the fine. However, it is anticipated that Russia will use all available legal possibilities to defend its position.
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The arbitration panel’s ruling on Monday, however, won’t benefit the 55,000 former minority shareholders of Yukos.
Second big legal setback
The European Court of Human Rights (ECHR) ruling Thursday ordering Russia to pay $2.5 billion represents the largest compensation award made by Europe’s top human rights court. The latest ruling covers all those who held Yukos shares when the company was liquidated in 2007, including about 55,000 minority shareholders, some of which were investment funds.
The ECHR had already ruled on the substance of the case in 2011, and has been assessing damages since then. However, unlike Hague’s arbitration court, the ECHR didn’t find that Russia had deliberately misused its justice system, nor that Yuko’s CEO and biggest shareholder, Mikhail Khodorkovsky was a victim of selective justice.
Interestingly, unlike the Hague’s arbitration award, Russia is legally obliged, as a signatory to the European Convention on Human Rights, to pay out the damages, if the award is upheld on appeal. Legal experts point out Russia has always complied with monetary rulings by the ECHR in the past.
Created in 1953 by the Council of Europe, the ECHR is an intergovernmental organization that counts Russia among its 47 member states. The ECHR is one of the world’s most respected courts. It said Thursday Russia must draw up a plan within six months for how it will pay the damages and costs.