By Elizabeth Whitsitt
January 13, 2010
In a decision not yet released to the public, it has been reported that former Yukos shareholders may proceed to the merits phase of their multi-billion dollar expropriation claim against the Russian government.
According to various sources* a tribunal of the Permanent Court of Arbitration (PCA) in The Hague has ruled that Russia is bound by the Energy Charter Treaty (ECT), despite having never ratified the agreement.
The tribunal’s decision appears to be based on Article 45 of the ECT. Under Article 45(1) signatory states like Russia agree to apply the treaty “provisionally” (to the extent that such provisional application is not inconsistent with its constitution, laws or regulations).
Russia’s formal announcement terminating its provisional application of the ECT as of October 18, 2009 appears to have had little impact on the tribunal’s jurisdictional holding, a finding likely supported by Article 45(3)(b) of the ECT. According to that provision, for energy investments made in its territory prior to October 18, 2009 Russia remains bound by certain provisions of the treaty for twenty more years.
* “YUKOS owners win ruling in $100 bln case vs Russia,” By Dmitry Zhdannikov and Chris Baldwin, Reuters, 1 December 2009.
“Tribunal in $100 Billion Yukos Arbitration Rules Russia Bound by Energy Charter Treaty,” By Sanjay J. Mullick, Ronan J. McHugh & Irene Dallas (Pillsbury Advisory) 17 December 2009.
“Energy Charter Treaty ruling clarifies effect of Russia’s “provisional application” accepting jurisdiction to hear Yukos’ claim” (Investment protection e-bulletin) 4 December 2009.
Previous ITN Reporting on Yukos Dispute:
“Spanish fund to open new front in arbitration against Russia over Yukos,” By Luke Eric Peterson, Investment Treaty News, 19 July 2006, available here:
“More Spanish portfolio investors line up to sue Russia over Yukos,” By Luke Eric Peterson, Investment Treaty News, 13 October 2006, available here:
“Spanish financial investors initiate arbitration against Russia over Yukos,” By Luke Eric Peterson, Investment Treaty News, 27 April 2007, available here:
“MFN clause used successfully in bid by minority Yukos shareholders to sue Russia,” By Luke Eric Peterson, Investment Treaty News, 5 February 2008, available here: