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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

Tue, Apr 26th 2016 11:23pm — Glyn Moody

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.

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Filed Under: corporate sovereignty, courts, isds, netherlands, russia
Companies: yukos

16 Comments

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Martin, 27 Apr 2016 @ 2:12am

It would be interesting to learn how the court reasoned, but I couldn't find anything about this in the linked article.
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Anonymous Coward, 27 Apr 2016 @ 2:33am

Sounds like some pretty serious venue shopping and sue in every location possible is going to happen.
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Ninja (profile), 27 Apr 2016 @ 3:55am

Re:
That's what I thought. And even if all countries happen to be sane, the costs of defending on each country are an unreasonable burden. And it wastes taxpayer money on all those countries. These clauses are nothing but trouble.
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got_runs? (profile), 27 Apr 2016 @ 4:45am

Bank Dog Food (TPP)
TPP is going to get shot down by different court systems.
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Anonymous Coward, 27 Apr 2016 @ 6:41am

I hope they sue those other countries very soon, before TTIP is done. Maybe then some politicians see for themselves how much damage that ISDS can do.
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Anonymous Coward, 27 Apr 2016 @ 7:49am

Re:
Looks, its news, you just need to accept what you have been told! I treat news without good sources and documentation as nothing more than fanfare!
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That One Guy (profile), 27 Apr 2016 @ 9:38am

Re:
They won't care, it's not like they're paying out for the court costs and fines. No, they get their 'donations' from the corporations that benefit from the 'trade' agreements and any problems beyond that is someone else's to deal with.
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Richard (profile), 27 Apr 2016 @ 9:42am

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
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Anonymous Coward, 27 Apr 2016 @ 9:46am

I know monster cables cost a lot, but charging the Kremlin 50 Billion (usd) for a HDMI cable is bit much.
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Ninja (profile), 27 Apr 2016 @ 10:33am

Re: It can get worse
Omg, warn the pubs not to serve vodka!
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RussianLawyer, 27 Apr 2016 @ 11:22am

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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Richard (profile), 27 Apr 2016 @ 2:37pm

Re: Vlad does not have to pay... for now
We are talking here about him taking the third largest business in the world from its shareholders

Those shareholders themselves took it from the Russian state when that drunk Yeltsin was in charge.

If you steal my wallet and I take it back who's the thief?
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Bergman (profile), 27 Apr 2016 @ 5:40pm

Re: Re:
How exactly is it legal to sue someone for the same thing, simultaneously in half a dozen countries?

If you win in all six, wouldn't that mean the person or group you sued gets punished six times for a single offense?

Do none of these countries have double (sextuple) jeopardy laws?
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Anonymous Coward, 28 Apr 2016 @ 2:35pm

Re: Re:
Really? Are you serious? That last piece of hope I had that some form of Merkel-effect could occur... gone, burned down, quartered, and buried.
Thank you very much for that ; )
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Wendy Cockcroft, 29 Apr 2016 @ 5:42am

Re:
The trouble with secret courts is they don't make their proceedings transcriptions public. We'll have to wait and see if the judgement gets leaked or otherwise provided to an individual or group willing to post it online where we can all scrutinise it.
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Wendy Cockcroft, 29 Apr 2016 @ 5:44am

Re: Bank Dog Food (TPP)
How? The point of ISDS is to bypass local and national court systems and Fast Track Authority means that Congress is obliged to either ratify it or reject it. The option to track down the bugs and squash them has been taken out the back and shot.
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