The Yukos Annulment: Answered and Unanswered Questions – Vol. 27 No. 1

Print Friendly, PDF & Email

Author: George A. Bermann*

Published: September 2016

Description: On April 20, 2016, a Dutch court issued a major judgment annulling awards rendered in a dispute between the Russian Federation and three majority shareholders of the former giant Russian oil producer, OAO Yukos Oil Company (“Yukos”). The annulment by a national court of any investor-State award is always of great moment, but it was particularly so in the case of an award in excess of $50 billion. Discussion of the judgment has understandably occupied much of the international arbitration blogosphere.

After setting out the basic facts of the case, this piece briefly describes the position that the Tribunal had taken and that the Dutch court found sufficiently flawed to justify the award’s annulment. It then examines the court’s own reasoning in some detail. Lastly, it shows that, however momentous the annulment may have been, the Dutch court avoided answering several very difficult and important questions that it might otherwise have had to address and that warrant serious consideration.


Starting in 2003, the Russian tax authorities charged Yukos with systemic and large-scale tax evasion. It imposed on Yukos very substantial tax assessments and fines, and ultimately seized Yukos’ assets, as a result of which Yukos went into bankruptcy in August 2006. The Yukos shareholders claimed that the Russian Federation had thereby unlawfully expropriated most of Yukos’ assets, and thus their protected investment.

The Yukos shareholders (“the Claimants”) initiated three separate arbitral proceedings at the Permanent Court of Arbitration (“PCA”) in the Hague against the Russian Federation under Article 26(4)(b) of the Energy Charter Treaty (“ECT”) and the UNCITRAL Arbitration Rules. After the parties had appointed their arbitrators, the Secretary-General of the PCA appointed a third arbitrator, Yves Fortier. Following the replacement in 2007 of one of the arbitrators

Download Full PDF

*Jean Monnet Professor of European Law and Walter Gelhorn Professor of Law; Director, Center for International Commercial and Investment Arbitration, Columbia Law School. The author has filed an expert opinion on behalf of the Russian Federation in the award enforcement proceeding pending in the federal district court for the District of Columbia.