The ad-hoc Arbitral Tribunal, sitting in The Hague under the auspices of the Permanent Court of Arbitration, ruled that the Energy Charter Treaty (ECT) is binding on Russia despite the fact that it has not been ratified by the Duma, the winners of the case said in Brussels today (1 December).
Former Yukos subsidiary GML director Tim Osborne and lead counsel Emmanuel Gaillard, head of Shearman & Sterling LLP's international arbitration group, said the majority shareholders of the former the Yukos Oil Company - Hulley Enterprises Ltd. and Yukos Universal Ltd. - two subsidiaries of GML Ltd. and Veteran Petroleum Ltd., the pension fund for the benefit of former Yukos employees, have won the first phase of their compensation claim against the Russian Federation.
As the speakers explained, the proceedings are the largest in international arbitration history, and were initiated by the claimants following what they said was the illegal expropriation by the Russian Federation of their investment in Yukos Oil Company.
No court rulings were made available at the press conference as the legal process was still ongoing, Gaillard explained.
However, he stressed that the decisions have "a huge precedent value" as they go "far beyond the Yukos case," meaning that all EU investments made in Russia up to 19 October 2009 - when Russia's notification of its decision to leave the ECT entered into force, will benefit from ECT protection for 20 more years, until 19 October 2029.
Asked by EurActiv what the estimated timeframe for the future court proceedings is, the speakers explained that similar cases are "not particularly speedy". A "merit phase" during which time Russia can challenge the ruling could take up to three years. A judgement would then be pronounced and an award determined. If Russia does not honour this compensation payment, it will be enforced according to international practice.
However, the speakers said "experience shows that states comply with awards".
Answering another question from EurActiv as to Russia's argumentation during the process, Tim Osborne said that one such claim was that GML were not the proper claimants.
The Russian Mission to the EU was unavailable for comment at short notice.