Former Yukos investors urge UK High Court to restart legal action

Former Yukos shareholders have urged London’s High Court to allow them to restart legal action aimed at trying to secure a $50bn award made almost a decade ago over Russia’s seizure of what was once the country’s largest oil company.

Russia has so far refused to pay any of the $50bn it was ordered to in 2014 by the Court of Arbitration in The Hague, which ruled that the Kremlin had illegally expropriated the company’s assets. Mikhail Khodorkovsky, its chief executive and a vocal critic of Vladimir Putin, was arrested in 2003 and sentenced to 10 years in prison.

Following the ruling in The Hague, former Yukos shareholders embarked on legal action in London in an effort to seize assets tied to the Russian state in the UK, but the action was put on hold while a parallel case was also pursued through the Dutch courts.

The group on Tuesday urged the High Court in London to allow the case to be reactivated because the sanctions imposed on Russia following its invasion of Ukraine raised the “real risk” that the state’s assets in the UK would erode in value.

Jonathan Crow KC, representing the former shareholders, claimed that sanctions imposed by the UK on Russian individuals and entities meant there was a “real risk of the value of the Russian Federation’s UK assets eroding over time”, alongside Moscow “taking steps to reduce its UK assets” and of “very substantial creditors seeking to enforce ahead of the claimants against that decreasing pool of assets”.

He also argued that the London lawsuit should now go ahead because a recent Dutch ruling meant that the risk that the English and Dutch courts would be ruling on the same legal points had “effectively disappeared”.

The imprisonment of Khodorkovsky on tax and fraud charges, largely seen by international observers as politically motivated, and the subsequent break-up of Yukos and sale to mostly state-controlled oil companies marked a watershed moment for Mr Putin’s rule.

The Kremlin characterised the arrest as part of a crackdown on oligarchs who had become rich by taking control of Russia’s natural resource assets.

The Russian government was not represented by lawyers in court on Tuesday after White & Case, which had previously acted for it, stopped following the war in Ukraine. However, Mr Justice Christopher Butcher allowed Tuesday’s hearing to proceed after Russia sent its written submissions to the court.

In the submissions, Mikhail Vinogradov, an official in the prosecutor-general’s Office of the Russian Federation, argued that the London lawsuit should remain paused and said attempts to restart it were “misconceived and a transparent attempt to take advantage of a situation in which the defendant is bereft of legal representation in the jurisdiction.” 

He added that Russia had contacted 11 barristers and four law firms in the UK who have refused to act for it or cited conflict of interest. The government is currently seeking to obtain legal representation, the submissions noted.

Vinogradov added in the arguments that the Dutch courts were still considering the case and it was “absurd” to suggest that events since February 2022 “have done anything other than make it more difficulty [sic] for assets to be accessed, never mind dissipated and/ or removed from the English jurisdiction.” 

The hearing continues with a decision expected some time after it has finished.