Russian state property arrested in Belgium, France in Yukos case

By bne IntelliNews June 18, 2015

bne IntelliNews -


Court bailiffs in Belgium and France have reportedly begun seizing Russian state property to settle a $50bn compensation award made last year during arbitration in The Hague to shareholders in the former oil giant Yukos.

Arrested assets included the Paris offices of the Russia Today television channel, according to Forbes Russia, while reported on June 18 that assets belonging to the state news agency TASS were also affected. Russian daily Vedomosti cited a former Yukos shareholder as confirming French bailiff actions were underway, including the freezing of bank accounts. Diplomatic representations were not affected, however.

Amid similar initial moves underway in Belgium, Russian officials participating in the annual international economic forum in St Petersburg said the government in Moscow did not recognize the ruling and was braced for more property to be impounded. Economy Minister Aleksei Ulyukayev was quoted by TASS as saying Russia would never pay on the Yukos claims. "I completely rule this out," said Ulyukayev, warning that "we may also expect this kind of unfriendly actions in other jurisdictions".

"This needs to be challenged in a judicial procedure," Foreign Minister Sergei Lavrov added in a statement. "If there are breaches of law, then we will take the legal steps against this." 

Meanwhile, former Yukos owner Mikhail Khodorkovsky wrote on Twitter that he welcomed the Belgian government's decision to freeze Russian assets. "I expect that the money raised will be used for projects useful to Russian society," commented Khodorkovsky, who was jailed in 2005 for nine years for tax evasion, before the final bankruptcy and dismemberment of Yukos by Russian authorities. Khodorkovsky was released in 2013 and has continued his criticism of Kremlin politicies.

Belgian court bailiffs notified Russian organisations in that country that they should disclose their ownership of any Russian state assets, reports said.  


However, the actions in both countries had little effect in financial terms, the Vedomosti source said, adding that accounts frozen contained only "tens of thousands of euros".

A notice and a letter drafted by Marc Sacré, Stefan Sacré & Piet De Smet law firm was reportedly sent to 47 Belgian offices of Russian companies, international banks, branch of the Russian Orthodox Church, and other institutions. The letter accused the Russian side of "systematic failure to voluntarily follow" the rulings of international legal institutions. 

The action in Belgium is related to the $1.85bn award granted by the Permanent Court of Arbitration in The Hague in July 2014 to former shareholders of Yukos as compensation for "expropriating investment" by the Russian authorities. The award is part of the $50bn settlement ordered by the arbitration court but not recognised by Russian authorities, which claim the Yukos case has been politicised in the West on the background of the Ukraine conflict.

Russian air carrier Aeroflot told that it had not received any documents on property arrest. A partner of Lidings law firm, Andrei Zelenin, reminded that only fully owned state assets could be arrested in such a case, and doubts that enough such assets could be found in Belgium to meet the awarded sum.

Earlier settlements reported

In April, it was reported that ex-shareholders of Yukos have settled claims to the state-controlled oil major Rosneft, which indirectly acquired most of Yukos's assets in a controversial auction held more than a decade ago. Rosneft announced that a number of its subsidiaries in a non-financial litigation have settled all claims with companies representing ex-Yukos shareholders, who agreed not to pursue the claims in future. The unexpected confidential litigation deal did not relate to the $50bn award against the Russian state, or the $2bn compensation awarded by the European Court of Human Rights.

Meanwhile, the reported deal will shield Rosneft from asset claims under the $50bn case. In the autumn of 2014, there were unconfirmed reports that ex-Yukos shareholders were preparing property claims in Germany, Britain, the Netherlands, France and the US, in the event that Russia fail to pay the $50bn award.

An unnamed minority shareholder of Rosneft said the issue of Yukos compensations was one of principle for Russian President Vladimir Putin, and that the authorities will never extract $50bn from the state budget. Other unnamed sources told that unofficial information last year suggested that Yukos shareholders were ready to sell the $50bn debt with 90% discount.

The bankruptcy of Yukos and jailing of Khodorkovsky, formerly Russia's richest man, was seen as a politically-motivated case at the time. However, the seizure of the company and its nontransparent transfer to Rosneft was de facto accepted internationally: in 2006, when what became Russia's largest oil company Rosneft held an IPO, large investors, including British Petroleum entered its capital.

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