'Yukos v. Russia' Update: US Court Stays $50 Billion Enforcement

BY MICHAEL D. GOLDHABER

The Global Lawyer

When we last asked what’s new in Yukos v. Russia, our answer was “the truth.” But if U.S. courts ever probe the truth of Yukos’ origins, it won’t be any time soon.

On Sept. 30, a Washington, D.C., federal court stayed U.S. confirmation proceedings pending the claimants’ appeals in the Dutch courts, which in the first instance vacated the $50 billion awards rendered by international arbitrators against Russia for seizing OAO Yukos Oil Co. from its controlling shareholders in a political vendetta. Chief Judge Beryl Howell reasoned that the U.S. confirmation and Dutch set-aside proceedings are inextricable. Indeed, wrote Howell, if the Dutch set-aside stands, he “may be obligated to decline to confirm the awards,” and his ability to confirm them would be “questionable.”

Russia had urged the D.C. federal court to dismiss the action for lack of subject-matter jurisdiction. The former superpower bombarded the court with motions to supplement the record with evidence that purported to be new, and purported to show that the former controlling shareholders had acquired their stake in Yukos through fraud and bribery.

The Yukos camp protested that this evidence is too old to be admissible. But Howell called this objection “puzzling,” and accepted Russia’s supplemental motions as good-faith submissions. After all, he reasoned, if the latest evidence of corruption is really so repetitive, what harm can it do?

It now falls on Dutch courts to either reinstate the $50 billion arbitration award, or affirm the set-aside. The Global Lawyer has speculated that affirming the vacatur on old technical grounds is likelier than affirming on new grounds of corruption. For, as Jack Nicholson said of Tom Cruise in “A Few Good Men,” courts can’t handle the truth. But readers who like their history unvarnished should rest assured. Columnists rush in where judges fear to tread.

The Global Lawyer is a regular column by senior international correspondent Michael D. Goldhaber. He can be reached at mgoldhaber@alm.com. On Twitter: @TheGlobalLawyer.

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