Bloomberg News

Rosneft Fails to End Yukos’s U.K. Case Seeking $160 Million

June 14, 2011

(Updates with Khodorkovsky in last paragraph.)

June 14 (Bloomberg) -- The Dutch remnant of Yukos Oil Co. won court permission to question the independence of Russia’s judicial system in a U.K. case against OAO Rosneft over $160 million in interest on arbitration awards.

Britain’s Act of State, which blocks English judges from questioning the legitimacy of domestic actions by “friendly” governments, doesn’t apply to the case, in which Yukos Capital relies on findings that a Russian court unfairly favored Rosneft in a dispute over $425 million in loans, Justice Nicholas Hamblen ruled today at the High Court in London.

“There is no rule against passing judgment on the judiciary of a foreign country,” Hamblen said in ruling. “Allegations of systemic partiality or corruption are not subject to the Act of State.”

Yukos Capital sued government-controlled Rosneft in the U.K. over claims a Russian tribunal annulled $425 million in arbitration awards in 2006 due to political interference. Moscow-based Rosneft paid the award in August, after asset freezing orders were issued against it in Britain, the Netherlands, New York, Ireland and the British dependency of Jersey. Yukos is now seeking interest on the sum.

Rosneft’s lawyer, Anthony Trace, today said that Hamblen had erred in his ruling and asked for permission to appeal.

Most of Yukos’s assets were sold to Rosneft after the company was bankrupted in 2004 and liquidated by then-President Vladimir Putin’s government to recover some of the more than $30 billion in taxes Yukos Oil was said to owe. Amsterdam-based Yukos Capital claims Russia coordinated with the courts to illegally nationalize Yukos.

Mikhail Khodorkovsky, the former chief executive officer of Yukos Oil and once Russia’s richest man, was jailed in 2003 while challenging Putin politically. Last year, he was sentenced to a further six years in prison after a Moscow court found him guilty of money laundering and embezzlement.

--Editor: Anthony Aarons

To contact the reporter on this story: Erik Larson in London at elarson4@bloomberg.net.

To contact the editor responsible for this story:.

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net.


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus