Dutch top court slaps down Yukos bankruptcy ruling

Top Dutch judges refused Friday to recognise Russia’s 2006 bankruptcy ruling of Yukos, in a case involving the transfer of shares from the defunct oil giant to a Russian state company.

Once the face of post-communist Russian capitalism, Yukos was broken up after its former owner, Kremlin critic and ex-tycoon Mikhail Khodorkovsky, was arrested in 2003.

Yukos was then sold off to state companies led by Rosneft, and claimants have been trying since then to win compensation for what they said were their losses caused by the Yukos break-up, some filing complaints abroad.

The Dutch Supreme Court on Friday “ruled in a final judgement that the 2006 Russian judgement declaring Yukos bankrupt will not be recognised in the Netherlands.”

Rather it upheld a ruling two years ago by a Dutch appeals court that Russia unlawfully bankrupted Yukos, once the country’s largest post-Soviet oil company.

The Dutch judges said the Russian judgement declaring Yukos bankrupt “was contrary to Dutch public policy… therefore the bankruptcy judgement has no legal effect.”

A key consequence of Friday’s ruling is that the Netherlands did not recognise the authority of the Yukos liquidator to transfer shares held by a Dutch subsidiary to Russian company Promneftstroy, the court said.

This means Promneftstroy, which paid $307 million (222 million euros) at the time, “did not become the owner of shares in Yukos Finance,” the judges added.

However, they did not say what the next step should be in the long-running battle between Russian state-owned companies and former Yukos shareholders.

Khodorkovsky’s arrest came shortly after Russian President Vladimir Putin, then prime minister, warned the nation’s growing class of oligarchs against meddling in politics.

In 2014, the Hague-based international Permanent Court of Arbitration (PCA) awarded a record $50 billion in damages to former Yukos shareholders, also ruling that the Kremlin forced the company’s collapse in a bid to crush Khodorkovsky.

Moscow refused to pay out, prompting the claimants to seek the seizure of Russian assets in several countries abroad.

But in a separate setback, a Dutch court in 2016 ruled that the PCA did not have the authority to award compensation in the first place.