WASHINGTON (CN) — In a $50 billion case rife with political implications, a federal judge stayed Yukos Oil shareholders' efforts to collect the enormous award against Russia, which dismantled the oil giant, allegedly as retaliation against a political opponent of Vladimir Putin.
U.S. District Judge Beryl Howell on Sept. 30 stayed the shareholders' request to confirm the arbitration award, pending proceedings in The Hague.
Yukos Oil was dismantled after its chief executive Mikhail Khodorkovsky was convicted of fraud and tax evasion, in a case widely believed to be politically motivated retaliation for Khodorkovsky's funding of candidates who opposed Russian President Vladimir Putin.
Khodorkovsky was the richest man in Russia when he was arrested in 2003, and the 16th richest man in the world. He spent a decade in prison before Putin pardoned him in 2013.
Yukos' assets are now wholly owned by the state-owned oil company, Rosneft.
Yukos shareholders say the company's assets were auctioned off at a fraction of their value to a third party, which was then acquired by Rosneft.
After 10 years of "mammoth" proceedings, shareholders persuaded a Hague arbitration panel that Russia took advantage of Yukos' tax vulnerability to bankrupt the company and appropriate its assets, to destroy Khodorkovsky's political ambitions and make an example of him.
The panel awarded shareholders the largest arbitration award in history: $50 billion in damages, plus interest, and $60 million in attorneys' fees.
Shareholders then filed petitions to confirm the arbitration award, in District of Columbia Federal Court and elsewhere around the world, to try to collect.
A Dutch court quashed the award on procedural grounds in April this year. It found that the tribunal lacked jurisdiction to rule on the matter because it was brought under the Energy Charter Treaty, a treaty signed but never ratified by Russia.
That ruling is pending appeal before the Dutch Court of Appeals.
In Washington D.C., Judge Howell said she would stay proceedings on the confirmation of the $50 billion arbitration award until the Dutch appeals court rules.
Russia opposed a stay, saying the U.S. court must first determine whether it has jurisdiction.
But Howell said Russia's position had no basis in law.
"The Supreme Court has expressly held that a court may, for the sake of efficiency, decline to determine its subject matter jurisdiction prior to deciding a 'threshold, nonmerits issue' presented by a case," she wrote.
The plaintiffs are Hulley Enterprises et al., majority shareholders in Yukos before it was seized.
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