Historic Award in the Yukos Majority Shareholders Arbitration 28 - PowerPoint PPT Presentation

Historic Award in the Yukos Majority Shareholders Arbitration 28 July 2014

Final Award of 18 July 2014 “… the [Russian] State apparatus … launch[ed] a full assault on Yukos and its beneficial owners in order to bankrupt Yukos and appropriate its assets while, at the same time, removing Mr Khodorkovsky from the political arena ”. Final Award, ¶¶ 515; 1404 2

Final Award of 18 July 2014 - Key Facts & Figures USD 50 billion of damages USD 60 million in legal fees EUR 4.24 million in arbitration costs (USD 5.6 million) 20 times larger than the 2 nd largest arbitral award (Dow - Kuwait, USD 2.5 billion) 30 times larger than the 3 rd largest arbitral award (Occidental v Ecuador, USD 1.7 billion) 3

Final Award of 18 July 2014 - Key Facts & Figures 10 years (2004-2014) 37 days of hearings, including a 21-day Hearing on the Merits (The Hague) Hearing on the Merits: 8 fact witnesses for Claimants v. 0 for Russia 6,500 pages of submissions 11,000 exhibits 3,300 pages of hearing transcript 4

The Arbitral Tribunal Yves Fortier Charles Poncet Stephen Schwebel 5

Final Award of 18 July 2014 - Fabricated tax re-assessments “ After having now traversed, at some length, the treatment of Yukos by Russian tax authorities, the bailiffs and the courts, and having considered the totality of the evidence, especially the VAT evidence, the Tribunal has concluded that the primary objective of the Russian Federation was not to collect taxes but rather to bankrupt Yukos and appropriate its valuable assets. ” Final Award, ¶ 756 6

Final Award of 18 July 2014 - Rigged auction of Yuganskneftegaz “ the auction of Yuganskneftegaz was not driven by motives of tax collection but by the desire of the State to acquire Yukos’ most valuable asset and bankrupt Yukos. In short, it was in effect a devious and calculated expropriation by Respondent of Yuganskneftegaz ” Final Award, ¶ 1037 7

Final Award of 18 July 2014 - Forced bankruptcy of Yukos “ the totality of the bankruptcy proceedings […] were not part of a process for the collection of taxes but rather, as submitted by Claimants, indeed the ‘final act of the destruction of the Company by the Russian Federation and the expropriation of its assets for the sole benefit of the Russian State and State-owned companies Rosneft and Gazprom ”. Final Award, ¶ 1180 8

Final Award of 18 July 2014 - Political motivation “ The harsh treatment accorded to Messrs. Khodorkovsky and Lebedev remotely jailed and caged in court, the mistreatment of counsel of Yukos and the difficulties counsel encountered in reading the record and conferring with Messrs. Khodorkovsky and Lebedev, the very pace of the legal proceedings, do not comport with the due process of law. Rather the Russian court proceedings, and most egregiously, the second trial and second sentencing of Messrs. Khodorkovsky and Lebedev on the creative legal theory of their theft of Yukos’ oil production, indicate that Russian courts bent to the will of Russian executive authorities to bankrupt Yukos, assign its assets to a State-controlled company, and incarcerate a man who gave signs of becoming a political competitor. ” Final Award, ¶ 1583 9

Final Award of 18 July 2014 - Key Facts & Figures USD 50 billion of damages USD 60 million in legal fees EUR 4.24 million in arbitration costs (USD 5.6 million) 20 times larger than the 2 nd largest arbitral award (Dow - Kuwait, USD 2.5 billion) 30 times larger than the 3 rd largest arbitral award (Occidental v Ecuador, USD 1.7 billion) 74% of today’s market capitalization of Rosneft 10

Final Award of 18 July 2014 - Attribution “ In respect of attribution, the Tribunal concludes that the Russian Federation is responsible for its organs, executive, judicial and administrative, in the actions that they took against and in relation to Yukos and its stockholders; that […] the Russian Federation, speaking through its President, accepted responsibility for Rosneft’s acquisition of YNG and for the auction that underlay it; and that, in respect of other actions of Rosneft that bear on the destruction of Yukos, while proof of specific State direction is lacking, it may reasonably be held that the highest officers of Rosneft who at the same time served as officials of the Russian Federation in close association with President Putin acted in implementation of the policy of the Russian Federation. […]” Final Award, ¶ 1480 11

The Energy Charter Treaty Parties bound by the ECT (including Belarus, which applies the ECT provisionally) Signatories having opted out of provisional application Observers of the Energy Charter Treaty Conference 12

The 1958 New York Convention State parties to the New York Convention States not party to the New York Convention 13

Key contacts Emmanuel Gaillard Yas Banifatemi Partner Partner Head of International Arbitration Head of Public International Law + 33 1 53 89 71 40 + 33 1 53 89 71 62 egaillard@shearman.com ybanifatemi@shearman.com 14

Historic Award in the Yukos Majority Shareholders Arbitration 28 July 2014