Russia Faces Another Seizure Of Foreign Assets Worth $60 Billion

Previously, the Russian Federation had already lost half of its international reserves worth $300 billion.

Having lost half of its international reserves worth $300 billion as a result of sanctions for the war unleashed in Ukraine, Russia could lose up to another $60 billion in foreign assets.

The High Court of London ruled on Wednesday that Russia cannot appeal to the principle of state immunity in its dispute with former Yukos shareholders over compensation for the virtual expropriation of the country's largest oil company more than a decade and a half ago. This decision was made by Judge Sarah Cockerill, denying the Russian representatives the right to appeal, Reuters reports.

In 2014, Yukos shareholders won a case in international arbitration in the Hague, which awarded them a payment of $50 billion. Russia then challenged this decision in various ways, reaching the Supreme Court of the Netherlands. He overturned the payment order in 2021 and sent the case back to the lower court on procedural grounds.

Meanwhile, the Yukos shareholder firms that initiated the dispute (Hulley Enterprises, Yukos Universal and Veteran Petroleum) filed separate lawsuits in the UK, USA and the Netherlands, demanding the seizure of Russian assets. The British court paused the case in 2016 pending a decision from the Dutch courts, but resumed consideration of the claim in October 2022 after a ruling by the Dutch Supreme Court. “The first step in the trial must be to decide whether the country has state immunity,” Judge Christopher Butcher said at the time.

Today the High Court of London made the following decision: Russia does not have state immunity in this case. Meanwhile, the amount of compensation increased to $60 billion as a result of accrual of interest and penalties.

The case will continue, although it may take several more years, Reuters notes.

Russia has made it clear that it does not intend to pay regardless of the outcome of the legal disputes. In December 2020, the Constitutional Court of Russia actually denied foreign courts the right to consider disputes under investment agreements signed by Russia (the demands of Yukos shareholders are based on the fact that Russia violated the terms of the Energy Charter it signed, although not ratified). That is, the Constitutional Court considered such decisions of foreign courts not binding on Russia.

But if Russia does not pay voluntarily, Yukos shareholders may demand the seizure of its foreign assets to pay compensation.