The path to Yukos: the largest arbitral award in history


In a historic award rendered on 18 July 2014, a tribunal formed by the Permanent Court of Arbitration (PCA) in The Hague unanimously held that the Russian government breached its international obligations under the Energy Charter Treaty (ECT) by destroying Yukos Oil Company and appropriating its assets. The tribunal ordered Russia to pay damages in excess of US$50 billion to the majority shareholders of Yukos and to reimburse 75% of their legal fees. This is by far the largest award ever rendered by an arbitral tribunal.


In 2003, Yukos was the largest oil company in Russia and produced over a million barrels of oil a day. It was about to become the fourth-largest oil company in the world. That same year, Russia launched co-ordinated attacks on Yukos, starting with the arrest of its CEO, Mikhail Khodorkovsky. Russia then proceeded to destroy the company, the tribunal found, through the enforcement of fabricated tax claims and the intimidation and harassment of employees, officials and other individuals related to the company.

The expropriation of Yukos’ assets was achieved gradually, the tribunal found, starting in December 2004 with the rigged auction of its largest production unit and ending with the company’s final liquidation in November 2007. Yukos’ majority shareholders initiated arbitration proceedings against Russia in 2005, complaining of arbitrary, unfair and discriminatory treatment, and of an unlawful expropriation of their investment.

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Emmanuel Gaillard is an arbitrator at Beijing Arbitration Commission/Beijing International Arbitration Centre. He is also the head of international arbitration at Shearman & Sterling