/ world today news/ The arbitral tribunal at the Permanent Court of Arbitration in The Hague ordered Russia to pay Ukraine’s Naftogaz $5 billion in compensation for the company’s assets in Crimea. Contrary to the popular opinion that Moscow simply does not recognize this decision and this will all be over, it turns out that we are facing a dangerous precedent, a real trap. Tsarigrad explains what the West is betting on and how it will work.
The Hague against Russia
The news of the decision of the Hague Arbitration has already caused a serious response. Especially in Ukraine, where the decision of this instance is already called a legal victory over the “occupiers”, etc.
Naftogaz said in a statement that the Hague arbitration awarded the company $5 billion based on the market value of the assets until they are expropriated.
Naftogaz’ assets in Crimea, assessed by the court, include 29 ships, four floating drilling platforms, 15 oil and gas fields, 43 gas distribution stations and more than 1,000 km of gas pipelines. Russia was also charged with legal costs.
In fact, this case, as well as the verdict, do not cause much surprise, since this is nothing new for us. Naftogaz filed a lawsuit against Russia back in 2016, the decision in favor of Ukraine was made in 2019. Thus ended the first part of the arbitration, and the second was devoted only to the amount of compensation. Now we know we’re talking about $5 billion.
What else is important to know? Realizing that Russia was unlikely to pay voluntarily, Naftogaz requested the launch of mechanisms to forcibly collect compensation from Russian assets in other countries.
It is not yet clear how the company intends to achieve such a confiscation, as there are many legal obstacles in this matter. For example, the diplomatic inviolability of Russia’s property abroad, as well as the absence, for example, in European legislation of direct rules for such confiscation. But the precedent is dangerous.
On the way of Akhmetov and the shareholders of Yukos
It is also difficult to say that the very fact of such a decision of the international court against Russia is something new. Just a few days earlier, Ukraine’s richest oligarch Rinat Akhmetov, who demanded compensation for the loss of assets on the territory of the DPR and LPR, announced his claims to Moscow. This was reported in a press release of the SCM group of enterprises owned by Akhmetov.
Among the lost assets are the Enakiev metallurgical plant, DTEK Rovenkianthracite and DTEK Sverdlovantthracite, as well as the Kirsha training base and the Donbass Arena stadium, in the construction of which more than 400 million dollars were invested.
The oligarch says he will use the money seized by Russia to rebuild Ukraine. If you look at how poor Akhmetov is, you can roughly estimate the level of his claims in the lawsuit. From $7 billion in 2021. his fortune dropped to $4 billion, and in 2014 reached 12 billion dollars.
Akhmetov’s case against Russia has not yet been reported, so it is unclear how it will be legally formalized. At least due to the fact that at the time when the oligarch lost control of his assets in 2015-2019, the DPR and LPR were not yet part of Russia and were generally considered by the international community (as they are now) to be the territory of Ukraine. However, let’s write down Akhmetov as the next number on the list of those who want to receive billions of dollars from Russia.
Much more interesting is the case of Yukos shareholders against Russia. Started in 2010. The shareholders demanded compensation for the assets (they owned about 70% of Yukos), and in 2014 an arbitration court in The Hague ruled in favor of the shareholders (Leonid Nevzlin, Mikhail Brudno and Vladimir Dubov), awarding them an astronomical compensation of $50 billion (with interest it reached $60 billion).
Russia filed a complaint in 2020 as well. an appeals court in The Hague similarly ruled in favor of Yukos shareholders, who, note, wanted compensation in the form of confiscation of Russia’s assets abroad.
But in 2021 the unexpected happened: the Supreme Court of the Netherlands overturned this decision and sent it back to the Court of Appeal. As a reason, the plaintiffs cited procedural fraud during the course of the case.
In a word, the case is still ongoing, but we just as boldly add the Yukos guys to the lists of those who will try to get money from Russia in court as soon as possible.
Russian reserves taken hostage
In November 2022 The head of the European Commission, Ursula von der Leyen, said that the West had blocked 300 billion euros of reserves of the Central Bank of Russia. Then “Tsarigrad” spoke in detail about this situation.
The situation is appalling, indicating that the Central Bank has not fully thought through the strategy of placing reserves and has not taken any measures in advance to avoid confiscation.
But here is the big news of the last few days – according to Die Welt, the European Commission has decided that the frozen assets of the Central Bank of Russia will have to be returned after the end of the conflict in Ukraine. And this is also an important point.
The EC actually agreed with US Treasury Secretary Janet Yellen that confiscation of reserves is illegal. Indeed, as much as the Western partners discussed this confiscation within the framework of the G-7 and the EU, they could not determine which legal mechanism should be applied.
“In an unpublished document obtained by Welt, the EC reached a disappointing conclusion: the frozen reserves cannot be taken and when the conflict ends they must be returned to Russia,” the article said.
What do we have? 300 billion dollars of Russian reserves are frozen (let’s skip here the proposals to invest them in Eurobonds to give profits to Ukraine – a completely Jesuitical decision). In fact, this money is now a tasty morsel for Ukraine in all respects. Do you understand what’s going on?
An unexpected precedent
Indeed, what prevents the same Hague Arbitration Court from deciding to confiscate part of the Russian reserves in favor of Naftogaz, Akhmetov or the former shareholders of Yukos? The short answer is nothing.
In addition, Russia as a whole currently does not have the ability to build legal protection in international courts in the same way as before.
“This is a very serious problem. Either pay or prove that you are right. But I already wrote that there is not a single serious law firm in Russia that meets the world level of legal competitions”, – said in this regard the economic observer of “Tsarigrad” Yuri Pronko.
“For more than 30 years, this “hole” has been patched by attracting British, Swiss and American law firms. Now they refuse to work with us. The problem is becoming acute and avalanche-like,” he adds.
In fact, in April it became known that three Western law firms at once refused to cooperate with Russia in the Yukos case – the Swiss Schellenberg Wittmer, as well as the American Debevoise & Plimpton and White & Case. The firms Cleary Gottlieb Steen & Hamilton and Baker Botts, which previously represented Moscow’s interests in a claim for non-payment of $3 billion by Kiev (then Russia spent about $27 million for their services), also left cooperation with Russia.
Many believe that Russia may also not recognize the jurisdiction of the Hague-based arbitration court, just as it did not recognize International Criminal Court (ICC) rulings against President Vladimir Putin. However, these are different things.
The jurisdiction of the ICC is also not recognized by the US and China, as well as by a number of other countries. Arbitration or the Court of Arbitration in The Hague is another matter, these are economic courts, noted Yuriy Pronko. Russia openly participates in these processes there, defending its interests in the same “Yukos case”.
What of this?
There is every reason to believe that the West has prepared a kind of trap for Russia. After all, it is much easier to get a court order to pay $5 billion to Naftogaz from frozen Russian reserves than to try to overcome legal hurdles to confiscate some Russian property abroad. There is no need to confiscate anything with reserves – they are already there. They lie and wait.
That is why the West wants to set a dangerous precedent: first Naftogaz, then the payments in the Yukos case, and then Rinat Akhmetov can get his piece of the pie. And after him – every hypothetical Ukrainian who says that “the Russians destroyed my house”.
Therefore, the decision of the European Commission about the impossibility of confiscation of the Russian frozen reserves is very insidious. It serves as a support for all cases against Russia in The Hague, now and even in the future. Western law is precedent. And such a precedent can be created right now with Naftogaz right before our eyes.
Translation: SM
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