Setting aside international investment arbitration awards by state courts at the seat of arbitration (inspired by the Yukos saga): show must go on?

This article deals with the judgment of the Hague Court of Appeal (the Court) of 2020 on setting aside six international investment arbitration awards – on jurisdiction (2009) and on the merits (2014), jointly referred to as “the Yukos awards”. These awards were rendered in favor of former shareholders of Yukos Oil Company OJSC against Russia on the basis of the Energy Charter Treaty (ECT). In 2016, Russia secured the set-aside of the Yukos awards by the Hague District Court (court of the first instance). Thus, this article also briefly analyzes the judgment of the first instance court. The plaintiffs appealed against that decision of 2016. The author examines Russia’s arguments, counterarguments of the plaintiffs and the findings of the Dutch courts of both instances. In brief, Russia based its claims on six grounds. These grounds are listed in Section 1065 subsection 1 of the Dutch Code of Civil Procedure. Each of them entails the state court’s duty to set aside the Yukos awards. The Hague District Court ruled that Russia is not bound by the provisional application of the provisions of the ECT (to the extent pertaining arbitration) and therefore has never made an unconditional offer to foreign investors to arbitrate in the meaning of Article 26 ECT. As a result, the “notice of arbitration” sent by the plaintiffs to Russia did not form a valid arbitration agreement. Thus, the arbitral tribunal erroneously declared itself competent to consider these claims and to render awards on the merits of the dispute. By virtue of the principle of procedural economy, the Hague District Court decided that it would not consider the other grounds for setting aside to which Russia referred. However, the Court carefully examined each of following arguments: the arbitral tribunal exceeded its authority; there were violations in the formation and activities of the tribunal; the Yukos awards are not sufficiently motivated; they are contrary to Dutch public policy and public morality, as they indicate the lack of independence and impartiality of the arbitrators. The Court did not agree with the findings of the Hague District Court.

About the author: Ilia Rachkov – Candidate of Sciences (Ph.D.) in Law, Associate Professor, Moscow State Institute (University) of International Relations, Moscow, Russia.

Citation: Rachkov I. (2020) Otmena resheniy mezhdunarodnykh investitsionnykh arbitrazhey gosudarstvennymi sudami po mestu arbitrazha (na primere sagi o YUKOSe): shou prodolzhaetsya? [Setting aside international investment arbitration awards by state courts at the seat of arbitration (inspired by the Yukos saga): show must go on?]. Mezhdunarodnoe pravosudie, vol.10, no.1, pp.107–124. (In Russian).

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