Supreme Court decision


In a 5 November 2021 judgment, the Dutch Supreme Court rejected Russia's claims that it was not bound by the Energy Charter Treaty (ECT), thereby confirming the arbitral tribunal's jurisdiction in the decade-long Yukos arbitration.

The Supreme Court further dismissed several other grounds for annulling the Yukos awards (which were in excess of $50 billion) (the awards) as rendered in 2014. However, the Court accepted Russia's argument that the lower courts should have reviewed (the admissibility of) Russia's claims that there was sufficient evidence that the Yukos shareholders had committed fraud during the arbitration proceedings. Therefore, the Supreme Court referred the matter back to the Appeal Court of Amsterdam, further extending the Yukos saga, which has been keeping the Dutch courts busy in recent years (for further details please see "End of Yukos saga may be in sight – ultimate attempts to set aside $57 billion awards are likely to fail").

Supreme Court decision

Russia had put forward eight grounds for cassation appeal of the 2018 and 2020 judgments of the Appeal Court of The Hague.(1) The Supreme Court ruled the first ground to be well founded and dismissed the other seven grounds.

The key points of the Supreme Court's judgment are as follows.

Alleged fraud in arbitration proceedings must be investigated
The Appeal Court of The Hague, in its 2018 and 2020 judgments, had ruled on procedural grounds that it did not have to investigate the allegations by Russia that the Yukos shareholders had committed fraud in the arbitration proceedings leading to the awards.

Dutch arbitration law differentiates between the remedy of annulment and the remedy of revocation, providing for different types of proceedings for annulment and revocation actions. The Appeal Court of The Hague had decided that the allegations of fraud in the arbitration proceedings could be addressed only in revocation proceedings (which had not been initiated by Russia) and therefore it did not have to decide on these allegations. The Supreme Court reversed this decision, stating that the allegations of fraud can also be addressed in annulment proceedings (for further details please see "Supreme Court clarifies when suspicion of fraud in proceedings is sufficiently concrete to start clock on revocation proceedings").

The Supreme Court decision has formally led to the annulment of the Appeal Court of The Hague judgments on this point and the Supreme Court has held that there must be an investigation into the issue. While this can be seen as a victory for Russia, the Court's rejection of Russia's other grounds may turn out to be more significant as it is unclear whether the arguments were timely and admissible, and if Russia will be able to prove that the alleged fraud before the Appeal Court of Amsterdam.

Russia bound by ECT and criteria for "investor" and "investment" under ECT met
Provisional application of ECT
One of the principal issues in the annulment proceedings of the Yukos awards was the question of whether Russia was bound by the ECT. Russia has signed but not ratified the ECT.

The discussion revolved around the provisional applicability of the ECT and the "limitation clause" therein, which would, in short, prevent the provisional application of the ECT if that would be contrary to Russian law. After an assessment of the interpretation of the limitation clause, the Court found that the ECT could be provisionally applied, confirming that Russia was bound by the ECT.

Definition of "investor" and "investments" under ECT
Another major issue regarding the application of the ECT was the question of whether the Yukos shareholders met the definition of "investor", and whether they had made an "investment" within the meaning of the ECT.

The Court found that the criteria for an investor and an investment under the ECT had been met, confirming the Appeal Court of The Hague's 2020 judgment. Applying the interpretation rules of the Vienna Convention of the Law of Treaties, the Supreme Court ruled that the contracting parties of the ECT had attached special meaning to the terms "investment" and "investor" in the ECT through the definitions contained therein. Following this finding, the Court applied a black-letter interpretation of the terms, refusing to apply the other criteria that Russia had put forward, including the "Salini-criteria" for investments (which requires risk and a contribution to the economic development of the host state in the context of the International Centre for Settlement of Investment Disputes Convention) and relevant "subsequent practice" by the contracting parties. On this latter point, Russia argued that it was relevant for the interpretation of the ECT that certain ECT contracting parties have excluded "U-turn-investments" (ie, investments by nationals through foreign companies) from investment protection under other treaties, and that similar issues had been addressed in discussions regarding the ECT's modernisation. The Court ruled that these circumstances were simply not relevant for the interpretation of the ECT's (current) text.

The Supreme Court even went as far as stating that its interpretation of the ECT qualifies as an acte clair, refusing Russia's requested referral to the European Court of Justice.

(Alleged) role of tribunal assistant cannot lead to annulment of awards
The other grounds for cassation appeal were also dismissed, including Russia's novel argument regarding the role of the tribunal assistant. Russia had argued, on the basis of two experts' linguistic analysis of several chapters of the awards, that the assistant had a disproportionately large role in making the awards. The Appeal Court of The Hague had dismissed this argument by Russia and the Supreme Court has now summarily (without reasons) also dismissed this ground for annulment.


While the Supreme Court judgment does not mean the end of the Yukos saga before the Dutch courts, the pressing issues on the applicability and interpretation of the ECT have been finally decided upon. The Court's willingness to allow the provisional application of the ECT, and its strict interpretation of the terms "investor" and "investment" in the ECT, could be read to include a confirmation that the Dutch judiciary continues to be willing to salvage arbitral awards where possible. While internationally – and in the Netherlands as well – there have been signs that states are limiting investment protection, it seems that the Dutch judiciary is not willing to retroactively apply that sentiment (for further details please see "New model BIT: negotiations to commence soon").

For further information on this topic please contact Basya Klinger or Alexander Schurink at Freshfields Bruckhaus Deringer LLP by telephone (+31 20 485 7000) or email ([email protected] or [email protected]). The Freshfields Bruckhaus Deringer LLP website can be accessed at


(1) The Hague Court of Appeal, 25 September 2018, ECLI:NL:GHDHA:2018:2476; The Hague Court of Appeal, 18 February 2020, ECLI:NL:GHDHA:2020:234.