The Commercial Court has recognised and enforced an arbitration award of $50 billion plus the compound interest awarded on those damages, which has accrued since 2014. In total, the figure exceeds $66 billion which is the largest judgment ever issued by the English Courts.
The decision in Hulley Enterprises Ltd & Ors v The Russian Federation [2026] EWHC 456 (Comm) reinforces the pro-enforcement provisions of The New York Convention and the corresponding implementing provisions in UK law, enshrined in sections 101 to 103 of the Arbitration Act 1996.
Brief background facts
HVY (Claimants) were formerly the majority shareholders in OAO Yukos Oil Company (Yukos). The beneficial owners of the HVY companies included various Russian individuals (the Russian Individuals).
The underlying dispute relates to Yukos’ oil assets in Russia and HVY’s case that the Russian Federation unlawfully expropriated those assets.
HVY’s position was that the Russian Federation breached its obligations to them under the Energy Charter Treaty (ECT), and they brought claims in arbitration for damages. The claims led to the Final Awards which became the focus of enforcement proceedings in the English Court, which was a trial of preliminary issues.
Section 103(3) and public policy arguments
Section 103(3) of the Arbitration Act 1996 makes it possible to refuse the recognition or enforcement of a New York Convention award if it would be “contrary to public policy”,
The Russian Federation’s challenge to enforcement raised two different kinds of public policy objection:
- Objections founded on historic conduct and events including the Russian Federation’s allegations of misconduct and illegality around the acquisition and operation of Yukos.
- Objections founded on conduct and events that occurred in the course of the arbitration proceedings. The Russian Federation raised allegations concerning fraud in the arbitrations.
These issues were determined on the basis of preliminary issues, as the Russian Federation has already lost the issues in arbitration and / or in proceedings in the Netherlands.
Public policy: the threshold and test
The threshold for a public policy objection is high, and the grounds for refusing enforcement are construed narrowly.
The burden is on the party resisting enforcement to establish that one of the exceptions applies. Even if the party can establish an exception, the court retains discretion to allow the enforcement.
In other words, it is a steep uphill battle for the resisting party to avoid enforcement.
Historic conduct and events
There were allegations of:
- misconduct in relation to the privatisation of Yukos
- illegality in connection with the Claimants’ acquisition of their shares in Yukos
- misconduct in relation to Yukos’s tax affairs and taxation
Several of the preliminary issues related to the question of whether these issues were capable of rendering the enforcement of the Awards contrary to English public policy.
Here the court emphasised that the critical question is whether the enforcement of the award would be contrary to English public policy; it is not whether the underlying subject-matter is in some way contrary to English public policy.
Further, the allegations were raised before the Tribunal and accepted by it, but the Tribunal nevertheless made an award in favour of the Claimants. It was accepted that the Tribunal’s findings in respect of the illegality or immorality can be relied on.
In this instance, the Commercial Court recognised that even if moral failings of the Claimants and the Russian Individuals could be established, they would be simply incapable of affording any defence (save to a very limited extent in relation to costs).
Public policy objection founded on fraud in the arbitration
It is “well recognised” that, where an award has been obtained by fraud or other means contrary to public policy, this is a basis for invoking section 103(3) of the Arbitration Act 1996.
The fraud must be material in that it has a sufficiently close degree of connection with the award, and the alleged misconduct should have caused substantial injustice to the innocent party.
In this case, there were allegations of “procedural fraud” which included the allegation of wrongful payment of a witness. The court was asked to decide whether the preliminary issues that related to this point would be capable of rendering the enforcement of the Awards contrary to English public policy.
The judge found that any payment to this witness (and/or the failure by HVY to make the existence of the same known) was not wrongful under applicable principle of Dutch law and/or international arbitration rules or practice.
In deciding the point, the Court recognised (among other reasons) that the witness (Dr Illarionov) had no personal connection with HVY and owed them no loyalty.
The UK takes a pro-enforcement stance to arbitration awards and as a signatory to the New York Convention, it will normally recognise and enforce awards, unless there are very good reasons not to.
Section 103 of the Arbitration Act 1996 allows an exception to enforcement on the grounds public policy, but there are high hurdles to overcome to establish this defence.
Even in a case like this, which is not devoid of “moral failings”, the Court will not easily render an award unenforceable.
