On 18 February 2020, the Court of Appeal in the Hague rendered its long awaited judgment on the appeal lodged by Veteran Petroleum Ltd. (Cyprus), Yukos Universal Ltd. (Isle of Man) and Hulley Enterprises Ltd. (Cyprus) against the judgment of the District Court in the Hague which had annulled the awards rendered in their favour against the Russian Federation.
The dispute turns around an alleged expropriation and failure to protect a foreign direct investment made by such companies through Yukos Oil Company. It has a great notoriety also due to the amount at stake, the Arbitral Tribunal having awarded damages in excess of US $ 50 billion.
The Court of Appeal held that the arbitration agreement was valid and that under the Energy Charter Treaty the Tribunal had jurisdiction.
The issue on which the appellate judgment has decided was whether, even if Russia had not ratified that Treaty (an undisputed fact since the Treaty had not been approved by the Duma), Russia was bound by it.
The Court has based its reasoning on art. 45(1) ECT which provides that a Member State which had signed the Treaty is bound to apply it provisionally “to the extent that such provisional application is not inconsistent with its constitution, laws or regulations”.
The Court of Appeal has held that the provisional application of that Treaty was not violating the constitution, laws and regulations of the Russian Federation and has consequently dismissed the appeal. The three challenged awards have then come back to life.