United Kingdom / 14 June 2011 / England and Wales, High Court / Yukos Capital S.à r.l. v. OJSC Rosneft Oil Company / 2010 Folio 315 & 316
| Country | United Kingdom |
| Court | England and Wales, High Court |
| Date | 14 June 2011 |
| Parties | Yukos Capital S.à r.l. v. OJSC Rosneft Oil Company |
| Case number | 2010 Folio 315 & 316 |
| Applicable NYC Provisions | V |
| Source |
[2011] EWHC 1461 (Comm) | online: BAILII |
| Languages | English |
| Summary | The claimant, Yukos Capital S.A.R.L. (“Yukos Capital”) was a Luxembourgian company which had once been a member of the Yukos Group (“Yukos”) in Russia. The defendant, OJSC Rosneft Oil Co. (“Rosneft”), was a Russian State-owned company which had acquired the majority of Yukos’ assets. The acquired assets included a former production subsidiary of Yukos, Yuganskneftegaz (“YNG”). Disputes had arisen in respect of certain loan agreements between Yukos Capital and YNG. The disputes were submitted to arbitration pursuant to the Rules of the International Commercial Arbitration Court at the Chamber of Commerce of Trade and Industry in Russia. The arbitral tribunal issued four awards in favour of Yukos Capital. By the time the awards were issued, YNG had been acquired by Rosneft. Rosneft then applied to the Russian courts to have the awards set aside. The Russian courts granted the application. Meanwhile, Yukos applied to the Dutch courts for enforcement of the awards. The Dutch courts ultimately granted enforcement, refusing to recognise the Russian courts’ setting aside of the awards on the basis that it was the product of a judicial process that was partial and dependent. Yukos also applied to the English High Court to enforce the awards pursuant to section 101(2) of the Arbitration Act 1996 (U.K.) (“the Act”) (providing for enforcement as a judgment or order of the court of an NYC award, as defined by the Act). Rosneft objected to enforcement on three broad grounds. First, it maintained that the awards had been set aside by the Russian courts, relying on section 103(2)(f) of the Act (incorporating Article V(1)(e) NYC regarding refusal to recognise or enforce an award where, inter alia, the award has been set aside by a competent authority of the country in which, or under the law of which, it was made). Second, it argued that the allegations by Yukos Capital regarding the conduct of the Russian court proceedings raised a challenge to the validity of executive and administrative acts of a foreign sovereign upon which the English courts could not adjudicate under the act of state doctrine and the doctrine of non-justiciability. Third, it asserted that the awards should not be enforced because they gave effect to an unlawful tax evasion scheme. Yukos Capital replied first, that the Russian courts’ setting aside of the awards was partial and dependent, as the Dutch courts correctly found in their decision granting enforcement, and that this decision bound and estopped Rosneft under the doctrine of issue estoppel; second, that the doctrine of act of state did not apply because there was no challenge to the validity of any act of state and the doctrine of non-justiciability did not apply because the allegations were concerned with judicial standards, which were justiciable; and third, that the allegation of unlawful tax evasion was part of a campaign to strip the Yukos Group of its assets. The High Court was asked to rule on two preliminary issues, namely: (i) whether Rosneft was issue estopped by the decision of the Dutch courts from denying that the Russian courts’ setting aside of the awards was the result of a partial and dependent judicial process and (ii) whether Rosneft was entitled to rely on the act of state and non justiciability doctrines. The High Court ruled in favour of Yukos Capital on both of the preliminary issues. In the course of ruling on the first preliminary issue, the Court referred to the history of the Dutch enforcement proceedings, noting that they were commenced before the District Court of Amsterdam, which had refused enforcement on the basis that the setting aside of an award by the courts of the seat of arbitration should only be disregarded in “extraordinary” circumstances, including partiality and dependency, and that such circumstances had not been made out by Yukos Capital. Yukos had then appealed to the Amsterdam Court of Appeal, which (the English High Court explained) granted leave to enforce the awards on the ground that a Dutch court was not compelled to refuse enforcement of an award under the NYC if the decision setting aside that award could not be recognised as a matter of Dutch public order. In the Amsterdam Court of Appeal’s view (as recounted by the English High Court), Yukos Capital had properly substantiated that the Russian courts’ setting aside of the awards was not impartial and independent. Rosneft had then lodged a cassation appeal (which, as the English High Court explained, was a limited review of the lower court’s decision, which could not be overturned except on the grounds of an error of law or a procedural error) with the Dutch Supreme Court. The English High Court noted that the Dutch Supreme Court ultimately dismissed the appeal on a jurisdictional ground, being that, in cases of enforcement of an award under the NYC, Dutch law did not permit an appeal against the grant of “exequatur” (i.e., leave to enforce). Having thus recounted the history of the Dutch enforcement proceedings, the English High Court turned to the argument advanced by Rosneft that under the NYC, all that was required to enforce an award was the production of certified copies of the award and the arbitration agreement. As such, Rosneft submitted, the finding of the Amsterdam Court of Appeal that recognition of the Russian courts’ setting aside of the awards would be contrary to Dutch public order was neither necessary nor fundamental to its enforcement decision and could not form the basis of an issue estoppel. This argument was rejected by the English High Court, on the ground that the finding that the Russian courts’ setting aside of the awards was the result of a partial and dependent judicial process was both necessary and fundamental to the Amsterdam Court of Appeal’s decision. |
| affirmed by : |
Attachment (1)
 Original Language Adobe Acrobat PDF |
