At  of the Award, the majority states that "the Tribunal considers that the Claimant was negligent in safeguarding its own interests as lender", and at  it says that "[t]he Tribunal considers that the Claimant’s failure in this respect equally contributed to this part of the loss along with the Respondent’s subsequent breaches of the treaty."
(i) Yukos Oil had been advised in very plain terms by its outside lawyers that there was utterly no merit in the 2000 Tax Assessment (discussed further below in relation to the August 2004 Loan);
(ii) another judge of the Moscow Arbitrazh Court had, on 19 May 2004, suspended the 2000 Tax Assessment, and that this suspension remained in force as at the 26 May 2004 court ruling;
(iii) even if Yukos Oil were to declare bankruptcy, at this stage of events (well before Respondent’s unlawful behaviour in relation to the rigged YNG auction) Yukos Oil had more than enough assets (details below) to pay the 2000 Tax Assessment and any penalties should the assessment survive the challenge Yukos Oil had launched against it;
(iv) on 17 June 2004, the day after Claimant made its next advance on the Loan, President Putin made a strong statement (details below) that was evidently designed to reassure concerned foreign investors that the Russian authorities, the government and the economic officials of the country were not interested in seeing Yukos Oil go bankrupt; and
(v) the last two advances on the December 2003 Loan were made (as required in the Loan Agreement) during the week that followed President Putin's widely reported reassurance (i.e., on 22 and 28 June 2004).
At  and  of the Award, reference is made to a number of cases in which other tribunals are said to have concluded that the relevant investor caused its own loss (and thus was entitled to no compensation from the relevant state) despite the fact that the state in question has also been found culpable. The paragraphs wrongly suggest that these cases are good precedents for the majority’s conclusion that Claimant should receive no compensation for the loss of its August 2004 loan.
The cases cited by the majority in  and  are summarised briefly below. I respectfully suggest that these cases do not support the conclusion that the loss suffered by Claimant in relation to the August 2004 Loan was entirely or predominantly attributable to its own conduct such that Respondent can properly be released of any responsibility for its unlawful treatment of Claimant.
...provide overwhelming evidence establishing that, were it not for the Respondent’s actions, the financial position of Yukos Oil would have been such as to enable it to repay Yukos Capital’s Loan in full and to continue to make quarterly interest payments in accordance with its terms, A reasonable lender in the position of Yukos Capital would have so concluded and valued the FMV of the Loan at face value.16
Second, the majority gives virtually no consideration in the Award as to the foreseeability of that dispute. With the exception of one paragraph (), at no point in Part VII does the majority concern itself with whether it was reasonably foreseeable by Claimant, when it made the two Loans, that Respondent would attack it, as it did, when it later sought to register its claims in Yukos Oil's bankruptcy.
that this was as a result of deliberate conduct on the part of the Respondent, which was 'intent on destroying the entire company’. The foreseeability of such an intention would affect the totality of the assets of the Yukos Group on the territory of the Respondent.
Exactly what was happening and when is set out in useful detail at - of the Award. In broad sweep, it shows plainly that at the time the two Loans were advanced, what we now know was an unlawful campaign to acquire the Yukos Group’s assets was only just getting underway.
(i) Only the first of the five Tax Assessments had reached a stage where Yukos Oil had been found liable for tax offences when the August 2004 Loan was made. The second Assessment (the 2001 Tax Assessment) came to a decision on such liability only on 2 September 2004,22 well after the two Loans had been made. All the others come later.
(ii) Initially, after it received the 2000 Tax Assessment, Yukos Oil’s external Russian counsel stated in robust terms that it was so unmeritorious, and the extent of the tax ministry’s violations were so apparent that it would be "impossible even for the most biased judge to support the clearly unlawful inspection act."23
(iii) Although the tax ministry’s collection claim on the 2000 Tax Assessment was upheld by one judge of the Moscow Arbitrazh Court on 26 May 2004, the effect (i.e., the enforceability) of that Assessment had previously been suspended (by another judge of the same court), and remained so until the suspension was annulled on 23 June 2004.24
(iv) On 17 June 2004, a day before an expected court ruling on the 2000 Tax Assessment, President Putin was reported in the New York Times as saying:
Russian authorities, the government, and the economic officials of our country are not interested in seeing Yukos go bankrupt... The government will try to do everything not to topple this company.25
The majority expressed the view, "based on its assessment of the Respondent’s conduct to this date", that "little weight can be placed on this statement . Given that this statement was made less than six months after the 2000 Tax Assessment, and long before the rigged auction of YNG’s assets and the 2006 bankruptcy, the majority's "view" can only be hindsight based. In any event, it is well established that what governments say in these circumstances to and about investors matters (and can have consequences) in the context of investor-state disputes. It may now be a relatively common view that Mr Putin cannot wholly be trusted. But that was not so clear in the summer of 2004. Moreover, the fact that he made the statement on behalf of the government and the relevant Russian authorities was clearly intended to calm roiling markets and to be believed.
(v) The New York Times reported further that shares of Yukos Oil jumped 42% on the news (of Mr Putin’s statement) before trading was suspended for the day and gave details of settlement discussions between Yukos Oil and Russia. The market’s reaction to Mr Putin’s statement was signalling the possibility of Yukos Oil’s tax problems being resolved.
(vi) As mentioned earlier, on 21 July 2004, the Ministry of Justice announced plans to sell the seized YNG assets. All of the valuations that were carried out at this time indicated that the share capital of YNG well exceeded the then known and future tax liabilities. Valuations ranged between USD 18.6-21.1 billion (DKW valuation), USD 16.1-22.1 billion (JP Morgan valuation) and USD 20-25 billion (possible bid range by TNK-BP).26
(vii) The second to fifth Tax Assessments all occurred after the August 2004 Loan was advanced.27 The rigged YNG auction took place on 19 December 200428 and Yukos Oil was petitioned into bankruptcy in March 2006.29
Award at , citing Summary of the tax inspection of OAO NK Yukos, Sergey Pepeliev (5 January 2004), 3 (R-577).
Date: 23 July 2022
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