fbpx

No Honor Among Thieves

When you make the decision to steal a company, don’t you also thereby steal any of that group’s outstanding debts? Apparently not in Russia, where whatever inconvenient legal decision that is not approved by Rosneft gets overturned by a more obedient court. Below the latest news from Kommersant, reporting on Rosneft’s refusal to pay for several Yukos’ debts. This regular refusal on behalf of Russia to respect international arbitration decisions is of enormous concern to all foreign investors doing business in the country. Kommersant:

Rosneft Isn’t Willing to Pay Yukos Debts A few lawsuits were filed to the arbitration courts late past week to challenge loans that Luxembourg Yukos Capital S.a.r.l. granted in 2004 to Yukos subsidiaries, which are currently controlled by Rosneft. If nine loan agreements are acknowledged null and void, Rosneft won’t pay roughly 20 billion rubles to Yukos Capital that the latter is attempting to enforce via the International Commercial Arbitration. Some Vesta Co. filed four suits to Moscow Arbitration on August 9, 2007. Acting on behalf of Rosneft, Vesta is seeking invalidation for four loan agreements worth $450 million that Yukos Capital and Yuganskneftegaz concluded in July to August of 2004. Rosneft is the legal successor to Yuganskneftegaz. On September 19, 2006, the International Commercial Arbitration of Russia’s Chamber of Commerce ruled to charge from Rosneft roughly 13 billion rubles (with accrued interest taken into account) in favor of Yukos Capital. On May 18, 2007, however, the award was annulled by Moscow Arbitration, and the Moscow Region’s Court of Cassation backed up cancellation on July 26, 2007. But the Amsterdam Court upheld that verdict of the International Commercial Arbitration and to avoid paying Rosneft needs a favorable award of the RF Supreme Arbitration Court. The latter, however, tends to oppose lower courts should they challenge awards of the International Commercial Arbitration. Yukos Capital granted loans not only to Yuganskneftegaz, but also to Tomskneft VNK and Samaraneftegaz (Yukos used to own 100 percent in them). Rosneft subsidiary, Neft-Aktiv, acquired Tomskneft and Samaraneftegaz in May, empowering Yukos to go to the International Commercial Arbitration for their debts as well.