Russia’s steps in Yukos case to rely on Constitutional Court’s position

Russia’s further steps in executing an additional resolution of the European Court of Human Rights (ECHR) in the case of ex-Yukos shareholders will be based on the Russian Constitutional Court’s legal position, Deputy Justice Minister Georgy Matyushkin said on Friday.

The deputy justice minister, who is also Russia’s envoy to the ECHR, made this statement at a roundtable discussion on topical international law problems in the 21st century.

The Russian Constitutional Court is currently considering an inquiry from a group of deputies of the State Duma, the lower house of Russia’s parliament, on applying ECHR judgments in Russia. The Constitutional Court press office reported earlier a decision would be announced on July 14.

"I believe that further actions of the Russian authorities will be taken proceeding from the legal position, which will be formulated by the Constitutional Court following the examination of this inquiry," the deputy justice minister said.

In the Yukos vs Russia case, the ECHR "failed to provide legal arguments that would leave no doubts about the fairness and the unbiased nature of its ruling," the deputy justice minister said.

"This resolution is unprecedented as the court never before in its practice awarded compensation to persons who had not applied to it with a relevant request and did not participate in the examination of the corresponding case," the deputy justice minister said.

In the Yukos case, the Russian side was deprived of the right to state its position on the personal composition of shareholders among whom there were persons who, as the European Court noted itself, participated in implementing fraudulent tax evasion schemes," Matyushkin said.

"Moreover, the court ignored the existence of the company’s unrepaid debt to creditors in the amount of over 227 billion rubles," the deputy justice minister said.

"Therefore, for some reasons and contrary to common sense, the court gave priority to compensation in favor of persons who had incomes that had also emerged through the company’s breach of tax legislation and unrepaid credits," Matyushkin said.

Therefore, the ECHR once again ignored the position of the Russian Constitutional Court, which "confirmed compliance with the Constitution of Russia by those legal norms that laid the basis for bringing this company [Yukos] to liability in accordance with law," the deputy justice minister said.

The ECHR ruled on July 31, 2014 to award over 1.866 billion euros in compensation payments to former Yukos shareholders under their complaint filed against Russia and examined in 2011.

The ECHR concluded that Russian courts had breached article 6 of the European Convention on Human Rights stipulating the right to a fair trial when they had examined Yukos taxation issues in the early 2000s because the company had not been given enough time to prepare for its defense.

The court also obliged Russia to pay 300,000 euros to former Yukos shareholders as compensation for their judicial expenses.

Russia’s justice minister said in March the execution of the ECHR’s ruling on paying 1.8 billion euros in compensation to former Yukos shareholders was not binding for Russia.
"The procedure of challenging [the court’s ruling] has been completed. From the ECHR’s viewpoint, the process is over and the talk is now about executing the decision. As for how to execute it, only the procedure for the Committee of Ministers of the Council of Europe is prescribed to monitor the execution of the decision," the justice minister said, adding Russia was denied a review of the case.

"There are no tight timeframes there. They will recommend executing it and remind of the need to carry it through. But no sanctions are stipulated. That is why, this is a free will of a state," the justice minister said.

Yukos case

Yukos oil giant was accused of tax crimes and declared a bankrupt by a Russian court ruling in 2006 while its assets were sold at auctions during the liquidation procedure.

Yukos former head Mikhail Khodorkovsky and his business partner Platon Lebedev were found guilty of embezzlement and tax evasion in May 2005 and sentenced to nine years in prison.

While serving their prison term, both Khodorkovsky and Lebedev were found guilty of embezzlement and money laundering in a second criminal case in December 2010 and sentenced to 14 years in prison, with account taken of the jail term they had served.

Khodorkovsky was pardoned by Russian President Vladimir Putin and left the prison in December 2013. Lebedev was released from the jail in early 2014.