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May 6, 2011

Russian Rule of Law

[Page: S2721]  GPO's PDF 


Mr. WICKER. Mr. President, on several occasions I have risen to address my colleagues on the topic of Russia and the continuing sad state of the rule of law in the Russian Federation. Today, I rise once again to address the latest information regarding the absence of a rule-of-law framework in Russia's approach to businesses and investors. Specifically, this situation negatively impacts the United States and the entire international community.

There have been a number of poor decisions around the world related to the Yukos Oil issue that highlight Russia's hostility toward investment and business. As my colleagues may be aware, GML, the majority shareholder of the former Yukos Oil, previously headed by businessman and now political prisoner Mikhail Hoarders, has a $100 billion arbitration claim against the Russian Federation to obtain compensation for the Yukos assets which were summarily taken between 2003 and 2005.

Several recent developments demonstrate yet again that international courts do not recognize Russia's 2003 expropriation of Yukos Oil Company as legitimate and that former stakeholders of the company may pursue compensation for their assets that were seized improperly and, in essence, nationalized by the Russian State.

Court victories handed to shareholders involved in the dispute indicate that the international legal system

[Page: S2722]  GPO's PDF
will not recognize the validity of Russia's bankruptcy of Yukos. In December 2009, the New York Times detailed one of these victories in which an independent arbitration panel made a jurisdictional ruling that shareholders of the former Yukos Oil Company, GML, had the right to file and pursue an estimated $100 billion in damages from the Russian Government. The tribunal determined that Russia, as a signatory, was bound by the Energy Charter Treaty and must adhere to its provisions. This claim now moves to the next stage, with a decision expected in October 2013--regrettably slow but moving surely.

The most recent victory occurred in December of last year and involved a second international arbitration tribunal in Stockholm, which awarded RosInvestCo UK, a minority shareholder of Yukos, $3.5 million for the damages resulting from the Russian Government's actions. This was the first case in which anyone seriously examined the claims of an individual Yukos shareholder. The panel independently and unanimously concluded that the Russian Federation was liable for expropriating RosInvestCo's assets. I stress to you that this was a unanimous decision even though the tribunal included a Russian arbitrator.

I bring these developments to the attention of my Senate colleagues because I believe they demonstrate a growing movement in the international community that holds Russia accountable for its actions toward investors, and it is a movement the United States should support.

Minority shareholders, such as RosInvestCo, are just the tip of the iceberg when it comes to shareholders who lost billions that were rightfully theirs as a result of the seizure of Yukos assets. In the United States alone, shareholders were stripped of $6 billion to $12 billion.

Russia's actions toward Yukos remind us that investment in Russia is extremely risky. The international community is taking note. Americans are taking note. American legislators should take note.

Recent court decisions indicate that the legitimacy of the Russian Government's claims over Yukos assets are suspect at best.

With these thoughts in mind, I urge my colleagues to continue working to ensure protection and adequate mechanisms for U.S. shareholders and businesses doing business in Russia.

I yield the floor.

(Senate - May 5, 2011)

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