Yukos Case: Brussels Court of First Instance Unfreezes Russia’s Assets
On 8 June 2017, the Brussels Court of First Instance handed down its decision on the legality of the seizures of assets belonging to Russia carried out by Yukos Universal Ltd (YUL) in the context of the Belgian enforcement proceedings of the Yukos case. As you certainly know, the Yukos case refers to an arbitral saga that saw three arbitral tribunals issuing three arbitral awards which cumulatively ordered Russia, in 2014, to pay USD 50 billion as reparations for the irregularities committed during the nationalisation of the Russian oil company Yukos (click here for a report of the hearing that took place before the Brussels Court of First Instance in November 2016).
Following the issuance of the award in 2014 in its favour, YUL (one of Yukos‘s former shareholder) sought the exequatur and the enforcement of the award in several countries, including Belgium. The Belgian exequatur of the award was granted to YUL in June 2015. In addition, YUL was also allowed to freeze and seize several key assets belonging to Russia as well as assets belonging to two Russian press agencies (ITAR TASS and Ria Novosti).
As a response to those precautionary seizures, Russia filed a third-party opposition before the Brussels Court of First Instance in which it challenged the legality of those seizures. As explained earlier, Russia’s main argument in opposing those seizures was that the three awards rendered in favour of Yukos‘s former shareholders had all been annulled by the District Court of the Hague (the Netherlands being the seat of the arbitration) in April 2016. As a consequence of this judgment by the District Court of the Hague, Russia argued that the Belgian exequatur order which had initially been granted to YUL in June 2015 was null and void and YUL was thus not entitled to proceed with the seizure of Russia’s assets.
In its decision of 8 June 2017, the Brussels Court of First Instance fully sided with Russia on this point.
More specifically, the Court of First Instance referred to the Belgian law provision on seizures (Article 1494 of the Belgian Judicial Code) which provides that in order to proceed with a seizure, a creditor must rely on a valid enforcement order. In the case of arbitration, the Court of First Instance recalled that such a valid enforcement order is comprised not only of the exequatur order but also of the award itself. In the case at hand, however, the Court of First Instance held that since the District Court of the Hague had annulled the award, this award was considered to have completely disappeared from the Dutch judicial order (“l’ordre juridique néerlandais“). In addition, the Court of First Instance also held that the judgment rendered by the District Court of the Hague (which annulled the award in YUL’s favour) had to be fully recognised in Belgium in application of a 1925 bilateral convention between Belgium and the Netherlands on the recognition and the enforcement of arbitral awards and judicial decisions.
Consequently, and without prejudice of the fact that the validity of the exequatur order had been confirmed a few months ago by the same court, the Brussels Court of First Instance held that YUL could not rely on a valid enforcement order and proceed with the seizures since it lacked a valid arbitral award. The Brussels Court of First Instance therefore ordered YUL to unfreeze all the assets that it aimed to attach.
As an incidental ground, it is also worth noting that Russia’s subsidiary argument according to which the arbitral award had been erroneously served on the basis of The Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters was dismissed by the Court of First Instance.
On a practical ground, the judgment from the Brussels Court of First Instance opens the door for discussion: as we know, the Court of First Instance dismissed, in December 2016, the third-party opposition filed by Russia against the exequatur order granted for the benefit of YUL. However, the same court (although composed of a different judge) now rules that this order is not capable of enforcement, thereby depriving its decision of December 2016 of any effectiveness… Even if technically speaking the judgment of 8 June 2017 does not contravene the previous judgment of 9 December 2016 (which is currently subject to an appeal), there is definitely a contradiction, at least in the spirit of both decisions.