Russian SOEs Exposed to Future European Asset Seizures related to $50 Billion Yukos Ruling against Moscow

Following last years court ruling in The Hague that Moscow unlawfully dismantled Yukos, the giant oil company formally owned and managed by Mikhail Khodorkovsky, and owes its former shareholders $50 billion in compensation, GML, Ltd. (the Gibraltar-registered company through which Mr. Khodorkovsky and his colleagues held their shares) has been prompting individual European states to uphold this award against Russia by seizing its state-controlled assets.

Due to the nature of this enforcement exercise and its success being largely dependent on technical interpretations of the law by local and regional judiciaries — rather than on the diplomatic or political preferences of national leadership — these actions have the potential to become a major point of contention (the beginnings of which are already in evidence).  With asset seizures and bank account freezes taking effect in France and Belgium, much to the consternation and surprise of Moscow, Kremlin officials are now threatening to retaliate with the seizure of assets belonging to these countries within Russia.

Interestingly, thus far, asset seizures have only targeted those belonging directly to the Russian state, although most technical experts believe this is merely a matter of officials initially focusing on “low-hanging fruit.”  Those assets that are majority owned by Russian state-owned enterprises are susceptible to similar treatment and are legally fair game.  IntelTrak identifies the global business footprint of these enterprises and can identify exposure to this category of risk and conflict.