The YUKOS hearing at Strasbourg

Russia has lost a great many cases at Strasbourg since it ratified the European Convention on Human Rights in 1998. It takes this seriously. In a recent development, on 26 February 2010 the Constitutional Court of the Russian Federation ruled that in addition to criminal and arbitrazh (commercial) cases, all civil cases in Russia must be subject to rehearing following a judgment of the ECtHR.

Russia has also been taking steps to improve its performance at hearings of the ECtHR. In August 2008 President Medvedev nominated the 39 year old former prosecutor Georgiy Matyushkin, who had already held high office in Russia, as Russia's new representative before the ECtHR. Greater professionalism is already evident.

Victory for the YUKOS claim was never a foregone conclusion. In 2009 the former Russian representative, Pavel Laptev, predicted that Russia would win. And in an article published a few days before the hearing entitled “Yukos Case in Strasbourg Is An Uphill Battle” , Dmitry Gololobov, a former lawyer for Yukos now living in the UK, listed a series of respects in which the outcome for the applicant is far from clear.

His predictions were borne out by the hearing itself. But the first surprise was that for the very first time (so far as I know) Russia was represented by a foreign lawyer in addition to Mr Matyushkin. The English barrister Piers Gardner, who has been representing YUKOS since the start of the case, was confronted by another English barrister, the commercial law Queens Counsel (senior barrister) Michael Swainston QC.

Olga Pleshanova, who reports regularly on commercial law issues for the daily Kommersant, was present in court and has written the most detailed analysis to have appeared in the Russian media. In her view, things turned out rather badly for YUKOS. In his submissions for YUKOS (advocates were in this case given 75 minutes to make their case) Gardner answered the questions out by the Court before the hearing; questions which seemed rather favourable to YUKOS.

Then, in a short but surprising submission, Mr Matyushkin asked for a transfer of the case to the Grand Chamber, with the aim of having the claim dismissed. He argued that Gardner could not appear as YUKOS representative, since he did not have instructions from the alleged victims. In his view, the only victims could be the former shareholders of YUKOS, but they have applied not to Strasbourg but to the ICC International Court of Arbitration at The Hague, under the terms of the Energy Charter Treaty. On 30 November 2009 the Hague Court granted the majority shareholder of YUKOS, Menatep Ltd (GML), admissibility in its claim for over $100 billion. It is also a rule of international law that a victim may not apply to more than one international instance.

This submission was surprising because the question of Mr Gardner's authority to act had already been raised by Russia and dismissed by the Court in its admissibility decision; and the question of proceedings at The Hague had been put to the parties by the Court itself, and answered in detail. And the Court had refused to refer the case to the Grand Chamber.

Mr Swainston in turn asked the Court, rhetorically, “Whose interests does Mr Gardner represent?” He argued that the “victim” (without which there can be no claim to Strasbourg) could not be the former top managers of YUKOS, nor the foundations created in The Netherlands for the protection of its interests. “Piers Gardner by himself cannot demand payment of compensation to his personal account, and then distribute the money to his clients”, Swainston declared. He also maintained that YUKOS was quite properly pursued by the Russian tax authorities.

Under the Strasbourg procedure, the judges do not ask questions until both sides have made their submissions.

The first two questions were aimed at Mr Gardner. Judge Elizabeth Steiner, the Austrian judge at Strasbourg, asked him how he could continue to represent the company, when his “power of attorney” for the company was only for one year, from 19 August 2003 until 19 August 2004. Judge Bushev, the substitute Russian judge, also asked him whom exactly he represented – who are the “stakeholders”? The final question, on fines and taxes, was directed at Russia.

The Court did not receive a short answer from Mr Gardner. The President of the Chamber, Judge Rozakis, from Greece, had to remind him that the parties had agreed a maximum of 30 minutes for replying to the judges and to the other side's submissions, and he had been speaking for 45 minutes. YUKOS supporters consider that he gave a full answer; Russia insists that he gave no answer.

It would appear from the questions asked that the judges have some intensive discussion ahead of them. There may well be a judgment this year. And Russia could conceivably win.

© Bill Bowring

* First published at: http://www.eu-russiacentre.org/our-publications/column/yukos-hearing-strasbourg.html