Yukos vs Russia face off European Court of Human Rights as former oil giant seeks retribution

Yukos vs Russia face off in European court

STRASBOURG, France — Thousands of miles (kilometers) from the Siberian jail where its founder is imprisoned, representatives of the ruined Russian oil giant Yukos and the Russian government will meet face to face for the first time at the European Court of Human Rights this week as the dismantled company seeks to prove that its rights were violated.

Fearful it would never get a fair day in a Russian court, Yukos representatives filed a complaint with the European court on April 24, 2004 on the ground that it was “targeted by the Russian authorities with tax and enforcement proceedings, which eventually led to its liquidation.”

Six years later, Thursday’s hearing is a milestone in Yukos’ efforts to win acknowledgment that the Russian government’s actions were “unlawful, disproportionate, arbitrary and discriminatory, and amounted to disguised expropriation” of the company. Russian authorities had accused Yukos of shady deals and shell companies used to hide revenue from tax authorities.

Russian authorities began pursuing Yukos in 2002 on allegations of tax fraud. Through the courts, they ultimately froze its assets, forced it to sell its shares in other companies and declared it insolvent in 2006 before the company was finally liquidated a year later.

Mikhail Khodorkovsky, the former oligarch who founded the company in the chaotic years that followed the Soviet collapse, was convicted on charges of fraud and tax evasion and has been imprisoned since 2003.

Yukos would not give up the fight, however, and representatives of the company’s entities that managed to survive kept pressing the complaint they filed with the European court, which was set up in Strasbourg by the Council of Europe Member States in 1959 to deal with alleged violations of the 1950 European Convention on Human Rights.

On behalf of Yukos, its representative has submitted a claim for $98 billion in damages.

The treatment of both Khodorkovsky and his company have continued to dog the Kremlin even as President Dmitry Medvedev, a lawyer, says that judicial reform and the rule of law are among his top priorities.

“We chronically do not respect laws,” Medvedev said Wednesday, addressing a high-level group of Russian and French business leaders during his state visit to France. “We have to change things in people’s heads.”

He promised his audience that he would make sure Russia would become a country where the rule of law prevailed.

Russian citizens have long seen the European court as a place they could gain a hearing, and the Russian government has been hostile to it. Recently, however, Russia has moved to ease that stance. In January, Russian lawmakers ratified an international agreement intended to strengthen and speed up the work of the court after years of refusing to do so.

Late last year, the Russian Supreme Court agreed with the European court’s earlier judgment that a 2003 arrest of one of Khodorkovsky’s business partners was illegal, although that did not led to Platon Lebedev’s release.

Khodorkovsky, himself, now serving an eight-year jail sentence, has few illusions that Medvedev’s promises will produce change. His supporters believe that he is prison in part for supporting opposition parties and challenging the Kremlin’s political supremacy while still a free man.

“The system is an assembly line of a gigantic factory. … If you become raw material for the assembly line, then a Kalashnikov rifle is always produced — that is a guilty verdict. Any other result from the system’s processing of raw material is viewed as a malfunction,” Khodorkovsky wrote in an article that appeared Wednesday in the Nezavisimaya Gazeta newspaper.

Khodorkovsky faces another two decades in prison on similar charges to those that have stranded him in Siberia.

The European Court of Human Rights, is an independent judicial body under the auspices of the Council of Europe, which has 47 member states, including the Russian Federation. The court agrees to hear less than 5 percent of the applications it receives. The court declared most of Yukos’ complaints admissible Jan. 29, 2009.

The European court has agreed to examine Yukos’ complaints of irregularities in the Russian authorities’ proceedings on its tax liability, about the unlawfulness and size of the tax assessment and forced sale of Yuganskneftegaz, selective and arbitrary prosecutions that led to “double punishment.”

Rulings of the European Court of Human Rights are binding on all its member countries.

AP correspondent David Nowak in Moscow contributed to this report.