The European Court of Human Rights has rejected the company’s claim that the prosecution of Yukos was politically motivated in its Tuesday’s ruling. Russian government had not violated article 14 of 1950 European Convention on Human Rights, which prohibits discrimination on any ground, including political opinion, the court unanimously held. The court has also ruled that Russia did not use the court proceedings as a pretext to destroy Yukos and take control of its assets. Article 18 of the Convention was not, thus, violated. However, the court discovered violation of Article 1 of 1952 Protocol of the Convention, securing the right of every person to enjoy his possessions, concerning the 2000 and 2001 tax assessment. But the violations were procedural.
Judges ruled that key violation in Yukos case was not giving enough time for the managers to prepare its defense, binding the company to pay back taxes in a short period of time, which was a disproportionate way in achieving legitimate aim. The Strasbourg court said, “Before choosing to auction the asset [Yuganskneftegaz] that was the last hope of the company to survive, the authorities had to examine properly other variants that could reduce the damages of the indebted company”. The state, thus, pressed ahead with selling 76.79% in Yuganskneftegaz. Besides that, the execution fee of 43 billion roubles ($1.4b) for executing the tax warrant, was absolutely disproportionate and delivered a “fatal blow to Yukos’ ability to stay in business”, the court ruled.
Yukos sought 81 billion euros in damages for violations of the rights of the company, plus a daily interest payment of 29.6 billion euros for pecuniary damage and no less than 100,000 euros for moral damage. The court deferred its ruling on the company’s claims, saying that the sides could agree on the final sum of compensation within 3 months. The decision is opened for appeals in the Grand Chamber of the Court. However, the sides would be unwilling to settle the issue of compensation, the analysts say, and the compensation will be settled by the Strasbourg court. The compensation will be considerably less than Yukos claimed.