Hulley Enterprises Ltd v The Russian Federation

Hearing dates: 21, 22, 26, 27, 28, 29 January 2026

Approved Judgment

This judgment was handed down remotely at 9.30am on 2 March 2026 by circulation to the parties or their representatives by e-mail and by release to the National Archives.

Table of contents

I: Introduction and parties

This judgment concerns the trial of preliminary issues. The preliminary issues arise in the context of proceedings brought by the three Claimants (collectively, “HVY”; individually, “Hulley”, “YUL” and “Veteran”) for the enforcement of three New York Convention arbitration awards (“the Final Awards”), pursuant to ss. 101 and 103 of the Arbitration Act 1996.

HVY are three companies originally incorporated in (respectively) Cyprus, the Isle of Man and Cyprus, and now all incorporated in the Isle of Man. Their beneficial owners have, over time, included various Russian individuals who have sometimes been referred to as oligarchs (“the Russian Individuals”). The most prominent among them, in the pleaded allegations I have had to consider, is Mr Mikhail Khodorkovsky. Mr Platon Lebedev is also alleged to have had a significant role.

The Defendant is the Russian Federation. It was held to be amenable to the jurisdiction of this court, and not immune from such jurisdiction under the State Immunity Act 1978, by the judgment of Cockerill J [2023] EWHC 2704 (Comm) and the subsequent judgment of the Court of Appeal [2025] EWCA Civ 108 (which upheld the judgment of Cockerill J).

HVY were formerly the majority shareholders in OAO Yukos Oil Company (“Yukos”). The underlying dispute relates to Yukos, its oil assets in Russia and HVY's case that the Russian Federation unlawfully expropriated those assets.

HVY's position is that this was a breach by the Russian Federation of its obligations to them under the Energy Charter Treaty (“ECT”). They brought claims in arbitration for damages under the ECT.

These claims ultimately led to the Final Awards that are the focus of these enforcement proceedings. The total value of the three Final Awards is over US$50 billion, plus interest and costs.

Given the sums at stake, it is no surprise that both sides fielded extremely large teams. The arguments for HVY were presented by Jonathan Crow CVO KC and David Peters KC, assisted by Guy Olliff-Cooper and Naomi Hart and instructed by Stephenson Harwood LLP (“Stephenson Harwood”). The arguments for the Russian Federation were presented by Vernon Flynn KC, assisted by Mark Wassouf, Cameron Miles and Maud Mullan and instructed by Pinna Goldberg Ltd (“Pinna Goldberg”). I am extremely grateful to them all for their very considerable assistance.

II: Outline chronology of Yukos

Until the mid-1990s, Yukos was state-owned. It was privatised, in particular by two auctions held in December 1995 (“the 1995 Auction”) and December 1996 (“the 1996 Auction”). The Russian Individuals were involved in the auctions, via a bank founded by Mr Khodorkovsky (“Bank Menatep”). The successful bidders at both auctions were companies owned and controlled by the Russian Individuals. By the end of 1996, via those companies and/or their transferees, the Russian Individuals indirectly owned and controlled shareholdings which (taken together) comprised a majority of the shares in Yukos.

During 1999 to 2001, the relevant shareholdings were transferred to HVY.

(1) Hulley was incorporated in Cyprus on 17 September 1997. It acquired its shares in 1999–2000 and ultimately held 48.72%.

(2) YUL was incorporated in the Isle of Man on 24 September 1997. It acquired its shares in 1999–2000. Some of them were then transferred to Veteran in April 2001. It ultimately held 2.25%.

(3) Veteran was incorporated in Cyprus on 7 February 2001. It acquired its shares in April 2001 from YUL, via a Jersey trust, and held 10%.

Until 2003, Hulley and YUL were both indirectly owned and controlled by the Russian Individuals via shareholdings in intermediary companies; and YUL was the 100% owner of Veteran, via the Jersey trust (from April 2001).

In 2003, the shares in the company that was the immediate owner of Hulley and YUL (Group Menatep Limited – “GML”) were settled into a series of Guernsey trusts.

From July 2003, a series of criminal investigations were initiated by the Russian Federation against Yukos and its management, including the Russian Individuals. In particular, Mr Lebedev was arrested in July 2003 on charges including of embezzlement, fraud and tax evasion, and Mr Khodorkovsky was arrested on similar charges in October 2003 (as was another of the Russian Individuals, Mr Vasily Shakhovsky). They were convicted and in May 2005 Mr Khodorkovsky and Mr Lebedev were sentenced to nine years' imprisonment. In February 2007, new charges of embezzlement and money laundering were brought against Mr Khodorkovsky and Mr Lebedev, leading to further convictions and lengthy sentences.

From December 2003 to 2006, the Russian Federation undertook a series of tax assessments in respect of Yukos, covering the tax years 2000 to 2004. These resulted in tax demands, totalling more than US$24 billion. Yukos was unable to meet these demands.

Yukos's core asset was its oil production company, Yuganskneftegaz (“YNG”). YNG was sold at auction on 19 December 2004 for US$9.37 billion to a newly incorporated entity, Baikal Finance Group, which was in turn quickly bought by Rosneft, a state-owned Russian oil company.

On 4 August 2006 Yukos was declared bankrupt. Nearly all its remaining assets were acquired by Rosneft and another state-owned oil company, Gazprom. On 21 November 2007 Yukos was liquidated and struck off the register of legal entities.

III: Arbitration in the Netherlands

HVY's position was that the tax assessments, the tax demands and the auction of YNG were part of a campaign conducted by the Russian Federation to destroy Yukos, appropriate its assets and eliminate the Russian Individuals (in particular, Mr Khodorkovsky) as political opponents. They said that the actions of the Russian Federation against Yukos constituted an unlawful expropriation, for which each of them could claim damages under the ECT.

These claims were referred to arbitral proceedings which took place in the Netherlands with their seat in The Hague, before a panel consisting of Mr L Yves Fortier CC QC, Dr Charles Poncet and Judge Stephen M Schwebel (“the Tribunal”). There were three separate references, commenced by Hulley, Veteran and YUL (respectively) but all heard together. In all three arbitrations, the Russian Federation challenged the jurisdiction of the Tribunal, and strenuously resisted the claims on the merits. It alleged that HVY's stake in Yukos was the result of fraud on the part of the Russian Individuals, and that further frauds had...