Oil & Gas: European Court of Human Rights awards record damages to Yukos’ shareholders

United Kingdom
The European Court of Human Rights has ordered that the Russian Federation pay record damages of €1.8 billion to all of Yukos’ former shareholders.

This follows an award in July of approximately US$50 billion dollars in damages against the Russian Federation in an Energy Charter Treaty claim (the “ECT claim”) click here for more information.

Unsuccessful Article 6 claim

In the latest proceedings, Yukos claimed €38 billion in damages in relation to violations of the right to a fair trial under Article 6 of the European Convention on Human Rights (the “ECHR”). The European court decided that there was no causal link between the breach of Article 6 by the Russian courts and the damage suffered by Yukos.

Breach of property rights

However, Yukos did successfully claim damages for violations of its property rights under protocol 1, Article 1 of the convention (the “Protocol”).

The scope of the Protocol is wider than often assumed. It can cover shares, goodwill to business, ownership of a debt and even court or arbitral awards. The key is that the property violated has an economic value.

The court found that the inflated and disproportionate tax assessments imposed upon Yukos and the ensuing enforcement proceedings ultimately led to the liquidation of Yukos, which resulted in losses for its shareholders.


This is the largest award of damages in the court’s history. That said, there is a large disparity between this €1.8 billion sum and the sum of US$50 billion dollars awarded in the ECT claim.

The court has been more conservative in its judgment. It awarded damages based on the penalties unlawfully imposed by Russia in Yukos’ 2000 and 2001 tax assessments. It also awarded damages for what it considered to be disproportionate enforcement fees.

In the ECT claim, the damages represented the arbitral tribunal’s assessment of the value of Yukos (i.e. its share value and potential dividends), rather than any penalties or fees imposed on it.


The decision illustrates that investors may have more than one method of recourse against a state if they have their rights infringed.

Individuals and companies investing in European countries (including Russia) benefit from the provisions of the ECHR protecting property, which includes shares and contractual rights. However, the more conservative approach of the European Court of Human Rights in assessing damages means that parties are well advised to consider the full range of investment protections before and after making investments, including contractual remedies, local laws, bilateral investment treaties and multilateral investment treaties (such as the ECT).

The Russian Federation could yet refer the case to the court’s Grand Chamber for review, so further developments are possible.