Smarting from the potential of massive losses over shareholder lawsuits in European courts over the Yukos affair, the Russian Parliament, the Duma, has introduced a bill that would allow Russia to confiscate property belonging to foreign states. Sponsors of the bill expect the bill to become law in January of 2016.
Citing European court rulings that award large sums to former Yukos shareholders, Russian President Vladimir Putin has directed the Duma to prepare legislation that would give Russia the ability to seize foreign assets in Russia as a “tit for tat” strategy against Yukos associated losses. Last Wednesday the Duma’s website published the text of the lawsuit, calling the idea a form of the “principle of reciprocity.”
Yukos was the former oil giant that was seized and dismantled by the government. It’s primary partner, Mikhail Khodorkovsky, was sentenced to prison on questionable legal grounds, and many considered him to be a political prisoner. He was released from prison prior to the Winter Olympics in 2014.
European courts have ruled against the Russian government, awarding millions of dollars to former shareholders. The assets of Yukos eventually found their way into oil companies controlled by the Kremlin, primarily the closely held Russian oil company Rosneft.
Russian Duma members sponsoring the measure openly hint that the new bill is designed to intimidate countries whose courts rule against Russia in such lawsuits. Konstantin Dobrynin of the upper chamber’s constitutional law committee, told the Moscow Times newspaper that “the idea of the legislation is of a preventative character.”
After courts had begun to rule against Russia in June, President Putin indicated that Russia would respond in kind and promised that “we will defend our interests.”