Archive for January 10th, 2015

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14th January 2015 and the New York Convention 1958

January 10, 2015

Today there is a note in the dairy – It reads “ICA, NYC, $50B, Yukos” – Yes a written diary.  I also like books – printed books.  And quality fountain pens.  And other such antiquities in this modern era.

Anyway, having yesterday mentioned the gargantuan sum of $50 billion proposed by George Soros to throw at Ukraine, its economy and its reforms, today the figure of $50 billion remains relevant for the purposes of this blog, per the diary – but in an entirely different way, and with very little to do with Ukraine directly.

On the 18th July 2014, the International Court of Arbitration at the Hague, in three judgements – here, here and here – awarded damages/compensation from the Russian Federation to those who were formerly involved with the now defunct Yukos, totaling $50 billion.

The Kremlin/Rosneft/Russian Federation – if they can be separated in any meaningful way – naturally had the right to appeal and have all or part of the verdicts set aside.  Despite appeals, as of the time of writing, it has failed to do so and $50 billion remains the total award.

It goes without saying that it is unlikely that the Kremlin will pay the $50 billion, even in part – particularly as acknowledging wrongs done to – and compensating to the tune of $ billions – Mikhail Khodorkovsky will simply not be entertained.  Even more so as Mr Khodorkovsky is busily attempting to build up some institutional competence around him preparation – it appears – to return to Russia and save it when the fall of President Putin eventually arrives.

That Mr Khodorkovsky, just as fellow oppositionist Mr Navalny, are not what Russia needs to replace Mr Putin, for now is not the point.  Suffice to say replacing one personality cult with another is hardly likely to be helpful if a liberal democracy is the desired outcome.  If another Tsar with a slightly different philosophy is the desired outcome, then Messrs Khodorkovsky or Navalny indeed fit the profile.  Regardless, in the absence of any genuine liberal Kremlin opposition, these two men, together with Boris Nemtsov and Sergei Udaltsov are about all there really is.  (What ever happened to Udaltsov? – Very quiet of late.)

Whatever the case, it is extremely unlikely that The Kremlin will pay, which brings us to the “Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958” – or The New York Convention as it is better known.

As a result of its nefarious activities when applying rule by law to acquire and butcher Yukos – and then suffering when international rule of law is then latterly applied – there is also little to no chance of State owned/majority owned assets being seized in lieu of compensation within the Russian Federation – which is where the New York Convention comes into play for the aggrieved parties.

To keep things brief, The New York Convention obliges the 150 nations that are ratified to this international instrument to seize assets to fulfill the rulings of the International Court of Arbitration – less diplomatic missions and military assets.  However, planes, trains, ships, art, NBR assets, antiques etc., owned by the Russian Federation or its State owned enterprises can – and are obliged to be – seized to the total value of $50 billion, as stated by the court, from amongst the 150 ratified nations.

This obligation coming into effect 180 days after the final ruling.  Thus the 18th July Hague ruling comes into effect on 14th January – next Wednesday – on the proviso that all pending appeals have been dismissed.

On 16th December, the European Court for Human Right dismissed the Kremlin appeal – there being no courts of higher ranking in Europe, it would seem that is the end of that.  The only question now being, is the 180 day clock commenced from 18th July, or reset to that of the 16th December when the appeal was dismissed?  If reset, then that delays asset seizure until 14th June 2015 – at which point an already tetchy and irritable Kremlin will start to witness – if the process doesn’t begin on 14th January per original ruling date – its assets to the tune of $50 billion begin to be seized globally – and legally.

None of this has anything to do with Ukraine – unless it is requested to seize assets on behalf of the injured parties, which considering its own pending and continually mounting claims against the Russian Federation, it would not only legally be obliged to do as a ratified signatory to the New York Convention, but also morally, if it expects the same international willingness to enforce the law, when its claims against The Kremlin are eventually heard and court rulings delivered.

Regardless of whether 14th January, or 14th June be the effective New York Convention date, one wonders whether those representing the injured parties have already scanned the globe identifying Kremlin owned assets for seizure and all associated bureaucratic documentation is penned waiting only to be dated and submitted.

Interesting times, as they say.

A note made for 14th June in the diary stating “ICA, NYC, $50B, Yukos”has been made just in case – at which point this issue will once again appear in the blog a few days prior to bureaucratic and legal requirements having been fully observed.

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