Yukos and Russia's human rights hurdle

Russia faces its first major test since the Duma took the unprecedented stop of ratifying Protocol 14 of the European Convention on Human Rights, in January. The European Court of Human Rights has now begun hearing the case of Yukos, once Russia’s largest oil company, which was at the centre of one of the biggest corporate scandals in the country since the fall of communism.

Faced with charges of $27bn-worth of tax evasion from the Russian government, the company’s executive were arrested and the business was broken up and sold to state-owned enterprises before finally being liquidated in 2007. Although many in the west had voiced their concerns over the seizure of former state assets in the early 1990s that heralded the rise of the oligarchs in Russia, many even within the Kremlin ranks were shocked at the handling of the Yukos affair. As a consequence Mikhail Khodorkovsky, the former owner of the company and Russia’s richest man before his high-profile arrest on his private jet in 2003, has become a symbol for those angry at the perceived corruption and politicisation of the Russian Federation’s justice system.

In the past the Kremlin has strongly defended its stance, claiming Khordorkovsky abused his proximity to Soviet power structures to facilitate the purchase of state assets at large discounts in the chaos that followed the implosion of the USSR. On a state visit to France last year Prime Minister Vladimir Putin likened the imprisoned oligarch to Al Capone and disgraced American financier Bernard Madoff, noting: “Mr Madoff in the United States received a lifetime, and no-one sneezed.”



Their accusations, however, have never been put under international scrutiny and this has left room for Khordokovsky’s supporters to claim the charges against him have been falsified in order to facilitate a de-facto expropriation of Yukos assets. Now, with the opening of proceedings in Strasbourg, both sides will finally have the opportunity to put their case to the international community.

A quick glance at the statistics might suggest that the odds are hardly stacked in the Kremlin’s favour. Of the 219 cases from Russia heard by the court last year, the judgment went against the government on 210 occasions. This is good news for the representatives for Yukos who are seeking $98bn in compensation for what they call the “unlawful, disproportionate, arbitrary and discriminatory” actions of the Russian government.

The long-running row has taken on new significance since the Duma voted to sign Protocol 14 in January. The protocol gives the Committee of Ministers the right to bring a member state before the Court of Human Rights for non-compliance with the court’s judgments. Such international pressure would draw unwelcome focus on the glacial pace of legal reforms in the country and, more broadly, would damage Russia’s reputation as a business destination, which has already been dented by the TNK-BP and British Council disputes in recent years.

It is worth noting, however, that the current case does not necessarily bear comparison to previous ones as the claim is the largest ever filed with the court—and the political stakes are far higher. Though it may sound perverse, that it has got this far illustrates at least in part President Dmitry Medvedev’s successes in thawing the traditional hostility of Russian politics towards international institutions. It is worth questioning whether Protocol 14 would ever have been passed under a Putin-led administration.

If the government’s case is found wanting, it would be a major embarrassment to a president who has repeatedly stated that legal reform is a key priority for his administration. The weight of responsibility on the judges in Strasbourg is therefore clear: a judgment against the government would be seen as a blow to Medvedev’s credibility and could threaten to derail the modest progress he has already made. But their true duty lies in illustrating the value of open and independent legal process—since any embarrassment suffered would merely be a reflection of how far short of this the defendant has fallen.