The Hague’s arbitration court ruled yesterday that Russia must pay a group of shareholders in oil giant Yukos $51,6 billion for expropriating its assets, a big hit for a country teetering on the brink of recession.The arbitration panel in the Netherlands said it had awarded shareholders in the GML group just under half of their $114 billion claim, going some way to covering the money they lost when the Kremlin seized Yukos, once controlled by Mikhail Khodorkovsky, a decade ago.

“The award is a slam dunk. It is for $50 billion, and that cannot be disputed,” said Tim Osborne, director of GML. “It’s now a question of enforcing it.”

Russia’s Finance Ministry called the ruling “flawed”, “one-sided” and “politically biased” and said it would appeal the decision. It comes as Russia and the West are in their biggest stand-off since the Cold War over Moscow’s actions in Ukraine.

Russia argued that the court ignored tax violations by Yukos and said it was senseless and speculative to value Yukos so long after the events. Lawyers, however, said there were only limited grounds on which to appeal.

The panel of judges, which has been reviewing the case since 2005, concluded that officials under President Vladimir Putin had manipulated the legal system to bankrupt Yukos. “Yukos was the object of a series of politically motivated attacks by the Russian authorities that eventually led to its destruction,” the court said. “The primary objective of the Russian Federation was not to collect taxes but rather to bankrupt Yukos and appropriate its valuable assets.”

The ruling hits Russia at a time when it faces international sanctions about its role in Ukraine and anger over the downing of a Malaysian airliner over eastern Ukraine, where Moscow-backed rebels are fighting a separatist campaign. The country is also grappling with slowing economic growth.

“This decision affects the assessment of the long-term financial stability of Russia and could become the basis for arguments for revising Russia’s ratings by international rating agencies,” said Credit Suisse economist Aleksei Pogorelov.

The $50 billion represents about 2,5 percent of Russia’s total GDP worth, or 57 percent of Russia’s Reserve Fund, which is earmarked to cover budget holes.

The ruling hit Russian stocks. The RTS index .IRTS of Russian shares was down 3,1 percent by 10.00 am ET.

The European Court of Human Rights (ECHR) in Strasbourg is expected on Thursday to announce a separate decision on Yukos’s multi-billion-dollar claim against Russia, ruling on ‘just satisfaction’ or compensation, a Yukos spokeswoman said.

Yukos’s application in the ECHR, which is on behalf of all Yukos shareholders, argued that Yukos was unlawfully deprived of its possessions by the imposition of bogus taxes and a sham auction of its main asset.- AFP.

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