English Court rejects Ukraine’s attempt to set aside enforcement order on grounds of state immunity

The English Court (the “Court“) has dismissed an application by Ukraine to set aside a court order permitting Russian investor, PAO Tatneft, to enforce an arbitral award against Ukraine.  Ukraine argued that it was immune from the Court’s jurisdiction by virtue of the State Immunity Act 1978. The Court found that Ukraine had not waived its right to rely on state immunity arguments, despite not having raising them in the arbitration. However, it found that Ukraine had agreed to submit the disputes in question to arbitration under the Russia-Ukraine Bilateral Investment Treaty (the “BIT“) and was therefore not immune from proceedings in connection with the arbitration by virtue of s9(1) of the State Immunity Act 1978 (“SIA“).

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EU prolongs Russian sectoral sanctions until July 2016

On 21 December, the Council of the EU announced that the EU's economic sanctions against Russia would be extended until 31 July 2016.   These measures were originally introduced for a one year period in July 2014 and were extended until 31 January 2016 in June 2015 when the EU confirmed that the duration of the sanctions would be linked to the implementation of the Minsk agreements.  In the most recent announcement, the Council said that, since implementation will not be complete by the end of the 2015, the duration of the sanctions should be prolonged to allow the Council to continue its assessment of progress in the implementation of the agreements. 

The Council Decision amending the validity period of the sanctions was published on 22 December and came into force upon publication.  Specifically, this extends Council Decision 2014/512/CFSP, which in turn forms the basis of Regulation 833/2014, the regulation which imposes the so-called sectoral sanctions (which restrict certain activities in relation to, inter alia, the Russian energy sector and particular entities' access to capital markets).

For details of the restrictions imposed by the EU's sectoral sanctions, please refer to our previous e-bulletins here and here.

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Russia-related sanctions: US Issues important advisory on ensuring compliance with Crimea sanctions regime and expands sanctions designations

The US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) recently added a number of new persons and individuals to the US’s Specially Designated Nationals (“SDN”) and Sectoral Sanctions Initiative (“SSI”) lists. OFAC also issued new guidelines to strengthen compliance with the existing Crimea sanctions regime. While Treasury Department officials noted that the measures were intended to “maintain,” not “escalate,” the sanctions regime, the new OFAC guidelines put financial institutions on notice that OFAC will focus on tightening enforcement of the Crimea sanctions and preventing their evasion.

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EU sanctions update: EU extends sanctions against Syria and amends sanctions against Libya and Somalia; further developments relating to Ukraine/Russia

Herbert Smith Freehills has published the latest edition of its Sanctions Update e-bulletin on recent developments in various international sanctions regimes. At EU level these are relatively limited:

  • The EU has announced additional sanctions in respect of the situation in Syria, extending the designated persons list and announcing an imminent restriction on the export of jet fuel to Syria;
  • Minor amendments have also been made to the EU sanctions against Libya and Somalia; and
  • The EU has published two new sets of conclusions on the situation in Ukraine, but these do not discuss possible changes to the sanctions regime.

In the UK, a new Overseas Territories Order extends the current EU sanctions relating to Russia/Ukraine to the British Overseas Territories including the Cayman and British Virgin Islands. Updated guidance on the Russia trade sanctions has been issued by the Export Control Organisation.

To read the full briefing, please click here.

For further information, please contact Rod Fletcher, Partner, Susannah Cogman, Partner, Daniel Hudson, Partner, Elizabeth Head, Associate, or your usual Herbert Smith Freehills contact.

Rod Fletcher
Rod Fletcher
Partner
+44 20 7466 2411
Susannah Cogman
Susannah Cogman
Partner
+44 20 7466 2580
Daniel Hudson
Daniel Hudson
Partner
+44 20 7466 2470
Elizabeth Head
Elizabeth Head
Associate
+44 20 7466 7555

Upcoming Webinar: Sanctions Update: Ukraine and Russia

Monday 22 September 2014, 2.00pm – 3.00pm BST

The international sanctions landscape has continued to develop in response to the situation in Ukraine.

On 12 September, the EU and US both published details of expansions to their existing sanctions against Russia, including in relation to the restrictions on certain Russian companies’ ability to access the EU/US capital markets. Both the EU and US have also designated additional individuals and entities under their respective asset freeze regimes.

In this webinar we will provide:

  • An overview of the current sanctions, including the amendments to the EU and US sectoral sanctions
  • An overview of relevant EU institutions and decision-making processes in relation to sanctions
  • An update on any further EU and US developments during the course of this week
  • An opportunity to pose your questions to our expert team.

Speakers:

If you would like to register for this event please click here. We will then send you an email with the event details and confirmation of your log-in address. If you have queries about the webinars or the registration process please contact: Prudence Heidemans, Webinar co-ordinator, London.

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The largest Arbitration Awards in history: Three Majority shareholders in Yukos awarded total damages of over $50bn from the Russian Federation

On 18 July 2014, the Claimants in three related arbitrations administered under the 1994 Energy Charter Treaty and the 1976 UNCITRAL Arbitration Rules prevailed against the Russian Federation.  The Claimants[1] were former shareholders of the OAO Yukos Oil Company (“Yukos”), which had emerged in the early 2000s as the largest private oil company in post-Soviet Russia.

Although the arbitrations were brought separately by each Claimant and not consolidated, the Parties appointed the same arbitrators to each Tribunal (collectively, the “Tribunals”) and the Tribunals proceeded to hear and decide the claims together in three substantially similar awards (the “Awards”).  The Tribunals found that the Russian Federation had unlawfully expropriated the assets of Yukos, in contravention of its obligations under international law, through a series of targeted measures taken between 2003 and 2007.  Put together, in monetary terms the arbitration Awards are by far the largest ever made public, as the Tribunals awarded total damages to the Claimants of more than US$ 50 billion. The Tribunals also ordered Russia to reimburse the Claimants for arbitration costs of € 4.2 million and costs of representation of more than US$ 60 million.

Of particular note in the Awards is the Tribunals’ consideration of the doctrine of “unclean hands” in international law, along with the application of the doctrine of contributory fault. The Tribunals’ decision to reduce to Claimants’ recovery by 25%, following the same approach adopted in the recent case of Occidental Petroleum and another v Ecuador, is likely to attract significant attention and may set a precedent for future investment treaty cases. However, the Tribunals’ extensive analysis of the Parties’ submissions concerning valuation, damages, and the awarding of interest will also add to the body of jurisprudence available to practitioners and arbitrators faced with similar questions.

The decision could prompt other Claimants (including some of the over 50,000 other minority shareholders in Yukos) to move forward with claims against the Russian Federation. For claimants from ECT signatory states, the Tribunals’ decision to uphold the continued application of the substantive protections of the ECT, at least for qualifying investments made before Russia withdrew from the ECT in August 2009, is likely to make the ECT an attractive option under which to bring such claims.

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Sanctions Update: EU extends sanctions against Russia

Herbert Smith Freehills has published the latest edition of its Sanctions Update e-bulletin. This edition covers the new sanctions regime agreed by the EU against Russia, including:

  • the introduction of “phase 3” sanctions affecting key sectors of the Russian economy such as the banking and energy industries;
  • trade restrictions relating to Crimea and Sevastopol; and
  • expansions to the EU’s asset freeze.

For further information, please contact Rod Fletcher, Partner, Susannah Cogman, Partner, Daniel Hudson, Partner, Elizabeth Head, Associate, or your usual Herbert Smith Freehills contact.

Rod Fletcher
Rod Fletcher
Partner
+44 20 7466 2411
Susannah Cogman
Susannah Cogman
Partner
+44 20 7466 2580
Daniel Hudson
Daniel Hudson
Partner
+44 20 7466 2470
Elizabeth Head
Elizabeth Head
Associate
+44 20 7466 7555

Sanctions Update: EU and US introduce further sanctions in response to the situation in Ukraine; EU amends sanctions against Libya, Central African Republic and Syria

Herbert Smith Freehills has published its latest Sanctions Update e-bulletin, on the latest developments in sanctions regimes in Ukraine, Libya, Central African Republic and Syria.

Both the EU and US have introduced limited additional sanctions in light of the current situation in Ukraine, and Australia has announced its list of Ukraine-related designated persons.  The EU has also announced amendments to its sanctions against Libya, the Central African Republic and Syria.  Of these developments, the most significant is a ban on the import into the EU of goods from Crimea and Sevastopol, and any associated financing or re/insurance by EU persons.

For further information, please contact Susannah Cogman, Partner, Elizabeth Head, Associate, or your usual Herbert Smith Freehills contact.

Susannah Cogman
Susannah Cogman
Partner
+44 20 7466 2580
Elizabeth Head
Elizabeth Head
Associate
+44 20 7466 7555

Ukraine – EU imposes asset freeze and travel ban on 21 Russian individuals; US introduces additional Executive Order and imposes asset freeze and visa ban on 11 Ukrainian and Russian individuals

Herbert Smith Freehills has published its latest Sanctions Update e-bulletin, on the imposition targeted sanctions by the EU and US in response to the recent Crimea referendum.

On 17 March 2014, the EU introduced an asset freeze and travel ban applying to 21 Russian individuals. On the same day, the US introduced a second Executive Order, allowing it to sanction Russian individuals and released a list of 11 Russian and Ukrainian individuals subject to an asset freeze and visa ban under its Executive Orders.

For further information, please contact Rod Fletcher, Partner, Susannah Cogman, Partner, Daniel Hudson, Partner, or your usual Herbert Smith Freehills contact.

Rod Fletcher
Rod Fletcher
Partner
+44 20 7466 2411
Susannah Cogman
Susannah Cogman
Partner
+44 20 7466 2580
Daniel Hudson
Daniel Hudson
Partner
+44 20 7466 2470

Ukraine – EU imposes asset freeze on members of former government and issues a statement in relation to Russia; US introduces Executive Order permitting the blocking of assets

Herbert Smith Freehills has issued its latest Sanctions Update e-bulletin, concerning the EU and US response to recent events in Ukraine.

On 5 March 2014, the EU introduced an asset freeze applying to former President Yanukovych and other former government officials and persons associated with the former government. The UK has introduced domestic legislation criminalising breaches of this asset freeze. The EU also held an emergency Heads of State meeting on 6 March. The conclusions from that meeting indicate that there is a possibility of EU sanctions being imposed on Russia in the absence of negotiations between Russia and Ukraine which produce results within a limited timeframe. Also on 6 March the US introduced an Executive Order which would permit the imposition of an asset freeze and visa bans although no companies or individuals have yet been designated.

For further information, please contact Rod Fletcher, Partner, Susannah Cogman, Partner, Daniel Hudson, Partner, or your usual Herbert Smith Freehills contact.

Rod Fletcher
Rod Fletcher
Partner
+44 20 7466 2411
Susannah Cogman
Susannah Cogman
Partner
+44 20 7466 2580
Daniel Hudson
Daniel Hudson
Partner
+44 20 7466 2470