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News

London land plot owned by Kremlin seized as part of $60bn Yukos legal battle

The UK’s High Court of Justice has arrested a plot of land at 245 Warwick Road in the affluent London area of Kensington on behalf of the former shareholders of the now-defunct Russian oil giant Yukos.

The case is rooted in events that stretch back to 2003, when former Yukos CEO Mikhail Khodorkovsky — Russia’s richest man at that time and a substantial investor in political movements opposed to Vladimir Putin — was arrested on charges of fraud and tax evasion. Khodorkovsky would not be released from a Russian prison until late 2013, by which time most of his since-bankrupted company had been acquired by the Russian state-owned oil giant Rosneft. A 2014 decision by the Permanent Court of Arbitration at The Hague ruled that Yukos’s former shareholders were entitled to receive $50 billion in compensation from the Russian state.

However, enforcing that decision has proved to be a challenge. According to a press release from GML Limited, which was one of Yukos’ majority shareholders through its subsidiaries Hulley Enterprises and Yukos Universal, the arrest of the plot at 245 Warwick Road represents “the first successful charge of Russian property in London.”

The property itself has a complicated history. Independent Russian media outlet Mediazona, which obtained an official document confirming the sale, reported that the Russian government purchased the plot in 2006 for £8.125 million. The Irish Examiner noted that the plot was intended for the construction of housing for embassy staff and a school for their children.

As per OpenSanctions, which describes itself as an “international database of persons and companies of political, criminal, or economic interest,” the history of the plot goes even deeper. After the Russian government purchased the site, Embassy Development, a Jersey-registered offshore company of VTB Bank, became the de facto owner. There appear to have been plans for the construction of an elite residential complex on the site, and designs were even published by the architectural firm Auckett Swanke on behalf of the bank. But while applications for planning permission were submitted, work on the project never began.

On January 23, the High Court of Justice in London issued a decision on the arrest, which came into force on January 31. The arrest is related to the Yukos shareholders' longstanding dispute with the Russian authorities, a case that was heard by the Permanent Court of Arbitration in The Hague. In 2014, the court ordered Russia to pay the former majority shareholders (Hulley Enterprises, Yukos Universal and Veteran Petroleum) $50 billion in compensation, which has since risen to $57 billion with interest.

Since the Hague ruling nine years ago, a series of legal battles have unfolded across the globe as shareholders have struggled to enforce the arbitration ruling in the UK, the U.S., and the Netherlands. The GML press release marking the arrest included a statement from its CEO, Tim Osborne, who hinted at the legal battles that still lay ahead:

“Russia makes it a point to ignore court judgments, making it very difficult if not impossible for its victims to get justice. This historic first charge over Russian property in England is a testament to our commitment to hold Russia accountable for its actions by pursuing Russian state assets worldwide until justice is done”.

Russia will have the opportunity to appeal the ruling over 245 Warwick Road at a hearing on Apr. 12, 2024.

“Legal proceedings for recognition and enforcement of the $50 billion awards in London and Wales continue. The next London High Court hearing in these proceedings is scheduled for 13 June 2024,” concluded GML’s press release.

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