Constitutional Court Absolves Russia From Paying $2Bln to Ex-Yukos Shareholders

The Russian Constitutional Court absolved Moscow from abiding by the 2014 European Court of Human Rights (ECHR) ruling on Russia's $2-billion liability to the shareholders of the now-defunct Yukos oil firm earlier in the day.

MOSCOW (Sputnik) — The court clarified that it does not waive its obligations to carry out European Court of Human Rights (ECHR) decisions, but will only do so with rulings that comply with the Russian Constitution, a RIA Novosti correspondent reported Thursday.

The ECHR 2014 decision to award $2 billion to the shareholders of Russia's now-defunct Yukos oil firm is unconstitutional, Chairman of the Russian Constitutional Court Valery Zorkin ruled on Thursday.

The ECHR said in 2014 that Russia must pay about 1.9 billion euros, including taxes, as compensation to former Yukos shareholders.

"The enforcement of the European Court of Human Rights judgment on the payment to the former shareholders of Yukos is impossible in accordance with the Russian Constitution," Zorkin said.

He said the ECHR decision violates the constitutional principles of justice and equality with an "unprecedentedly large amount from the budget system."

Zorkin also asserted that the ECHR did not deny that Yukos used "large-scale tax evasion schemes."

Russia Entitled to Make Goodwill Payments to Ex-Yukos Shareholders

Russia is entitled to pay the ex-shareholders of Yukos on the basis of goodwill and from the company's assets, the Russian Constitutional Court ruled.

"Russia has the right, on the basis of goodwill, to make certain payments to the former shareholders of the company affected by the illegal actions of its management, through Yukos' unveiled property," the court said.

The payments "should not affect the costs and revenues of the Russian budget and Russian property," the court ruled.

In October 2016, the Russian Ministry of Justice inquired the Constitutional Court whether it was possible not to execute the ECHR ruling. The ministry argued the obligations imposed on Russia by the contested ruling were based on the ECHR decision to apply provisions of the European Convention for the Protection of Human Rights and Fundamental Freedoms and to interpret them in such a manner that runs counter to the Russian Constitution.

On December 15, 2016, the Russian Constitutional Court reviewed the inquiry at its open meeting. The court ruled against any liability for the 1.9 billion euro ruling on behalf of the corporate shareholders. Representatives of the involved state bodies noted at the court session that the ECHR decision was unenforceable because it infringed upon Russia’s sovereignty and because it would hamper the country’s ability to fulfill its budget obligations to its citizens.

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