“i. Our clients retain the right to argue at the preliminary issues trial listed for 19 to29 January 2026 … that the points addressed in your client's amendments to its Amended Defence, including the amendments which are being made now, are irrelevant, unintelligible and/or not supported by documents, and that our clients' concession of accepting the amendments is not and cannot be construed as an acceptance that any of the amendments are arguable or viable in any way; and ii. The allegations contained in the amendments are strenuously denied by our clients and on a full trial (if the PI Trial does not resolve these Proceedings) would be contested in their entirety. Our clients reserve all their rights in this regard, including but not limited to the right to challenge the authenticity of the underlying documents.”
“As regards reservations made in your Letter, our client does not accept that it is open to your clients to argue “that the points addressed in your client's amendments to its Amended Defence, including the amendments which are being made now, are irrelevant, unintelligible and/or not supported by documents” during the PI Trial insofar as such arguments are intended to invite the Court to second guess the accuracy or veracity of the facts as presented by our client in the Defence. The formulation of preliminary issues presupposes the assumed facts nature of the PI Trial and does not leave any room for advancing arguments about the facts. Without prejudice to those comments, if it is your clients’ intention to challenge some or all of the facts on which our client relies at the PI Trial, please provide details of the challenge(s) your clients intend to advance and to which particular facts they relate, so that we may consider their implications for the draft Chronology and preparations for the PI Trial more broadly.”
“103 Refusal of recognition or enforcement. (1) Recognition or enforcement of a New York Convention award shall not be refused except in the following cases. ... (3) Recognition or enforcement of the award may also be refused if the award is in respect of a matter which is not capable of settlement by arbitration, or if it would be contrary to public policy to recognise or enforce the award.”
“…the English court is considering the enforcement of an award, and not the underlying contract. The English court takes cognisance of the fact that the underlying contract, on the facts as they appear from the award and its reasons, does not infringe one of those rules of public policy where the English court would not enforce it whatever its proper law or place of performance. It is entitled to take the view that such domestic public policy considerations as there may be, have been considered by the arbitral tribunal. It is legitimate to conclude that there is nothing which offends English public policy if an arbitral tribunal enforces a contract which does not offend the domestic public policy under either the proper law of the contract or its curial law, even if English domestic public policy might have taken a different view.” (2) This passage was quoted with approval by Hamblen LJ in RBRG Trading (UK) Ltd v. Sinocore International Co Ltd[2018] EWCA Civ 838 , at [26(3)], with the comment: “(3) There are sound justifications for taking a different approach to substantive claims and enforcement claims, reflecting the different role performed by the court in each circumstance.”
“(3) Where, on the facts found, there is no illegality under the governing law but there is illegality under English law, public policy will only be engaged where the illegality reflects considerations of international public policy rather than purely domestic public policy. This is in accordance with the rules at common law and under the Rome 1 Regulation (art 21) in relation to the refusal of the application of the governing law on public policy grounds—see generally Dicey, Morris & Collins Rule 229 at 32R–181. In Lemenda Trading Co Ltd v African Middle East Petroleum Co Ltd[1988] 1 All ER 513 at 521,[1988] QB 448 at 459 Phillips J referred to the heads of public policy which would be engaged as being those ‘based on universal principles of morality’. In Westacre Investments Inc v Jugoimport-SPDR Holding Co Ltd [1999] 1 All ER (Comm) 865 at 877,[2000] QB 288 at 304 the court stated that what the Lemenda case decided was that; ‘there are some rules of public policy which if infringed will lead to non-enforcement by the English court whatever their proper law and wherever their place of performance but others are based on considerations which are purely domestic’.”
“157. ... In RBRG Hamblen LJ referred to where the illegality reflects considerations of international public policy and cited Phillips J in Lemenda referring to “universal principles of morality”
“Outside the field of such universally-condemned international activities as terrorism, drug-trafficking, prostitution and paedophilia, it is difficult to see why anything short of corruption or fraud in international commerce should invite the attention of English public policy in relation to contracts which are not performed within the jurisdiction of the English courts.”
“(4) In considering whether and, if so, to what extent public policy is engaged the degree of connection between the claim sought to be enforced and the relevant illegality will be important. The main example of the court refusing to enforce an award on the grounds of illegality is Soleimany in which, on the facts found by the arbitral tribunal, the contract was illegal as a matter of English law reflecting international public policy grounds (a contract to smuggle goods out of Iran). By contrast, whilst recognising that an award enforcing a contract to bribe would not be enforced, the courts have enforced awards where it has been alleged that the underlying contract has been procured by bribery—see Wilson v Hurstanger Ltd[2007] EWCA Civ 299 ,[2007] 4 All ER 1118 ,[2007] 1 WLR 2351 and the National Iranian Oil case. As Burton J stated in the National Iranian Oil case ([2016] EWHC 510 (Comm) at [49]: ‘(2) There is no English public policy requiring a court to refuse to enforce a contract procured by bribery. A court might decide to enforce the contract at the instance of one of the parties. It is not that the contract is unenforceable by reason of public policy, but that the public policy impact would not relate to the contract but to the conduct of one party or the other.’” ‘(2) There is no English public policy requiring a court to refuse to enforce a contract procured by bribery. A court might decide to enforce the contract at the instance of one of the parties. It is not that the contract is unenforceable by reason of public policy, but that the public policy impact would not relate to the contract but to the conduct of one party or the other.’”
“41. The public policy referred to in section 103 of the Act is of course the same as that referred to in section 68, and it is never wise to attempt an exhaustive definition of its content. For present purposes however I am satisfied that nothing short of reprehensible or unconscionable conduct will suffice to invest the court with a discretion to consider denying to the award recognition or enforcement. That means conduct which we would be comfortable in describing as fraud, conduct dishonestly intended to mislead.”
“For the purposes of meeting the substantial injustice test, an applicant need not show that it would have succeeded on the issue with which the tribunal failed to deal or that the tribunal would have reached a conclusion favourable to him; it [is] necessary only for him to show that (i) his position was reasonably arguable, and (ii) had the tribunal found in his favour, the tribunal might well have reached a different conclusion in its award.”
“Many investments are complex operations. They may consist of preparatory studies, licenses, government permits, financing arrangements, real estate transactions, various contractual arrangements, and a variety of other legal dispositions. Each of these elements has its own legal existence, but in economic terms they are united to serve a common purpose. Typically, investment tribunals have treated the various assets that make up an investment as a unity. In most cases, they have not dissected investments into their individual legal components but treated them as an integral whole. In doing so, they have given precedence to economic realism over legal formalism.”
“The record establishes that the shares were legally acquired in 1999 and 2000 and paid for from 2000 to 2003.”
“1366. This leaves for the Tribunal’s consideration Respondent’s allegations of bad faith and illegal conduct in the acquisition of Yukos and the subsequent consolidation of control and ownership over Yukos and its subsidiaries, set out in Subsection IX.B.2(a) above. 1367. It is common ground between the Parties that these actions were taken before Claimants became shareholders of Yukos in 1999, 2000 and 2001 and, consequently, were not taken by Claimants themselves, but by other actors, such as Bank Menatep and the Oligarchs. Claimants submit that these actions are thus irrelevant to these arbitrations, as the conduct complained of was not that of Claimants’ themselves and, in any event, pre-dates Claimants’ investment. 1368. Respondent replies that, on the contrary, the process of the acquisition of the Yukos shares by Claimants should not be seen in isolation but as an integral part of the “making of the investment” by Claimants. Respondent’s argument was most convincingly put by Dr. Claudia Annacker during the Hearing. Dr. Annacker argued as follows: Contrary to Claimants’ position, the serious illegalities that infect the entire process of the acquisition of the Yukos shares by Claimants cannot simply be ignored because the transfer of the shares to the Claimants . . . viewed in isolation, is asserted to be legal. These illegalities cannot somehow be cured through multiple transfers within this network of the oligarchs’ offshore companies from one shell company to another. Indeed, the making of an investment is often a process rather than an instantaneous act, and often comprises a number of diverse transactions. These transactions must be treated as anintegrated whole. The transactions may have a separate legal existence, but they have a common economic aim . . . Indeed, it would be incompatible with economic reality and undermine the integrity of the legal process if serious irregularities – illegalities – infecting the process of the making of the investment would not affect the availability of investment treaty protection, whether or not a specific transaction, part of the process, if viewed in isolation, might be legal. Now, this conclusion applies a fortiori where a claimant is not unrelated to the persons or entities that committed these illegalities, but is an investment vehicle owned and controlled by the same persons who committed the illegalities… Otherwise, investment treaty protection could be achieved simply by shifting investments through layers of ownership and control to launder illegal investments… While Claimants’ acquisition of their shares may be a separate legal transaction, there is a common economic aim pursued by the same oligarchs… 1369. The Tribunal agrees with Respondent that an examination of the legality of an investment should not be limited to verifying whether the last in a series of transactions leading up to the investment was in conformity with the law. The making of the investment will often consist of several consecutive acts and all of these must be legal and bona fide. 1370. In the present case, however, Respondent has failed to demonstrate that the alleged illegalities to which it refers are sufficiently connected with the final transaction by which the investment was made by Claimants. The transactions by which each Claimant acquired its investment were their purchases of Yukos shares. As established in the Interim Award, these purchases were legal and occurred starting in 1999.1782 On the other hand, the alleged illegalities connected to the acquisition of Yukos through the loans-for-shares program occurred in 1995 and 1996, at the time of Yukos’ privatization. They involved Bank Menatep and the Oligarchs, an entity and persons separate from Claimants, one of which––Veteran––had not even come into existence. With respect to Respondent’s other allegations, regarding profit skimming and the oppression of minority shareholders, it is also clear to the Tribunal that they are not part of the transaction or transactions by which each Claimant acquired their interest in Yukos. ________________ 1782 Interim Awards ¶¶ 431 (YUL); 430 (Hulley); 474 (VPL) 1371. Respondent relies on Anderson for the proposition that “illegalities infecting an investment that pre-date a claimant’s acquisition of the investment are not irrelevant or outside the tribunal’s jurisdiction ratione temporis.”
“18B. HVY (i) benefitted directly from the Russian Oligarchs’ unlawful conduct regarding the privatisation, acquisition and operation of Yukos, and (ii) were sham companies ultimately owned and controlled by the Russian Oligarchs at all relevant times. In particular, the series of transactions set out at paragraphs 19-26 below were part of an unlawful and fraudulent money laundering and tax evasion scheme by which the Russian Oligarchs sought to (i) obscure their connection with the Yukos shares they had illegally obtained, and (ii) evade Russian taxes associated with the ownership of those shares. These transactions show that HVY thereby obtained the relevant Yukos shares as a benefit of the Russian Oligarchs’ unlawful conduct. The Final Awards, which purported to compensate HVY for the loss of their shares in Yukos, therefore were the direct product of such unlawful and fraudulent conduct.”
“… it is in our view inconceivable that an English court would enforce an award made on a joint venture agreement between bank robbers, any more than it would enforce an agreement between highwaymen, Everet v Williams (unreported): see Lindley on Partnership, 13th ed. (1971), p. 130, note 23. Where public policy is involved, the interposition of an arbitration award does not isolate the successful party’s claim from the illegality which gave rise to it.”
“The decision [in Soleimany] was based on the principle that a court would not enforce an award in respect of what the arbitral tribunal had accepted was an illegal contract, just as it would not, for reasons of public policy, enforce a contract between highwaymen or bank robbers for the distribution of the profits of their crimes.”
“Your Lordship asked today which part of Russia’s pleaded case as to misconduct in relation to tax goes beyond what the tribunal found in the relevant award. 1. What the Tribunal found As reflected in the Final Awards, the Tribunal accepted Russia’s argument that Yukos committed tax evasion in Lesnoy and Trekhgorniy. That is reflected at ¶¶ 639 [I/8/525], 1611 [I/8/814] and 1637 [I/8/820] of the Final Awards. Those findings are reflected in Russia’s pleaded case at paragraphs 33-39 and 41.1 of the Re-Amended Defence [I/1/36-37]. 2. Additional allegations in the Re-Amended Defence In addition to the tax evasion concerning the low-tax regions of Lesnoy and Trekhgorniy, Russia’s case is that there was also tax evasion committed by the Oligarchs and/or persons and entities acting on their behalves in relation to the regions of Mordovia, Evenkia, Kalmykia, Baikonur and Sarov. These regions are not expressly named in the Re-Amended Defence, however they are captured by the pleading at paragraphs 32A, 33, 40, 41.2-41.3 and 42 of the Re-Amended Defence [I/1/36-38]. In particular, paragraphs 32, 32A and 33 set out Russia’s case that the abuse of low tax regions by “the Russian Oligarchs and/or persons and entities acting on their behalf” generally, without limitation as to which low tax regions Russia’s case relates. Other elements of Russia’s pleaded case confirm that it goes beyond the narrow case as to the Lesnoy and Trekhgorniy tax frauds. 3. Relationship to the Concealed Documents If the Concealed Documents had been disclosed, the Tribunal might well have found that the tax frauds committed by the Russian Oligarchs and/or persons and entities acting on their behalf in each of Mordovia, Evenkia, Kalmykia, Baikonur and Sarov should be imputed to the Claimants, in addition to the frauds committed in Lesnoy and Trekhgorniy.”
“In the view of the Tribunal, Claimants should pay a price for Yukos’ abuse of the low-tax regions by some of its trading entities, including its questionable use of the Cyprus-Russia DTA, which contributed in a material way to the prejudice which they subsequently suffered at the hands of the Russian Federation.”
“28. Throughout both the jurisdiction/admissibility and merits phases of the Arbitrations, HVY intentionally and unlawfully concealed from the Defendant and the Tribunal the Concealed Documents which demonstrated that the Russian Oligarchs had exercised ownership and control over HVY and Yukos at all relevant times, including (1) throughout the period 1997-2003, despite the purportedly strict corporate formalities that had been imposed, and (2) during the period after 2003, despite the additional interposition of the Guernsey Trusts. The Concealed Documents demonstrated that HVY and the Russian Oligarchs were one and the same.”
“Bribery of a Witness 47A. HVY deliberately and dishonestly paid a bribe to Dr Andrei Illarionov in exchange for his favourable witness testimony during the Arbitrations. HVY intentionally concealed this payment. This was a fraud on the Tribunal and was contrary to (i) Dutch law (as set out in paragraph 55A below), and (ii) the rules and practice of international arbitration.”
“52. However, as was not disclosed and/or intentionally concealed from the Defendant and the Tribunal during the Arbitrations, Dr. Illarionov was paid an exorbitant fee (US$ 200,000 ) in exchange for his witness evidence. This fee went far beyond reasonable remuneration in exchange for his tainted witness evidence, and was a dishonest and illegal bribe. Dr. Illarionov’s witness evidence was therefore tainted. If the Tribunal had known this fact, it would have: 52.1. discounted Dr. Illarionov’s witness evidence; 52.2. therefore not made the findings in the Final Award that were made in reliance on Dr Illarionov’s evidence. These included, inter alia, the findings set out at paragraph 50 above; and 52.3. sanctioned HVY for their dishonest and unlawful conduct.”
“Is it permissible to agree to pay the witness for his evidence? Yes, within limits, so long as the payments are not contingent on the nature of the evidence or the outcome of the case.49 There is no problem with “reasonable expenses” or compensation for loss of time in attending court. There comes a stage when the compensation may go beyond that. In Odyssey 50 three crucial witnesses in a major case who had previously all effectively been sacked by the party who wanted their evidence were proving less than helpful and their recollection of the relevant events was limited. The Court of Appeal expressed concern about an arrangement which it described as a “charm offensive” whereby the former employer had them in for lunch and agreed to pay them£50 per hour in 1988 with retrospective effect for their time in assisting. It may be that the concern in the Odyssey case was as much with the circumstances and timing of the arrangement as with the actual money. In fact, the witness who says, “I will not help unless you pay me a decent sum for my time”, and means it, may be more objective than the man who remains employed. The latter does have an interest in assisting his employer and whether the party paying him wins; whereas the former may well take the view he has fulfilled his part of the bargain by giving the statement and spending the time. It does mean the position is difficult where there is an important witness who wants rather generous compensation. _______________ 49 The Solicitors Regulation Authority Code of Conduct previously provided in its Guidance to Rule 11 “there is no objection to your paying reasonable expenses to witnesses and reasonable compensation for loss of time attending court” but this has also been omitted from the current version. 50 Re Odyssey London) Ltd v OIC Run-Off Ltd [2001] Lloyd’s Rep IR 1”
“2: Dispute resolution and proceedings before courts, tribunals and inquiries 2.1 You do not misuse or tamper with evidence or attempt to do so. 2.2 You do not seek to influence the substance of evidence, including generating false evidence or persuading witnesses to change their evidence. 2.3 You do not provide or offer to provide any benefit to witnesses dependent upon the nature of their evidence or the outcome of the case.”
“Whether any payment which was made to Dr Illarionov (and/or any failure by the Claimants to make the existence of the same known) would have been wrongful under any applicable principle of Dutch law and/or international arbitration rules and practice.”
“A person who intentionally expresseshimself orally, by gesture, by written or graphic means towards a person, apparently to influence his freedom to make a statement to the truth or conscience before a judge or official, while knowing or having serious reason to suspect that such statement will be made, is punished with imprisonment of up to four years or fine of the fourth category.”
“Parties must make a full and truthful presentation of the facts that are relevant to the decision. In the event of non-compliance, the court may draw such adverse inferences as it considers appropriate.”
“Article 15 1. Subject to these Rules, the arbitral tribunal may conduct the arbitration in such manner as it considers appropriate, provided that the parties are treated with equality and that at any stage of the proceedings each party is given a full opportunity of presenting his case.”
“Article 24 … 3. At any time during the arbitral proceedings the arbitral tribunal may require the parties to produce documents, exhibits or other evidence within such a period of time as the tribunal shall determine.”
“25. A Party Representative may pay, offer to pay, or acquiesce in the payment of: (a) expenses reasonably incurred by a Witness or Expert in preparing to testify or testifying at a hearing; (b) reasonable compensation for the loss of time incurred by a Witness in testifying and preparing to testify; and (c) reasonable fees for the professional services of a Party-appointed Expert.”
“The extent to which any part of Dr Illarionov’s evidence was relevant to the outcome of the Arbitrations.”
“Whether, in light of the Court’s decision on Issues 8-10 above, the allegations of “procedural fraud” which the Defendant raises in its Defence would be capable of rendering the enforcement of the Awards contrary to English public policy.”
“Whether, in light of the Court’s decision on Issues 1-12 above, judgment ought to be entered for the Claimants on their Claims.”
“1888. For the reasons set forth above, the Tribunal unanimously: (a) DISMISSES the objections to jurisdiction and/or admissibility, based on Article 21 of the Energy Charter Treaty; (b) DISMISSES the objections to jurisdiction and/or admissibility, pertaining to Respondent’s contentions concerning “unclean hands” and “illegal and bad faith conduct”; (c) DISMISSES the renewed objections to jurisdiction and/or admissibility based on Article 26(3)(b)(i) of the Energy Charter Treaty; (d) HOLDS that the present dispute is admissible and within the Tribunal’s jurisdiction; (e) DECLARES that Respondent has breached its obligations under Article 13(1) of the Energy Charter Treaty; (f) ORDERS Respondent to pay to Claimant Hulley Enterprises Limited damages in the amount of USD 39,971,834,360; (g) ORDERS Respondent to pay the amount of EUR 3,388,197 to Claimant Hulley Enterprises Limited as reimbursement for the costs of the arbitration; (h) ORDERS Respondent to pay the amount of USD 47,946,190 to Claimant Hulley Enterprises Limited for a portion of the costs of its legal representation and assistance in the arbitration proceedings; and (i) ORDERS Respondent to pay to Claimant Hulley Enterprises Limited, if within 180 days of the issuance of this Award Respondent fails to pay in full the amounts set forth in paragraphs (f), (g) and (h) above, post-award interest on any outstanding amount starting from15 January 2015 , compounded annually. Post-award interest shall be determined as the yield on 10-year U.S. treasury bonds as of15 January 2015 and then the dates of compounding yearly thereafter.”