Recognition and enforcement

Yukos Capital SARL v OJSC Rosneft Oil Co [2011] EWHC 1461 (Comm) raised a somewhat unusual question. Where a foreign award has been given, and has been annulled by the curial courts, the English courts will generally be unable to recognise or enforce that award, in that the ruling of the curial courts creates an issue estoppel. In the present case, however, the annulment by the curial courts (Russia) had itself been rejected in later proceedings in Holland, and the English court had to rule on whether the Dutch decision itself created an estoppel which prevented a ruling in England that the award was invalid.

Yukos: the facts

Yukos Capital was a member of a Russian group of companies, Yukos Group, engaged in oil production and trading. Intra-group loans were made by Yukos Capital to production subsidiary, YNG. Arbitration proceedings were commenced by Yukos Capital to recover its loans plus interest in the International Commercial Arbitration Court at the Chamber of Trade and Industry of the Russian Federation. On 19 September 2006 four awards were made in favour of Yukos Capital by the arbitrators, the sum awarded being about US$425m. By the time of the awards the Yukos Group had been subjected to an enforced break up, and YNG had been acquired by Rosneft, a company owned and controlled by the Russian state. In the arbitration Rosneft had not contested the validity of loans.