Irina Reznik, Henry Meyer and Jessica Morris Moscow and London

Former majority owners of Yukos Oil have won a landmark $50 billion (R525bn) award against Russia for the confiscation of what was once the nation’s largest oil company after a decade-long battle.

The Permanent Court of Arbitration in The Hague ruled that Russia was liable to pay almost half of the $103bn (including interest) that they sought, GML, the holding company for Yukos’s former main shareholders, said yesterday.

The decision showed Russia’s campaign against Yukos was “politically motivated”, GML head Tim Osborne said.

“A superpower like Russia has been unanimously held accountable for its violation of international law by an independent arbitration tribunal of the highest possible repute,” Emmanuel Gaillard, one of GML’s lawyers, said. “Today is a great day for the rule of law.

Russia must pay the award by mid-January next year or face penalties, GML said. The possibility for appeal was limited to technical grounds in the Dutch courts, Gaillard said.

The decision risks dragging Russia’s two biggest companies, oil producer Rosneft and natural gas exporter Gazprom, into extended legal battles.

The assets of the state-controlled companies might be targeted because they were beneficiaries of expropriated Yukos assets, another GML lawyer, Yas Banifatemi, said.

Rosneft and Gazprom both declined about 2 percent in Moscow trading yesterday.

President Vladimir Putin’s government dismantled Yukos between 2004 and 2007 over $2bn in tax charges after jailing chief executive Mikhail Khodorkovsky. The former owner, who is not party to the award, said it was “fantastic that the company shareholders are being given a chance to recover their damages”.

Khodorkovsky was freed in December last year under a presidential pardon after serving a decade in prison camps.

Most of Yukos’s former assets were acquired by Rosneft in a series of forced sales. Gazprom bought stakes in Yukos natural gas assets from Eni and Enel, which won them at auction in 2007.

Rosneft complied with the law regarding Yukos assets and did not expect the decision to “negatively affect its commercial activity or assets”, the oil producer said. Gazprom declined to comment.

Osborne said Yukos shareholders had the right to go after state assets if Russia did not pay.

Moscow would be able to appeal, Foreign Minister Sergei Lavrov said yesterday. “Russia will use all available legal means to defend its position,” he said. – Bloomberg