The District Court of The Hague ruled that the decision of the Permanent Court of Arbitration (PCA) based in The Hague dated July, 2014 which obliged the Russian Federation to pay to the former YUKOS shareholders a compensation of 50 billion USD is illegal and out of jurisdiction of the PCA. However, this will unlikely end the dispute. Yet, Russia has already stated that it will demand release of its assets arrested in France and Belgium .

The PCA had no powers to consider YUKOS shareholders’ claim against the Russian Federation, according to the District Court of The Hague. As a result, Russian Federation was found to be under no obligation to comply with the decision on payment of an amount exceeding 50 bln USD as compensation for the alleged expropriation of the oil company.

In coming to such conclusion, The Hague Court focused on Russia’s arguments concerning the PCA’s lack of jurisdiction, as by virtue of international law state courts have no competence to review the arbitral award on the merits. The Court recognized that the PCA had no powers to consider the case and that Russia was not obliged to execute the award. At the same time, YUKOS shareholders have already stated that they would lodge an appeal to the second instance court in the Netherlands, which signifies that the case may proceed as far as to the country’s Supreme Court and remain unsettled for the next several years.

The question of whether other countries will execute the PCA’s decision after it was struck down in The Hague itself remains unclear. Russia contends that The Hague Court’s decision precludes further enforcement of the award, yet some countries consider that arbitration institutions are autonomous international tribunals, their decision’s enforceability must be decided upon by each country individually.