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Early last week, the interim awards on Jurisdiction and Admissibility in Hulley Enterprises Limited (Cyprus) v. The Russian Federation ,Yukos Universal Limited (Isle of Man) v. The Russian Federation,  and Veteran Petroleum Limited (Cyprus) v. The Russian Federation were published unilaterally by Sherman & Sterling.

Collectively, these three decisions might be thought of as Yukos v Russia –  all three claimants were shells designed to hold parts of the shareholding of Yukos for the managment and staff of Yukos and all claimed for losses suffered as a result of the bankruptcy of Yukos in 2008 that was said to be  caused for reasons ultimately attributable to the Russian Federation.

In large part the awards are identical, with the same issues being resolved, the same tribunal, the same counsel for each side and the same legal result.

As the first public award in relation to the otherwise high profile Yukos litigation, these naturally should and did evoke some interest from those of us who like to read 227 page arbitral awards recreationally. The Yukos litigation has a high profile internationally, sprawling as it has into multi-billion dollar claims across multiple jurisdictions all tinged by the portrayal of Mikhail Khodorkovsky in the west as a oil tycoon who made the wrong decision by opposing Vladmir Putin in domestic politics.

Having read the awards, it’s hard to find any reason to discuss them for their legal content other than to note that they exist. In large part they confirm the decision on jurisdiction in Ioannis Kardassopoulos v Georgia and confirm the familiar literal but pro-investor reading of the Energy Charter Treaty.

The utility of the decisions – if they can be really said to have any – is the minor victory that the ECT is provisionally applicable to Russia and protects investments made under the ECT until 19 October 2009 when Russia ‘s exercise of their right under Article 45 of the ECT to not be subject to the provisional application regime became effective. All existing investments will be protected for the the next 20 years. Tough luck if you wanted to get into the act after October 2009 – your best bet is that an existing BIT will be honoured instead.

Additionally, the literal language of the ECT means that the fact that Russian shareholders were using shell companies incorporated in other state parties was irrelevant as the ECT did not permit piercing the veil to look at the true ownership of the shareholding except where the companies were being used by shareholders whose states were not party to the ECT. This appears to be a rather obvious drafting flaw in the ECT – to permit nationals of the host state to incorporate abroad and then ‘re-invest’ in their home country but its been a problem known to the international investment community for a while now, and if the drafters of the ECT left it open then they have only themselves to blame especially in the light of recent rounds of negotiations that have seen some progressive amendments to the ECT (albeit focused on the Trade chapter and designed to bring it into line with the GATT).

It appears now – from what we know of the particulars of the case from the public statements of the parties and the factual background now disclosed in the awards – that the Yukos shareholders will have a relatively easy run on the final merits although of course one expects that Russia will contest this fiercely.