## Facts

- Yukos Capital S.A.R.L. (Luxembourg) extended intra-group loans to OAO Tomskneft VNK (Neftegaz) under agreements governed by Russian law.
- Yukos Oil and related entities faced major tax claims in Russia, followed by bankruptcy proceedings in which Rosneft acquired key Yukos assets, including shares in Neftegaz.
- Yukos Capital initiated arbitrations in Moscow before the ICAC seeking repayment of the loans.
- The ICAC issued multiple awards ordering Neftegaz to pay Yukos Capital about 13 billion rubles.
- Neftegaz was merged into Rosneft and ceased to exist; Rosneft then sought annulment of the awards in Russian state courts.
- Russian courts set aside the awards, accepting arguments that the loans were connected to an unlawful tax-evasion scheme.
- Yukos Capital sought recognition and enforcement of the awards in the Netherlands under the New York Convention and Dutch arbitration law.
- The Amsterdam District Court refused enforcement because the awards had been annulled at the seat.
- Yukos Capital appealed to the Amsterdam Court of Appeal.

## Issues

1. Whether Article V(1)(e) of the New York Convention requires refusal of enforcement when an award has been set aside at the seat, or permits enforcement in appropriate cases.
2. Whether the Russian judgments annulling the awards should be recognized in the Netherlands under Dutch rules for giving effect to foreign judgments.
3. Whether alleged deficiencies in independence, impartiality, and due process in the Russian set-aside proceedings barred recognition of the annulment judgments and supported enforcement of the awards.

## Decision

- The Court of Appeal reversed the District Court and granted recognition and leave to enforce the arbitral awards in the Netherlands.
- Article V(1)(e) of the New York Convention was construed as discretionary: a court may refuse enforcement due to annulment at the seat, but is not required to do so.
- The court held that a foreign annulment judgment can be given effect in the Netherlands only if it satisfies minimal due-process requirements, including issuance by an impartial and independent court.
- The Russian set-aside judgments were not recognized because, in the circumstances presented, they did not satisfy those minimal requirements.
- Because the annulment judgments were denied effect, the awards were treated as enforceable in the Netherlands notwithstanding their set-aside in Russia.

## Legal Principles

- Under the New York Convention, Article V(1)(e) uses permissive language (“may be refused”); annulment at the seat does not automatically bar enforcement in another jurisdiction.
- A party invoking a foreign annulment judgment bears the burden to show that the judgment meets minimal procedural standards for recognition, including impartiality and independence of the issuing court.
- Dutch courts may deny effect to foreign judgments that fail minimal due-process standards and thereby decline to treat an award as nullified for enforcement purposes.
- Judicial cooperation with foreign decisions is limited by fundamental procedural fairness; when those limits are crossed, enforcement of the underlying award may proceed.

## Conclusion

The Amsterdam Court of Appeal enforced Moscow arbitral awards against Rosneft despite their annulment in Russia, holding that the New York Convention permits (but does not compel) refusal after set-aside and that the Russian annulment judgments could not be recognized because they did not meet minimal standards of independent and impartial adjudication.


Yukos Cap. S.A.R.L. v. OAO Rosneft, ECLI:NL:GHAMS:2009:BI2451 (Neth. Ct. App. 2009)