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Russia Warned France Of Reprisals Months Before Yukos Asset Freeze

Moscow warned Paris in March that it would retaliate if France froze Russian assets to cover a $50 billion award to Yukos shareholders.
Moscow warned Paris in March that it would retaliate if France froze Russian assets to cover a $50 billion award to Yukos shareholders.

WASHINGTON -- Months before French authorities froze Russian assets over a $50 billion arbitration judgment, Moscow threatened retaliatory measures targeting not only France's government and companies but its citizens as well, according to a document seen by RFE/RL.

Russia confirmed this week that France and Belgium froze some assets tied to the Russian state in an effort to enforce the award issued by a Dutch arbitration court to shareholders of the defunct oil company Yukos, once owned by self-exiled Kremlin critic Mikhail Khodorkovsky.

The asset freezes incensed Moscow, which said the moves were illegitimate and that Russian entities would pursue similar legal actions in domestic courts against foreign-owned companies.

But more than two months before news of the asset freezes emerged this week, Russia warned Paris in a diplomatic note that French citizens could be hit with reprisals as well if legal action was taken against “Russian property” in France to enforce the arbitration award.

“Any attempt to undertake injunctive measures or measures of execution against Russian property located on the territory of the Republic of France will be seen by the Russian Federation as grounds to take adequate and proportional retaliatory steps against the Republic of France, its citizens, and its legal entities,” Russia’s Foreign Ministry told the French Embassy in the March 26 note, a copy of which was seen by RFE/RL.

Though France’s judiciary is independent from its executive branch, the ministry asked the embassy to relay the contents of the diplomatic note to “the relevant French court.”

The Russian Embassy in Washington did not respond to an e-mailed request for comment on June 19, and calls to the embassy went unanswered.

The ministry stated in the document that it was responding to a note from the French Embassy that was dated February 27 and formally received by Russian diplomats on March 6.

The contents of the French diplomatic note are unclear, though the Russian document seen by RFE/RL suggests it concerned The Hague court’s ruling in favor of the former Yukos shareholders.

The court ruled on July 18, 2014, that Russia violated the 1991 international Energy Charter when it dismantled Yukos and auctioned off its main assets in 2004.

The seizure of the Yukos assets followed Khodorkovsky's 2003 arrest on fraud and tax-evasion charges, after which he spent a decade in prison due to prosecutions widely seen as politically motivated.

Khodorkovsky was pardoned by Russian President Vladimir Putin in December 2013 and currently lives in Switzerland.

The former shareholders of Yukos are now trying to collect some of the $50 billion they were awarded in The Hague court’s ruling by pursuing enforcement actions in multiple countries. Russia filed an appeal in February seeking to overturn the court's judgment.

Tim Osborne, the director of GML, a holding company created by the major shareholders in Yukos, told news agencies that French authorities began freezing multiple bank accounts linked to the Russian state more than a week ago, while Belgium started on June 17.

He told AFP that the French enforcement actions included freezing “eight or nine buildings,” as well as accounts in some 40 banks with ties to the Russian state.

Russia’s Foreign Ministry said on June 18 that it had summoned Brussels’ envoy to Moscow to protest the freezing of assets in Belgium, which the ministry said affected Russia’s EU and NATO representative offices, as well as "a number of other Russian organizations" in Belgium.

Belgium’s Foreign Ministry said the actions were conducted by court bailiffs and did not involve the Belgian government.

Osborne, the director of GML, told AP this week that The Hague court's judgment was "rolling out" in France and Belgium and was likely to continue in Britain and the United States.

"It'll take years but it'll get done eventually," he was quoted as saying.

The shareholders have already petitioned the U.S. District Court for the District of Columbia for recognition of The Hague court's judgment against Russia, according to court documents.

They are currently attempting to serve a summons on the Russian government via the U.S. Embassy in Moscow, according to a May 18 filing in the federal court.

The filing quotes a U.S. State Department representative as saying that the necessary documents to serve the summons had been sent to the Moscow embassy but that it was unclear whether the Russian government had already been served in the case.

The attorney who filed the document, Christopher Ryan of the law firm Shearman and Sterling, declined to discuss the matter when contacted by RFE/RL on June 19.

The State Department did not respond to a request for comment.

With additional reporting by AFP, AP, Reuters, and TASS
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    Carl Schreck

    Carl Schreck is an award-winning investigative journalist who serves as RFE/RL's enterprise editor. He has covered Russia and the former Soviet Union for more than 20 years, including a decade in Moscow. He has led investigations into corruption, cronyism, and disinformation campaigns in Russia and Central Asia, as well as on poisoning attacks against Kremlin opponents and assassinations of Iranian exiles in the West. Schreck joined RFE/RL in 2014.

RFE/RL has been declared an "undesirable organization" by the Russian government.

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