From Russia With Love, my friends
I'd like to learn your opinion on the YUKOS case and its enforcement in the US (See: https://en.wikipedia.org/wiki/Yukos).
Perhaps you may know that YUKOS was eliminated by the Russian government through the tax reassessment and fraudulent bankruptcy. The assets of YUKOS were abducted by the state-owned Rosneft (RN). In 2000s, those assets comprised 75 % of RN cap. The Hague court (PCA) in its arbitral award held that RN performed the role of the Kremlin's hand (I understand that as an acknowledgement of RN as a mere instrument)
In paragraph 1480 of PCA Final Award (PCA Case Nos. AA226 (Hulley), AA227 (YUL) and AA228 (VPL)):
In respect of attribution, the Tribunal concludes that the Russian Federation is responsible for
its organs, executive, judicial and administrative, in the actions that they took against and in
relation to Yukos and its stockholders; that, for the reasons stated above, the Russian
Federation, speaking through its President, accepted responsibility for Rosneft’s acquisition of
YNG and for the auction that underlay it; and that, in respect of other actions of Rosneft that
bear on the destruction of Yukos, while proof of specific State direction is lacking, it may
reasonably be held that the highest officers of Rosneft who at the same time served as officials
of the Russian Federation in close association with President Putin acted in implementation of
the policy of the Russian Federation. The actions of Mr. Rebgun as bankruptcy administrator
are not attributable to Respondent.
So, three issues raised on the FSIA and common law.
1. RN assets may be subject of attachment under 1605(a)(3) of the FSIA
'(a)A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case—
in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States'
2. The corporate veil of RN may be peirced by the existence of fraud and injustice.
US Supreme Court in First National City Bank v Banco para el Comercio Exterior de Cuba set general rules on seizure the assets of the state-owned enteprises for the State's debt:
'Thus, the presumption that a foreign government's determination that its instrumentality is to be accorded separate legal status is buttressed by this congressional determination. We next examine whether this presumption may be overcome in certain circumstances.
In addition, our cases have long recognized "the broader equitable principle that the doctrine of corporate entity, recognized generally and for most purposes, will not be regarded when to do so would work fraud or injustice." Taylor v. Standard Gas Co., 306 U.S. 307, 322, 59 S.Ct. 543, 550, 83 L.Ed. 669 (1939). See Pepper v. Litton, 308 U.S. 295, 310, 60 S.Ct. 238, 246, 84 L.Ed. 281 (1940).'
I think that in this case we can apply Litton's test because there are too much things in common. Litton was an owner of the debtor-company. He had created fictitious salary debt and removed all assets from his corporation (In Yukos, unlawful tax reassessment and falsified auction which entailed the transfer assets, mainly, to Rosneft). After, he made corporation to file bankruptcy (the same in Yukos).
3. RN may be qualified as a Chabra Defendat as it was the playing the role of controlled entity who concealed the abducted assets (See TSB Private Bank International SA v Chabra).
Am I right? Thanks for feedback