Former owners of Yukos Oil Co. have started proceedings in the U.S. and the U.K. to recover a $50 billion damages award against Russia, and plan to target assets of state energy giants OAO Gazprom and OAO Rosneft.

The Permanent Court of Arbitration in The Hague ruled last year that Russia is liable to pay almost half of the $103 billion plus interest sought by GML Ltd., a holding company belonging to four former owners who don’t include Yukos founder Mikhail Khodorkovsky. Belgium and France began collecting the damages in June, sparking Russian protests.

The Yukos plaintiffs expect Russia to respond formally in the autumn to the legal actions in Washington and London to enforce the award, GML Director Tim Osborne said by phone on Friday. It may take years to exhaust all of Russia’s avenues for appeal in the U.S. and U.K. courts, he said.

Russia is fighting a legal battle with former owners of Yukos, once the country’s biggest oil producer, which was dismantled amid billions of dollars of tax claims that Khodorkovsky called revenge by the Kremlin for his funding of opposition parties. The tycoon, formerly Russia’s richest man, is campaigning in exile for the ouster of President Vladimir Putin, who issued a pardon to free him 18 months ago after a decade in prison on convictions for fraud and tax evasion linked to Yukos.

“We’re some years away from challenging the assets of state companies, but it’s on our agenda and we will get there in the end,” Osborne said.

Assets Frozen

The U.K. and the U.S. provide the best jurisdiction to make the case that companies such as Rosneft and Gazprom are acting as an “agency” of the state, and not just a commercial enterprise with majority state ownership, Osborne said. Rosneft acquired most of the former assets of Yukos.

In Belgium and France, GML obtained court orders to freeze real estate and bank accounts belonging to the Russian state that amounted to “double digit millions” of euros, Osborne said. Some accounts were later unfrozen after it emerged they were held by Russian diplomatic missions.

Russia in June warned the European Union countries that it would seize their assets if they didn’t reverse the court actions. The government in Moscow is drafting a law to allow retaliatory seizure of foreign assets, Prime Minister Dmitry Medvedev told a cabinet meeting on Thursday. The legislation will curtail the immunity in Russia of foreign governments under a principle of reciprocity, he said.

Russia has appealed the $50 billion award in the Netherlands and ruled out paying the damages.

Source: www.bloomberg.com

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