In Yukos Universal Limited v. The Russian Federation, Hulley Enterprises Limited v. The Russian Federation, and Veteran Petroleum Limited v. The Russian Federation, identical arbitral tribunals (Yves Fortier – Chairman, Charles Poncet and Judge Stephen Schwebel) ruled that the Russian Federation breached its obligations under the Energy Charter Treaty (ECT).

In particular, the arbitral tribunals unanimously held that the Russian Federation had taken measures with the effect equivalent to an expropriation of the Claimants' investments in Yukos and thereby breached Article 13.1 of the ECT. At the same time, the tribunals found some contributory fault on behalf of the Claimants. As a result, the Russian Federation was ordered to pay damages in the order of USD 50 bln. The Russian Federation has 180 days of grace period to pay. After 15 January 2015, interest will start accruing.

The final awards, which can be considered as a landmark decision in the understanding of the interaction between taxation and investment protection under the ECT, are the culmination of protracted legal proceedings initiated under the ECT in 2005 by the former majority shareholders of Yukos Oil (two GML subsidiaries – Hulley Enterprises and Yukos Universal, and Veteran Petroleum, the pension fund for the benefit of former Yukos employees) in what is considered as the largest aggregated claim in arbitration history (more than USD 100 bln).

Many of the benefits that both current and potential ECT Contracting Parties perceive as arising from the Treaty are linked to its internationally enforceable 'rules of the game', including the ECT's strong mechanism for the settlement of disputes. Furthermore, the effective dispute settlement mechanisms contained in the Treaty have significance beyond the particular cases that come before a tribunal. Such cases provide strong encouragement for Contracting Parties to observe their Treaty obligations, or to reach amicable settlements out of court, thereby reducing the specific risks associated with the operation of the energy sector.