Dmitry Chernyy on Yukos v SamaraNefteGaz

When Yukos Capital tried to enforce the award SamaraNefteGaz claimed among other thing, that the new arbitration clause was invalid because the director of SamaraNefteGaz, who signed new agreement, did not act in the interests of the company but ‘following the orders of the management of Yukos Oil’ and, therefore, it was an abuse of rights. Dmitry Chernyy defended SamaraNefteGaz.

Dmitry Chernyy, partner

Muranov, Chernyakov & Partners
+7 495 783-74-50

I believe that the supplementary agreements which transferred the case to New York were invalid because of the abuse of rights by Yukos. No one was interested in the agreements except for Yukos itself. In the award it was stated that the parties were properly notified. But when we studied the documents we found that it was not so. Essentially, Yukos sent notices to itself in Moscow and not to Samara where the company was located.

Though the directors of SamaraNefteGaz had formal authority, they did not follow the procedure for entering such agreements as was established in the company.

Generally speaking, this is not an obstacle and such contracts can be valid, but here it was evidence that the agreements were rather ‘hasty’.

The director went abroad and signed these agreements on behalf of SamaraNefteGaz. And then SamaraNefteGaz was forced to deal with them even though they were made with just one purpose: to make the process easier for Yukos, and harder for SamaraNefteGaz.

In the early 1990s there were many similar cases, but the law has evolved and now there is an instrument that can be applied, the abuse of rights. The Supreme Commercial Court seems to agree with such a view. Now, for example, in bankruptcy cases references to article 10 are quite common. In 2010, the Supreme Commercial Court issued several rulings that set aside transactions within six months prior to bankruptcy seeing such deals as an abuse of right.