Currently, the Hague International Tribunal is considering a claim filed by Sergei Pugachev against the Russian Federation on compensation of at least $ 12 billion for the assets expropriated from him. Read More
The Russian Federation has named David Goldberg of White & Case law firm to represent its interests before the Permanent Court of Arbitration (Hague, Netherlands) in connection with the $12 billion arbitration proceedings brought by Sergei Pugachev against Russia for expropriation of his empire starting in 2010. The White & Case legal team will be led by David Goldberg who was born in the USSR in 1968 and member of the International Centre for Legal Protection established by Russia to prevent Yukos from collecting on its $50 billion award against Russia.
Sergei Pugachev, a French national and international investor, initiated arbitration proceedings against Russia for $12 billion due to breaches by Russia of the Bilateral Investment Treaty between France and the USSR signed in Paris on 4 July 1989. Pugachev’s claim is the largest investment treaty claim ever filed by any single individual against a State. Pugachev’s claim is principally concerning actions by Russia and its agents resulting in the forced taking of his business empire with no payment in return and include efforts by agents of the Russian State to force Mr Pugachev to sign certain contracts and documents adverse to Mr Pugachev’s interests. Such efforts by Russian agents include threats to his personal physical safety and that of his family. Further actions by the Russian State include a pending unfounded criminal prosecution initiated against him that is claimed to be politically –motivated and related to improper and unsubstantiated civil claims against Mr Pugachev concerning his alleged involvement in the bankruptcy of the International Industrial Bank of Russia.
Mr. Pugachev’s arbitration claim was registered by the Permanent Court of Arbitration located at the Hague, Netherlands on September 21, 2015. In accordance with eh french & Russian Investment Treaty, the Arbitration Rules of the United Nations Commission on International Trade Law of 1976 (United Nations Commission on International Trade Law, UNCITRAL) govern this arbitration procedure.
King & Spalding law firm based New York assisted in the preparation of the Notice of Arbitration. Starting in 2016 a Paris-based law firm specializing in investment arbitration, Lazareff Le Bars, represents the interests of Mr. Pugachev.
On June 17, 2016 Sergei Pugachev’s counsel appointed Professor Thomas Clay as arbitrator to the Hague court to consider the case against the Russian Federation. In accordance with article 7 of the UNCITRAL Rules, the Russian Federation had 30 days to comply with procedures in the United Nations Commission rules agreed to by Russia in the Treaty.
On 15 July 2016 the Russian Federation confirmed to the President of the Permanent Court of Arbitration in The Hague and legal counsel for Mr. Pugachev that Russia would participate in the procedure and it recognized the jurisdiction of the designated court.
However, as a result of Russia having failed to respect the rules and deadlines required for the nomination of its arbitrator by 8 August 2016, Russia lost the right to appoint an arbitrator and as a result on 19 August 2016 the Secretary General of the Permanent Court of Arbitration appointed Professor Bernardo Cremades on behalf of Russia.
Russia’s appointment of David Goldberg as leal counsel is unsurprising given his prominent role as a member of the government body overseeing efforts to delay and frustrate payments due to Yukos from an Energy Charter Treaty award against Russia. “The choice of David Goldberg as legal counsel in the case against Sergei Pugachev demonstrates that the Russian Federation recognizes the weakness in its legal defense against Mr Pugachev’s claims. Starting in 2010 the actions of the Russia State against Mr Pugachev are clearly violations of international law as noted by the UK High Court in London during hearings held in 2015. Goldberg is not White & case law firms top specialist in investment arbitration before the Permanent Court of Arbitration. Mr Goldberg will no doubt attempt to assist Russia in continuing to avoid its international treaty obligations. Therefore it is clear that – even before the first hearing – Russia is employing a strategy that does not defend the State against its illegal activity, but instead tries to defend assets against the seizure that will take place by Mr Pugachev after the success in his arbitration procedure.” said Michael McNutt, Senior Litigation Advisor to Mr Pugachev.
November 20, 2015 – In response to recent publications in the Russian media reporting that the Russian law enforcement agencies have involved Interpol in their quest to establish Sergei Pugachev’s whereabouts, the Press Office states the following:
Sergei Pugachev, a citizen of the Republic of France, has been living in France with his family since the beginning of the 90s, and since 2010 Mr. Pugachev is living in France on permanent basis.
Mr. Pugachev renounced his Russian citizenship in 2012 in connection with the expropriation of his assets in Russia. At the end of 2014 the Interpol Russian Bureau placed Mr. Pugachev’s name on its wanted list. In 2015 Mr. Pugachev’s name was removed from the list following the appeal filed by Mr. Pugachev’s French lawyers to the Interpol Central Bureau. Today Mr. Pugachev’s movements around the world are not restricted.
Sergei Pugachev and his lawyers believe that the allegations by the Russian authorities targeting Mr. Pugachev are politically motivated and judicially groundless. The legal team is awaiting action proceedings at the International Arbitration Court in the Hague in regards to Mr. Pugachev’s $12 billion compensation claim against the Russian Federation.
Sergei Pugachev is being represented by one of the world’s biggest American law firms, King & Spalding LLP. At the moment legal procedural steps are being taken to obtain interim measures in the form of seizures of the Russian Federation’s property in various jurisdictions.
Sergei Pugachev’s Press Office
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Pugachev Files International Arbitration Against the Russian Federation Over Violations of the France-Russia Bilateral Investment Treaty with Estimated Damages of US$ 12 Billion
PARIS, France, September 22, 2015 – Mr. Sergei Pugachev, a French national and international businessman, has filed an international arbitration claim against the Russian Federation for damages estimated at US$12 billion citing violations of the country’s obligations under the France-Russia Bilateral Investment Treaty and international law. The complaint stems from the Russian Federation’s mistreatment of Mr. Pugachev and his investments, outright taking of several multi-billion dollar investments without paying any compensation, coercion of Mr. Pugachev to enter into transactions on unfavorable terms, threats to the security and wellbeing of Mr. Pugachev and his family, and sham criminal proceedings against him. The arbitration proceeding has been commenced under the 1976 Rules of the United Nations Commission on International Trade Law.
Mr. Pugachev’s claims relate to the Kremlin’s campaign and targeted strategy, since 2009, to strip him of his valuable investments without paying him any compensation whatsoever. Among the investments that the Russian Federation has taken are: (1) the Red Square 5 development project, which was authorized to build a major hotel and residential complex in Moscow; (2) the Shipyards, Russia’s biggest and most modern shipyards, which included the nation’s leading designer of icebreakers and builder of military ships and commercial vessels; (3) the EPK, a company that held the exploration and extraction license to develop one of the richest coalfields deposit in the world located in the Tuva region in Russia; and (4) Optik Trade, which owned and planned to develop land plots in the Moscow Region and the related Gribanovo development project. The Russian Federation also has instituted and pursued sham civil and criminal proceedings against Mr. Pugachev, with the expressed intent to ruin Mr. Pugachev and his family. The Russian Federation is using these unfounded proceedings as a basis for exporting its persecution and harassment of Mr. Pugachev to other jurisdictions, like the U.K. or Switzerland, which has inflicted additional harm on Mr. Pugachev. Those actions ultimately also resulted in the loss of investments in countries outside of Russia. All of this conduct is in breach of Mr. Pugachev’s rights under the France-Russia Bilateral Investment Treaty and international law. In addition, legal counsel is exploring the possibility of a claim also to be brought against Russia for violations of the European Convention on Human Rights as a result of the treatment of Mr Pugachev.
“Over the past few years, Russia has pursued a multi-pronged attack against me, my family, and my investments. I refuse to be intimidated by Russia’s tactics, and I look forward to having an international arbitral tribunal assess Russia’s conduct by applying international standards,” said Mr. Pugachev.
“Mr. Pugachev’s filing today should not come as a surprise,” added Mr. Edward G. Kehoe, of King & Spalding LLP, lead counsel to Mr. Pugachev in the international arbitration proceedings. “Russia’s conduct violates the Bilateral Investment Treaty’s guarantee of fair and equitable treatment and prohibition against unlawful expropriation with respect to French investors, among other protections.”
“Russia cannot continue its worldwide persecution of Mr. Pugachev with impunity. This international arbitration proceeding is intended to hold Russia to its international obligations under the Bilateral Investment Treaty”, said J. Michael McNutt, Senior Litigation Advisor to Mr. Pugachev.
Mr. Pugachev is not alone in highlighting Russia’s misconduct and its hostility towards foreign investors. At present, over ten (10) investment treaty arbitrations against Russia are pending. Most recently, an international arbitral tribunal ordered Russia to pay former shareholders of the OAO Yukos Oil Company approximately $50 billion in compensation for unlawful expropriation through a series of targeted measures taken between 2003 and 2007.
Mr. Pugachev’s notice of arbitration has been delivered to the Minister of Economic Development of the Russian Federation, as well as to Russia’s President, Minister of Finance, Minister of Foreign Affairs, and Minister of Justice of the Russian Federation. Upon appointment of the arbitrators to hear the case, the tribunal will establish a schedule for briefings and arguments on the merits.
Copies of the petition in English, as well as related materials, can be found on the ‘Litigation’ page at www.pugachevsergei.com.