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.