Yukos Entitled to Enforce $186M Arbitration Award (Second Circuit) | Practical Law

Yukos Entitled to Enforce $186M Arbitration Award (Second Circuit) | Practical Law

In Yukos Capital S.A.R.L. v. OAO Samaraneftegaz, the US Court of Appeals for the Second Circuit affirmed a $185.9 million judgment rendered by a district court in New York confirming a New York-seated ICC arbitration award.

Yukos Entitled to Enforce $186M Arbitration Award (Second Circuit)

Practical Law UK Legal Update Case Report 7-587-3569 (Approx. 3 pages)

Yukos Entitled to Enforce $186M Arbitration Award (Second Circuit)

by Practical Law Arbitration
Published on 07 Nov 2014 • USA (National/Federal)
In Yukos Capital S.A.R.L. v. OAO Samaraneftegaz, the US Court of Appeals for the Second Circuit affirmed a $185.9 million judgment rendered by a district court in New York confirming a New York-seated ICC arbitration award.
In Yukos Capital S.A.R.L. v. OAO Samaraneftegaz, a federal appeals court in New York affirmed a lower court's entry of a $185.9 million judgment in favor of Yukos Capital S.a.r.l., an affiliate of now-defunct Yukos Oil Co. (592 F.App'x 8 (2d Cir. 2014)). The judgment was the result of the confirmation of an ICC arbitration award issued in New York that Yukos Capital had won.
In seeking to dismiss the petition to enforce the award, Samaraneftegaz argued, among other things:
  • The confirmation proceeding should have been dismissed on forum non conveniens and jurisdictional grounds.
  • The arbitration award was unenforceable.
  • The district judge improperly set the exchange rate in converting the award from rubles to dollars.
In its summary order, the Second Circuit quickly disposed of each of these arguments. The court held:
  • Samaraneftegaz could not show substantial prejudice resulting from confirmation proceedings in New York and therefore the forum non conveniens argument was without merit.
  • The New York courts have jurisdiction because the agreement to arbitrate in New York was valid.
  • There was no substance to Samaraneftegaz's argument that the arbitration award was unenforceable as a result of a lack of due process during the proceedings. Although a Russian court refused to enforce the arbitration award on the grounds that Samaraneftegaz was not given notice of important stages of the arbitration proceeding and that the award violated Russian public policy, the New York Convention reaquires the application of the forum state's (US) standards of due process.
  • The arbitration did not violate American standards of due process, which entitles parties to notice reasonably calculated, under all the circumstances, of the pendency of the proceeding and afford them an opportunity to present their objections. Samaraneftegaz had a full opportunity to present its objections.
  • The district court correctly chose the date of the award as the date to convert from rubles to dollars. Under Supreme Court precedent, the exchange rate from the date the cause of action accrued should be used. Here, the cause of action (enforcement of the award under 9 U.S.C. § 207) accrued when the award was rendered.
The court considered Samaraneftegaz's remaining arguments and concluded that they were without merit without further comment.