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Kristine Aghalaryan

Rosneft and Yukos Settle Legal Dispute: So What Awaits Yukos’ Armenian Subsidiaries?

Russian petroleum giant Rosneft has announced that it has resolved its quarrel with the Yukos family of companies.

On March 27, the Rosneft board of governors backed a deal with Yukos that would waive all mutual claims and cease all legal and other disputes by the parties involved.

The agreement, signed on March 31, also obligates the sides to indemnify each other for any claims in the future in connection with the bankruptcy and liquidation of Yukos.

This will result in a review of all ongoing trials in the Netherlands, England, the United States, Russia and other jurisdictions.

One of Yukos’ subsidiaries was Yukos CIS Investment, registered in Armenia. Yukos CIS Investment then set up Yukos Hydrocarbons Investment (registered in the Virgin Islands) as a subsidiary. In turn, Yukos Hydrocarbons then set up other subsidiary companies (Fair Oaks Trade, Invest Limited, Glendale Group Limited) in the Virgin Islands. But most of the assets were concentrated in Yukos Hydrocarbons Investment. The family of Armenian companies, whose assets amounted to some US$ 4 million, grew in this manner.

In August 2006, Moscow’s Court of Arbitration decided to declare Yukos bankrupt. Rosneft also took control of Yukos CIS Investment shares; in addition to those of numerous other companies.

While Yukos head Mikhail Khodorkovsky and his partners were in prison, various offshore companies (in Holland, Great Britain, the U.S. and Armenia) were attempting, via legal means, to get back millions of dollars worth of Yukos assets ‘seized’ by Rosneft, or at minimum, to prevent Rosneft from enveloping  those companies.

A number of court cases took place throughout the entire Armenian judicial system in an attempt to prevent Khodorkovsky’s friends and his Armenian partners from taking control of capital invested by Rosneft in the Armenian company and in sister companies it founded. But these attempts proved futile.

The tangled dispute then reached the Amsterdam Regional Court where the case eventually died.

In 2009, a criminal case was launched against Yukos CIS director Armen Mikaelyan at the Chief Investigative Department of Armenia’s Police Department. He was charged with Article 214 of the Armenian Criminal Code - Abuse of authority by the employees of commercial or other organizations.

Mikaelyan was specifically charged with failing to present the company’s registration affidavit and stamp based on unsubstantiated reasoning. The case is still under investigation and the outcome remains uncertain. Mikaelyan still resides in the United States.

Through it all, Khodorkovsky has strengthened his position. The Russian edition of Forbes writes that he continues to invest in various countries and seeks to regain his ranking as one of Russia’s wealthiest businessmen.

He has entered the real estate market jn various countries as well as in Georgia and plans to build a four hectare residential complex in Tbilisi at an estimated value of US$30 million.

Khodorkovsky also is set to build the US$90 million Eastpoint Shopping Center in the Georgian capital.

Photo (from left): Mikhail Khodorkovsy, Armen Mikayelyan.