Thursday, July 31, 2014

Window on Eurasia: Hague YUKOS Decision Less About Money than Principle, Pastukhov Says

Paul Goble


            Staunton, July 31 – Many have been transfixed by the size of the 50 billion US dollar judgment by the international court in the Hague against Moscow in the YUKOS case, but the real threat to Russia lies not from that vast sum but rather in the principle that the international court has articulated, according to Vladimir Pastukhov.


             In a commentary published by “Novaya gazeta,” the St. Antony’s scholar argues that one needs to look beyond the number and recognize that even if it were only one dollar, “the historic significance of this decision would be no less and perhaps would be even greater” (


            The decision of the Hague court represents, he continues, “a doctrinal breakthrough,” one that reflects a triumph of the liberal legal doctrine that Moscow partially accepted two decades ago but has since moved away from, retreating toward the formalist principles on the basis of which the Soviet state.


            The liberal position holds that a law must be legal, that is, it must be part of a general quest for justice and that its application is possible only if this broader context is taken into consideration.  The formalist position holds that the text of any law must be enforced regardless of this context.


            That somewhat abstract difference, Pastukhov continues, has enormous practical consequences.  The formalist position was the basis of Stalin’s Great Terror. Regardless of why charges were being brought or how a law was being used, if an individual was judged to have violated a particular law’s provisions, he was guilty.


            The liberal position, in contrast, argues that the political use of a law can be the basis for deciding that its provisions should not be applied in a particular case because that case would not be in that case “legal” but rather “political.” 


            Until the YUKOS decision, the Russian government has been successful in defending itself in cases where it is involved by insisting on the letter of the law and rejecting any consideration of the context in which it has been applied.  Now, the Hague court has rejected that position, something that opens up “a Pandora’s box” of problems for Russia, Pastukhov says.


            Moscow had defended itself against suits like the YUKOS one by arguing that the firm had not paid taxes and that any other issue was irrelevant. Even when it acknowledged that there were “numerous procedural violations,” the Russian government successfully returned to its point that the law had been violated because the taxes had not been paid.


             The Hague arbitration court in this case, however, “did not limit itself to a formal consideration of the facts but viewed them in a broad legal context and as a result came to opposite conclusions” to the ones it would have reached if it had continued to accept Moscow’s formalist approach.


            That makes the current decision “important not just in and of itself,” Pastukhov argues. Rather, it has “enormous importance as precedent” and changes the legal framework under which Europe will consider Russian legal practice and thus Russia as a whole. And that “will have consequences for Russia much more serious than the loss of 50 billion dollars.”


            At least “potentially,” Pastukhov says, “this is a much more rapid path to the organization of the complete isolation of Russia than even sectoral or other sanctions” because it means that in any case involving Russia, “issues of legality will be considered not formally but in terms of context and with an account of the legal correctness of the goals pursued by the sides.”


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