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Thursday, November 16, 2006

US Court Rules to Protect YUKOS

HOT October 2006 - Kommersant - A U.S. court has turned down a suit of YUKOS’s minority shareholders against the company’s former management and MENATEP Group, its major shareholder. The court said it has no jurisdiction over this dispute. The court may also use this ground considering a suit of YUKOS’s minority shareholders against Russia.
The Court of Appeal for the Southern District of New York has dismissed a suit of three minority shareholders of YUKOS, British citizen Mikolya Buynitsky, Roxwell Holdings and Parsimory Ltd., against YUKOS, the company’s then auditor PricewaterhouseCoopers and major shareholder MENATEP Group. The plaintiffs claimed that these people and entities had not informed them about political risks that holding stocks of YUKOS could entail and deliberately hid facts about YUKOS’s tax strategy and Mikhail Khodorkovsky’s political activities.
In March, the U.S. court considered two claims from MENATEP Group and YUKOS to decline examining the suit. The court satisfied both. The decision was party based on the fact that the plaintiffs had little relation to the United States. Buynitsky is a British citizen who resides in Moscow and Roxwell Holdings is registered on the Bahamas but it bought stocks of YUKOS at a Russian exchange. Parsimony is New York-based firm but it also bought stocks of the oil giant at a exchange elsewhere.
The court dismissed the claims on Thursday, saying that the place of consideration was inadequate and the court had no jurisdiction over the case.
U.S. courts have used these grounds in Russia-related cases for a number of times lately. The same reasons were given for dismissing claims of Moncrief Oil against Gazprom, Dzhalol Khaidarov against Iskander Makhmudov or Palmco Corp. against Tekhsnabexport.
Another suit of YUKOS’s minority shareholders is still pending. Plaintiffs accuse the Russian Federation and high-placed officials of expropriating YUKOS’s major assets. Yet, arguments of the plaintiffs are the same as with yesterday’s case, therefore U.S. courts are most likely to dismiss these claims as well.

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