U.S. judge says Russia can't delay $50 bln Yukos case, citing sanctions

(Reuters) - Russia cannot again pause U.S. litigation brought by shareholders of the defunct oil company Yukos to enforce a $50 billion judgment against the country, a judge in Washington, D.C., ruled Wednesday, citing delays in the case and escalating sanctions over Russia's Ukraine invasion.

The U.S. case has been placed on hold repeatedly while Russia challenged the shareholders' arbitration award in Dutch courts. But U.S. District Judge Beryl Howell found that freezing the case again “is neither warranted nor appropriate.”

A Hague tribunal found in 2014 that Russia illegally bankrupted Yukos and seized its assets, awarding the shareholders $50 billion. The Dutch Supreme Court last year tossed the award, and the case is now before the Amsterdam Court of Appeal. A ruling is not expected until next year.

In asking Howell to reject Russia's latest bid to stay the eight-year-old U.S. action, the shareholders argued that U.S. sanctions imposed on Russia since it invaded Ukraine would make it “far more difficult” to collect on the award if the case succeeds.

The judge agreed in Wednesday ruling.

“The hardship to the shareholders — which prevailed in a decade-long arbitration that concluded in 2014 — only increases with each passing year and is today further compounded by the evolving risk that Russian Federation assets in the United States may be liquidated or otherwise become inaccessible,” Howell wrote.

She also ruled that claims by Russia in the Dutch litigation that the shareholders committed fraud in the arbitration are not reason enough to put off deciding the U.S. case. She said even if Dutch courts reject the award, a U.S. court could still recognize and enforce it.

Lawyers for Russia and the Yukos shareholders did not immediately respond to requests for comment.

Attorneys with law firm White & Case are representing Russia in the D.C. case. They have said in court papers after Russia's Ukraine invasion that they are seeking to withdraw from the case.

The case is Hulley Enterprises Ltd et al v. Russian Federation, District of Columbia, No. 14-cv-01996.

For the plaintiffs: Steven Shepard of Susman Godfrey

For Russia: Carolyn Lamm of White & Case

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