Mikhail Khodorkovsky

The Court of the Appeal of The Hague has dismissed the Russian Federation's application to set aside the $50 billion arbitration award – the largest in history – that the Russian government was ordered to pay by the Hague's Permanent Court of Arbitration in 2014.

The saga is rooted in allegations made over a decade ago that officials had manipulated the legal system to bankrupt the Yukos oil company and jail its boss Mikhail Khodorkovsky.

The decision was handed down on February 18, with the arbitral tribunal sitting in The Hague under the Energy Charter Treaty (ECT) ruling unanimously that the Russian Federation appropriated the assets of Yukos Oil in violation of international law.

A partner involved in the case told Law.com International that the decision is a "historic victory for the rule of law prevailing over the exercise of illegitimate power in government" and that the court "had not been reticent to explain why Russia is accountable".

The partner continued: "In many ways it's a very important case, because Russia has been held accountable for what the tribunal described as 'illegal expropriation of Yukos'."

Meanwhile, a partner at Shearman & Sterling said the case is a "question about international obligations in states".

"People want to make it a political decision but it's not – it's legal," they added. "From a legal standpoint, the arbitration awards were accurate and in line with international law, and therefore Russia is obliged to respect it."

Acting for the former Yukos majority shareholders was De Brauw Blackstone Westbroek, with a team led by arbitration partner Marnix Leijten, and partners Matthias Kuscher and Eelco Meerdink.

Shearman supported De Brauw with a team led by international arbitration head Emmanuel Gaillard and public international law head Yas Banifatemi.

Meanwhile, the Russian Federation was represented by Dutch firms Houthoff Buruma and Hanotiau & van den Berg, with U.S. firm White & Case supporting. The White & Case team was led by London disputes partner David Goldberg, alongside litigation partners Carolyn Lamm and Francis Vasquez in Washington D.C., according to a person with knowledge of the situation.

In a statement by the firm, Shearman's Gaillard said: "This is a landslide victory for our clients. By confirming the Arbitral Tribunal's landmark decisions, The Hague Court of Appeal reinforces the finding that the Russian Federation was bound by its international obligations under the ECT and that it must be held accountable for the largest expropriation in modern history."