States Behaving Badly: Sovereign Veil Piercing in the Yukos Affair

Abstract

In July 2014, former shareholders in the now-defunct Yukos oil company won a historic $50 billion arbitration award against Russia. So far Moscow has shown no desire to comply voluntarily. The widespread embrace of the restrictive view of sovereign immunity and multilateral conventions on enforcement of arbitral awards should, in theory, make it easier for the award winners to collect their spoils in domestic courts all over the globe. Despite that, recalcitrant sovereign debtors remain able to stymie efforts to execute against state assets, and thus leave some litigants with a right but not a remedy. This Article details the how the Yukos shareholders may try to pry precious assets away from the Russian government and ultimately concludes that they are unlikely to come close to satisfying their record arbitral award. Therefore, this Article suggests courts recognize sovereignty as the legal fiction it is, which, hopefully, will empower judges to “pierce the sovereignty veil” and hold states like Russia to account.

Keywords: Yukos, Sovereign immunity, FSIA, SIA