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Stockholders may take government to human rights court
By Andrew Jack in Moscow
Published: November 2 2003 20:21 | Last Updated: November 2 2003 20:21


Key Yukos shareholders are considering launching high-profile international and domestic challenges in the coming days to the actions brought by the Russian authorities against Mikhail Khodorkovsky, according to advisers to the company.


Lawyers are studying the possibility of appealing abroad as well as within Russia over the validity of the freeze brought by prosecutors last Thursday on more than 42 per cent of Yukos' shares, which they claim are controlled by Mr Khodorkovsky.

Another specialist legal team, which includes attorneys from North America, is examining options for seeking an emergency ruling from the European Court of Human Rights in Strasbourg in relation to procedural violations in the criminal cases brought against Mr Khodorkovsky, who was arrested last month, and other key Yukos shareholders.

Russian lawyers are nervous about taking their legal battle abroad, as it is likely to irritate the Kremlin. Such a move could escalate diplomatic tensions between the Russian authorities and foreign countries, which have already openly criticised the conduct of the investigation and argued that it may be political. It could also make any attempts to reach a negotiated settlement with Mr Khodorkovsky still more difficult.

Advisers to Mr Khodorkovsky say that ownership of his shares, including voting rights and the possibility of selling them to third parties, was transferred after his arrest, in accordance with a trust document that he made public last year.

One of his advisers firmly denied reports that control of his shares had passed to the influential British financier Jacob Rothschild, and indicated that it was instead held by Leonid Nevzlin, Yukos's second-largest shareholder and a long-standing partner of Mr Khodorkovsky who is now based in Israel.

Mr Rothschild may play an intermediary role in the legal and lobbying battle in the weeks and months to come. He is a trustee of the British branch of Mr Khodorkovsky's Open Russia philanthropic organisation, and has got to know him over several years.

"Jacob is the man who first gave Khodorkovsky access to British society and politicians, the first man to take him seriously," said one acquaintance of Mr Rothschild.

A Moscow-based western lawyer with no links to the case said on Sunday that criminal charges would normally override any commercial document, so that the clause permitting the automatic shift in Mr Khodorkovsky's ownership after his charging and arrest could in theory be annulled.

However, if legal actions are brought by the new owners under English law - which is likely because the shares were held by Menatep Gibraltar, which falls under the jurisdiction of the English courts - then Russian prosecutors would have to demonstrate their charges "beyond reasonable doubt" to justify the share seizure.

A challenge to the asset freeze in Moscow's courts could also pose problems for the Russian prosecutors. They have up until now used the Basmanny Court in Moscow, which has a long tradition of finding in their favour.

However, they could face greater problems if the asset freeze is challenged in the Moscow commercial courts, which have shown greater independence from political or corporate pressure in the past few years. "They risk compromising their entire reputation," the foreign lawyer said.

He added that Russian courts often accept procedural violations as grounds for appeal, and that Menatep shareholders might be able to argue that seizing all Mr Khodorkovsky's former shares was "inappropriate or disproportionate".

The ultimate new owners of Mr Khodorkovsky's shares may also be able to argue that they acquired them in good faith and should not be penalised for any "taint" that existed on the shares as a result of action by the previous owner. He said that this argument has been accepted by Russian courts in other cases in the past.

However, aside from political pressure over judicial decisions in Russia, appeals by Mr Khodorkovsky's team also face an important technical challenge. President Vladimir Putin himself, his new head of administration, Dmitry Medvedev, and his deputy Dmitry Kozak are all trained lawyers.

Mr Putin, renowned for his command of detail, and his advisers in the Kremlin have been following the investigations closely, and will have tried to ensure no errors were made in the prosecutors' actions.

One lawyer in Mr Khodorkovsky's team studying the criminal charges described as "the nuclear option" the decision by prosecutors last month to raid the office of Anton Drel, Mr Khodorkovsky's personal lawyer.

The prosecutors took away documents and refused to show him either a judicial warrant or allow him to accompany them during the search. They later attempted to call him for questioning in the investigation.

He argued that these actions alone represented a fundamental violation of lawyer-client privilege, due process and a "fishing expedition" beyond acceptable conduct under legal procedures that renders a fair trial in the Russian courts impossible. This could justify an intervention by the European Court of Human Rights, which normally requires that all domestic remedies be first exhausted.

Mr Rothschild may play an intermediary role in the legal and lobbying battle in the weeks and months to come. He is a trustee of the British branch of Mr Khodorkovsky's Open Russia philanthropic organisation, and has got to know him over several years.