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Dutch territorial approach to bankruptcies confirmed in final Yukos verdict

The former shareholders of the Russian oil company Yukos have the ownership of the foreign assets of the company back after more than ten years of litigation. On 18 January 2019 the Dutch Supreme Court gave its final verdict in the proceedings concerning Yukos Finance, a Dutch company in which the international possessions of Yukos Oil are held. This involves approximately € 800 million of assets.
There has been litigation in the Netherlands since 2007 about Yukos Finance, which includes the ownership of a refinery and oil pipelines. After the bankruptcy of the Russian oil company in 2006, the shares of Yukos Finance came in the hands of the Russian company Promneftstroy. The shares go back to the former shareholders of Yukos after the judgment of the Supreme Court.
The Supreme Court confirmed a judgment of the Amsterdam Court of Appeal from 2017. The Court then found that the bankruptcy of Yukos can not be recognized in the Netherlands. At the time Yukos received a high Russian tax assessments which made bankruptcy inevitable. The Court concluded that the Russian tax rules were violated and that this was done with the obvious intention to provoke payment power and ultimately cause the bankruptcy of Yukos Oil. After the bankruptcy, the majority of Yukos' assets came into the hands of the Russian state oil company Rosneft.
The broader meaning of this verdict is that the Dutch Supreme Court has expressed its opinion on how Dutch courts shall deal with bankruptcy judgments from countries outside the European Union. The territorial approach makes that the Dutch courts will not automatically rely on such a judgment. It will have to be tested whether such a judgment does not conflict with public order in the Netherlands.
Asset protection is an important factor in international structuring. The Netherlands has a territorial approach to bankruptcies. As a result the level of asset protection of a Dutch holding company used for doing business in riskful countries is high.