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    News Jul 18, 2006 at 10:00

    A Summons for the Kremlin;
    The Russian Federation is a defendant now

    On March 14, Russia received a summons to a court in the District of Columbia. Lawyers acting for American minority shareholders of YUKOS delivered the summons to the Russian Foreign Ministry via the US State Department. Russia is officially the main defendant now. Summons were already served to Viktor Khristenko, Alexei Kudrin, and Sergei Bogdanchikov. Further summons will be served to Igor Sechin, Dmitri Medvedev, Alexei Miller, Farid Gazizullin, Igor Yusufov, and Nikolai Borisenko

    A Foreign Ministry spokesman declined to comment on or deny reports that Russia has received a summons to an American court. “That’s a complicated matter that will be considered by specialists,” he said. “We are a bureaucratic administrative machine with no time limits attached.” In the meantime, it is already known that Russia and its ministers will be defended by Michael Goldberg of Baker Botts.

    Laconic response from the Foreign Ministry is understandable. Being a defendant in a scandalous affair in a foreign country doesn’t exactly concur with the post of G8 president. Besides, ministers Khristenko and Kudrin and Bogdanchikov of Rosneft denied the serving of summons to the last, but obediently sent their representatives to negotiations

    Twelve minority shareholders, YUKOS ADR owners, filed a lawsuit against Russia last October. They accused the Russian Federation, Gazprom, Rosneft, Gazpromneft, Rosneftegaz, Baikalfinansgrup, and some senior officials of the Russian state of unlawfully confiscating the company’s property without compensation. The plaintiffs also accuse state officials of insider trading in YUKOS shares.

    At a State Department briefing in 2004, an official said: “We are concerned about the so-called YUKOS affair and the fate of Mikhail Khodorkovsky, and regularly said so at the meetings with senior Russian officials. Violations of the principle of the rule of law and a clear danger to private property rights are particularly worrying.” These days, the opinion that Russia doesn’t deserve to chair the G8 is widespread in Washington.

    The serving of the summons to the Russian Federation essentially initiates the trial. Plaintiffs’ lawyer Thomas Johnson from Covington & Burling says that the summoned defendants (the Russian Federation, Gazprom, Rosneft, Rosneftegaz, Khristenko, Kudrin, and Bogdanchikov) have until May 15 to inform the court of whether they accept the accusation or deny it. The date of the hearing will be set then.

    There is, however, a chance that the court may turn down the lawsuit. Daniil Petrov of Egorov Puginsky Afanasiev & Partners refers to sovereignty of the Russian Federation. “In my view, Russia will be spared the necessity to participate in the process,” he said. “One of the fundamental principles of the international law grants Russia immunity abroad in the same manner it grants the United States immunity from Russian courts. This immunity may only be overcome if Russia itself removes it for the duration of this particular investigation. Needless to say, it is not going to do so. It will probably announce that it doesn’t acknowledge jurisdiction of the court, and that will be that.”

    But that isn’t the only opinion. Olga Lazareva of Yakovlev and Partners said: “The lawsuit was filed in an ordinary American court. It will be considered within the framework of civil law – that is, relations dealing with business and finance. Countries in these relations play the role of ordinary entities. This logic concurs with the international practice, and references to immunity do not apply.”

    There is another debatable nuance. If the American court itself decides that its jurisdiction covers matters like that. Petrov doesn’t think that it does. “Indemnity affairs are usually considered on the defendants’ territory. It follows that jurisdiction of the American court is at least questionable,” Petrov said. Goldberg backed him. “This is a matter that dwells with activities of the Russian company,” he said. “There are no reasons at all to have it considered on American territory.”

    It follows that after May 15 the defendants’ lawyers will probably request that the court refuse to consider the case. Johnson maintains that their request will be waived.