Washington, D.C. — August 5, 2025 — The U.S. Court of Appeals for the D.C. Circuit has ordered a lower court to independently determine whether Russia agreed to arbitrate with former shareholders of Yukos Oil Co., casting fresh scrutiny on a $50 billion arbitral award — one of the largest in history.
In a published opinion Tuesday, the D.C. Circuit vacated U.S. District Judge Beryl A. Howell’s 2023 ruling that rejected Russia’s claim to sovereign immunity. The appeals court concluded that Howell improperly deferred to the arbitral tribunal’s conclusion that Russia had agreed to arbitration under the Energy Charter Treaty (ECT).
“Whether an arbitration agreement exists is a jurisdictional fact under the [Foreign Sovereign Immunities Act] that must be independently evaluated by the district court,” the court wrote. “Because the district court gave binding effect to the arbitral tribunal’s determination of this jurisdictional fact, we vacate the judgment.”
Core of the Dispute: Did Russia Consent to Arbitrate?
The case centers on whether Russia is bound by the arbitration clause in the ECT — a treaty it signed but never ratified. The former Yukos shareholders argue Russia provisionally applied the ECT, including its arbitration clause, enabling the tribunal in The Hague to issue the awards after a decade-long proceeding.
Russia counters that such provisional application is inconsistent with its domestic laws, meaning no valid arbitration agreement ever existed.
The D.C. Circuit remanded the case with instructions for the district court to independently assess whether the ECT’s provisional application aligns with Russian law, a key issue that determines the applicability of the FSIA’s arbitration exception.
