Judgment of the Stockholm District Court, 11 September 2014, Case No. T 15045-09
Summary:The Russian Federation requested the District Court to declare that the tribunal lacked jurisdiction. The Federation alleged, among many other grounds, that the claimants were not investors and even if they were, that the investment was not made within the territory of the Russian Federation, thereby they were not protected by the relevant Treaty and excluded from the tribunal’s jurisdiction. The claimants had commenced arbitration alleging expropriation from the Russian Federation. The claimants had acquired American Depository Receipts which corresponded to a stake in Yukos Oil Company (Yukos). Yukos’ taxable income increased substantially and Yukos was unable to pay additional taxes resulting in Yukos’ stake in its subsidiary being confiscated and sold in public auction. Yukos was eventually declared bankrupt. The Stockholm District Court explained that when determining jurisdiction one and the same circumstances may be relevant for both the court’s jurisdiction and the merits (double relevance). According to the so called doctrine of assertion, when determining its jurisdiction, a tribunal should not decide on the alleged existence of those circumstances, which the requesting party asserts are covered by a legal relationship within the scope of the arbitration clause. Instead, the arbitral tribunal shall assume that these circumstances exist, provided that a binding arbitration clause is at hand. Only exceptionally, the tribunal shall not assume such circumstances when it is obvious that the asserted claims are unfounded. Here, the Court found that it was clear that there was an arbitration agreement and that the asserted claims(existence of investment and investment within the territory of the Federation), were circumstances relevant for both, jurisdiction and merits, and it was not obvious that these assertions were unfounded. The Court emphasized that such circumstances shall, when an arbitration agreement is at hand, be fully reviewed only by the arbitral tribunal, and so the District Court shall accept the circumstances referenced by the claimants. As a result, the arbitral tribunal did not lack jurisdiction.