In a victory for Moscow, a Dutch court on Wednesday overturned an order that Russia pay $50 billion to shareholders in defunct oil company Yukos, saying that the Hague-based Permanent Court of Arbitration had no jurisdiction.

Former Yukos shareholders said they would appeal the surprise decision, which could impact earlier rulings in Belgium and France that four former shareholders were entitled to seize Russian state assets to compensate them for the loss of the oil giant.

Once controlled by Mikhail Khodorkovsky, then one of Russia's richest men, Yukos was bankrupted after Khodorkovsky fell out with Russian leader Vladimir Putin and the government began demanding payment of huge sums in back taxes. State oil company Rosneft got most of its assets.

In July 2014, the Permanent Court of Arbitration (PCA) in The Hague ruled that the four plaintiffs - not including Khodorkovsky - were entitled to compensation for the loss of the company, entitling them to seize Russian state assets. But in Wednesday’s ruling, the district court in The Hague said Russia had never ratified the treaty under which the PCA had claimed jursidiction in the affair. “The court quashed the judgments by the international arbitrators on the ground that they had no power to intervene in these matters as arbitrators,” the ruling said.

A key moment in Putin's consolidation of power in Russia, the 2003 Yukos affair led to Khodorkovsky being imprisoned on fraud and tax evasion charges just as he had appeared set to emerge as a political rival to Putin. He was released suddenly in December 2013 and now lives in exile. "We will appeal this surprise decision by The Hague Court and have full faith that the rule of law and justice will ultimately prevail," said Tim Osborne, director of GML, the company representing the four shareholders.

Reuters