Is the Russian Vodka War Finally Over?

  • The Stolichnaya brand is no longer under arrest.
  • Russia no longer has to pay former Yukos shareholders $50 billion.
  • Russia can start selling Stolichnaya brand.

A district court of The Hague, Netherlands, lifted the seizure of the Stolichnaya and Moskovskaya vodka brands, imposed earlier as part of the proceedings between the Russian Federation and former Yukos shareholders. This is evidenced by the court’s decision published on Tuesday.

Vodka war refers to heated discussions within the European Union about the definition of which hard liquors may or may not be branded as “vodka.”

The court battle for the brand has been ongoing for 20 years, and the final decision has been made. According to the Supreme Court of Netherlands, billionaire Yuri Shefler will have to repay all his profits from vodka sales for the period of over 20 years.

It should be noted that in January, the court ruled the vodka brand Stolichnaya belongs to Russia. Furthermore, the new court document states “In accordance with the judge’s decision, the arrest is lifted from the specified trademarks,” the court document says.

Earlier, former Yukos shareholders managed to seize a number of Russian-owned trademarks for alcoholic beverages, including Stolichnaya and Moskovskaya vodka, on the territory of the Benelux countries.

As stated by representatives of former shareholders of Yukos, brands are expected to sell at public auction, and the proceeds credited within collection with Russia over $50 billion on judicial decision rendered by the court of appeal of The Hague in February. Soyuzplodoimport, the owner of these trademarks, challenged this decision.

Moreover, an  international arbitration court mediated by the Permanent Court of Arbitration in The Hague ordered Russia to pay more than $50 billion in 2014 to Yukos Universal, Hulley Enterprises, and Veteran Petroleum companies linked to former Yukos shareholders. The judges found that Russia’s actions against Yukos violated the Energy Charter Treaty, which the country signed but did not ratify.

Yukos shareholders v. Russia are several international court and arbitral cases seeking compensation from the government of Russia to the former shareholders of Yukos based on the claim that Russian courts were not acting in good faith in launching tax evasion criminal proceedings against Yukos, which led to the bankruptcy of the company.

The Russian side appealed to the fact that certain provisions of the document could not be applied to the Russian Federation without completing the ratification procedure. However, this verdict was appealed and the district court of The Hague agreed with Russia. Thus, making previous decisions invalid.

Therefore, Russia no longer over $50 billion judgment that was awarded to the other parties. Prior to the appeal, Yukos representatives filed arrests on the brands. Hence, it would have meant that the brands could have been sold at the auction to recoup the $50 billion awarded.

Nevertheless, the document published on October 27 means that the brands are no longer under seizure. The filing of the seizure removal was filed  in May at the Supreme Court of the Netherlands.

Overall, it is clear Russia won the case. Going forward, Russia can sell vodka under such brands. It also means Yukos has lost all the rights and any chance of the funds recoup.

Additionally, it is a landmark case for Russia to bring the Russian brand that was created in 1934 finally back home. This case was also very important to the Russian President Vladimir Putin.

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Christina Kitova

I spent most of my professional life in finance, insurance risk management litigation.

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