Valoración de embriones criopreservados

This analysis and assessment of the arguments has shown why the claims against rights protection are weak. It also identified the benefits and reasons why the rights of corporations should be protected. However, perhaps the best way to demonstrate why corporations need their rights protected is to use an illustrative case that highlights the potential issues and problems that can arise for corporations, which is what the next section of this chapter accomplishes.

2.2.2.3 The Case of Yukos Oil

The case of Yukos Oil Company (hereafter, ‘Yukos Oil’),⁷³ is an significant case which needs discussion when one wishes to study the protection of a corporation’s rights. This is because the facts of the case and its outcome illustrate what can happen to a company when rights are not adequately protected at a national level.⁷⁴ In addition to this, it illustrates why corporations do in fact require some form of rights protection.

Before discussing the demonstrative case it is pertinent to make a few observations and to establish some of the background facts surrounding the

73 Yukos (n 20).

74 There are other cases that illustrate the importance of a corporation having its rights

protected. For example, Forminster Enterprises v Czech Republic [2008] ECHR 1041 involved the seizure/freezing of a parent companies shares in the subsidiary after an alleged fraud by the directors of the subsidiary. This was held to be an unlawful violation of their right to peaceful enjoyment of possessions, under Article 1 Protocol 1 of the ECHR. In the case of Fortum Corporation v Finland [2003] ECHR 367 it was held that there was a violation of Article 6 ECHR when documents in an abuse of dominant position case were not disclosed to the company under investigation, but were disclosed to the court. Other examples include MGN v UK [2011]

ECHR 66. However, Yukos Oil perhaps illustrates these problems most clearly given the extremes of the case.

case. This case is an extreme example of the problems that a corporation can potentially face, but it is often in these type of situations that we can identify why something is required; in this case, the protection of a corporation’s rights and corporations having the ability to go to a truly independent body. It should be noted that the case of Yukos Oil did not involve competition law nor did it have anything to do with the Commission or its procedures. This case involved Russia and its national courts. Russia is not a member of the EU; nonetheless, it is a signatory State of the ECHR, which means that the Convention must be applied to those in its jurisdiction. Because of this the ECtHR has the power to adjudicate cases regarding alleged infringements of the Convention. Having said all of the above, this does not detract from the significance of this case with regards to the Commission’s proceedings and the need for a corporation to have rights protection. This is something that is illustrated and discussed after the facts of Yukos Oil have been laid out.⁷⁵

Yukos Oil was originally a State-owned petroleum company until it was privatised in 1993. Once privatised the company traded for 13 years until it was declared bankrupt and ceased trading in August 2006. During this time, Michail Khodorkovsky operated in the oil industry and worked his way up to become the CEO of Yukos Oil. Yukos Oil performed incredibly well under Khodorkovsky’s leadership and this led to the company ‘accumulating tremendous wealth and influence’.⁷⁶ However, Khodorkovsky’s political stance clashed with the views of the then Prime Minister, Vladimir Putin. This meant that by the end of 2003 the Russian Federation had begun questioning whether Yukos Oil had diligently paid its due taxes for the year of 2000. On the 8 December 2003, the Russian Tax Ministry announced a re-audit of Yukos Oil’s accounts. This audit led to the Russian Tax Ministry concluding that Yukos Oil owed 2.9 billion euros. What was interesting about this re-audit was that it only took the Tax Ministry three weeks to conduct and conclude that the aforementioned tax was owed. Yukos

75 Another good discussion of this case and the outcome of it can be found in Muijsenbegh and Rezai (n 11). This case discussion is based upon the case and their research into the judgment.

76 ibid 60.

Oil was summoned to pay this amount within two days from the 14 April 2004.⁷⁷ The Russian Federation opted not to wait two days and the Tax Ministry requested a Moscow Court to order Yukos Oil to pay the amount and issue a freezing order for Yukos Oil’s assets. This order was made on the same day, leaving Yukos Oil no time to release any assets. The hearing was scheduled for 21 May 2004, and Yukos Oil requested an adjournment but it was denied. A few days before the hearing, the Tax Ministry supplied Yukos Oil with an unnumbered document that comprised of over 71,000 pages.⁷⁸ However, the Tax Ministry supplied a well-ordered and numbered document to the Court, which Yukos Oil did not see until arriving in court. Yukos Oil was, nonetheless, given a thirty-minute period to consider the document on the lunch break.

Yukos Oil was required by the Court on the 26 May 2004 to settle a large part of the claim. Yukos Oil attempted to appeal the Court’s decision, but this failed and thus the Tax Ministry sought enforcement measures. This led to Yukos Oil’s prime asset being auctioned off for a very small percentage of its actual worth, which eventually ended up in the hands of the state-owned Rosneft Oil Company. The Tax Ministry then pursued Yukos Oil for payment of back taxes from 2001-2004 totaling 20.1 billion euros. By this point, Yukos Oil was bankrupt and it was finally liquidated on the 12 November 2007. The counsel for Yukos Oil had lodged an application with the ECtHR under Article 34 ECHR, claiming breaches of various Convention rights on the 23 April 2004.

The Russian Federation raised an objection to the Court’s jurisdiction, claiming that the Court had lost jurisdiction to hear the case as Yukos Oil had ceased to exist by the time the case was to be heard. On 20 September 2011 the Court gave its judgment on the merits after previous dealing with issues of standing.⁷⁹ The Court had no difficulty in holding that human rights provisions may be applicable to corporations. In actual fact, their applicability to corporations was never even a topic of discussion in this case.

77 ibid 61.

78 Yukos (n 20).

79 ibid.

Addressing the Russian Federation’s claim that the victim no longer existed and thus the Court had lost jurisdiction, the Court acknowledged the need for a victim to initiate proceedings, but refused to follow a rigid interpretation of this throughout. Again what we see here is the Court treating the Convention as a living instrument and making the Convention practical and effective, and not theoretical and illusionary.⁸⁰ If the Court did not do this, it would allow the State to force undertakings to cease trading so as to prevent them from having their rights adequately protected.

The Court held that the Russian Federation had breached its duty to provide Yukos Oil with a fair trial, owing to the insufficient time it provided to Yukos Oil to adequately prepare its defence, and the unjustifiable restrictions placed on Yukos Oil’s ability to appeal. The Court also held that the interference with Yukos Oil’s property was unlawful due to the unforeseen change in the interpretation of a statutory time bar that laid down the period during which Yukos Oil could have been held liable. However, the Court rejected the other rights violations claimed by Yukos Oil.

This case highlights the importance of the need to protect a corporation’s rights. From providing the facts of this case, it creates a powerful argument for the need for corporations to have their rights protected. When one hears of what happened in this case, it is difficult not to empathise with Yukos Oil and see what appears to be the excessively unfair treatment of a corporation.

Indeed, one of the interesting features of this case was the ‘potent and compelling demonstration of the importance of the mere availability of the [ECtHR], as an international independent judicial venue, for a brutalized corporation which simply had nowhere else to go.’⁸¹ Undeniably, many of the theoretical arguments regarding the potential concerns in the previous part of this chapter and why a corporation needs it rights protected, appear to play out

80 Something which has been stated before by the Court before see Airey v Ireland (1979) 2 EHRR 305.

81 Muijsenbegh and Rezai (n 11) 62.

and occur in this case. What we can see is that by Yukos Oil having their rights protected they had a place to turn when they suffered an infringement of their rights.

Some may wish to question why it matters that Yukos Oil has its rights protected. Indeed, they may ask why it is important as it is only a corporation and what happens only affects shareholders. However, this is a short-sighted view that cannot be supported when one considers the possible implications of what happened to Yukos Oil. By Yukos Oil being forcefully bankrupted, there were consequences and ‘knock-on effects’ that were felt far wider than just by the shareholders. To begin with, Yukos Oil employees lost their jobs and, thus, their livelihoods. This would have meant that they had to find another job, which would have probably been difficult given that other workers from the same company were also likely to be looking for similar jobs – and those workers would likely have comparable skills to each other. Furthermore, one should not forget the implications losing a job would have had on that individual and the loved ones they supported. Here we can consider more than just the financial implications but also the physical and emotional consequences.

In addition to this, there will be effects of the bankruptcy to the economy. Some assets will have been sold on and, thus, will have been reutilised but many will not have. These will sit idle and therefore be unutilised which is a deadweight loss to the economy and society. Customers lose out too, as the industry loses competitive pressure as a corporation that is preforming economically well is removed from the market. This increases the risks of collusion within the market, as there are fewer competitors, which can impact on the prices consumers end up having to pay. This is particularly true where the only remaining oil firms left within the market are state owned. Also, we must not forget the impact on Yukos Oil’s suppliers here; there will be contracts that have been lost, having an impact on other businesses. Indeed, there will be some contracts, which were at the stage of partial completion where significant time and money had been invested which may have been irrecoverable if they

cannot transfer the purchase to another in time.

Finally, one should not forget or downplay the harm this caused shareholders.

Put simply, shareholders will have lost the share capital that they invested in Yukos Oil. This may not seem a great deal but this has a variety of effects on the market and shareholders. Let us begin by considering the implications of this on the market. When businesses go bankrupt, this can lead to market uncertainty, particularly when they are a key part of the national infrastructure. For example, if we consider the ramifications of the bankruptcy of Lehman Brothers in the US and what then happened within the market to investor confidence.⁸² This uncertainty could also lead to a lack of investment by shareholders in companies and an unwillingness by banks to lend money to companies. This then has knock-on effects to the economy again. For the shareholder that has a diversified and wide-ranging portfolio, this loss may not be too great; however, for a shareholder who has a more limited portfolio or only invests in one company, this could have a massive impact on their savings and investments and, in turn, their future life.

Yet, it is important to reiterate that this case is a very extreme example where a corporation appears to have been systematically targeted by the government and their departmental bodies. But, nonetheless, minor breaches of rights can still have drastic consequences for corporations, the community and the people involved and, as such, this case only serves to strengthen the claims that corporations need to have their rights adequately protected. The next section of the chapter shall move on to consider why the thesis focuses its attention on the ECHR and which key ECHR and procedural rights will be discussed in the remainder of the thesis.

82 It is noted though, that this example is regarding financial markets that have their own unique requirements for certainty. Yet some of the certainty requirements will be the same for

investors and companies within the energy market.