30 août 2013

ECtHR re-establishes Khodorkovskiy’s wealth, 11082/06


Mikhail Khodorkovskiy, former Yukos head and current prisoner, achieved a huge victory in Strasbourg. The biggest Russian oil company was convicted in tax and business fraud.

It was liquidated leaving $ 9.2 billion of unsatisfied liabilities (§ 18). Together with Platon Lebeder, former Yukos director, he was ordered to pay the State all remaining tax liabilities of Yukos (§ 227), since they were de facto organisers and beneficiaries of the tax evation scheme (§ 319). The Russian Courts held that there is a subsidiary liability of managers if the corporate taxpayer had no assets (§ 875). Russians considered that owners used the limited liability company as a façade for fraudulent action, and therefore piercing of the corporate veil was an appropriate solution for defending the rights of its creditors, including the State (§ 877).

However the Strasbourg judges considered that, as a matter of principle, the Russian law did not provide for the recovery of unpaid company taxes from the managers guilty of tax evasion (§ 875). Such a practice was not “adequately accessible and sufficiently precise” (§ 876) or “clear” (§ 877).

If unpaid taxes are claimed as “damages”, the ECtHR analyses national expressis verbis law, Article 1068 of the Russian Civil Code must apply, which provides that damage caused by an employee of the company while performing his official duty must be compensated by that company (§ 879).

Article 56 of the Russian Civil Code previews personal liability of owners and managers in cases when they caused insolvency of their company. The Strasbourg judges replied that this Article was not applied in the Khodorkovskiy case, since (§ 880):
1)      The claim of the tax authorities was granted while the corporate taxpayer still existed.
2)    Article 56 provides subsidiary liability of owners and managers, while Khodorkovskiy and Lebedev were ordered to recover the amounts on the solidary basis with the company.
3)      Article 56 was not mentioned in Russian judgments.

In addition, in internal case I and K, 11/01/2001, the Russian Supreme Court interpreted the law as not allowing for the shifting of liability for unpaid company taxes from the company to its executives (§§ 449 & 882).