Arbitration Unbound: How the Yukos Oil Decision Yields Uncertainty for InternationalInvestment Arbitration

Lena Serhan reviews a large dispute under the Energy Charter Treaty between an oil company and the Russian Federation, which resulted in the largest arbitration in history with $50 billion awarded to the oil company. However, Russia appealed the award to a Dutch district court, and in a surprising opinion, the court quashed the entire arbitration award, claiming that the tribunal lacked jurisdiction to decide the case despite the arbitration provision in the ECT. Serhan argues that the Dutch court’s opinion leads to poor policy in international law, will deter the effectiveness of international arbitration in multilateral treaties, and will chill future investments in energy—regardless of whether the Dutch court was influenced by Russian pressures—because investors cannot count on the protection that the arbitration provision usually provides.