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. Last Updated: 07/27/2016

State Snubs Yukos Summons

bloombergThe summons follows papers served to Russian officials over Yukos.
The Foreign Ministry on Friday said it was not obliged to respond to a summons served through diplomatic channels earlier this month in an ongoing lawsuit that was filed by U.S.-based shareholders of Yukos.

The ministry said mutual legal assistance in civil and commercial matters between Russia and the United States had been frozen since 2003.

Diplomatic channels "simply cannot be used for the transmission of any judicial documents," it said in a statement posted on its web site Friday.

The ministry's comments come after the Russian government was served a summons on March 14 in a lawsuit brought by 12 holders of Yukos' American Depositary Receipts. The move is part of a suit filed in the United States last fall against the government, a group of senior government officials and four state energy companies.

The suit -- which is being funded by Yukos' parent company, GML, formerly known as Group Menatep -- accuses the government of securities fraud in the de facto renationalization of Yukos. Under U.S. law, foreign governments have 60 days to respond to a summons, which is delivered to the respective foreign ministry by the State Department, giving Russia a May 15 deadline.

The lawsuit states that the 12 plaintiffs, who include former U.S. National Security Adviser Richard Allen, lost a total of $3 million due to the drop in market value of the 115,000 Yukos American Depositary Receipts they had purchased over a three-year period.

According to Thomas Johnson Jr. of the Washington-based law firm Covington & Burling, which is representing the shareholders, the plaintiffs could claim up to $9 million in damages under the U.S. Racketeer Influenced and Corrupt Organizations Act, which contains a civil component that allows plaintiffs to sue for triple damages if the defendants are found guilty of racketeering.

In a statement received by e-mail Friday, Johnson said the Foreign Ministry's rejection of the summons was baseless because it was delivered to the ministry "pursuant to provisions of the U.S. Foreign Sovereign Immunities Act."

"As a matter of American law, Russia has been effectively and legally served," Johnson said in the statement.

If the Russia does not respond to the summons by the May 15 deadline, "the minority shareholders will seek, and will be awarded, a default judgment" in a U.S. court, Johnson said.

The summons follows a series of legal papers served to Russian officials in connection with the lawsuit, which was filed in a U.S. District Court in Washington in October.

The 12 minority shareholders say Industry and Energy Minister Viktor Khristenko and Finance Minister Alexei Kudrin were served while visiting Washington in October and January, respectively. Johnson said that Sergei Bogdanchikov, president of state-owned oil producer Rosneft, was also served while he was attending an energy conference in London last month.

Other defendants include Gazprom chairman and First Deputy Prime Minister Dmitry Medvedev, Rosneft chairman and deputy presidential administration head Igor Sechin, and Gazprom CEO Alexei Miller. Also named in the suit are Rosneft, Rosneftegaz, Gazprom and Gazpromneft.