(Photo by James Russell)

Three days after word arrived that Russia’s handling of OAO Yukos Oil Company would result in the largest arbitration award in history by a factor of 20, the European Court of Human Rights on Thursday announced a judgment thought to be its largest by a factor of over 100.

A chamber of the human rights court in Strasbourg announced an award of $1.86 billion ($2.5 billion) against Russia. Adopted June 24, the ECHR award benefits all former Yukos owners, including some 55,000 minority shareholders. Russia may effectively appeal the damages award to a Grand Chamber of the court, which, according to The Financial Times, it is planning to do.

News of the ECHR judgment in Yukos v. Russia comes on the heels of Monday’s announcement of a $50 billion arbitration award in Yukos Majority Shareholders v. Russia by a tribunal in The Hague, which concluded that Russia bankrupted the country’s largest oil producer to plunder the company’s assets. Adopted on July 18, the arbitration award mainly benefits the five men who last controlled Yukos. (For The American Lawyer’s in-depth coverage and commentary on the Yukos affair, click here.)

The human rights ruling announced Thursday was delivered by a vote of 5-2, with the judges from Greece, Luxembourg, Croatia, Switzerland and Norway supporting the award over the dissent of Russian and Azerbaijani judges. The ECHR’s previous damages record—for 16 million euros—is believed to be held by the 1994 case of Stran Greek Refineries v. Greece. The Strasbourg court is best known for its wide-ranging protection of individual civil liberties, with damages rarely running beyond five or six figures.

Yukos has argued that Russia drove its largest taxpayer into bankruptcy through a series of punitive assessments and fines for back taxes in 2004. To the Yukos camp, this was an expropriation that violated Russia’s promises under investment protection treaties—as well as the right to the peaceful enjoyment of property guaranteed by Article 1 of Protocol 1 of the European Convention on Human Rights.

Ruling on the merits of Yukos’ claim in September 2011, the ECHR stopped short of finding expropriation. However, Russia’s hasty tax prosecution was deemed to offend due process under Article 6 of the European Convention. Invoking the convention’s right to property, the court faulted Russia for imposing retroactive tax assessments for 2000-01, and imposing disproportionate penalties for 2002-03.

Yukos deserves compensation for 1.3 billion euros in improper assessments for 2000-01, the court announced on Thursday, and 567 million euros in excessive fines for 2002-03. The court rejected Yukos’ larger claim of 38 billion euros ($51 billion) because it could see no causal link between the violations found and the company’s demise.

Enforcement of the final judgment will fall to the Council of Ministers of the Council of Europe, composed of representatives from all 47 member nations. The ECHR ordered Russia to work with the council to produce a plan, within six months of the final judgment, to distribute the award to Yukos’ former shareholders.

The ECHR has a record of enforcement that is the envy of other international courts, but it is largely reliant on political peer pressure. The only nation to be suspended from the Council of Europe was Greece from 1970 to 1974, during a period of military rule.