Originally from the Journal of Enforcement of Arbitration Awards

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The decision by the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) in Hulley Enterprises Ltd. v. Russian Federation represents the latest chapter in the decades-long dispute between the former controlling shareholders of Yukos Oil Company and the Russian Federation. The case arises out of allegations that, in 2003 and 2004, the Russian Federation expropriated valuable assets of Yukos, Russia’s largest oil company. Yukos’s shareholders—Hulley Enterprises Ltd., Yukos Universal Ltd., and Veteran Petroleum Ltd.—initiated three separate arbitrations seated in The Netherlands under the Energy Charter Treaty (“ECT” or “Treaty”) to challenge the alleged expropriations. The arbitrations resulted in three separate, but substantially similar awards issued by same tribunals, collectively amounting to $50 billion, the largest publicly known award in history. After the Dutch courts rejected Russia’s bid to set aside the awards, the shareholders sued for enforcement in U.S. federal court.2 

In a significant decision issued on 5 August 2025, the D.C. Circuit held that U.S. courts will not defer to an arbitral tribunal’s factual findings as to the existence of an arbitration agreement when determining whether a foreign sovereign may invoke sovereign immunity to avoid enforcement of an arbitral award rendered against it under the United States Foreign Sovereign Immunities Act (“FSIA”).3 Instead, courts are to independently assess the existence of an arbitration agreement that forms the basis for an arbitral tribunal’s authority to render an award. The court further held that issue preclusion may apply to a foreign court’s determination of jurisdictional facts under the FSIA, but remanded the matter to the district court to determine if the doctrine applies to the facts at hand.