The ruling is one of the biggest ever against a sovereign state and threatens to inflame tensions between Russia and Europe still further, coming at a time when the Ukraine crisis and the downing of Malaysian Airlines flight MH17 have already driven relations to their lowest point since the end of the Cold War.

Yukos was the flagship company of Mikhail Khodorkovsky, the oligarch whose fall from grace in 2003 was the defining episode in Putin’s consolidation of power.

Khodorkovsky was convicted of large-scale tax evasion and jailed for nine years, while Yukos was broken up and sold for a fraction of its true value to state-controlled OAO Rosneft. Rosneft is now the largest listed oil producer in the world, accounting for over 4% of world crude supply.

A crucial part of a Russian economy already showing signs of strain, Rosneft has been banned from U.S. capital markets, limiting its ability to deliver new projects.

Khodorkovsky distanced himself from the Yukos business after his conviction, but a handful of associates continued to press their suit through three holding companies at the Permanent Court of Arbitration in the Dutch capital of the Hague. A parallel suit on behalf of all Yukos shareholders is also being heard by the European Court of Human Rights in Strasbourg, France, and is expected to rule Thursday.

The PCA has jurisdiction over disputes arising under the 1994 Energy Charter, an international treaty on investments in the energy sector which Russia originally signed but never ratified. In 2009, it withdrew entirely from the process.

As such, the chances of Russia recognising the court’s ruling are close to zero, meaning that the shareholders will have to look to the courts again to enforce their claims. Russia’s Foreign Minister Sergei Lavrov said the country would appeal the decision.

Leonid Nevzlin, one of the ex-shareholders behind the suit, told the Ekho Moskvy radio station that they would “search for and freeze Russian assets around the world” if need be.

In a statement on its website, Rosneft said it wasn’t a party to the ruling, which is directed at the Russian state. “Rosneft doesn’t consider that there can be any claims against the company in relation to the decisions published, or that the rulings could negatively affect the company’s commercial activity.”

The timing of the judgment, coming so soon after the MH17 disaster, is sure to provoke accusations of selective, politicised justice from Russia–exactly the kind of justice that Khodorkovsky’s associates were initially complaining against.

There are already indications that Russia may use its legal system to exert its own pressure on the West by hitting western companies there, McDonalds Corp (MCD) being one of the first to be hit.

Khodorkovsky and his partners in what became known as Group Menatep rose to power through dubious privatizations in the 1990s and then sought to cement their influence by sponsoring a wide range of Russian lawmakers.

By winning what amounted to a trial of strength between his ruling clan of former security service men and the class of Yeltsin-era oligarchs, Putin broke the back of organised political opposition in Russia and his power has never seriously been threatened since.

“It’s wonderful that the company’s shareholders will get the chance to be compensated for their losses, but sad that this compensation will come from the state budget, and not from the pockets of the mafiosi close to the government,” Khodorkovsky said in a statement on his website.

Khodorkovsky now lives in Switzerland .