Later this year, three arbitrators will begin to consider the largest compensation claim ever launched outside the normal court process. At face value, it is worth $32 billion. According to the claimants, though, not even that eye-watering sum would be enough to cover their losses. The figure they may eventually be seeking could be more than $100 billion.

At the heart of this fascinating tale is Russia’s attempt to open its oil industry to Western investment in the 1990s, followed a decade later by President Putin’s decision to bring his country’s energy resources back under state control. The claimants are investors who lost money in Yukos, the now-bankrupt oil company formerly run by Mikhail Khodorkovsky. Convicted of fraud in what was widely seen as a politically motivated prosecution, Mr. Khodorkovsky received an eight-year prison sentence in 2005 and was sent to Siberia. He would have been eligible for parole by now if the Russian authorities had not brought further charges of embezzlement against him last year. And the defendant? No less than Russia itself. Yukos shareholders accuse the Russian Federation of unlawfully expropriating their investments in what had been Russia’s largest oil company.

This, they say, was done by issuing the company with a series of impossibly huge tax demands, forcing the sale of its production subsidiaries to state-owned companies at a fraction of their value. The shareholders have little prospect of getting any compensation through the Russian courts. But they have another option.

After the Cold War, the European Union led moves toward European cooperation on energy. Western Europe wanted reliable sources of oil and gas. Net exporters, like the former Soviet Union, needed foreign investment to modernize their state-run industries while foreign funders sought reassurance that they would be treated as favorably as local investors. The eventual result was an international agreement known as the Energy Charter Treaty. Signed in 1994, it came into force in 1998 after 30 states had ratified it. The treaty has now been signed by 51 states plus the European Union. It provides specifically that investments must not be nationalized or expropriated without compensation.

So does Russia have to submit the Yukos dispute to binding international arbitration? Look at the wording of the treaty, the Russians have said: Arbitration is compulsory only for states that are contracting parties; a contracting party is defined as a state that has consented to be bound by the treaty and for which the treaty is in force; and provisional application applies, by definition, only to countries where the treaty is not yet in force.

Not so, say the Yukos investors. If you look at the text of Article 45 and the treaty as a whole, it is clear from the context that “contracting party” was meant to include countries that have agreed to apply the treaty provisionally. Provisional application does not violate the Russian constitution, they insist, and Russia should not be permitted to escape its obligations now.

Even though the Russians argue that they are not bound by the treaty’s arbitration provisions, they seem perfectly happy for this question to be decided under the dispute resolution process provided by the treaty itself. The three arbitrators will therefore deal with this question first at a two-week hearing in the Hague, planned for November.

If they find they do have jurisdiction, they will subsequently consider the merits of the case — deciding whether the collapse of Yukos resulted from appropriation without compensation or merely the legitimate application of Russia’s tax laws.

Each of the parties is allowed to appoint one of the three arbitrators. Russia, represented by American-founded law firm Cleary Gottlieb, has appointed the American judge Stephen Schwebel, a former president of the International Court of Justice. The claimants, represented by American-founded firm Shearman & Sterling, originally chose Daniel Price, who subsequently took a post with President Bush’s administration, delaying the hearing by nearly 18 months; they then appointed Charles Poncet, a Swiss lawyer with 20 years’ experience of international arbitration. The president — appointed by the Permanent Court of Arbitration at the Hague — is Yves Fortier, a distinguished Canadian lawyer and former diplomat.

The formal claimants are the majority shareholders in Yukos Oil — two subsidiaries of a company originally called Group Menatep Ltd. and now known as GML — along with a pension fund that could benefit some 40,000 former Yukos employees. They are all registered in countries that have ratified the Energy Charter Treaty, an advantage they have over American investors whose government decided not to sign it. Another weapon that the Yukos investors are exploiting is publicity. They believe that Russia — despite its dominant European position as an energy producer — does not want potential investors to be reminded of its obligations under the Energy Charter Treaty.