The decision, which followed nearly a decade of hearings, comes at a time of strained relations between Moscow and the Netherlands over the downing of a Malaysian airliner carrying 298 passengers and crew, including 194 Dutch citizens.
"Russian courts bent to the will of Russian executive authorities to bankrupt Yukos, assign its assets to a state-controlled company, and incarcerate a man who gave signs of becoming a political competitor," the court said.
A panel of judges, which has been reviewing the case since 2005, said "these have been mammoth arbitrations" with total claims having reached $114 billion.
The panel concluded that "the primary objective of the Russian Federation was not to collect taxes but rather to bankrupt Yukos and appropriate its valuable assets".
Moscow was ordered to pay damages to compensate claimants, but the tribunal said there was also some fault on behalf of claimants, which had led to a reduction in the size of the award.
It said that "officials of the Russian Federation in close association with President Putin acted in implementation of the policy of the Russian Federation". (Reporting by Anthony Deutsch and Thomas Escritt; Editing by Kevin Liffey)