News

11 April 2011 NLMK Group

NLMK challenges ICAC arbitration award

NLMK has filed a lawsuit with the Moscow Arbitration Court seeking an order to overturn the March 31, 2011 ICAC decision partially satisfying the claim of Mr Maximov.

NLMK believes that the ICAC decision was based on a biased approach by the arbitration panel to the case. For instance, the court was presented with evidence of fraud committed by Mr Maximov against NLMK in 2007 when he included warranties and representations into the Share Purchase Agreement misrepresenting the actual financial condition of Maxi Group. The ICAC panel, however, refused to acknowledge the legal validity of Annexes to the Agreement containing these representations and warranties, dismissing these issues as unimportant.

Moreover, NLMK became aware of facts concealed by ICAC arbitrators confirming their bias. The Rules on Impartiality and Independence of Arbitrators approved by Order of the President of the Chamber of Commerce and Industry (CCI) of the Russian Federation from 27.08.2010 require that the arbitrator disclose all circumstances of his working relations over a three year period with the organization also employing the experts and consultants for one of the parties in the proceedings. And even though proceedings on Mr Maximov’s case had been launched earlier, on 20.12.2009, the arbitrators were still required to comply with the Order of the Chamber President.
However, NLMK is now aware that two of the three judges responsible for issuing the ICAC award work under experts engaged by Mr Maximov.

Arbitrator V. Belykh works at the Ural State Law Academy (USLA), under Prof. V. Bublick, the Academy President. A legal opinion signed by the USLA President was included into Mr Maximov’s evidence submitted to ICAC. Mr Maximov also submitted evidence signed by S. Alexeev and S. Stepanov, both professors at USLA. Arbitrator V. Belykh failed to disclose this circumstance, breaching the Order of the CCI President.

Mr I. Zykin, also on the ICAC panel, accepted evidence from Mr Maximov signed by his superior J.Shulzhenko, Deputy Director at the Institute of State and Law, Russian Academy of Sciences. Arbitrator I. Zykin also failed to disclose these circumstances.

In light of this information, NLMK has addressed the President of the Chamber of Commerce and Industry of the Russian Federation, with a motion to disqualify the current ICAC arbitration panel as there is clear evidence that the ICAC ruling is compromised by the panel’s bias, partiality and prejudice.

NLMK is confident that the CCI President and the RF Arbitration Court will restore the reputation of independent arbitrators and the Russian court system overall.