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22 June 2011

Court overturns ICAC ruling

On June 21, 2011 the Moscow City Arbitration Court issued a ruling accepting NLMK’s application to overturn the International Commercial Arbitration Court (ICAC) award from March 31, 2011 which had partially satisfied the claim of Nikolay Maximov and awarded the latter RUR9.5 billion in compensation. The Moscow City Arbitration Court supported NLMK’s position, dismissing Maximov’s motions aimed at delaying the proceedings and seeking to leave the claim undecided. As a result of the order, the RUR9.5 billion ICAC award has been annulled.

Among its claims to the ICAC, NLMK stated that the ICAC decision was due to the arbitrators’ biased approach to the case. Facts of the ICAC arbitrators’ connections with Maximov’s experts were presented to the tribunal, but were ignored by the ICAC in violation of its own procedures. The ICAC panel was presented with evidence that in 2007 Maximov had misled NLMK by making representations and warranties on Maxi-Group’s state of business in the Share Purchase Agreement which were in fact incorrect. However, the ICAC refused to give a proper legal weight to these multiple violations on the part of Maximov, dismissing these issues as “irrelevant”. Moreover, in breach of its own regulations, the ICAC, having dismissed the motion to disqualify Judges Belykh, Vyatkin and Zykin, stripped NLMK of the opportunity to appeal before the CCI (Chamber of Commerce and Industry of the Russian Federation) President within thirty days, by publishing the motion dismissal at the same time as the award on the main proceedings.

NLMK shall continue its court legal actions related to the ICAC ruling, including seeking a dismissal of proceedings initiated by Maximov in foreign jurisdictions on the basis of the unlawful ICAC ruling.

The text of the Moscow City Arbitration Court decision will become available within a few days.