Court: RUSAL dispute can be heard in UK

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(Agencies)
Updated: 2009-08-01 01:00

LONDON: Britain's court of appeal ruled on Friday that Russian entrepreneur Michael Cherney may sue Russian billionaire Oleg Deripaska in Britain over a disputed stake in Russian aluminium company UC RUSAL, Cherney said.

"I am pleased that after several years of Mr Deripaska refusing to accept that England was the appropriate place for our dispute to be resolved, the Court of Appeal in England has very strongly endorsed last year's ruling that England is indeed the right venue," Cherney said in a statement.

Deripaska's lawyers wanted the case heard in Russia, arguing that it was the natural jurisdiction, but lawyers for Cherney have said their client's life and freedom would be at risk in Russia and any trial there would be unfair.

"We do not believe it is the place of the English courts to be ruling on matters that, by their own admission, should fall under Russian law and jurisdiction, nor making pejorative claims about other countries' legal systems," a spokesman for Deripaska said in a statement.

Cherney has accused Deripaska, a former business partner, of not honouring an agreement struck in London in 2001 that he says entitled him to a 13.2 percent stake in UC RUSAL, an agreement that would be governed by English law.

Deripaska has said that while an agreement was made in London in 2001, it was for a one-off payment of $250 million to Cherney, which would end his obligations to him. He denies that any discussions about English law took place.

Setback for deripaska

The appeal court's decision is a setback for Deripaska, whose companies have suffered in the economic crisis.

The dispute with Cherney focuses on a stake Cherney believes he is entitled to in Deripaska's RUSAL, the world's largest aluminium producer. Rusal is valued at $36 billion but has debts totalling around $17 billion.

Deripaska's holding, Basic Element, has claimed progress in restructuring talks with creditors this week.

But lenders to his business empire, especially the 70-odd banks nearing the home stretch in tough talks over UC RUSAL's $7.4 billion in foreign debt, would be unlikely to welcome the threat of an additional call on Deripaska's straitened finances.

Friday's decision can, in theory, be further appealed to Britain's highest court, a soon-to-be-inaugurated Supreme Court. Deripaska's spokesman was unable to comment on plans to contest the ruling in the higher court.

London courts ruled on another prominent Russian dispute this month, issuing a fresh injunction in tycoon Shalva Chigirinsky's dispute over control of a stake in oil company Sibir Energy.