LONDON (Reuters) - Russian billionaire Oleg Deripaska launched a legal challenge Monday to try to prevent a case over a disputed stake in his indebted aluminium giant RUSAL from being heard in Britain.
Michael Cherney, an Israeli-based Russian entrepreneur, is accusing his former partner Deripaska of failing to honour a business deal struck in 2001 in London, which entitles him to a 13.2 percent stake in RUSAL.
The world’s largest aluminium producer, RUSAL was valued at $36 billion earlier this year and has total debts of $16.8 billion (10.1 billion pounds) and is engaged in arduous restructuring talks with a 70-strong creditors club.
Cherney’s lawyers seek a trial in Britain, arguing their client’s life and freedom would be at risk in Russia and a trial there might not be fair. An English High Court judge ruled in his favour over the location in July 2008.
Deripaska’s lawyers are seeking to overturn the decision at the Court of Appeal, saying Russia is the whole focus of this case and therefore it should not be heard in Britain.
The initial hearing is scheduled to last for 2 days. However, Deripaska’s lawyers asked for the possibility of an extension Monday, which was not ruled out by the judges.
Lawyers for both sides say a decision after this week’s hearing could take weeks. UK courts are due to break for summer on July 31.
Lord Justice Waller, one of three judges hearing the appeal, asked Deripaska’s lawyers whether the location was such an important issue.
“Why not get the thing tried? Why not just get on with it?. Your client has two houses in this country, what is so inconvenient,” Waller said, referring to Deripaska who owns properties in England.
A ruling in favour of Cherney on the actual case could put the brakes on RUSAL’s talks with a 70-strong group of Western creditors negotiating the return of $7.4 billion in debt from RUSAL, Russia’s bellwether debt restructuring case.
Western bankers have said the outcome of the talks will determine their ability to shoulder Russian risk in the coming years and much will depend on the government’s position.
WHAT COULD HAPPEN?
Cherney’s argument is based on an agreement which he says was made at a London hotel in 2001, where the two sides agreed that such agreement was to be governed by English law and the disputes were to be decided in England.
Deripaska agreed he met Cherney in London in 2001 but he also said the only agreement reached was for the payment of $250 million which was paid to Cherney. Deripaska denies any agreement on further sums to be paid to Cherney and where the jurisdiction should be in case of disputes.
Cherney is seeking the cash equivalent of a 13.2 percent stake in RUSAL, Deripaska’s lawyers said.
Deripaska is married to the daughter of a senior official in late President Boris Yeltsin’s Kremlin, and was one of the few tycoons who managed to expand his fortunes when Yeltsin handed power to Vladimir Putin, now serving as prime minister.
His indebted carmaker, GAZ, is Canadian auto parts maker Magna’s industrial partner in a joint bid for German carmaker Opel, the main European asset of former U.S. automotive giant GM, together with Russia’s largest lender, state controlled Sberbank
Additional reporting by Melissa Akin in Moscow, Editing by William Hardy
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