ALRUD’s Dispute Resolution Practice achieved two glorious victories in the Supreme Arbitrazh Court of the Russian Federation in a dispute against Sollers-Elabuga LLC (subsidiary of Sollers).

The Dispute Resolution Practice of ALRUD Law Firm had two resounding victories in the Supreme Arbitrazh Court of the Russian Federation in a landmark dispute against the company of Sollers holding, on the recognition, in Russia, of the award of the London Court of International Arbitration (LCIA), ruled in favor of the well-known Polish supplier of equipment for the production of automotive components Autorobot-Strefa Sp.z.o.o.

Aiming to prevent enforcement of the award in Russia, the debtor referred to a violation of the rules of its notification, arguing that since, in the arbitration proceedings, the correspondence was conducted with the head of the legal service of the parent company of the holding, rather than with the debtor itself, the proper notification of the party in the arbitration proceedings had not taken place. In parallel, the parent company in an expedited bad-faith manner liquidated the debtor under the LCIA award, which made it impossible to actually enforce a claim.

The lower courts supported the position of the defendant and its parent company, and considered the liquidation of the defendant as lawful and, as a result, refused to recognize the arbitral award. After long and complex proceedings in courts of all levels, the ALRUD team managed to achieve the transfer of both cases for consideration on the merits by the Presidium of the Supreme Arbitrazh Court of the Russian Federation.

2 glorious
victories
in the Supreme Arbitrazh Court of the
Russian Federation

Despite the purely formal approach to the issues of parties’ notification that prevailed at that time, the judges of the Supreme Arbitrazh Court of the Russian Federation concurred with the opinion of ALRUD on the possibility of the parent company, whose powers stemmed from the situation and were apparent, to act on behalf of the subsidiary, and on the priority of the person's actual knowledge of the proceedings. The judges confirmed the inadmissibility of abuse by means of references to formal procedural aspects, non-compliance with which did not entail a real violation of the rights of the person. The Sollers case boosted development of the concept of effective notification in Russian procedural law, which is actively applied nowadays. It has been reinforced a few years later by the Resolution of the Plenum of the Supreme Court of the Russian Federation No. 23 of June 27th, 2017.

Resolving the issue of declaring invalid the debtor’s liquidation, the Presidium of the Supreme Arbitrazh Court of the Russian Federation supported the arguments of ALRUD on the need to restore the debtor’s legal capacity, the hasty liquidation of which was carried out with a clear bad-faith and illegal purpose.

As a result of these victories, the ALRUD team managed to achieve the initiation of a bankruptcy case of the debtor and conclude an amicable agreement with Sollers Holding on favorable terms.

To learn more about the projects of the Dispute Resolution Practice, please follow the link.