Wednesday, October 6, 2010

ARCELORMITTAL Faces Potential Loss of $4 Billion Investment

OJSC “ARCELORMITTAL KRYVIY RIH” issued a press release stating that the Attorney General's Office of Ukraine (“Genprokuratura”) filed a claim on behalf of the State Property Fund (SPF) against “ARCELORMITTAL DUISBURG GmbH” with the Kyiv Economic Court to invalidate an agreement between ARCELORMITTAL and SPF related to certain investment obligations.

According to the press release, the state court improperly assumed jurisdiction over the claim ignoring the agreement's arbitration clause regarding the referral of disputes to the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry. At the same time, ARCELORMITTAL pointed out, the court failed to comply with The Hague Service Convention when it neglected to properly summon the defendant to court.

Should the claim succeed, ARCELORMITTAL faces possible confiscation of its more than $4 billion investment as a result of the purported breach of its investment obligations. ARCELORMITTAL contends that the speed of the court proceedings and apparent legal nihilism cast doubts as to “real intent” of the court and raise questions about protection of investments in this country.

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