Russia's High Arbitrazh (Economic) Court intervened to prevent the abuse of arbitration in resolving a fictitious dispute and creating legal cover for the misappropriation of company assets. The supposed dispute arose from a breach of contract to supply materials. The companies concluded a settlement, confirmed by an arbitral tribunal, whereby the supplier would transfer an airplane hangar to the buyer. A former shareholder in the debtor company challenged the arbitral award in court, asserting that the debt was fictitious, and pointing out that the supplier's general director owned the buyer and that the supplier's decision to transfer the hangar did not receive the corporate approvals needed for interested transactions. The former shareholder claimed that as a result of the transaction, he did not receive fair compensation upon the sale of his shares. The lower courts ruled that they did not have the right to review the merits of the arbitral award. The High Arbitrazh Court reversed, ruling that the arbitral award was unenforceable and that the use of arbitral proceedings to validate a transaction lacking required corporate approvals was contrary to public policy.
http://www.clj.ru/news/65171.html
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