IPOC Disappointed at Court Order over Russian Operator Stake

IPOC International Growth Fund has voiced its disappointment at the refusal by a Stockholm arbitration Tribunal, based on a highly-technical interpretation of Swedish and Russian corporate law, to require CT-Mobile to sell or transfer a disputed stake in MegaFon, Russia's third largest mobile telecoms company.

This was despite the Tribunal's finding that CT-Mobile, under Alfa Group control, is and remains in a 'Situation of Indirect Competition' in contravention of the Shareholders Agreement, due to its ownership stake in mobile telephone operator Vimpelcom.

The Tribunal also refused to invalidate the Shareholders' Agreement itself as requested by CT-Mobile, and the Agreement thus remains intact and enforceable.

IPOC and other shareholders in MegaFon based their argument on the fact that, under Swedish law, Russia's Alfa Group had violated the provision of the MegaFon Shareholders' Agreement that specifically prohibits holdings in competitor companies. The arbitration panel agreed on this point with IPOC and the other shareholders aligned with it, but nonetheless refused to enforce this contractual provision.

IPOC has always claimed that it is the rightful and legal owner of Alfa Group's 25.1% stake in MegaFon and has fought a four-year legal battle to highlight what it says are "questionable" business practices by the Alfa Group.

"While we note the Tribunal's acceptance of the principle of the MegaFon Shareholders' Agreement that Alfa was in indirect competition, we are disappointed that a legal technicality has prevented the Tribunal from ordering Alfa to divest its MegaFon shareholding that was stolen from us in the first place," an IPOC spokesperson said today.

"This is a temporary setback in our ongoing fight against Alfa to recover our 25.1% stake in MegaFon, but strengthens our resolve to continue our legal challenge."

IPOC says that Alfa's questionable business practices included attempts to subvert and invalidate the MegaFon shareholders' agreement, to which CT-Mobile, a company controlled by Alfa, is also a signatory. This was notably by contriving to initiate litigation against the Shareholders' Agreement in the remote Khanti-Mansysk region of Siberia, where the Alfa Group enjoys great economic influence and power."

Posted to the site on 2nd May 2007