Russia's VimpelCom has announced that the Arbitrazh Court of the City of Moscow has granted the injunction requested by VimpelCom's wholly-owned subsidiary, KB Impuls. The injunction suspends a provision contained in a notice officially received by KB Impuls from Moscow Gossvyaznadzor on January 9, 2004. The injunction remains effective pending the resolution of KB Impuls's suit against Moscow Gossvyaznadzor, seeking the invalidation of such provision. The provision raises issues regarding the adequacy of the documentation of the agency relationship pursuant to which VimpelCom acts as KB Impuls's agent with respect to concluding agreements with KB Impuls's Moscow GSM subscribers.
Alexander Izosimov, Chief Executive Officer of VimpelCom, commented on the granting of the injunction, "We welcome the court's injunction today, as it enables us to continue to provide uninterrupted, high-quality service to our loyal customers until the resolution of this matter with Moscow Gossvyaznadzor. We also welcome the opportunity such time affords us to continue our ongoing dialog with the regulatory bodies in an effort to resolve these issues in a mutually satisfactory manner."
Moscow Gossvyaznadzor, which reports to the Russian Ministry of Communications, is using certain technical drafting issues in the subscriber agreements and the agency agreement as a basis for asserting first, that KB Impuls does not have any agreements with subscribers and, therefore, has violated Russian law, and second, that the agency agreement between KB Impuls and VimpelCom does not specifically provide that VimpelCom shall sign subscriber agreements on behalf of KB Impuls, also in violation of Russian law.
VimpelCom maintains that it and its subsidiaries are conducting their operations in accordance with Russian law. Nevertheless, as it has done consistently in the past, the Company is willing to work with Moscow Gossvyaznadzor to resolve the issues raised in the Notice in a mutually satisfactory manner. However, certain aspects of the current inspections, in contrast to past inspections, alarm the Company and cause it to question the fairness of its regulator in this regard. Specifically:
Since 1997 when the agency structure was put into place, VimpelCom and KB Impuls have had numerous inspections each year by Moscow Gossvyaznadzor and other government bodies and no questions were ever raised regarding the agency relationship or these specific points in the documentation.
At the conclusion of the unscheduled inspection by Moscow Gossvyaznadzor in December, which inspection preceded the issuance of the Notice, VimpelCom, KB Impuls and Moscow Gossvyaznadzor agreed in writing in a protocol on a course of action to clarify the language in the documentation of the agency relationship between VimpelCom and KB Impuls. The protocol specifically stated that "The rights and obligations under these [subscriber] agreements are those of KB Impuls which is consistent with the civil legislation of the Russian Federation." However, in the Notice subsequently issued to KB Impuls, Moscow Gossvyaznadzor reversed its position and claimed that KB Impuls does not have any agreements with subscribers and, therefore, has violated Russian law.
KB Impuls did not officially receive the Notice until January 9, 2004. Despite this fact, Moscow Gossvyaznadzor gave only until February 1, 2004 to correct the alleged violations in question and did not state the actions required to be taken to cure the alleged violations."
Posted to the site on 26th January 2004
Posted to: www.cellular-news.com/story/10485.php