Page 15 - RusRPTApr19

Russia’s most famous fund manager Michael Calvey and several of his colleagues were arrested in February after the Federal Security Service (FSB) opened an investigation into an accusation that BVCP illegally mispriced shares in Orient Express Bank (OEB, aka Vostochniy Bank).
Artyom Avetisyan is also a shareholder in the bank, but is trying to avoid being diluted after the Central Bank of Russia (CBR) ordered the bank’s recapitalization or face closure. Avetisyan is widely believed to have instigated the FSB investigation, using his personal collection with Dmitri Patrushev, a banker and the son of Nikolai Patrushev, the long time head of the FSB.
Last week Avetisyan demanded the dispute between himself and BVCP be heard in a Russian court, despite the fact that the shareholders agreement explicitly says all disputes should go for arbitration in The London Court of International Arbitration (LCIA) – a very widespread practice in the Russian investment business.
“If Avetisyan is successful, this will threaten all Russian businesses that refuse to trust Russian courts and rely, instead, on UK law to solve corporate conflicts,” The Bell said in a report.
Avetisyan has filed a lawsuit in a court in Russia’s Far East against Baring Vostok, demanding 9.99% of Vostochniy Bank’s shares. Avetisyan received an option for a 9.99% stake in the bank in 2016 when it merged with his Uniastrum Bank. But in 2018, Baring Vostok refused to uphold the agreement, claiming Avetisyan moved asset stripped ahead of the merger. The dispute is currently the subject of an arbitration case being heard in London.
However, a clause in the agreement also says if LCIA does not meet the Russian judicial standards, then each side of the conflict can choose another court, The Bell reports. “In his Russian filing, Avetisyan argues that the British court’s decision will be “impossible to execute” in Russia,” The Bell reports.
If Avetisyan successfully moves the case to a Russian regional court then the case could set a president that will undermine the legal protection investors into Russia have sought from abuse by Russian courts by naming London as the location for disputes to be heard.
Russia’s regional courts are notoriously corrupt as the Moscow Times recently highlighted with an extensive investigation into how some of the scheme work. If the dispute it moved to Russia’s legal jurisdiction Avetisyan will almost certainly win his case.
“The ruling in Avetisyan’s lawsuit could set a precedent allowing businessmen with good connections to move legal disagreements to corrupt Russian courts. This would be particularly dangerous for foreigner companies that don’t stand much of a chance in proceedings against influential Russian partners in Russian courts,” The
2.5 Watcom
Watcom shopping index starts 2019 on a low note, outlook for shopping in malls remains subdued
Russia’s Watcom Shopping index got of to a lacklustre start in 2019, repeating the lower levels of foot traffic in Moscow’s leading shopping malls that were seen last year. if the trend continues then the index suggests there is a permanent reduction in volumes of shoppers visiting big malls as other distribution channels eat into traditional organized retail’s share of the market.
The holiday shopping season gave Moscow’s leading malls a boost in December, but overall traffic in the leading malls in 2018 was the lowest since
15 RUSSIA Country Report April 2019 www.intellinews.com