Sevmash lost in Supreme Court

Norwegian private shipping company Odfjell expects that the full outstanding amount from the Russian state-owned shipyard Sevmash will be paid.

Odfjell in 2008 decided to cancel a major contract with Sevmash following the latter’s reported inability to follow up contract terms. The contract from 2004 was of 12 chemical tankers, each of about 45,000 dwt. The construction of the chemical tankers was the single-largest Norwegian business-order ever placed in Russia.

Odfjell claimed for damages and was awarded USD 43 million plus interest by the Stockholm Arbitration Tribunal in Sweden on December 30, 2009. The Russian shipyard failed to honour the international award, forcing Odfjell to seek enforcement within Russia. A ruling was made by the State Commercial Court in Arkhangelsk on 10 December 2010, in Odfjell’s favour. However, Sevmash appealed the decision and in March this year the Cassation Court in St. Petersburg turned down the appeal and ruled in favour of Odfjell. Sevmash again appealed the court order.

On Thursday this week, Russia’s Supreme Court made a final review of the case and turned down the appeal from Sevmash.

Including interest rates, the amount of the claim is now USD 50,5 million (€35,5 million). The original claim from Odfjell was more than USD 100 million in 2009.

The question now is: will Odfjell get the money and if, when?

In a press statement, Odfjell says they now expect that the full outstanding amount will be received within short, either by way of enforcement or voluntarily from Sevmash.

Sevmash has so far not made any public statement on the Moscow Supreme Court’s ruling.