Protecting the interests of a foreign organization in the Russian arbitration court.
Description of the problem
The client, a Dutch company, installed and maintained a protective coating on the dump truck bodies of a Russian mining enterprise. Without this coating, soil freezes to the body, which must be cleaned with an excavator, which makes mining more expensive.
The customer made a mistake while operating dump trucks. During the New Year holidays, untrained personnel drove cars with a protective coating for cleaning with an excavator, which is prohibited. Due to this mistake, the excavators of the enterprise tore off the protective coating with their buckets.
The protective coating was installed with installment payment for three years. The mining company after the breakdown of the protective coating ceased to make regular payments. In response to the Client’s claim, the company filed a counterclaim in which it indicated:
– the protective coating was installed poorly;
– the protective coating was installed in violation of the terms;
– The Dutch company must compensate for losses and forfeit that are several times higher than the cost of the protective coating.
A client contacted us to collect debt from a mining company and to protect against counterclaims. The case turned out to be under the jurisdiction of the International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation.
It was important for the client to prove that:
– the protective coating is of high quality;
– the protective coating was installed without any violations of technology
If the court had come to a different conclusion, it would have hit the reputation of the Dutch company.
The client agreed that he violated the deadline for installing a protective coating. But he did not agree with the size of the damage caused by the violation of the terms.
The case was complicated by the following circumstances:
- The mining company claimed that it sent dump trucks with a protective coating to be cleaned by an excavator because the protective coating could not cope with its task, and the soil continued to stick to the body.
- The quality of the protective coating can only be checked after it has been installed on dump trucks. Due to the fact that the mining enterprise tore off the protective coating from all dump trucks, it was impossible to conduct an examination.
- The Dutch company worked with a unique protective coating. The German company made the protective coating and no one worked with it in Russia. Therefore, it was also impossible to check the quality of the protective coating on other dump trucks.
- Submit electronic correspondence between the parties
The client and the mining company are constantly exchanged emails. In total, we analyzed over a thousand emails. From the correspondence it followed that:
– Prior to the breakdown of the protective coating, the Mining Enterprise did not send any claims to the Client;;
– The client was the first to inform the Mining Enterprise about the breakdown of the protective coating and asked for instructions on how to act in this situation;
– after a breakdown of the protective coating, the Mining Company did not know for 1month how to respond to the breakdown of the protective coating and did not write any instructions to the Client on this score.
We used these facts in court. If the protective coating had been torn down due to the fault of the Client, the Mining Company would immediately file a claim. A long silence was interpreted by us as a confession of guilt.
- Provide evidence of the effectiveness of the protective coating
In support of the fact that the protective coating did its job, we presented the following evidence to the court:
– A contract for testing a protective coating on one dump truck. This document confirmed that before the conclusion of the main contract, the Mining Enterprise ordered a trial installation of a protective coating on a single machine from a Dutch company. If the protective coating did not work, then the mining enterprise should have known about this during the tests and would not have entered into a basic contract.
– Monthly photographs of dump trucks, which compared the amount of soil sticking to bodies with a protective coating and without a protective coating. In these photographs, you could clearly see the effectiveness of the protective coating.
The International Commercial Arbitration Court at the Chamber of Commerce and Industry of the Russian Federation agreed with our arguments and admitted that the protective coating was broken due to the fault of the Mining Enterprise.
The court partially satisfied the counterclaims of the Mining Enterprise. The court refused to recover damages, but partially satisfied the claim for the recovery of the penalty. Counterclaims decreased tenfold.
At the stage of execution of the judicial act, we encountered opposition from the Mining Enterprise.
The Tax Service provided us with inaccurate information about the open accounts of the Mining Enterprise, in particular, it did not contain information about the main account on which the funds were located. We learned about this account from open sources - the mining company received a loan from the bank on this account, which was reported in the press.
Then the Bank refused to execute the writ of execution on the grounds that the Dutch company did not have ruble.
We have decided to file a bankruptcy petition with the debtor. If the court accepted the bankruptcy petition, then the banks that provided loans to the Mining Enterprise could raise interest rates on already issued loans. To avoid losses, the Mining Company voluntarily paid the Dutch firm all the debts recovered. The meaning of the case For the Client, this case allowed not only to receive payment for the work performed, but also to maintain their reputation. For the industry, the case is important in that it protected the legitimate interests of a foreign contractor, proving the safety and legal protection of foreigners doing business in Russia.