4 Min Read
MOSCOW (Reuters) - A Russian court threw out two multi-billion dollar lawsuits against BP (BP.L) on Friday, handing the British oil company a key victory in legal battles surrounding its Russian oil venture TNK-BP TNBP.MM.
A judge in the Siberian oil town of Tyumen rejected suits brought by Andrey Prokhorov, a minority shareholder in Russia's No.3 oil firm; one for $13 billion from BP and another for $2.8 billion from two BP nominees on the board of operating unit TNK-BP Holding (TBH).
Prokhorov had said TNK-BP suffered financial losses because it had been excluded from a planned strategic alliance unveiled in January between BP and Rosneft (ROSN.MM).
"None of the grounds for the lawsuits were proved in court,"
BP lawyer Konstantin Lukoyanov told Reuters.
Jeremy Huck, president of BP Russia, said the ruling was "a positive contribution to the investment climate in Russia."
"We are pleased with the court's decision to reject the groundless claims against BP and two TNK-BP Holding board members. As a shareholder of TNK-BP, we are committed to helping the company grow," he said in a statement.
A writing ruling on the $13 billion lawsuit against BP will be issued within days, Lukoyanov said. The court found against the $2.8 billion suit because Prokhorov did not muster the necessary 1 percent shareholding for the case to go ahead.
Prokhorov's lawyers said they would appeal the ruling, saying they were given less than two hours to state their case on Friday.
"These court proceedings show that Russia still has a long way to go to meet international standards of corporate law," said Dmitry Chepurenko of law firm Liniya Prava.
Legal wrangling continues surrounding TNK-BP, a 50-50 venture between BP and AAR, a consortium made up of four Soviet-born billionaires, after the local partners mounted successful legal action to block the BP-Rosneft transaction.
"The decision to reject (the) lawsuit does not mean the end of the conflict between the Russian and the Western shareholders in the company. But it may help to create a short-term positive background (for TNK-BP shares)," BFA brokerage said in a note.
BP and Rosneft had agreed to team up to explore for oil in Russia's Arctic offshore and swap shares, but AAR won a London court injunction against the deal that was upheld in arbitration proceedings.
The local shareholders in TNK-BP said the BP-Rosneft deal violated an exclusivity clause in TNK-BP's shareholder agreement. Rosneft has since agreed to search the same blocks in the Kara Sea with U.S. group ExxonMobil (XOM.N).
Arbitration under English law continues, seeking to establish whether BP infringed the shareholder agreement with AAR. A ruling in favor of AAR could open the way for it to seek damages.
Political analyst Nikolai Petrov of the Moscow Carnegie Center believes that Kremlin is keen to solve the differences to send a positive signal to foreign business, but the dispute is likely to run on.
"I'm not sure that the legal fight is over for BP. But it's good for the company that the Kremlin is trying to attract money to the country and halt capital outflows when the crisis is looming large," he said.
TNK-BP management has, meanwhile, written to the company's board asking it to consider legal action against BP and its executives in Britain and the British Virgin Islands over the Rosneft deal.
A board meeting tentatively scheduled for this week was not held, however, after the company's three independent directors sought outside legal advice on the dispute. The next board meeting is scheduled for December 9, shareholder sources say.
Reporting by Melissa Akin and Vladimir Soldatkin; Editing by Douglas Busvine and Andrew Callus