An ongoing shareholder dispute among Russian oligarchs over the management of Norilsk Nickel, one of the world's largest metal producers, has reached a temporary détente following the sale of a stake in the Moscow-based company.
Russian billionaire Roman Abramovich's investment firm Millhouse Capital has reportedly agreed to pay about $2 billion for a 7.3 percent stake in Norilsk. The deal would effectively put Abramovich between fellow oligarchs Oleg Deripaska and Vladimir Potanin, whose affiliated conglomerates have been battling for control of the Norilsk board in courts and before arbitration tribunals around the world since 2008.
A statement announcing the settlement released by Potanin's Interros, Deripaska's Rusal, and Abramovich's Millhouse claims that Interros and Rusal have agreed to "suspend all legal disputes and claims that are currently active surrounding Norilsk Nickel."
Several Am Law 100 and large international firms are helping the warring parties reach an agreement, which comes just as an arbitration proceeding related to the dispute was set to commence in London this week, according to the Financial Times.
Debevoise & Plimpton corporate partner Alan Kartashkin in Moscow and corporate partner Guy Lewin-Smith in London are leading a team from the firm representing Potanin and Interros, which owns roughly 28 percent of Norilsk. Kartashkin, whom Debevoise promoted to partner in 2006, and Lewin-Smith, who joined the firm from Linklaters in 2007, are both steeped in Russian transactional work.
Debevoise has been advising Interros in arbitration proceedings with Rusal, according to The American Lawyer's 2011 Arbitration Scorecard. A British court ruled against Rusal last year in its bid to force Debevoise to turn over documents related to its dispute with Interros for control of Norilsk.
Also advising Interros on this week's tentative settlement: Herbert Smith Freehills corporate partner Tomasz Wozniak in Moscow, who joined the firm's partnership earlier this year. Herbert Smith's website states that it has handled matters in various jurisdictions for Interros.
Alexey Kiyashko, a corporate finance and cross-border M&A partner at Skadden, Arps, Slate, Meagher & Flom who coheads the firm's Moscow office, is leading a team advising Abramovich on the deal. Other Skadden lawyers working on the matter include corporate partners Linda Davies in Moscow and Bruce Buck in London.
Abramovich is a longtime client of the firm, which advised the Russian oligarch on his $233 million purchase of the English Premier League's Chelsea Football Club in 2003. The New Yorkborn Buck, who has headed Skadden's European operations since founding the firm's London office in 1988, serves as chairman of the storied soccer franchise and has held Chelsea season tickets since 1991.
Skadden's work for Abramovich includes a nearly $60 million legal bill the firm submitted this summer for its representation of Abramovich in litigation in the United Kingdom with exiled oligarch Boris Berezovsky. Abramovich prevailed in that dispute in August after Berezovsky failed to convince a court in London that he was pressured into selling his holdings in Rusal and other assets sold off by the Russian government after it abandoned communism during the 1990s. (Besides Skadden, several other leading British firms had key roles in the litigation, according to Legal Week.)
The settlement announced this week, which appears to have the backing of the Kremlin, effectively gives Abramovich control of Norilsk as both Deripaska and Potanin will each contribute equal stakes amounting to 22 percent of the company to an escrow account controlled by Millhouse.
Representing Rusal, which owns 25.1 percent of Norilsk, on the agreement with Interros and Millhouse is leading Russian firm Egorov Puginsky Afanasiev & Partners. Name partner Dmitry Afanasiev has close ties to the Kremlin and the country's business interests, according to a December 2007 profile of the firm by The American Lawyer. (Egorov Puginsky swelled to more than 300 lawyers last year after with the acquisition of regional rival Magisters.)
Afanasiev has been a member of the Rusal board of directors since March 2007. Several other prominent attorneys can be found within the executive ranks at Moscow-based Rusal, which is the world's largest aluminum company.
Former Jones Day partner Igor Makarov was named Rusal's chief legal officer last year before being promoted by Deripaska in September to a senior legal affairs position at his holding company, according to British publication The Lawyer. Peter Maximov has since been named general counsel for Rusal.
Former Chadbourne & Parke associate Maksim Goldman serves as a nonexecutive director at Rusal, as does Nelson Mullins Riley & Scarborough partnerand former U.S. ambassador to the U.K.Philip Lader. Former Herbert Smith lawyer Maxim Sokov also serves on the Rusal board and is director for corporate strategy at the company.
Deripaska's Rusal will get to pick four of the Norilsk board's 13 members, as will Potanin's Interros; Abramovich's Millhouse will nominate three. Rusal and Interros will agree on two independent directors to fill the remaining board seats, according to Bloomberg, which also reports that Potanin will become Norilsk's CEO.
The long-running dispute between Potanin and Deripaska began in 2008 after Rusal purchased a 25 percent stake in Norilsk from the Onexim Group, a holding company controlled by Potanin's former business partner and fellow tycoon Mikhail Prokhorov.
Egorov Puginsky and British firm Ashurst advised Rusal on that deal, according to our previous reports, and Deripaska subsequently sought $1.4 billion in compensation from Potanin for allegedly violating a shareholder agreement that provided rights to board representation for Rusal. (Ashurst and King & Spalding have also been advising Rusal in arbitration proceedings with Potanin's Interros.)
Hogan & Hartson, now known as Hogan Lovells following a 2009 merger, advised Prokhorov on the roughly $5 billion sale of his Norilsk stake to Rusal. The firm then helped Prokhorov invest some of the proceeds from that sale in his $200 million purchase of an 80 percent stake in the National Basketball Association team now known as the Brooklyn Nets.
Norilsk is the world's largest producer of base metals like nickel and palladium, both of which are integral components in electronic products. The company's former general counsel is Kirill Parinov.
Despite the downturn in the Russian economy in recent years, the nation's energy and natural resources sector still provides corporate lawyers with many opportunities for high-profile transactional work, and attorneys at foreign firms might find their expertise even more in demand following the country's accession to the World Trade Organization in August.
An editorial this week in The Moscow Times by Alexander Kosov, head of the customs and foreign trade regulation practice at Russian firm the Pepeliaev Group, states that the country's own lawyers don't have the experience necessary for handling WTO disputes, potentially providing an opening for foreign firms in tandem with their local counterparts.