Ukrainian iron ore producer Ferrexpo said on April 4 that a long-running shareholder dispute over its main producing asset was “without merit,” a day after a UK court stopped its bid to move the legal battle to Britain from Ukraine.
On April 3, the High Court ruled against Ferrexpo’s bid to move a long-running shareholder dispute over its main production asset to Britain from Ukraine, where the iron ore producer says it is concerned about unfair treatment.
The move to shift the case, filed late last year, is the latest effort by a businessman from the former Soviet Union to use British courts, seen as neutral, for resolving disputes sometimes dating back to the chaotic years of privatization.
The ruling is a blow to Ukrainian opposition businessman Kostyantin Zhevago, who continues to control Ferrexpo’s top mining asset in Ukraine despite years of attempts by an influential Russian group to wrestle it away.
In media comments, Ferrexpo downplayed the seriousness of the legal challenges.
“The judge has applied a stay of proceedings in the UK while the case continues in Ukraine,” the London-listed miner said. “The board of directors of Ferrexpo has received legal advice that the Ukrainian proceedings are without merit.”
The court found Ferrexpo did not do enough to prove a real risk it would not receive justice in Ukraine and said any British hearing would duplicate Ukrainian proceedings.
But Ferrexpo, in comments quoted on the UK court judgment, said it was concerned there was a “real risk of injustice” in Ukraine, where the case is running. The miner and its lawyers have quoted corruption, government control of the courts and pressure on opposition politicians.
Ferrexpo had filed last year to move the case to Britain from Ukraine, where it says it could face unfair treatment.
Majority owned by Zhevago, Ferrexpo says it owns 98 percent of shares in Ukraine-based Ferrexpo Poltava, one of the world’s largest iron ore deposits and its most important asset.
This is disputed by former shareholders led by Russian parliamentarian Alexander Babakov. They say they own a 40 percent stake in the asset and want a 2002 sale deal canceled. The group claims the acquisition was conducted in violation.
They have fought it since 2005.
Babakov and business associates, known as “Gilson Investments and others” in court proceedings, said they welcomed the ruling from Justice Andrew Smith that the case should be heard in Ukrainian courts.
“We have always maintained that this is a matter for Ukraine’s legal system and we have faith in its workings,” they said in a statement.
Led by Babakov, the camera-shy group reportedly owns a diversified portfolio of assets in Ukraine, including the Premier Palace hotel group as well as electricity distribution utilities owned by Dutch-registered VS Energy International.
