Back to news

Rosatom won a new victory over the Conti Group over a silicon plant

Investment in innovative production and the creation of “solar clusters” has resulted in lengthy litigation.

In 2009, the Atomenergoprom JSC, which Rosatom owns, sold the Krasnoyarsk JSC Semiconductor Silicon Plant, which manufactures polycrystalline silicon, to Continent Energy LLC, a subsidiary of the state corporation Conti, for RUB 1 billion. There was a contingency that the seller would increase production ten times and modernize the facility for RUB 15 billion.

By 1 February 2013, Continent Energy LLC had to pay off the assets. In the meantime, the modernization process began, through a contract with the unitary enterprise Mining and Chemical Combine (MCC), which also is a subsidiary of Rosatom. Meanwhile, the new owner promised to contribute RUB 35 million for the work.

None of the firms honored the agreements. In early 2011, Conti sent an inquiry to MCC, claiming that the modernization did not minimize the cost, as promised. Instead of the planned USD 70 per kilo, the company continued to pay USD 109 per kilo.

MCC insisted that it had installed all the new and modified equipment, in accordance with the contract. Meanwhile, Conti suffered financial difficulties and did not pay for purchasing the firm. Atomenergoprom, therefore, claimed RUB 1 billion through the courts. Conti made a counterclaim and renounced the purchase agreement, stating that it was economically unfeasible (case no. A40-32900/2013).

Conti also sued MCC for RUB 1.5 billion (specifically RUB 1,406,085,672), in order to recover production losses because the modernization had failed to lower costs (case no. A33-5659/2013). Krasnoyarsk Arbitration settled this issue, awarding MCC a total of RUB 1.5 billion. The Third Arbitration Court of Appeals overturned the decision, returning to MMC a total of RUB 1.061 billion, less RUB 381,900 for court costs.

The plaintiff had claimed that in 2010-2011, the modernization resulted in a production cost per kilo of more than USD 109, but the court decided the cost for production per kilo does not depend solely on modernization and that many factors can influence production costs, including the entrepreneurial skills of a firm’s managers. The court concluded that the plaintiff also had known the technical characteristics of the equipment and what was necessary to reduce production costs but had not taken the appropriate steps.

The plant plans to appeal to the court of cassation, which may consider the legality of the contract and whether Conti has received some benefit for the money it had spent.

The Russian version of this posting is at http://artdelex.ru/rus/news/rosatom-oderzhal-ocherednuyu-pobedu-ocherednuyu-pobedu-nad-gruppoi-konti-v-spore-vokrug-kremnievogo-zavoda