Business Petersburg quoted Arthur Zurabyan in the article “Two Giprotrans for one billion: The court suspended the contract to design the subway”

Source: Business Petersburg

Through the courts, Lenmetrogiprotrans has suspended the contract of its competitor and simultaneously its shareholder, JSC Metrogiprotrans, for designing the subway.

Initially, Lenmetrogiprotrans (LMGT) won the tender for designing the Brown Line from Kazakovskaya to Sosnovaya Polyana, but the Federal Antimonopoly Service (FAS) cancelled the bidding results, based on a complaint of Moscow Metrogiprotrans. After that, in November, a contract was signed with the Moscow firm. Immediately, St. Petersburg filed lawsuits against the Federal Antimonopoly Service as well as against the committee for state orders, that is, the Committee on Transport Infrastructure Development (KRTI), and Metrogiprotrans itself.

On 31 January, Tatyana Resovskaya, a judge of the Arbitration Court of St. Petersburg and Leningrad Oblast, issued a negative decision on an LMGT petition to suspend the contract. Then, less than a month later, on 20 February, Nadezhda Milgevskaya, another judge of the same court, issued the completely opposite decision that suspended the execution of the state contract.

It is noteworthy that Metrogiprotrans is a minority (8.5 percent) shareholder of LMGT.

“The situation is quite unique and very rarely occurs in practice,” said Artur Zurabyan, the head of the Dispute Resolution and International Arbitration Practice at ART DE LEX. As a general rule, the courts refuse such claims, on the grounds that a contract’s term is fleeting and that the judicial act of taking interim measures, in the form of the suspension of a contract, may simply become unenforceable, which is a significant violation of the principles of the arbitration process.

Mr. Zurabyan added that, “in this case, the term of the contract’s execution is set to 2023, and LMGT was able to convince the court that, at this stage, the execution of the contract has not actually started, and the risks of violating the deadlines, resulting from a suspension of the execution, are minimal.” Besides, according to the expert, the arbitration court separately took into account that LMST was initially the recognized winner of the purchase.

Mr. Zurabyan believes that, “of course, LMGT will use the suspension of the contract itself as a psychological weapon in challenging the FAS decision.” KRTI has not yet decided whether to file an appeal. Representing Metrogiprotrans is Alexander Aronov, a member of the Moscow Bar Association and an attorney-at-law with Aronov and Partners. Aronov told Business Petersburg that the company will appeal the court decision. He maintained that “taking interim measures by suspending a state contract significantly disturbs the balance of public and private interests, does not maintain the status quo, and is solely aimed at securing the interests of the entity that had refused to participate in the state procurement process.”

According to the public procurement site, since November 2019, the customer has paid 61 million RUB out of the contract value of 990 million RUB.

Authors: Dmitri Marakulin and Darya Kiltsova

Read the complete article at https://www.dp.ru/a/2020/03/02/Dva_Giprotransa_na_odin