Maxim Kulkov’s testimony in the LCIA helped a claimant obtain a partial award in its favour

In a dispute concerning the recovery of $1.3bn of debt under a loan agreement, KK&P Trial Lawyers Managing Partner Maxim Kulkov prepared an expert report. It covered an unconventional argument made by the Respondent regarding the lack of authority of the Board of Directors of the Claimant’s parent company (the firm’s client) to approve arbitration proceedings.

Our client is a part of an international group of transportation and logistics companies, which owns a seaport used for trading between Russia and many Asian countries.

The charter of the Claimant’s parent company gives the Board of Directors quite an unusual power, i.e., to approve the initiation of litigation or arbitration proceedings by a subsidiary. In an attempt to avoid recovery of the debt, the Respondent, among other things, argued that this power was allegedly exercised by the members of Board of Directors of the Claimant’s parent company in violation of their fiduciary duties to the company, i.e., the decision itself was made in violation of the law. Consequently, the Claimant’s initiation of arbitration was alleged by the Respondent to be unlawful, and the proceedings should be terminated.

In early 2023, a hearing was held in London, attended by experts from both sides. The Tribunal partially ruled in the Claimant’s favour on the issues covered in the expert report.

Maxim Kulkov and the team (Senior Associate Dmitry Vlasov and Associate Luiza Movsisyan) refuted the position of the Respondent and its  expert, a foreign lawyer.This is not the first time in cases involving Maxim that foreign lawyers acting as experts on Russian law have tried to simplify Russian law or artificially introduce arguments built on concepts of foreign law, which often does not stand up to criticism. Thanks to Maxim’s simple and clear testimony, experienced foreign judges and arbitrators can easily dismiss such ideas.As a result of the hearing, the Tribunal found the arguments of the Respondent and his expert unconvincing and highlighted the difference between the Russian and English regulations on the issue of fiduciary duties of Boards of Directors. The Tribunal also agreed with Maxim’s testimony on the specifics of applying grounds for the invalidity of transactions to decisions of the Board of Directors.

Thus, the client avoided termination of arbitration at the preliminary stage of the proceedings, and the Tribunal will now examine the case on its merits.