Magister & Partners, Attorneys-at-Law, Proved the Rightness of STIM in the Dispute with a Russian Railways Subsidiary

October 23, 2007

On 18 October 2007, the Federal Arbitral Court of the Moscow District upheld the position of shipping company CJSC "STIM" and Magister & Partners, Attorneys-at-Law, which represented its interests, acknowledging that the dismissal of the claim of STIM against OJSC "TransContainer", an affiliated structure of OJSC "Russian Railways" was unfounded.

TransContainer is a leading Russian container operator: the company has more than 5,000 employees. Ninety-nine percent of its shares are owned by Russian Railways. According to the conclusions of the Russian Federal Anti-Monopoly Service from October 2006, to all intents and purposes, TransContainer has a monopoly in the area of providing access to the railway infrastructure in Russia.

STIM claims that TransContainer, taking advantage of its position, violated conditions determined in their agreement, by debiting funds from its account for services not ordered by STIM. The dispute between STIM and TransContainer had already lasted for about approximately one year, however, until recently attempts to prove the illegality of said debits were unsuccessful. In August 2007, after failures in two courts of lower instances, STIM turned to attorneys at Magister & Partners.

On 27 September, this law firm was able to reverse the court's decision in favor of STIM. On that day, the first precedent was established: Federal Arbitral Court agreed with the arguments of the complaint, overturning the previous judgments and forwarding the case for a new trial.

Reversing the judgments, the court made a note of contradictions between the conclusions reached by courts of lower instances and the actual facts of the case, as well as significant violation of rules of law. Therefore, the court ordered that the matter was investigated in greater depth before being reviewed again. It is noteworthy that the resolution contained a clear reference regarding the illegality of TransContainer's write-off of funds from STIM's bank account. A similar decision was reached on 18 October 2007. Thus, two judgments were made in favor of STIM, which evidenced the start of the stabilization of court practice on this issue.

"These decisions of Federal Arbitral Court of the Moscow District have far reaching consequences. STIM is probably not the only organization that has suffered from such actions on the part of TransContainer. However, until now, few entities had made the decision to go to court against Russian Railways. The accepted court acts demonstrate that such claims do have prospects and from this point of view, are important precedents. We expect more similar claims against TransContainer in the nearest future", - said Dmitry Dyakin, Managing Partner at Magister & Partners' Moscow Office.

In this case, Magister & Partners was represented by attorneys Alexandr Vaneev and Pavel Sadovsky. The project was under the management of Dmitry Dyakin.