The client, a major international construction company, acted as the general contractor for a multipurpose center construction project in Moscow. A subcontractor initiated ICC arbitration proceedings against the client with the seat of arbitration in Sweden. Prior to this, the client and the subcontractor had entered into an agreement to reduce the contract price due to defects and delays in the subcontractor's work. The subcontractor, ignoring this agreement, filed a claim demanding payment for the allegedly fully completed work.
After KIAP lawyers invoked the price reduction agreement, the subcontractor attempted to challenge its validity on various grounds.
The arbitral tribunal was composed of both Russian and international arbitrators. The opposing party was represented by a well-known civil law expert on the Russian legal market.
Following the proceedings, the tribunal confirmed that the price reduction agreement was duly concluded and valid, and dismissed the majority of the subcontractor's claims. Furthermore, the arbitrators agreed with KIAP's position that the 2022 bankruptcy moratorium applied to the interest accrued on the remaining portion of the subcontractor's claim. The tribunal justified this by stating that the client, although a foreign company, had been conducting sustained operations in Russia and was therefore in an equal position to Russian companies when the moratorium was introduced.
The client's interests in this case were represented by lawyers from KIAP's International Commercial Arbitration practice: Of counsel Rostislav Kats, Associate Anastasia Ryabova, Junior Associates Dinara Ibragimova and Artem Gritsuk, and Partner Stepan Sultanov.