The court evaluated the reputation of Ziyad Manasir’s company at a record amount

The damage to the reputation of the construction holding Stroygazkonsalting, the largest contractor of Gazprom, has been evaluated at 10 million roubles, which is unprecedented in the Russian court practice. Pursuant to the ruling by the Federal Court of Arbitration of the Moscow District (the FCA of MD), the 494UNR company, which supplies materials for the holding, is to pay the full amount of the compensation. Until now, according to the experts, the exactions for reputation damages never exceeded several hundred thousand roubles.

The lawyers point out that the court ruling creates a precedent. The case of exaction of 30 million dollars from the Kommersant newspaper to the benefit of Alfa Bank for reputation damages, which occurred in 2006, is nevertheless different. That claim was initiated on the basis of an article in Kommersant that the bank’s clients had problems withdrawing cash from their accounts. The mass media have much more opportunities to harm reputations. Concerning Stroygazkonsalting, the court opined that the reputation damage had resulted from the commercial correspondence, which was not available to the public.

The information contained in the letter sent by Alexey Kim, General Director of 494 UNR, to Gazprom last July was acknowledged as damaging to the business reputation of Stroygazkonsalting owned by the billionaire Ziyad Manasir.

The letter stated that Manasir’s holding had been using counterfeit materials, when conducting works on a Gazprom object (an automobile road in the area of the main Bovanenkovo-Uhta pipeline). The materials in question were the geosynthetic grids, which improve the construction properties of the ground.

494 UNR obtained the patent to the invention “Grid with cellular structure” back in 1999 and supplied the product to Stroygazkonsalting. When the holding started using similar materials produced by another company, 494 UNR believed that its intellectual property rights had been violated.

Alexey Kim, preoccupied at the fact, requested the Gazprom management to intervene. This resulted in a check of the information contained in the letter.

Stroygazkonsalting informed Izvestia that the geogrids similar to the product of 494 UNR, which Stroygazkonsalting had started purchasing from other sources, were fully legal and certified despite the respondent’s allegations. The letter containing false information was motivated by the fact that the construction holding terminated the cooperation with 494 UNR, according to Z.Manasir’s company.

Last August Stroygazkonsalting filed with the Court of Arbitration of the Moscow Region a claim demanding that the information contained in the letter be ruled false and 1 billion roubles be exacted as compensation for reputation damage.

The ruling by the court of arbitration, which had partially satisfied the laid claim in the amount of 10 million roubles, was upheld by the Tenth Arbitration Court of Appeal. 494 UNR appealed to the FCA of MD against the rulings, which put the full stop in the case.

The resolution by the FCA of MD says that the work documentation of the object, which is mentioned in the letter, provides for the use of three types of geogrids, including the product of 494 UNR. According to the project documentation requirements, the client is to choose “on the basis of the economic situation as of that moment”. The FCA of MD points out that the case materials contain the act by a committee, which confirms the use of the materials in compliance with the approved project decisions.

As a result, the court concluded that said information was harmful to the business reputation of Stroygazkonsalting, since it could mislead the potential partners into thinking that the holding conducts its activity with gross violations of the law by replacing the construction materials indicated in the project with the purpose of illegal profit extraction. Consequently, 494 UNR now should pay 10 million roubles to Z.Manasir’s Stroygazkonsalting.

Vladimir Pleshakov, Managing Partner of the advocates’ bureau “Pleshakov, Ushkalov and partners” says that the 10 million roubles exacted as a compensation for damages to the reputation of a legal entity is a record.

“As a rule, the amounts are much lower: tens, maybe hundreds of thousands roubles”. He is convinced that the decision will affect the existing court practice in the way of gradual increase of the amount of the compensation for damages to the reputation of a company.

By passing that resolution, the FCA of MD has initiated a new arbitration court practice in Russia, Stroygazkonsalting attorneys believe.Moreover, according to them, the FCA of MD has reiterated the general law provision that “business reputation as a legal category may be concretely expressed in a material form, which may be evaluated in real terms”.

Konstantin Astafiev, Partner of the advocates’ bureau “Korelsky, Ischuk, Astafiev and Partners” says that in the future the decision by the FCA of MD may become a landmark in the consideration of disputes involving damages to a legal entity’s reputation, even with the Russian law not being case law and Russian courts not being formally able to refer to the decisions of the courts of cassation.

Аlexander Bolomatov, Associated Partner of the Law Firm "YUST", adds that such decision of the courts may provoke a landslide of claims by other companies enticed by the new opportunities.

However, Sergey Moiseev, attorney of 494 UNR, Stroygazkonsalting LLC misled the court, since that company is in no way related to Gazprom, to a member of the Board of which the letter was addressed. Stroygazkonsalting Holding operates directly with Gazprom. Therefore, according to S.Moiseev, there was no way for Stroygazkonsalting LLC to take any damage. That means that the case if far from closed: 494 UNR plans to appeal to the supervision instance against the decision by the FCA of MD.

Stroygazkonsalting attorneys parry by saying the 494 UNR theoretically might appeal to the Higher Court of Arbitration (HCA) against the decisions passed by the lower instance courts. But, according to them, the chances that the HCA will take the case are minimal: violation of the uniformity of the court practice may the base for that, but as of now there is no such practice on that matter.