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Conflict of laws – all matters concerning the constitution of a corporation are governed by the place of incorporation – where a subsidiary a party to a dispute, Russian law making parent company jointly and severally liable

The Facts                               

Two individual claimants instituted arbitration proceedings in London against a Russian company (OJSC) and its parent company, the City of Moscow.

The context of the dispute was the redevelopment of the Moskva Hotel adjacent to the Red Square in Moscow.

Claimants alleged that they had been coerced by extravagant force to part with their stake in the redevelopment by signing away their interest in a BVI company (Konk). OJSC and the City of Moscow were alleged to have been part of the conspiracy which brought about the claimants’ loss.

A shareholders’ agreement and a share purchase agreement contained London arbitration clauses in these terms:

10.13  Arbitration of Disputes

  • Any dispute, controversy or claim arising out of, relating to or in connection with this agreement, including any question regarding its existence, validity or termination, or regarding a breach of this agreement (a “dispute”), shall be referred to, and finally settled by arbitration under an in accordance with the rules of the LCIA then in effect (the “rules”), which rules are deemed to be incorporated by reference to this section 10.13.
  • The place of arbitration shall be London, England, and the award shall be deemed to have been made there…”


Second claimant and OJSC were signatories.


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Charter Party Casebook