Arbiters award EuroChem $140 M

Zug, Switzerland — EuroChem Group AG reported Oct. 13 that its subsidiary, EuroChem-VolgaKaliy LLC, has won its fraud claim in the Swiss Arbitration Court of the Swiss Chambers’ Arbitration Institution against Shaft Sinkers (Pty) Ltd., a company then controlled by International Mineral Resources BV (IMR). A three-member Swiss arbitration panel unanimously confirmed a pattern of fraud and bribery by Shaft Sinkers and awarded VolgaKaliy around $140 million, including $112 million in damages and $8 million in legal costs. According to EuroChem, the panel determined that for more than two years Shaft Sinkers deliberately withheld critical information from tests and studies that established that Shaft Sinkers’ proposed method to construct a shaft at VolgaKaliy’s potash project in Kotelnikovo, Russia, would not work in the wet soil conditions, and that Shaft Sinkers’ written guarantee that such method would work was fraudulent. Additionally, the panel determined that Shaft Sinkers bribed VolgaKaliy’s senior project manager, who took action to protect and favor Shaft Sinkers while concealing its mistakes and fraud. EuroChem believes that the Swiss arbitrators’ decision clearly showed that Shaft Sinkers lied, cheated, and bribed to win and retain a contract to build a mine shaft with a method that it knew was likely to fail, while purposefully and deliberately withholding information that confirmed the likely failure. EuroChem said Shaft Sinkers is currently trying to avoid liability by pursuing what VolgaKaliy believes is a fraudulent bankruptcy scheme in South Africa. EuroChem says VolgaKaliy will pursue all available legal means to recover the $140 million award from Shaft Sinkers and IMR. It is currently pursuing additional damage claims in other legal proceedings before the International Chamber of Commerce and elsewhere. With the award and the additional evidence disclosed of IMR’s involvement, VolgaKaliy believes claims against IMR in the Netherlands will be upheld in an ongoing action in Amsterdam, where the court’s 2013 ruling granting VolgaKaliy a $1 billion attachment order against IMR remains in place.