In August 2005, Baltiyskiy Zavod, one of the oldest shipyards in Russia, and Stena RoRo AB of the Stena group entered a turnkey contract whereby the Russian shipbuilder agreed to manufacture two vessels with an option to build another two. The contract, valued 240 mln Euro, a rare contract of the kind for the Russians, seemed like a fabulous opportunity. But there was a catch. The works were to be financed through a loan secured by pledge of the Baltiysky Zavod's shares.
Just days before the contract was concluded the Baltiyskiy Zavod was overtaken by the United Industrial Corporation, one of the largest Russian industrial and development groups close to Kremlin. The new shareholder did not approve the deal and asked the Swedes to back off.
Stena had no choice but to hire another company and pay extra 58 mln US dollars for each vessel. In 2008 the arbitration tribunal in Stockholm made an award in favour of Stena. However, instead of the 145 mln Euro claimed by the company, only 20 mln Euro have been awarded.
In December 2008 Stena applied to the St.Petersburg Arbitrazniy Court to enforce the award in Russia. Baltiyskiy Zavod, on the other hand, had appealed to a court in Sweden to set aside the decision of the tribunal on the grounds that the contract was not approved the Board of Directors of Stena and, therefore, is void.
This appears to be a temporary failure and Stena most probably will enforce the award and get some cash. The overall picture, however, seems gloomy. The project which looked like a no-lose bargain ended in a puff of smoke.
