Fathoming the legal maneuvering around TNK-BP
16 Aug, 2011 14:50
With AAR seeking a Stockholm Arbitration ruling on whether the TNK-BP shareholder agreement was broken by the BP-Rosneft joint venture and share swap push, Business RT spoke with Andrey Goltsblat of Goltsblat BLP about the legal issues.
RT: What is AAR trying to achieve with a return to the Stockholm Arbitration Court?AG:“As you may know the original claim which AAR filed, was to block the transaction of BP and Rosneft, which they successfully achieved in the Stockholm Arbitrage in the first instance, confirmed that if they exchanged their shares, then the shareholders agreement would be violated.Now what AAR is trying to achieve is to confirm that the shareholders agreement was violated.They would like the Arbitrage to confirm this.They need it in order to have the ground for TNK-BP to claim that damage or loss from BP, because if they successfully confirm that the shareholders agreement was broken up by BP, that would mean that TNK-BP got a loss as a result of not being able to enter into the transaction with Rosneft, and to explore the deposit which belongs to Rosneft.That is the strategy.So if they successfully prove that there was a violation of the shareholders agreement by BP, the next step will be TNK-BP filing a damage claim to BP.That is how I see the situation.”RT: So this is AAR trying to setup the platform for TNK-BP to claim damages?AG: “Well AAR obviously wants, as one of the shareholders (in TNK-BP) obviously wants that anything they have agreed is observed, and both parties comply with.And AAR couldn’t prove the direct loss, because AAR has no way to get into the agreement with Rosneft.Concurrent to the shareholders agreement TNK-BP is a party to the transaction, or should be part of the transaction, so they just need to prove that the shareholders agreement was broken.Because they are two shareholders, AAR and BP, but the damage obviously occurred within TNK-BP, and that is why TNK-BP is going to claim damage. And I see that another pressure on BP, on their suspended or non-resolved negotiations over the sale of shares, of AAR to BP.”RT: If they get the Stockholm Court to confirm that there was a breach of the TNK-BP shareholder agreement, is TNK-BP likely to get the amounts that have been mentioned in the media?AG:“That is obviously very hard to say whether TNK-BP would be entitled to get $10 billion, but I am sure that in such cases they would have to build quite a serious case proving that if TNK-BP was offered that deal, then they would be benefiting from such an amount of money, there should be time taken into consideration, the investment taken into consideration, the prices of oil or gas – whatever they are going to explore – that is quite a complicated methodology to confirm the loss. This is why, probably, AR, or minority of TNK-BP, it is not AAR obviously, it is minorities of TNK-BP, they are filing a lawsuit in the Russian Federation, where the minorities are going to prove that the minorities are going to incur loss because of that transaction that happened with TNK-BP.”RT: Do they really have any claims? I have spoken to some analysts who say that under Russian law in 20 years of practice there has never been really a payment of compensation for huge future profits.How do you prove future losses?AG:“It is not proving the future, you are proving non received income, which is the case or can be the case.At the same time we remember the case of the minorities of VimpelCom which filed a lawsuit as well in the Russian Federation and were very successful.So that is a similar situation, there was a case of a claim for future damage or loss.And as I said they are probably not claiming the future damage alone, they are claiming unreceived income.”RT: But TNK-BP was technically never involved in the equation with Rosneft, so could BP and Rosneftclaim they were never in the plans in the first place?AG:“As long as Rosneft approaches BP, BP should have told Rosneft that they should have first approached TNK-BP. The fact that Rosneft approaches BP has opened the door for TNK-BP to be part of the deal.This is, in my opinion, how they are going to prove that they have incurred the loss.”RT: Is this lawsuit simply a matter of principle for AAR AG:“ In my opinion that is their strategy, they always have a strategy, and whatever AAR or Alfa group is doing, whatever their steps it is not just because they want a lawsuit, there is always a strategy, and at the end of the search you will see the result.There were cases with VimpleCom, there were cases with investments in Ukraine, KyivStar.There were any other cases, so thus I would anticipate that the next move will be part of their strategy that they are going to continue to pursue a particular goal or objectives to either finally sell out their stake or something else.”RT: Will the 50-50 joint venture TNK-BP partnership continue amidst these legal proceedings? And what messages do they carry for other joint ventures?AG:“For the TNK-BP joint venture this is nothing new in the world, so the 50-50 joint venture is usually do not work, they don’t survive, so this is why there are very few joint ventures of such kind of 50-50 shareholding structure.So everyone knows about it, thus that was probably a bit of political setup which is finally going down, so I think that is just a rather unusual structure.”RT: Do you think TNK-BP will continue?AG:“I am sure TNK-BP will continue as an entity, but something will happen.So, either of them will have to sell shares.Even with the claim there should be a majority decision to file a claim on behalf of TNK-BP, and if you have got a 50-50 Board of Director, that is why there is potential claims against the directors of BP for violation of fiduciary duties.This is what they want to eliminate in case TNK-BP has to file a lawsuit, and claim the damage.So this is quite a smart strategy and quite valid, so BP will obviously be trying to defend through filing a lawsuit against Renova only.So filing a suit against Renova obviously doesn’t help much against the other members of AAR.”