13 Apr 2023 19:54

Court lifts all restrictions on VW's Russian assets in GAZ's lawsuit against German concern for 15.6 bln rubles

MOSCOW. April 13 (Interfax) - The Arbitration Court of the Nizhny Novgorod Region on Thursday annulled all interim measures in Gorky Automobile Plant's (GAZ) lawsuit against Volkswagen for claims totaling 15.6 billion rubles, an Interfax correspondent said from the courtroom.

The court specifically annulled the previously imposed arrest on the shares of foreign legal entities in Volkswagen's Russian subsidiary, Volkswagen Group Rus LLC, Germany, its co-owners: Volkswagen AG at 28.06%, Skoda Auto A.S. at 16.8%, and Volkswagen Finance Luxemburg S.A. at 55.14%. The court also removed the arrest from VW's shares in controlled Russian legal entities, including Volkswagen Components and Services LLC, Scania Leasing LLC, Scania Insurance LLC, and Scania Finance LLC.

Among the interim measures, there was also a ban on all registration actions related to liquidation, reorganization, changes in the composition of participants, and changes in the charter capital of Volkswagen Group Rus LLC.

The court had already annulled part of the provisional measures for the claim, lifting the arrest from the real estate of Volkswagen Group Rus LLC, including the car plant in Kaluga, as well as production equipment and the company's other movable property. Removing the arrest from production assets, the court took into account that the value of the seized property significantly exceeded the amount of the plaintiff's claims.

As reported, GAZ filed a lawsuit against VW in the Arbitration Court of the Nizhny Novgorod Region in mid-March, seeking to recover 15.6 billion rubles in perceived losses from the German concern for the contract assembly of models that had occurred at GAZ's facilities in Nizhny Novgorod until the spring of 2022. The plaintiff is also seeking to invalidate the termination of the agreement on contract assembly.

GAZ subsequently filed a second lawsuit against Volkswagen, seeking to recover 28.4 billion rubles. According to the case file, around 20.8 billion rubles of the total claims were for compensation for lost profits, which the plaintiff could not receive owing to the inability to manufacture and sell cars with VW engines. Another 5.2 billion rubles are compensation for "actual damage in the form of expenses of the GAZ automobile plant to compensate its distributor for losses caused by failure to fulfill obligations to supply cars with the respondent's engines." Nearly 2.5 billion rubles were estimated damage in the form of investments in the organization of manufacturing cars, "which cannot pay off owing to the unlawful termination of engine supplies" on the part of VW.

In securing the second claim, GAZ asked the court to arrest the shares of foreign legal entities in Volkswagen Group Rus LLC, and prohibit the Federal Tax Service in the Kaluga Region from registering any actions related to the liquidation, reorganization, and alteration in the composition of participants, and/or related to an increase and/or decrease in the charter capital.

The court denied GAZ's petition, noting that, "the plaintiff did not provide unconditional grounds for taking the requested interim measures."

The main contender for VW's Russian assets, including the largest one, which is the car plant in Kaluga, was cited by the media as being the Avilon auto dealer group. However, potential parties did not provide any official comments on the upcoming deal.

Commenting earlier on the situation surrounding the litigation with GAZ, Volkswagen only confirmed that is was "in the process of applying for approval from the Russian state authorities for the sale of its stake in Volkswagen Group Rus LLC, including the plant in Kaluga with more than 4,000 employees, to a trustworthy Russian investor."

The termination of the agreement on contract assembly of Skoda and Volkswagen cars at the Gorky Automobile Plant, which the Russian automaker is challenging in court, was carried out following negotiations, by mutual agreement and on mutually beneficial terms, Volkswagen Group Rus LLC emphasized.

The enterprise has capacity of 225,000 vehicles per year and is located in the Grabtsevo industrial park in Kaluga. Until the spring of 2022, it manufactured the Volkswagen Polo, Volkswagen Tiguan, and Skoda Rapid. A gasoline engine plant with capacity of 150,000 units per year also operated in Kaluga.

VW announced at the beginning of March 2022 that it was suspending car production in Russia.

Moreover, the concern had been conducting contract assembly at the GAZ plant in Nizhny Novgorod since 2012, where the Skoda Octavia, Skoda Karoq, and Skoda Kodiaq, as well as the Volkswagen Taos were manufactured until spring 2022. VW in the summer announced the closure of its Nizhny Novgorod office.