Stockmann Locked in Battle Over Store

The flagship Moscow store of Finnish retailer Stockmann is under threat because of a legal dispute over its rental agreement.

Stockmann is locked in a heated legal battle with landlord Mosstroiekonombank over the fate of its central Moscow store in the Smolensky Passazh shopping mall, employees at the two companies confirmed Tuesday.

"We now have a court case going," Stockmann's director of international operations Jussi Kuusta said Tuesday.

The case, which is being heard in the International Commercial Arbitration Court in Moscow, should be concluded in the spring, Kuusta said. He said that he was optimistic that the store would remain open.

Although Russian media have reported that Stockmann's rental agreement is due to expire this April after 10 years, Kuusta said the original agreement was in fact a 20-year lease, but that the landlords are now trying to renegotiate the deal.

Kuusta put the problems down to the fact that the landlords had changed twice during the past 10 years.

He said that, up until now, Stockmann had enjoyed a reasonable relationship with the shopping center's owners.

"It has been a normal Russian working relation[ship]. Sometimes it was smoother and sometimes harder but the shop has been working every day," Kuusta said.

A spokesman for the owner of Smolensky Passazh, Mosstroiekonombank, put the dispute down to intransigence on Stockmann's part.

"The agreement with Stockmann was signed 10 years ago and has not been revised since then," said Marina Kurzina, head of Mosstroiekonombank's legal department, Vedomosti reported Tuesday.

Given the rises in rental prices over that period, Stockmann is now renting the floor space for one-tenth the market value, Kurzina said.

"We tried to come to an agreement with Stockmann peacefully, but they did not want to review the agreement. For this reason we are going to court," Kurzina said, Vedomosti reported.

When contacted Tuesday, Kurzina confirmed that the bank was in a legal dispute with Stockmann and said the retailer's rental agreement had already expired.

She refused to comment any further, saying she did not have clearance to discuss the subject.

Kuusta denied speculation that any of Stockmann's competitors could be behind the moves.

"I don't see any other parties involved here," he said.

Stockmann has been operating in Russia since 1989 and currently runs four stores in Moscow. Its other stores are in the Mega shopping malls at Khimki, Tyoply Stan and Belaya Dacha.

A fifth store is set to open in the new Metropolis shopping center later this year.