Install

Get the latest updates as we post them — right on your browser

. Last Updated: 07/27/2016

Metal Firm Takes Dispute to Tribunal




Claiming its mines were seized illegally and loads of metal shipped without consent, a London metal producer and supplier Tuesday asked its Kazakh partners to arbitrate the dispute through the International Chamber of Commerce in Paris.


Trans-World Group, which claims to have invested more than $750 million in the former Soviet republic, has been battling its partners -- Chodiev Group -- for control over five metallurgical factories in Kazakhstan in court venues from Amsterdam to the British Virgin Islands.


But the fight over assets has continued since late 1997, with no resolution in sight despite court decisions in Trans-World's favor. The decisions are not binding in Kazakhstan, and Trans-World claims Chodiev has ignored them.


"The basic reason why Trans-World decided to take this dispute to the ICI is that it is an internationally recognized neutral venue," said Charles Manduca, legal counsel for Trans-World in London. "We want to enforce our rights quickly and not depend on courts in any particular country."


He said it would be in the interest of both sides to agree to international arbitration on the case.


Officials at the Chodiev Group, which has its mining assets under the company name, Kazakh Mineral Resources Corporation, or KMRC, in Almaty, were not available for comment.


Trans-World suggested the arbitration a day after a court in Rotterdam ordered KMRC to stop shipment of 500 tons of metals from one of Trans-World's plants in Kazakhstan. The court ruled that Trans-World alone was entitled to export the products and the Kazakh producers cannot do so without consent.


The partnership was formed in 1994 when Trans-World took stakes in five metals plants in Kazakhstan, eager to supply the metal-hungry Chinese market. KMRC, which claimed to be well-connected in the republic, was expected to lobby Trans-World interests in return for a share in the profits.


Trans-World claims that after it expedited production at the plants as well as paid back wages and taxes, the Kazakh group, headed by Patokh Chodiev, illegally seized assets through false shareholder meetings and local managers.


Last December, managers loyal to Trans-World were ousted, and Kazakh Property Committee officials accused Trans-World of tax evasion and fraud.


To resolve the situation, Trans-World said earlier this year that it would sell its interests in Kazakhstan to the partners, who later backed out of the deal.


A Trans-World spokesman said the offer to sell was an attempt to settle the dispute quickly and amicably and was prompted by a request from the Kazakh government. "We have tried every possible angle," the spokesman said.


Production at the plants has fallen and costs have increased since the Kazakh partners took over the mines about six months ago, he said.


The spokesman said Trans-World has no intention of leaving Kazakhstan and plans to build a $1 billion metal plant once the dispute is resolved.


"But for the time being our plans have stopped," the spokesman said. "All our attention and determination is focused on getting our assets back."


Trans-World is a multinational with more than $6 billion in revenues in 1997. It is believed to control about 40 percent of the aluminum market in Russia.