Install

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

. Last Updated: 07/27/2016

Far East Court Snubs Seattle Firm

A Far East court on Wednesday ruled against the Seattle-based Euro Asian Investment Holding, or EAIH, in a business dispute that has raised concerns about foreign investors getting fair treatment in Russia.

EAIH asked the Primorye Arbitration Court in March to invalidate the sale of top assets by its business partner Primorkhleboprodukt, or PKP. The sale left PKP, which once controlled 75 percent of the Primorye flour market, an empty shell and EAIH's 20 percent stake in the company worthless.

More important, EAIH has said, the sale of the assets means its $12 million investment in PKP has gone up in smoke and the Russian company will no longer have the means to repay the $6 million it owes the American side.

The Primorye Arbitration Court ruled Wednesday that PKP had violated no laws in selling its main assets without the approval of the minority shareholder.

EAIH conceded that PKP had followed the letter of the law but protested the decision, saying it broke the spirit of the law.

"I can't see how our case will develop now," said Yelena Korneyeva, EAIH's representative in Vladivostok. "It looks like it will end up running in circles in the courts."

She said EAIH had not decided whether it would file an appeal against Wednesday's ruling.

PKP could not immediately be reached for comment.

EAIH has won backing in its battle from the U.S. consul general in Vladivostok, James Schumaker, and several U.S. lawmakers. President Vladimir Putin's envoy to the Far East has promised to look into the problem.

Schumaker appealed to Primorye Governor Sergei Darkin on behalf of EAIH, and Deputy Governor Igor Ivanov responded on Feb. 12 that "the conflict is over." PKP sold off the assets the next month.

Ivanov's aide Viktor Gorchakov said the Americans need to keep fighting their case in court.

"The American company tells us that PKP management has been selling assets to further bankrupt the stripped-off enterprise and prevent it from paying back its debts," Gorchakov said in an e-mail last week.

"If that is true, I hope that the Russian legal system will allow Euro Asian Investment Holding to prove the illegality of the deals."

He added that the Primorye economic crimes department was investigating the sales and would tell EAIH about the findings.

Korneyeva said EAIH has yet to learn the investigation's results.