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. Last Updated: 07/27/2016

Court Cancels Rossiya Rebuilding Contract

The Supreme Arbitration Court has canceled the results of a tender to reconstruct the Rossiya hotel near the Kremlin, a court spokeswoman said Wednesday.

The court's presidium made the decision Tuesday, acting on a complaint by Monab, a company that lost out to ST Development in the tender two years ago, spokeswoman Irina Yudina said.

Monab is owned by Evrofinans-Mosnarbank. Shalva Chigirinsky owns ST Development.

The ruling cannot be appealed, thus paving the way for a new tender, Kommersant Daily said Wednesday. The project to raze the hotel and build a replacement could cost more than $1 billion.

Yudina was unaware of the basis for the court's decision, but the court said when it accepted the case last summer that the Moscow city administration appeared to have violated two rules for tenders.

The court said at the time that the city had acted as the sole owner of the hotel, failing to coordinate the bidding process with the other owners, and that it should have auctioned off not only the right to reconstruct the hotel, but also the right to buy or rent the underlying land.

The city administration and ST Development are withholding comment until they receive a copy of the ruling from the court, Interfax reported Wednesday.

The court will officially issue the ruling in about a week, Yudina said.

Andrei Galiyev, vice president of Evrofinans-Mosnarbank, said he was pleased with the court decision, Kommersant reported.

ST Development won the November 2004 tender to rebuild Rossiya with a $830 million bid. Its closest competitor, Monab, bid $1.45 billion, while Bauholding Strabag bid $2 billion.

Mayor Yury Luzhkov last week ordered ST Development to redraw the project, which real estate experts say would push its cost to more than $1 billion. Luzhkov spoke after British architect Lord Norman Foster presented a design to fill the space where the sprawling hotel once stood with 10 to 11 buildings, including a cultural center in the shape of an ellipsis, a 2,000-room hotel and a museum.

The old hotel's underground space was used by the security services, Kommersant reported.