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. Last Updated: 07/27/2016

U.S. Court Dismisses Lawsuit

Itar-TassDeripaska attending a meeting of Russian business leaders Wednesday.
WILMINGTON, Delaware -- Steelmaker Evraz and billionaire Oleg Deripaska won dismissal of a U.S. lawsuit filed by former shareholders of vanadium-mining company Kachkanar GOK.

A trial of the 2004 suit probably should be held in Russia, Judge Gregory Sleet in U.S. District Court in Wilmington, Delaware, said in an opinion released late Wednesday. He said the issue was decided by a New York judge who threw out a similar suit filed in 2000.

"The court concluded that it should afford little deference to the plaintiffs' choice to litigate in the United States because their connections to the United States were tenuous at best" and such "forum shopping" was inappropriate, Sleet wrote.

The ruling is a setback to four companies that seek to recover more than $500 million. Their suit says people including Deripaska and Mikhail Chernoi, a former Russian aluminum and coal trader, used "physical force, bribery and extortion" to push Kachkanar into bankruptcy, then moved its shares through a network of Delaware corporations.

Some of the shares ultimately went to Evraz, a company controlled by defendants including Deripaska, the suit said. Kachkanar operates Russia's largest vanadium-ore plant, located in the Ural Mountains. Vanadium is used to make steel alloys.

A case in Delaware Chancery Court is based on similar allegations by the plaintiffs, Davis International of West Virginia, Holdex of Texas, Foston Management of Cyprus and Omni Trusthouse of England. They say they owned 72 percent of Kachkanar in court papers.

"We're disappointed with the decision, but it gives us the green light to proceed with the Court of Chancery case," said their lawyer, Bruce Marks of Marks & Sokolov in Philadelphia.

Evraz spokeswoman Irina Kibina did not reply to an e-mail message seeking comment after hours. Deripaska, who controls Russian Aluminum, did not immediately respond to an e-mail and was not available in his London office after hours. Chernoi's Moscow office was closed.

Judge Sleet "made the right decision," said Charles Oberly III, a lawyer with Wilmington-based Oberly, Jennings & Rhodunda who represents defendants including Chernoi.

Evraz lawyer William Lafferty of Morris, Nichols, Arsht & Tunnell did not immediately return a call seeking comment.

Evraz sold shares in an initial public offering in London in June, raising $422 million. The shares rose 10 cents to $24.60 in London on Thursday, valuing the company at $8.62 billion.