MOSCOW, May 15 - RAPSI. The Moscow Commercial Court has dropped proceedings in a defamation lawsuit lodged by Severnaya Verf shipyard against Grigory Menshikh, head of the United Shipbuilding Corporation's Strategic Development Department.

The litigation ceased as the shipyard decided to give up its claims.

The lawsuit centered on a Gazeta.ru story published in July, 2011. Menshikh was quoted as saying that the corporation suspected Severnaya Verf of partially embezzling funds received for a state defense order.

The shipyard has previously declared in court that the defendant's statements are "unsubstantiated and not supported by any evidence."

The shipyard requested Gazeta.ru to publish a statement that the information was unproven.

Menshikh held that the lawsuit should not be upheld as the court had already reviewed a similar application on the part of the shipyard against Gazeta.ru and dismissed it in December.

At that time the court ruled that article does not state that the plaintiff acted unlawfully, but raises some doubt as to the shipyards management. The appeals court upheld the trial court's judgment.

Severnaya Verf is a leading Russian shipyard. It mostly produces naval and commercial vessels.

Gazeta.Ru is a well-known online news portal in Russia, established in 1999.