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Defense Ministry disputes recovery of $5,900 instead of $3.47mln from Adidas

18:00 01/06/2012

MOSCOW, June 1 - RAPSI. The Defense Ministry has filed an appeal with the Ninth Commercial Court of Appeals against the recovery of $5,900 from Adidas instead of the initially claimed $3.47 million for failing to meet sporting good supply deadlines.

The ministry told the court that it sought to recover a fine, penalties and interest for non-compliance with a state contract's deadline.

The parties entered into a contract in September 2010 pursuant to which Adidas agreed to supply tracksuits and sport shoes to the ministry. The plaintiff filed a lawsuit against the company after it failed to deliver the sportswear to two military units on time.

In turn, Adidas said the plaintiff unjustifiably overrated the forfeited penalty several times over by claiming 115 million rubles. The defendant said the ministry calculated the penalty using the total price of the contract as opposed to the cost of the delayed shipment.

Furthermore, one shipment was delayed for 31 days, as opposed to the 55 days stated by the plaintiff. The defendant also said it is illegal to be simultaneously charged a fine, interest and penalties. Adidas requested to decrease the penalty to 195,000 rubles ($5,762).

Adidas asserts that the ministry did not sustain any losses.

The judge heard the parties' arguments and charged Adidas 200,000 rubles ($5,900).

Adidas is the Russian subsidiary of the Adidas Group, a global sportswear leader.

The Moscow Commercial Courts decision reads that the amount of the penalties stated by the plaintiff - 0.5 percent of the total contract amount - is too high given the circumstances.

"The court agrees with the defendants arguments and considers that there has not been an unlawful misuse of funds," the first-instance decision stated.

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Defense Ministry disputes recovery of $5,900 instead of $3.47mln from Adidas

18:00 01/06/2012 The Defense Ministry has filed an appeal with the Ninth Commercial Court of Appeals against the recovery of $5,900 from Adidas instead of the initially claimed $3.47 million for failing to meet sporting good supply deadlines.
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