MOSCOW, March 21 (RAPSI, Vladimir Yaduta) – United States District Court for the Central District of California ordered Ashot Yegiazaryan, a former Russia's State Duma lawmaker, to pay over $ 92.5 million to businessman Vitaly Smagin who sought to have the LCIA award enforced. 

On March 17, U.S. District Judge Manuel Real ruled that the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the “New York Convention”) afforded the court little discretion in reviewing arbitral awards as it manifested “a general pro-enforcement bias.” The court order indicated that “[t]he confirmation of an arbitration award is a summary proceeding that merely makes what is already a final arbitration award a judgment of the court,” and that non-finality of a foreign proceeding (one of the points put forward by Yegiazaryan’s lawyers) was not a jurisdictional defense to confirmation of an award under the New York Convention. As the court order summarized, “[t]he petition and supporting evidence establish that the London Award is final and enforceable, and that the Arbitration Tribunal had jurisdiction over the parties and the dispute.”

The ruling of the U.S. court will be appealed, Michael Adler from Tantalo & Adler LLP law firm who represents Yegiazaryan told RAPSI. “We believe it was inappropriate for the court here to enter judgment while the matter is pending on appeal in England.  We anticipate promptly filing an appeal here,” according to Adler.   

RAPSI has yet to obtain comments from Smagin’s lawyers. 

Smagin, Europark shopping center shareholder, in November 2014 was granted arbitration award after he accused Yegiazaryan of stealing shares in a company that owned and operated the center. Yegiazaryan and Kalken Holdings Ltd. owned by him were ordered to pay the damages.

Yegiazaryan first challenged the award in London’s High Court. He claimed among other issues that a 2008 partnership agreement with Smagin that included an arbitration clause was invalid. Yegiazaryan further alleged that he did not sign the 2008 agreement, but rather that his signature was forged.

In July of 2015, London’s High Court dismissed the complaint which had been lodged by Yegiazaryan. He appealed contesting only the effectiveness of the arbitration clause. The appeal was scheduled to be heard and decided in May, however, due to a significant backlog in the Court of Appeal, it is more likely to be heard later this year, court records show.

Meanwhile, Smagin seeks the recognition and enforcement of the arbitration award in the United States. In December of 2014, he filed a petition with the California District Court. In early February, he moved the court for issuance of a summary judgment noting that Yegiazaryan had avoided payment of the award for over a year “concealing his assets in jurisdictions worldwide.” A declaration by Edward Elcoat Poulton, a partner in the London office of Baker & McKenzie LLP, was filed in support of petitioner’s motion for summary judgment. Poulton laid out his vision of the proceedings in Britain and expressed his readiness to testify in the US court. 

Yegiazaryan presented his objections to Smagin’s petition. He claimed that his former business partner had already secured an asset freeze in Russian courts that would more than satisfy the arbitration award. 

Smagin did not disclose this freeze order when he applied to the US court as he was “trying to set himself up for a double recovery,” according to Yegiazaryan.

Declarations by Jeremy Brier, a member of Essex Court Chambers, Douglas James Watson from law firm Gibson, Dunn & Crutcher, and Dmitry Barannikov from Pavel Astakhov Collegium of Advocates, were attached to the objections.

In the meantime, two criminal cases were opened against Yegiazaryan on fraud charges in Russia. He has been on the federal wanted list since November 2010 and on the international wanted list since late December. In September 2013, the United States reportedly turned down a Prosecutor General's Office request to extradite Yegiazaryan back to Russia.