Yelena Baturina Seeking To Recover 33 Billion Ruble Compensation from the Ministry of Finance

Setunskaya Territorialnaya Direktsiya, a Closed Joint Stock Company, owned by Yelena Baturina, wife of Moscow’s ex-mayor Yuri Luzhkov, claims a 33.6 billion ruble compensation from the government for the land the company lost in the west of Moscow. Philip Ryabchenko, BIEL senior partner, commented how the dispute can affect the interests of Matveyevskoye CJSC, a third party involved in these proceedings.

The so-called “embassy land”, three plots totaling more than 16 hectares, were confiscated from Setunskaya Territorialnaya Direktsiya CJSC by a decision of the Moscow Arbitration Court passed at four instances following a lawsuit brought by the Federal Property Management Agency in 2010. As it turned out, the land in dispute was reserved under a Russian President Decree in 1993 for construction of embassy buildings for China, India and Cuba. Meanwhile, the title to the land was formalized without regard for international treaties of the Russian Federation. As a result, plans for construction of Setun Hills, a multi-functional complex, did not see the day.

A representative of Setunskaya Territorialnaya Direktsiya CJSC declared at the Moscow Arbitration Court that the confiscated company land was valued by legal experts at 18.5 billion rubles and claimed a 33.6 billion ruble compensation to be paid by the Ministry of Finance under the relevant lawsuit. The plaintiff’s calculation of the compensation amount included the market value of the land and taxes paid by Setunskaya CJSC over the whole period of land ownership. At the moment, the court has resumed these proceedings.

However, the dispute involves a third party, Matveyevskoye CJSC, indirect seller of the disputed land and long-standing BIEL customer. Philip Ryabchenko, the company’s legal counsel at court, believes that a dismissal of Baturina-backed company’s claim could have implications for Matveyevskoye CJSC. Therefore, the defense strategy will be aimed at avoiding a connection between losses incurred by Setunskaya Territorialnaya Direktsiya CJSC and actions by Matveyevskoye CJSC in order to prevent potential action on the part of Baturina-backed companies.