The refinery and Joy Lud signed a 10-year deal on the supply of oil products in January 1995. The Russian government simultaneously assigned quotas to the refinery for selling diesel and fuel oil to the U.S. company, with profits intended to cover the construction of a polypropylene processing plant on the refinery's premises.
However, the Moscow Oil Refinery broke off supplies in 1999. In 2003, Joy Lud took its case to the Stockholm court of arbitration, which ruled to charge the refinery $28 million in lost profits. In order to enforce the decision, the company turned to the Moscow Arbitration Court, claiming as much as $30 million, including a late payment penalty.
On December 8, 2005, the Moscow Arbitration Court overturned the decision of the Stockholm court, and rejected the U.S. company's claim.
In their turn, the shareholders of the Moscow Oil Refinery applied to the Moscow Arbitration Court with a request for $176.9 million to be paid to the refinery for oil products supplied, and $132 million as a late payment penalty. They cited the fact that the 1995 agreement had been signed by the refinery's general director without shareholders' consent, and was therefore invalid.
Joy Lud attorneys maintained during court hearings that the agreement's validity had been proven earlier in another case and presented payment receipts for supplies.
In the summer of 2005, the court turned down the shareholders' petition, and an appeals court upheld that decision on November 22.
The majority stake in the Moscow Oil Refinery is owned by the Moscow city government in partnership with UK-listed oil firm Sibir Energy.
