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EU: Stoli battle rages on as SPI sues Russian government

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SPI International, the company in battle with the Russian government for control of the Stolichnaya vodka brand, has filed a claim in the courts of the Netherlands for injunctive relief and monetary damages against the Russian Government.

In a release SPI said it was seeking an injunction to prevent the Russian Government from interfering with SPI's established business relationships throughout the European Union. In addition, SPI is seeking fines of €5m for each act taken in violation of the injunction sought.

This suit is the latest twist to a battle for control of the Stolichnaya brand between the Russian Ministry of Agriculture and SPI.

"SPI's suit alleges that the Russian Government...have illegally attempted to interfere with SPI's existing relationships with distributors throughout the European Union. This will, for the first time, effectively take significant aspects of this long-running dispute out of Russia and bring it into the legal system of the European Union," SPI said in a statement.

"This case represents a gross interference with SPI's legitimate ownership rights by certain Russian authorities who are continuously ignoring and undermining the rule of law, and participating in what is nothing more than a naked grab of assets from SPI which has well-established ownership rights to one of the most popular brands of Vodka in the world," said Richard Edlin, Partner with the law firm of Greenberg Traurig and attorney for SPI. "There is no legal justification for such egregious action and SPI will remain committed to defending its rights in every market where it has registered the Stolichnaya trademark."

Earlier this month, the country's General Prosecutor's Office issued an arrest warrant for Yuri Shefler, chairman of SPI, charging him with threatening to kill a government official.

SPI purchased the rights to Stolichnaya and other Russian vodkas in 1997 for US$300,000. However, the Russian state has been trying to retrieve them almost ever since, claiming the body that sold the rights had no legal right to do so.

The Ministry has also disputed the price paid, saying Stolichnaya and Moskovskaya alone were worth $400m. The battle has since escalated, with the Ministry blocking exports of SPI's Stolichnaya from the port of Kaliningrad bound for the US and UK.

The Russian Ministry of Agriculture has also officially renationalised a number of the brand names and now produces its own Stolichnaya. It has also relaunched the original state run vodka business Soyuzplodoimport (spelt with an extra 'o'), which sold the rights to SPI in the first place. Shefler had been president of Soyuzplodoimport.

SPI has continued to produce its Stolichnaya brand and is now exporting out of a plant in Riga, Latvia. It argues that the privatisation of the brands was completely above board.


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