Russian Federation Wins Southern District Ruling

July 20, 2005

Cleary Gottlieb won a ruling on behalf of the Russian Federation dismissing motions by Montreux Partners, L.P. to intervene and for a preliminary injunction in an action brought against Russia by Compagnie Noga d’Importation et d’Exportation S.A. to enforce two 1997 arbitral awards that are based on loan agreements from 1991 and 1992. The U.S. District Court for the Southern District of New York denied Montreux’s motions.

Montreux, an investment fund specializing in distressed debt of foreign sovereigns, moved to intervene in Noga’s action against Russia and sought a court order requiring advance notice of any settlement between Noga and Russia and that any settlement amounts be held in escrow pending adjudication of Montreux’s rights. Montreux’s argument was based on a terminated 2004 agreement with Noga under which Montreux agreed to manage Noga’s litigation against Russia. Southern District Judge William H. Pauley III ruled that Montreux lacks a sufficiently direct interest in the action and that allowing Montreux to intervene would substantially delay the litigation.

Since 1999, Cleary Gottlieb has successfully resisted Noga’s efforts to enforce the 1997 arbitral awards across the globe and thereby obtain treatment preferential to that afforded all other similarly situated creditors of Russia. This victory prevents parties with no legally cognizable interest to the dispute between the Russian Federation and Noga from complicating and delaying its resolution.