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Russian Aluminum

May 5, 2004

RUSAL welcomes dismissal of New York appeal by Zhivilo companies

MOSCOW, 05 May, 2004 – RUSAL, one of the world’s leading aluminium producers, today welcomed a ruling by the U.S. Court of Appeals affirming the dismissal of claims against it and other defendants brought by trading companies controlled by Mikhail Zhivilo. In a brief seven-page opinion, the Court said, “[T]his action has little or no connection to the United States, and thus little or no claim to the time and attention of an American jury or court.”

The U.S. Court of Appeals for the Second Circuit in New York upheld a March 2003 judgment against the plaintiffs, who had been seeking to reverse the effects of the 1999 bankruptcy of Novokuznetsk Aluminium smelter (NkAZ), brought about as a result of unpaid debts to an electrical utility. The appeals court issued a summary order Friday supporting the 2003 judgment that there was no basis for the claims to be tried in a U.S. court. The claims, first filed in December 2000, alleged that cancelled contracts arising from the bankruptcy deprived them of hundreds of millions of dollars in income.

Parallel claims were lodged in arbitration courts across Europe, as the plaintiffs sought to maximize the pressure on RUSAL and the other defendants. One by one, all the claims have been denied thus far, including a $100 million claim in Zurich in December 2002, and a $325 million claim dismissed by a Stockholm arbitration court in April of this year.

Alexander Boulygine, RUSAL’s CEO, said, “While we have been confident from the beginning that the courts would reject the allegations raised in these complaints, each new ruling demonstrates there was never any case to begin with. Plainly, the plaintiffs thought that by generating negative publicity and raising our legal costs they could force us to pay them to leave us alone. We refused to be held to ransom.

“We were encouraged from the start by the support from our suppliers, lenders, customers and other partners. On RUSAL’s behalf, I wish to thank them all for standing by us in spite of the lurid headlines. Throughout the nearly four long years we have fought to defend RUSAL’s reputation, our business has grown and matured, a clear sign of the global marketplace’s assessment of this case.”

Michael Burrows, lead counsel for the defendants, including RUSAL, said: “False claims disguised with sensational allegations and far-fetched tales of intrigue may attract the attention of the media, but they will never carry the day with a U.S. Federal Court. The plaintiffs sued without evidence or proof. Their claims are sheer fantasy and were seen as such by the court.”

The plaintiffs now have 90 days to seek review by the U.S. Supreme Court. However, RUSAL legal advisors believe that the Supreme Court is unlikely to agree to review the decision.

Mr. Burrows noted that this is the third case of this nature against Russian defendants to be dismissed by US courts in recent months.
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RUSAL, a world leader in aluminium production was formed in March 2000 from the merger of a number of the largest smelters and other aluminium producers located in the CIS. The company accounts for 75% of Russia's primary aluminium output and 10% of the global primary aluminium output. RUSAL is a fully vertically integrated company with a complete production cycle from bauxite mining and the production of raw materials, to the production of primary metal, semi-products and aluminium-based end products. RUSAL is headquartered in Moscow.

For further information:
Eugenia Harrison, Moscow, +7 095 720 5170, or;
Fred Harrison, London, +44 (0) 20 7431 7517, or;
Stan Neve, New York, +1 212 333 3810, or




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