NY court to decide on jurisdiction in Israeli oligarch case

Case involves a dispute over $270 million in an agreement for a stake in Russian coal-producing organization Kuzbassrazrezugol.

By JONNY PAUL
April 17, 2011 03:17
2 minute read.
A gavel strikes at the issuing of justice

311_gavel. (photo credit: Ariel Jerozolimski)

 
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The Supreme Court of New York is set to rule in the coming months on whether it has jurisdiction in a case involving two Israeli oligarchs and a disputed $270 million.

Michael Cherney, originally from Uzbekistan and now living in Israel, is accused by Alexander Gliklad, a Ukrainian-born Israeli living in New York, of owing the money in a dispute over a 2003 signed agreement for a stake in Russian coal-producing organization Kuzbassrazrezugol, a former state enterprise privatized in the early 1990s.

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Cherney, who last week was implicated in the possible indictment charges being prepared against Foreign Minister Avigdor Lieberman, had opened a counter suit in Israel demanding back the agreement note. This led to Gliklad’s lawyer issuing a contempt of court application stating that Cherney acted contrary to the New York Court case.

Both parties have now agreed to put the case in Israel on hold until jurisdiction is ruled on in New York.

Cherney’s lawyer, David Bamberger from the New York law firm Brickman and Bamberger, maintains that his client gave Gliklad the money, and that he is owed the money. He also said that Cherney mistakenly signed a promissory note in the wrong place and was “intoxicated” when he signed it.

This is contested by Gordon Dobie, from the Chicago-based law firm Winston and Strawn LLP, representing Gliklad.

“To our knowledge, it has been 100 years or more since any defendant has successfully defended such a case through judgment based on an ‘intoxication’ defense.

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Related to this, Cherney also signed four subsequent attachments on four more days, including two authorizations, one of which was in his native Russian language,” Dobie said.

Gliklad is also accused of obtaining the promissory note by fraud, something also contested by Dobie.

“If Gliklad owed Cherney hundreds of millions of dollars, as he contends going back to 1996, why is there no letter, e-mail or other document ever demanding payment?” he asked.

“Instead, Mr. Gliklad has produced audited financials to the contrary of the claim. It is only after Gliklad initiated litigation in New York against Cherney that he ever filed this claim in Israel, and almost a year and a half later,” Dobie said.

Cherney’s lawyer also questions how Gliklad can explain why he would take 100 percent of the disputed $270m. from Cherney. “Why wouldn’t Gliklad insist on receiving say 25% cash?” Bamberger asked.

“Mr. Gliklad has no answer for this, because there is none. In addition, why would Mr. Gliklad take the debt in a non-interest-bearing note and not even make written demand for repayment under that note for six years? Again, Mr. Gliklad has no explanation because none exists,” Bamberger said.

A close friend of Lieberman’s, Cherney made his fortune in the aluminum industry in Russia during the 1990s and moved to Israel in 1994.

The charges Lieberman faces, pending a hearing, include allegedly taking bribes of around NIS 10m. from Cherney and Austrian businessman Martin Schlaff.

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