Archangel gets no satisfaction out of Sweden

Denver — The Stockholm International Arbitration tribunal has ruled that it has no jurisdiction to arbitrate the diamond license transfer dispute between Archangel Diamond (AAD-V) and Russia’s Arkhangelskgeoldobycha (AGD).

The tribunal has ruled that, because the dispute contains no Swedish interests, there is no reason to apply Swedish law.

The opinion runs counter to a 1999 ruling by the tribunal that it had jurisdiction. The dissenting arbitrator says the decision is “manifestly erroneous and contrary to the overwhelming body of law, practice and legal commentary in Sweden.”

The three-member tribunal (composed of an American, a Russian and a Norwegian) convened the hearing in early March to resolve the transfer of the ownership of the Verkhotina diamond license to Almazny Bereg, a joint-venture company held by AGD, Archangel and a third party.

AGD, which would hold a 50% interest in the joint venture, refused to transfer the title according to the joint-venture agreement, which was dated 1993. In July 1998, Archangel, which would hold 40% of the 400-sq.-km property, withdrew exploration funding for the property in protest.

“I am appalled that after more than two years the tribunal reversed its own previous decision. I am amazed that the tribunal arrived at a decision which is contrary to Swedish law and practice,” says Archangel President Timothy Haddon.

Prior to the ruling, AGD tried to derail the arbitration by suggesting the joint venture was invalid.

The Verkhotina license hosts the Grib kimberlite pipe (discovered in 1996), which contains 67 million carats of recoverable diamonds (larger than 1 mm) within 98 million tonnes grading 69 carats per 100 tonnes. The estimated value is US$79 per carat.

Archangel is reviewing its options in light of the decision. The company will continue its efforts to resolve the issues with assistance from officials from the Russian and Canadian governments.