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Russia Sues its Own Shipyard Over Naval Repairs

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By MarEx 2018-01-23 17:13:00

The Russian government is suing its own shipbuilder over repairs made to unnamed Russian naval vessels in 2014.

If the new lawsuit brought by the Russian Ministry of Defense is successful, United Shipbuilding Corporation (USC) will pay the Russian government $65 million; if the suit is not successful, the Russian government will still receive the same amount in the form of profit or asset value, as it owns and controls USC. The shipbuilder made roughly $100 million for the Federal Agency for State Property Management in 2016.

The suit targets Zvezdochka JSC, the largest ship repair conglomerate in Russia and one of the largest units of United Shipbuilding. Government-owned TASS News reports that the suit involves a complex contract with a large number of contractors and a diverse array of ships; the dispute is reportedly related to difficulties in securing parts for Soviet-era vessels. 

In a related suit brought last year, Zvezdochka sought to recover $120 million from the Ministry of Defense, alleging that the Russian government has not fully paid for repairs to a secret submarine. Beginning in 2004, the yard said, it undertook two stages of repair to the spy sub Podmoskovye. The first stage was worth approximately $400 million, and USC claimed that the Ministry of Defense has not paid this amount in full. However, the Moscow Arbitration Court found that testing and acceptance of the vessel was not yet completed as required under the contract, and it turned down USC's claim. 

According to USC, shipbuilding work on the sub was completed in October 2016. The Podmoskovye entered sea trials in November and December of that year, and it demonstrated that it met all design parameters, the yard said. 

The Podmoskovye is a Delta IV-class ballistic missile submarine that has been converted for special missions. Western defense analysts believe that she serves as the mother ship for the top secret Losharik deep-diving mini-sub.