Money Growing: It’s Not the End Yet

Cooperation between the architect and the holding started in 2000 and up until December 2004 everything was good. They created 8 projects together. And then, according to Van Egeraat, co-operation suddenly stopped. “They just stopped answering my calls, other forms of contact went unanswered and they stopped payments for projects,” says Van Egeraat. He says the response from Capital Group was: you did the work, we paid you, we weren’t satisfied with the result, and now we own what you have made. After a while, and still with no satisfactory response, the architect sued for unpaid monies and to protect his intelligent property rights. Capital Group, at this time, had already involved NBBJ in the design and construction documentation of Gorod-Stolits in Moscow-City.

The Court Decides

The case was considered in the Stockholm Arbitration Court as this was specified in an agreement, explains Elena Trusova, senior lawyer at Pepeliaev, Goltsblat & Partners. The main subject of the case was the infringement of copyrights. And in fact, when the case started Van Egeraat contacted NBBJ’s office to ask whose design drafts they were using to make sure they were not using his. In fact, they were not.

On March 17, 2008, the Stockholm International Commercial Arbitration Court, Van Egeraat won his case against Capital Group. He was awarded a considerable amount totalling $3,709,214 (2,548,937 euro). “This total sum consists of several components,” says Van Egeraat.

“Unfortunately we have several cases against Capital Group, this one just concerned Gorod-Stolits.” There are two more lines of discord: Russky Avangard and Barvikha Hills, the court cases for which, still have not been heard.

It should be noted that the claim was not fully awarded, but a major part of it, says Maxim Kulkov, a partner at Pepeliaev, Goltsblat & Partners. Copyright infringements concerning design drafts were proven. The lawyers managed to convince the court that even though the final product is not the same, to construct something similar could be possible only if somebody saw Van Egeraat’s work.

Money

The amount awarded was the sum of unfinished work, loss of profit and compensation for infringement of copyrights (which makes it $4 million). The court decided there are 3 such cases, which are: illegal use of drawings and drafts on the internet, use of these in advertising and in the mass media and developing the project without the approval of its designer. There is a court decision on the termination of all of the above. According to lawyers, a letter has been sent to Capital Group demanding them to follow the decision of the court, but there has been no response to this letter.

But this time the holding, which had never before in any way made any comments either concerning its relationship with Van Egeraat or architecture, reacted.

Vedomosti has a press release reflecting the official position of the holding. It says: “<…> a decision has been made, according to which EEA has been rejected in its demands, including the recognition of the copyright of Eric Van Egeraat to the Gorod-Stolits complex. The arbitration court has passed an order for the partial payment of 12.5 million rubles to EEA, as compensation in connection with EEA being removed from the project. Capital Group has always disagreed with the fact that this dispute should be considered in the Stockholm Arbitration Court, and therefore considers the decision of the court illegal, unreasonable, and essentially, prejudiced towards the Russian side in the dispute.”

The case has caused a wide response. But would it be so wide if it had not been a well-known architect? But this is a problem in other countries too, not just in Russia.

Maxim Atayants, head architect at the M. Atayants Workshop thinks that it is 100 per cent precedent. According to him, some of his Moscow colleagues share his opinion. “Designing is big business and big money and conflicts are impossible to avoid,” he says. “In different countries, depending on how developed the legal framework is in the country, such disputes are resolved differently.” “If everything will be settled in a civilised way, it is good because this means we are moving in the right direction,” says the architect. But he notes that under Russian legal conditions, such a resolution of conflicts is possible only for a famous person.

Atayants cites an interesting historical fact: in the middle of the seventeenth century well-known architect at the time Gian Lorenzo Bernini was invited by the French ministry to design the Louvre. He is probably most similar to the modern day definition of a celebrity. Having drawn up 2-3 designs for the Louvre, because of his intrigue in the French architectural society, Bernini left home for Paris with nothing but the clothes on his back. Arguments against his designs were the following: he knew nothing about local technical conditions, the climate, or the city’s art culture that are so difficult to embody because they poorly correspond to the functional requirements of the project.

But Bernini got paid for his work through the court, which set a precedent. Although this litigation wouldn’t be possible if the architect didn’t have the Pope as a client. The current case is déjà vu.

At the present time many Russian developers involve western architects. Usually all nuances are stipulated in a contract: designing of the main concept, drawing up drafts, etc, says Irina Naumova, PR director at Peresvet-Group. In her opinion, in any creative work, it is difficult to predict the final result and therefore payment is usually made in stages. Developers, she continues, prefer to follow the conditions of the contract rather than be involved in long litigation with the executor of the contract.

“If we offer an architect to design the concept of a project but offer no further work on it, we redeem the copyrights,” says Maxim Temnikov, a member of the board of directors at Mirax Group. However if there are any changes to the project during its realization, they are made only with the consent of the architect with whom the company initially worked with, he continues. And if the contract stipulates that the architect carries out the project until its completion, then the intellectual property rights to the building belong to the architect, says the top manager.

The court’s decision is not the end of the story. At the moment, the recognition and execution of the court’s decision still has to be carried out. Kulkov and Trusova will move to this stage. Kulkov specifies that for this purpose it is necessary to go to any court in Russia, or any other country where the defendant has property, with the appropriate documents. If the court’s decision is recognized and accepted in whichever court is chosen, says Trusova, the defendant must have funds in their account to pay the sum awarded. Or property can be seized, she emphasizes. In such a case a legal executor, according to the law, can collect all information on the property of Capital Group. At the moment, the lawyers do not have any specific information about the defendant’s property.