DECISIONS OF THE INTERNATIONAL COMMERCIAL ARBITRATION COURT ON THE LEASE AGREEMENTS CONCERNING STOCKMANN'S DEPARTMENT STORE IN SMOLENSKY PASSAGE SHOPPING CENTRE IN MOSCOW CITY CENTRE

STOCKMANN plc Company Announcement 5.5.2008 at 14.15

DECISIONS OF THE INTERNATIONAL COMMERCIAL ARBITRATION COURT ON THE LEASE AGREEMENTS CONCERNING STOCKMANN'S DEPARTMENT STORE IN SMOLENSKY PASSAGE SHOPPING CENTRE IN MOSCOW CITY CENTRE

Stockmann's department store has operated in leased premises in the Smolensky Passage shopping centre in Moscow city centre since 1998. The lessors of Stockmann in the said shopping centre are Mostroiekonombank and the company of Smolensky Passage shopping centre. Under the lease agreements, the company has an option to extend the lease until 2018. In accordance with the lease agreements, Stockmann has in 2006 informed the lessors that it will exercise this option. The lessors have disputed the existence of the option and Stockmann has, in accordance with the agreements, submitted the matter to be decided by the International Commercial Arbitration Court of Moscow (ICAC).

As regards the lease agreement with the company of Smolensky Passage shopping centre covering approximately 90 per cent of the department store's premises, the Arbitration Court has confirmed that Stockmann has the right to extend the lease agreement for another 10 years under the terms and conditions of the lease agreement currently in force. The Arbitration Court has obliged the company of Smolensky Passage shopping centre to sign with Stockmann a new lease agreement that adheres to these terms and conditions and can be registered in accordance with the requirements of the Russian law. The new lease period will be from May 1, 2008, to April 30, 2018.

A different composition of the Arbitration Court found that Stockmann has the option to another ten years of lease under the current terms and conditions also regarding the lease agreement with Mostroiekonombank that covers the remaining 10 per cent of the department store's premises. In deviation to the other decision, this decision refers to section 40 of the Russian tax law according to which the Russian tax authorities have, in exceptional cases, the right to require adjusting of the rate of rent provided that it essentially differs from the market rate. One of the three arbitrators deciding on the case submitted a dissenting opinion in which it was held without any reference to the Russian tax law that the lease agreement should be continued under the terms and conditions currently in force. Hence, the Arbitration Court delivered two partly different decisions on the materially similar questions.

In order to become enforceable, the decisions of the Arbitration Court must further be confirmed by the general court of first instance of Moscow.

Stockmann believes that the recently awarded decisions enable the operation of the department store in the current premises in accordance with the original intent of the lease agreements.

STOCKMANN plc

Hannu Penttilä CEO

DISTRIBUTION OMX Nordic Exchange Helsinki Principal media





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