Surgut added in the statement that deducting capital investment from net profits is legal in the Russian Federation, and that it had a nearly decade-long history of deducting the cost of capital investments before declaring net profits to shareholders.

“Why did the Harvard minority shareholders disregard this fact at the moment when they were buying the shares?” Surgut asked in the statement.

This is not the first arbitration case brought against Surgut, Kelleher said.

But she added that Harvard is the first party to bring action against Surgut in the United States.

In its statement, Surgut said that Russian law makes Harvard’s attempt to arbitrate the case in America—rather than in the Russian Federation—illegitimate.

Harvard, on the other hand, asserted in its claim that the Deposit Agreement signed by Surgut in 1998 that enabled it to sell ADRs mandates that the arbitration must be conducted in the United States.

Harvard holds four percent of the preferred shares of Surgut. In total, 25 percent of Surgut is owned by preferred shareholders.

Kelleher said Harvard is attempting to gain leverage against Surgut in negotiations by applying for class-action status. If granted, class-action status would enable Harvard to act on behalf of all preferred shareholders. Harvard argued in its claim that all preferred shareholders suffered similar losses.

But in its claim, Harvard said it would pursue arbitration even if its request for class-action status is denied.

—Staff writer Alan J. Tabak can be reached at tabak@fas.harvard.edu.