Court is Now in Session: Severodvinsk SSGN

Severodvinsk SSGN "Severodvinsk"
(image courtesy of SevMash)

On August 3, 2012, the Russian Federation Ministry of Defense filed a petition with the Moscow Arbitration Court seeking RUB 68,736,790 from Malakhit St. Petersburg Naval Bureau of Machine-Building as a penalty for exceeding the deadline of a 1986 design contract related to Severodvinsk-class nuclear-powered submarine (SSGN) "Severodvinsk".

The following timeline provides some background and context to the case:

• On October 31, 1986, the MOD and Malakhit signed State Contract Number 102/86-Ye/554-86 for experimental design work (OKR) "Project 885" [Project 885 = Severodvinsk SSGN]. Under the contract, Malakhit was to produce design documentation for the Severodvinsk SSGN.


• On December 21, 1993, "Severodvinsk" was laid down at SevMash.


• Between 1996 and 2000, no major work was performed due to a lack of financing. Following some redesign work and with a new flow of money, construction recommenced in 2001.


• In February 2002, SevMash officials stated that deliveries of equipment from sub-contractors were delaying the submarine's construction.


• By July 2007, the submarine's reactor has been installed, and the steam turbine plant was to be delivered "soon."


• On April 8, 2009, the MOD issued a decision to test 22 prototype pieces of equipment on the submarine as a whole during factory sea trials. The prototypes listed in the MOD's decision included items designed by Malakhit under OKR "Project 885". Malakhit explained to the MOD that it could not finalize the working design documentation until all testing was completed.


• On June 15, 2010, "Severodvinsk" was finally launched.


• On March 31, 2011, the two sides signed Supplementary Agreement Number
  N/1/2/0217/D54-11-D203, under which Malakhit was to complete OKR Stages XXVII 3.1.3.3 (Rakonda automatic control system), 3.1.3.6 (Bulat-Ya integrated technical equipment control system), 3.1.3.7 (Mineral-Ya electro-hydraulic equipment package), 3.1.3.9 (SM-346 launcher and SM-353 universal loading device), and 3.3 by November 25, 2011.


• On September 12, 2011, "Severodvinsk" got underway for its first day of factory sea trials.


• On May 29, 2012, the MOD formally complained to Malakhit about non-fulfillment of its contractual obligations. When the two sides could not resolve this issue, the MOD filed its suit in August.

In court, Malakhit argued that it had fulfilled all contractual obligations that did not depend on SevMash, which built "Severodvinsk". All other obligations were hampered by SevMash's continued testing of the submarine. And the judge agreed, ruling in favor of Malakhit on February 8, 2013.

On May 8, 2013, the MOD filed an appeal with the 9th Arbitration Appellate Court, which also ruled in favor of Malakhit on June 19. On August 30, 2013, the MOD filed its final appeal with the Moscow District Federal Arbitration Court; it, too, ruled in favor of Malakhit on October 14.

Two months later, on December 30, the MOD took possession of "Severodvinsk". It joined the RF Navy on June 17, 2014, although the submarine still remains in a "trial operation" status.