Alrov (Israel) Ltd. (TASE: ALRO) chairman Alfred Akirov has asked the Tel Aviv District Court to set aside the judgment by the arbitrator in the case between Alrov and Hilton Hotels on the grounds that the arbitrator had a conflict of interests. Arbitrator Adv. Dr. Israel Leshem ordered Alrov to pay Hilton $20 million.
Leshem ruled that Alrov subsidiary Alrov Properties and Lodgings Ltd. (TASE: ALRPR) illegally abrogated its management agreement for the David Citadel Hotel (then called the Jerusalem Hilton) in Jerusalem in May 2001. Alrov Properties cancelled the management agreement for the hotel, on the grounds that Hilton was in breach of the agreement.
The hotel is across the street from Akirov's Mamilla project next to the Old City of Jerusalem.
During the hearing, Akirov said, "Let the hotel burn down, just so the Hilton won't get its hands on it." He hired some of Israel's top flight lawyers to represent him in the arbitration: Adv. Pinhas Rubin and Ofer Tzur of the Gornitzky & Co. law firm, Adv. Ram Caspi, and Adv. Gad Ticho.
In the request for voiding the ruling, Akirov claims that, after the ruling, he learned that Leshem's firm, Meitar Liquornik Geva & Leshem Brandwein, represented part of the consortium that financed The Blackstone Group LP's (NYSE: BX) acquisition of Hilton Hotels Corporation for more than $20 billion. The Meitar firm registered liens on Hilton properties, money, and rights in Israel in favor of the consortium.
Akirov claims that Meitar partner Clifford Felig had an interest in Hilton Hotel's soundness, so that it could repay the financing. Akirov claims that this created a conflict of interests, and had he known of it beforehand, he would have asked for a new arbitrator.
Akirov claims that the fact that Leshem failed to disclose the conflict of interest was, in itself, grounds for cancelling the ruling.
Published by Globes [online], Israel business news - www.globes-online.com - on February 16, 2009
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