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LEGAL PROCEEDINGS
12 Months Ended
Dec. 31, 2011
Commitments and Contingencies Disclosure [Abstract]  
Legal Matters and Contingencies [Text Block]

NOTE 5 - LEGAL PROCEEDINGS

 

In the normal course of business, the Company may become subject to lawsuits and other claims and proceedings. Such matters are subject to uncertainty and outcomes are not predictable with assurance. Management is not aware of any pending or threatened lawsuits or proceedings which would have a material effect on the Company’s financial position, liquidity, or results of operations other than as follows:

 

On March 25, 2009, Intercomsoft commenced an action in the court of first instance in Geneva Switzerland for the appointment of an arbitration tribunal in connection with its claims against the Ministry of Economics of the Republic of Moldova and the Government of the Republic of Moldova (the “Moldovan Defendants”) seeking damages for breach of contract and an injunction prohibiting Moldova from producing further essential government documents pursuant to the terms of the ten year Supply Agreement under which Intercomsoft had produced, since 1996, essential government documents for the Republic of Moldova including passports, driver’s licenses, permits and national identification documents (the “Swiss Proceeding”).

 

The Swiss court granted Intercomsoft’s request to establish an ad hoc arbitration panel to hear the merits of its claims in the Swiss Proceeding.  Two members of such panel have been appointed. To date, the Government of Moldova has failed to appear in the Swiss Proceeding and is currently in default with respect to its rights to appoint one of the three members of the ad hoc arbitration panel established in the Swiss Proceeding.  The Swiss court is currently awaiting a response from the Government of Moldova regarding service of the judgment establishing the ad hoc arbitration panel. There can be no assurance as to the outcome of the Swiss Proceeding.

 

In a separate action, on or about November 5, 2010, the Moldovan Defendants commenced another action before the courts of Moldova claiming that the Supply Agreement was properly terminated on April 29, 2006 and seeking legal costs in the amount of approximately $1.6 million (the “Moldovan Proceeding”). On or about November 24, 2010, Intercomsoft asserted a counterclaim in the Moldovan Proceeding seeking redress for its aforementioned claims, and seeking damages of approximately $51 million, including interest and penalties which continue to accrue pursuant to the terms of the Supply Agreement. On July 26, 2011, the District Court in Chisinau, Moldova issued a Judgment rejecting the Moldovan Defendant’s claim for legal costs of approximately $1.6 million as unfounded, and awarding approximately $35.6 million in damages to Intercomsoft. The Moldovan Defendants appealed the decision of the Moldovan District Court to the Economic Appeal Court in Chisinau, Moldova. On December 13, 2011, the Appeal Court partially upheld the Judgment of the District Court, similarly rejecting the Moldovan Defendant’s claim, and reduced the damage award to Intercomsoft to approximately $20.75 million. The Moldovan Defendants have appealed the decision of the Appeal Court to the Supreme Court of Justice in Moldova. The case is currently pending in that court.

 

There can be no assurance as to the outcome of such arbitration proceedings and actions.