One of the oldest Canadian-owned businesses in Russia, Moscow's Aerostar Hotel, has been shut down and its Canadian manager ejected by private guards working for a junior Russian partner.
"We were illegally evicted," said the Aerostar's Canadian general manager, Andrew Ivany, who has run the business on behalf of IMP Group of Halifax for the past 14 years.
"They came in last Friday, about midday, with about 30 people, and gave us two minutes to get out."
About 150 guests were also forced to leave over the weekend and find alternative accommodation.
The hotel was seized by Aviacity, a Russian company that owns 25 per cent of the Aerostar joint venture and also recently acquired property rights to the building.
Aviacity says it will reopen the Aerostar in October under its own management.
But Mr. Ivany said the Canadian company's lease, negotiated in 1989, is good until 2017.
A Canadian embassy official, who asked not to be named, said the federal government has sent an official note expressing "deep concern" over the incident to Russia's Foreign Ministry.
"We are in close contact with senior Russian authorities, and they share our concern," over the use of force to settle a business dispute that has been before Russian courts for the past year, the official said.
"We are pressing them regularly and intensively. We want to see the Aerostar returned to its rightful management without delay," he said.
The Aerostar, one of the first international hotels to open in Russia following the collapse of the Soviet Union, has been plagued by frequent conflicts between its Canadian and Russian partners.
The hotel was originally 50 per cent owned by IMP, with the other half divided between the Russian airline Aeroflot and the Main Services Dept. of Russia's Aviation Ministry.
Last year, however, Aviacity acquired Main Services's stake and went to court to void the lease. The issue is still working its way through Russia's complex legal system.
Aviacity itself is under criminal investigation by Russian authorities for the manner in which it acquired the government's share in the Aerostar.
The Canadian company built the four-star Aerostar around the shell of an unfinished Soviet-era hotel, with a $60-million loan from the Royal Bank of Canada, and opened it for business travellers in 1991.
Under the original joint venture terms, the Canadians were to manage the hotel and control the sub-leasing of its 6,200 square metres of plush, central Moscow office space.
During the 1990s, there were repeated conflicts with Aeroflot, which complained that the Canadian company had been given too sweet a deal.
The IMP Group won several rulings at the International Arbitration Court in Stockholm upholding the validity of the original contract, though the Russian authorities have done little to enforce those judgments.
In 1997, prime minister Jean Chrétien interceded with Russian leader Boris Yeltsin to help resolve one dispute over control of the Aerostar.
An undisclosed agreement was reached between the main partners in 1998, after the federal government briefly impounded an Aeroflot airliner in Montreal, and peace had reigned between them until now.