One of the most expensive lawsuits in British history settled today after three years of bitter accusations and tens of millions of pounds spent on legal fees.

The case, which arose from a fight for control of an aluminium smelter in Tajikistan, one of central Asia’s poorest countries, began last month at the High Court in London.

Tajik Aluminium Company (Talco), the smelter’s state-controlled operator, accused its former business partner, Azar Nazarov, of defrauding it of more than $500 million (£315 million) between 1996 and 2004 through a corrupt relationship with the plant’s former manager. Mr Nazarov, who denied the allegations, sought around $130 million in a counter-claim against Talco.

In a statement this morning, Talco said that both parties had reached a settlement and that proceedings had been terminated with no admission of liability by either side. The terms of the settlement were confidential.

The acrimonious fight for control of the smelter, the world’s third-largest and Tajikistan’s only significant industrial asset, led to numerous legal battles in several countries before the trial started.

It entangled two of the world’s most powerful aluminium producers, Rusal, the Russian company controlled by Oleg Deripaska, and Norsk Hydro, the Norwegian industrial giant, and featured a series of extraordinary allegations by both sides.

At the High Court last month, lawyers for Talco accused Mr Nazarov, a Tajik businessman now based in London, of paying millions of dollars in bribes to the plant’s former manager, including the gift of a £300,000 flat in Marylebone, London, for the use of the manager’s son.

In response, lawyers for Mr Nazarov accused individuals connected to the Tajik Government of using the allegations as a “smokescreen” to cover their own fraud.

Brian Doctor, QC, told the court that that people connected to President Emomali Rahmon, the country’s head of state, had unlawfully ousted Mr Nazarov in December 2004 and had since diverted more than $20 million a month in profits to an offshore holding company, leaving Talco unable to service its debts despite four years of booming aluminium prices.

Mr Doctor told the court that Talco had pursued the case with a “complete lack of restraint” and questioned why it was spending the equivalent of five per cent of its gross national product on the case. “Virtually no case in legal history has cost the claimant so much,” he said.

In a statement issued at the time, Talco denied Mr Nazarov’s allegations of fraud and said its legal costs had spiralled because of the “time-consuming and expensive process piecing together the facts from the distortions and deceptions of the conspirators and their accomplices”.

According to disclosures before the trial, Herbert Smith, the City law firm acting for Talco, said it expected to spend about £55 million by the end of the case. Clyde & Co, representing Mr Nazarov, projected costs of £22 million; other lawyers added another £10 million to the bill.

However, lawyers close to the case said that those figures related only to the proceedings in London and that the true cost of the dispute, when related proceedings were included, was greater. In one such action in the British Virgin Islands, Talco has accused Rusal, Mr Nazarov's former joint venture partner, of involvement in the fraud.

It is believed that only two commercial cases in British legal history have cost more. The staggering legal bill caused concern that the case could tarnish London’s reputation as a forum for commercial disputes and encourage companies to fight legal battles in less expensive jurisdictions.

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