Bula Resources has settled an action against a firm of London solicitors. The case, arising from a disastrous investment made in Russia in 1994, was settled without payment.

Bula wrote off £8 million as a result of a 1994 oil deal with a company called Russian Corporation. The deal fell apart soon after it was agreed. Following the collapse of the deal, Bula initiated legal action for damages against Gouldens, the London firm of solicitors which had provided legal advice in relation to the contract.

In November last year Bula directors told shareholders the company might have to withdraw from the proceedings because it had been asked to provide a banker's guarantee for sterling £250,000 to provide security of costs for Gouldens. At that date, Bula had spent £367,000 in legal fees fighting the case.

Yesterday Bula made a short announcement in relation to the case:

"Bula Resources plc announces that Bula and Gouldens have today settled their differences in respect of an action commenced by Bula against Gouldens in relation to oil fields in Russia. The settlement is on the basis that Bula have withdrawn all actions now and forever in relation to the issues without payment.

"Bula have paid sterling £10,000 and agreed to make a further contribution of sterling £75,000 towards the legal costs of Gouldens. Both parties have agreed that no other comments shall be made in respect of this matter."

The Russia deal was one of two disastrous Russian oil deals entered into in the mid-1990s. Between them they cost Bula over £20 million. The company is now hoping to develop deals in Iraq and Libya. Earlier this month the company said it had concluded an agreement under which it will buy two million barrels of crude oil from Iraq, and sell it on to a major international oil firm for a slim margin. The deal is part of the UN's oil-for-food programme for Iraq, and is subject to the approval of the UN committee overseeing the programme.