New Delhi: Domestic conglomerate Essar's latest US possession - Esmark - is caught in a legal tangle with global steel giant ArcelorMittal, which is seeking over Rs 2,000 crore in damages for defaulting on a billion-dollar deal.

Esmark finds itself in a precarious condition as it cannot settle any claim over 0.5 million dollars (Rs two crore) without Essar Steel's consent as per terms of merger with the Ruias-promoted firm. Besides, the Indian entity can seek up to 22.5 million dollar (Rs 90 crore) from the US company in case the deal falls apart.

ArcelorMittal has filed a suit against Esmark in the Supreme Court of the State of New York for the latter's breach of contract in buying its Sparrows Point steel mill at a consideration of 1.35 billion dollars.

The world's largest steel maker ArcelorMittal, run by the world's richest Indian Lakshmi Mittal, later sold Sparrows Point facility to Russian steel giant OAO Severstal on May 7 for 810 million dollars.

Luxembourg-based ArcelorMittal is seeking damages in excess of 540 million dollars -- the amount equivalent to the difference between Esmark's promised buyout price and the amount eventually it received from Severstal for the plant.

Esmark and ArcelorMittal had reached the contract on August 1, 2007, which was later terminated on December 16 the same year after Esmark failed to complete the transaction. Esmark had beat a number of steel firms, including Brazil's CSN, last year to win Sparrows Point mill in Baltimore.

As such, Esmark is already fighting a claim of over 200 million dollars sought from Wheeling-Pittsburgh, which it had acquired last year, in a breach of contract case filed by leading US coal producer Massey Energy. This claim also cannot be settled without Essar's consent.

Source : PTI