PARIS, Sept 22: France is readying itself for a diplomatic showdown with Russia over the threatened seizure, by a group of French investors, of a Russian naval vessel, which is scheduled to dock at Marseilles next month.

The investors say the Russian state owes them money on pre-1917 loans, this in spite of a reimbursement agreement worked out between the French and Russian governments back in 1996, and that they have no alternative, but to have the vessel seized by their lawyers.

The naval vessel, the Sedov, which is the largest tall ship in the world, was already at the center of a diplomatic imbroglio with France back in July 2000 when lawyers representing Swiss hotel group Noga had the vessel seized at the French port of Brest, where it was taking part in an exhibition of tall ships.

The attorneys had the Sedov seized at the time claiming that Russia had reneged on important sums it owed Noga, but a French court based at Rennes decided last July to confirm an earlier legal decision that the ship had been illegally seized. At the time, the ship was confined to port for 11 days, but was allowed to leave French waters after diplomatic pressure was brought to bear on France by Russia. French authorities say they are expecting the same kind of situation next month when the Sedov makes its way to Marseilles on what was intended to be a goodwill mission.

In spite of the precedent set by the Rennes-based tribunal, however, the Association Francaise des porteurs d’emprunts russes (AFPER) say they plan to get ahead and have their attorneys seize the four-masted sailing vessel at Marseilles next month, if, in fact, it decides to maintain its plans to visit the Mediterranean port city.

Already, in January of 2000, the Association - which represents holders of the Russian IOUs - seized the European Human Rights court claiming that the 1996 agreement between Russia and France did not properly indemnify them.

At the time, their president Pierre de Pontbriand noted that the 400 million dollar set aside in indemnities to the holders of the — emprunts russes — was “derisory” and “pathetic.”

The IOUs had been issued by the Russian state between 1867 and 1917 as a way of financing its development. The loans were popular at the time because they were issued in the wake of France’s defeat in the Franco-Prussian war of 1870, at which time the country’s alliance with Russia allowed France to break its diplomatic isolation in Europe.

When Russia decided in 1918 - the year following the Bolshevik revolution - to no longer reimburse the loans, they lost much of their attractiveness, and if they retained any value, it was usually to collectors of old documents.