A feud between two Russian billionaire shareholders in UC RUSAL, the world's biggest aluminium maker, will be aired in a London court, the company said on Tuesday, with a $47 billion supply deal in the balance.

Minority investors led by Viktor Vekselberg, who quit as chairman last month, are already in dispute with chief executive and main owner Oleg Deripaska, the former physicist who came out on top in the scramble for aluminium assets after the Soviet Union collapsed, for his refusal to sell the company's stake in Arctic miner Norilsk Nickel, which has since tumbled in value.

A source close to a RUSAL shareholder had told Reuters last week that Vekselberg's investment firm Sual Partners, which owns 15.8 percent of RUSAL, was opening a fresh dispute over the giant supply deal between RUSAL and commodities trader Glencore.

Sual, which Vekselberg runs with partner Len Blavatnik, claims the deal was struck in violation of its right of veto and is suing RUSAL, Glencore, Deripaska and his holding company En+, through which he owns 47.

While not directly related to the feud over Norilsk Nickel, the legal action marks an escalation in Vekselberg's campaign against Deripaska, in turn part of a wider clash between Russia's metals oligarchs, who made their fortunes from the corpse of the Soviet command economy in the 1990s.

Deripaska's own net worth was effectively wiped out when the markets turned during the financial crisis, one banker close to him has told Reuters, and RUSAL had to restructure the debt burden it took on to finance the Norilsk deal he had driven through.

RUSAL said on Tuesday the clash over the supply deal would be heard by the London Court of International Arbitration (LCIA), a disputes resolution forum provided for in the RUSAL shareholders agreement.

The company has engaged counsel to advise the company in the arbitration and will vigorously defend its position, RUSAL said in a statement.

The company does not expect its involvement in the arbitration would have any material adverse impact on its operations, it added.

Under the LCIA's rules it is required to respond to arbitration requests within 30 days. In the event of a favourable response, a tribunal can be formed to review the case. Proceedings are typically lengthy.

RUSAL's board is holding a regular meeting in Cyprus during the day, though a spokesman declined to say what was on the agenda.

MISSED MERGER

RUSAL bought a quarter stake in Norilsk at the top of the market in 2008 for an estimated $14 billion, but Deripaska's hopes of merging the two firms were dashed by the financial crisis.

Vekselberg had supported offers by Norilsk over the past year and a half to buy back the stake for as much as $13 billion, in a step that would have helped RUSAL clear its $11 billion debt burden.

He was consistently opposed by Deripaska, leaving RUSAL nursing paper losses on the stake, which is now worth around $9 billion.

The supply deal between RUSAL and Glencore runs for six years and will see the share of RUSAL's output that Glencore markets rise to 50 percent from 30 percent, according to a source familiar with the contract details.

Deripaska confirmed the deal was approved in December but has given no details.

Glencore, which owns 8.75 percent of UC RUSAL, said on Tuesday it had received a request for arbitration, but declined further comment.

A cyclical downturn in aluminium prices and shareholder frictions have knocked about 60 percent off RUSAL's Hong Kong-listed shares since their peak last April.

The shares have not traded since Thursday, as Hong Kong markets are closed for the Easter holiday.

(Reporting by Lee Chyen Yee; Editing by Matt Driskill and Will Waterman)