Category: Ukraine

Sayenko Kharenko has advised GoIT on an investment from Horizon Capital.

GoIT operates as an international group of companies in the educational technology business. According to Sayenko Kharenko, “through its innovative online learning platform, GoIT provides educational services to students from more than 30 countries and constantly expands its presence in different regions. Founded in Ukraine, the company is actively expanding in Poland, Romania, Mexico, Colombia, the Philippines, and other new countries with its educational offering, aiming to enter two new markets each year. It has helped thousands of career switchers secure jobs in the IT sector, with 850+ tech employers hiring GoIT alumni.”

Horizon Capital is a private equity firm in Central and Eastern Europe with over 29 years of investment experience, managing over USD 1.5 billion in assets through funds backed by over 40 institutional investors with a capital base exceeding USD 630 billion.

The Sayenko Kharenko team included Partner Alina Plyushch, Senior Associate Dmitriy Riabikin, Associate Zarina Khalimon, and Junior Associate Dmytro Zaiachkivskyi.

Avellum and Hillmont Partners have successfully represented Argentem Creek Partners and Innovatus Capital Partners before Ukraine’s Supreme Court in bankruptcy proceedings against GNT Group companies Olimpex Coupe International and MetalsUkraine.

Argentem Creek Partners is a US-based investment fund. Innovatus Capital Partners is a US-based asset management company. They both specialize in emerging market lending.

“The victory in the Supreme Court was a significant step in the course of protecting foreign investors from the misconduct of the former management of the GNT Group of Companies,” Avellum announced. According to the firm, “the US investors were forced to initiate enforcement proceedings against the GNT Group as a debtor under the facility agreements due to the group’s systematic failure to perform its loan obligations. Despite multiple extensions granted by the US lenders, the GNT Group did not even begin to perform its obligations to its creditors. Instead, the debtor initiated a series of actions aimed at illegally withdrawing assets and unreasonably recycling (destroying) huge grain stocks without providing any supporting documents. This left the US investors with no choice but to resort to legal debt collection mechanisms.”

According to Hillmont Partners, “in order to protect the assets, Madison Pacific Trust Limited, a credit agent acting on behalf of ACP, initiated bankruptcy proceedings against two GNT Group companies – Olimpex Coupe International Limited Liability Company (Olimpex) and MetalsUkraine Corporation Ltd (MetalsUkraine). During the first six months of 2023, the Economic Court of the Lviv Region opened bankruptcy proceedings against Olimpex and MetalsUkraine, appointed bankruptcy trustees, and imposed a moratorium on the settlement of creditors’ claims.”

Finally, on November 15, 2023, the Supreme Court ruled in favor of Madison Pacific Trust Limited on the cassation appeal filed by the former owners of the GNT Group against Olimpex and, on November 16, 2023, on the cassation appeal filed against MetalsUkraine. “The Supreme Court confirmed the validity and justification of the decisions of the Economic Court of the Lviv Region and the resolutions of the Western Economic Court of Appeal,” the firms reported. “These decisions will help prevent the GNT Group from further illegally withdrawing the property of Olimpex and MetalsUkraine, which are involved in the grain corridor. This will help to keep a significant number of jobs and maintain substantial revenues to the state budget of Ukraine, which is important for the smooth operation of the port industry during the war.”

The Avellum team was led by Senior Partner Kostiantyn Likarchuk and Partner Vadim Medvedev.

The Hillmont Partners team was led by Senior Partners Valentyn Zasukha and Andrii Nyzhnyi and Partner Andrian Artsishevsky.

Sayenko Kharenko, working with Appleton Luff, has successfully represented PJSC Stalkanat in the antidumping administrative review regarding prestressed concrete steel strand, conducted by the US Department of Commerce, resulting in a 0% (no-dumping) rate being granted.

According to the firm, the Federation of Employers of Ukraine had supported the position of PJSC Stalkanat during the review, while the DOC review specifically recognized the unique challenges of exporting from Ukraine during the Russian invasion and Stalkanat’s fair pricing. A 19,03% rate had been in effect following the results of the initial investigation.

“This case is unique for Ukraine because this is the first case in history when the review/investigation is terminated with a 0% dumping margin rate,” Sayenko Kharenko reported. For context, “the US now applies eight anti-dumping duties to imports of different products from Ukraine. The rates of duties are very high, from 23% to 237,9%. Some anti-dumping duties are very old and have been applied since 1994.”

The “successful case of Stalkanat confirms the readiness to review the anti-dumping measures for the Ukrainian producers. Therefore, now is a very good moment to ask for a review,” the firm announced.

Back in 2020, Sayenko Kharenko had also successfully represented the interests of the PJSC Manufacturing Association Stalkanat-Silur in a sunset review of antidumping measures against the import of wire ropes originating from China into Ukraine (as reported by CEE Legal Matters on June 17, 2020).

The Sayenko Kharenko team included Partner Anzhela Makhinova and Associate Oleksandra Sandul.

Former Counsel Iryna Kobets has been appointed a Partner with the LCF Law Group in Kyiv, where she will continue to head the firm’s Dispute Resolution practice.

According to the firm, she works on mandates covering the agricultural sector, banking and finance, energy, and the industrial and manufacturing complex. She began her career by joining the LCF Law Group in 2014 as an Associate. She made Senior Associate in 2018 and was appointed a Counsel and Head of Litigation in 2020.

“We are proud of Iryna and appreciate her dedication, professionalism, ability to find solutions in the most complicated cases, and commitment,” LCF Law Group Managing Partner Anna Ogrenchuk commented. “Our congratulations on her well-deserved promotion. We wish Iryna new achievements and recognitions.”

“Iryna Kobets is a brilliant lawyer, a bright speaker, and a professional practice leader,” Senior Partner Artem Stoyanov added. “Her thirst for victory, honesty, responsibility, and thorough approach to any case are highly valued by both the firm and clients.”

Against the backdrop of relentless conflict and uncertainty, Sayenko Kharenko Partner Nazar Chernyavsky offers a rare glimpse into the current state of his war-torn country and its resilient legal sector, shedding light on the challenges and adaptations of the Ukrainian people, the country’s legal industry, and the significant strides made in mental health support and economic resilience.

With the war raging in Ukraine, there is a lot of curiosity about the current situation in the country and what might come next. “It’s the question everyone asks but, truthfully, nobody knows for sure,” Chernyavsky begins.” We’re witnessing heavy fighting reminiscent of World War I, with two large armies engaged in daily combat. The progress is slow, and the mixed messages from outside about ongoing support add to the uncertainty,” he says.

As for the Ukrainian people, Chernyavsky reports that “remarkably, most have adapted. We discuss potential changes in government, reforms, and our path to closer integration with the EU. But the uncertainty regarding the end of the war remains,” he says. Still, the war has taken its toll on the overall well-being of all. “Working in Ukraine now involves enormous stress – we’ve seen many breakdowns. As a firm, we’re focusing on creating positive emotions in the office, like small gatherings for a better atmosphere. Also, we’re deeply involved in our charity foundation, focusing on mental health rehabilitation for war veterans and their families. Partnering with NGOs, we’ve established rehabilitation centers and plan to open more,” he says.

Focusing more on the legal sector and developments within it, Chernyavsky reports that “activities have resumed, although we’re not seeing large transactions yet. There’s a surge in small transactions and disputes, including international and national litigation. Tax disputes with the government and advising on tax matters for businesses relocating outside of Ukraine are also significant areas of work,” he explains. “Additionally, we’re heavily involved in physical relocation of production within Ukraine, dealing with real estate, zoning regulations, and permits.”

Interestingly, Chernyavsky says that “one of the most significant new areas is white-collar crime and sanctions-related work. Authorities are investigating and freezing accounts or shares with any Russian connections,” he says. “We’re helping international businesses, often with complex ownership structures, to navigate these challenges and continue operating in Ukraine,” Chernyavsky notes in conclusion.

Covington & Burling has successfully represented DTEK before the International Arbitral Tribunal seated in the Hague in a case against Russia over seized Crimean assets.

According to DTEK, the tribunal “ordered Russia to pay DTEK USD 267 million in damages for the seizure of company assets in illegally occupied Crimea. The lawsuit, first filed in 2017, relates to the seizure of the Group’s DTEK Krymenergo business, an energy distribution and supply company. Russia seized the assets following the occupation of Crimea in 2014.”

“DTEK intends to initiate the process for recognition and enforcement of the award in countries where Russian assets are located without delay. The award is enforceable under the 1958 New York Convention,” the company announced.

The Covington & Burling team was led by Partners Marney Cheek and Jonathan Gimblett.

Amid reports of substantial volumes of foreign exchange proceeds going unreceived under certain export transactions, the National Bank of Ukraine (NBU) has taken steps to shorten the mandatory settlement deadlines for the export of certain agricultural products.

The list of affected products includes wheat, a mixture of wheat and rye (meslin), rye, barley, oats, corn, soybeans, seeds of barbarea and rapeseeds, sunflower seeds, various types of oil (soybean, sunflower, safflower, cottonseed, barbarea, rapeseed and mustard oil), and press cake.

Effective as of 11 November 2023, the mandatory settlement period for exporting these goods has been reduced from 180 days to 90 days. As a result, local agricultural exporters must ensure the receipt of foreign currency proceeds in their Ukrainian bank accounts within 90 calendar days from the date of exporting these goods.

The NBU’s decision has been adopted amid the Ukrainian government’s broader efforts to increase supervision of agricultural exporters’ compliance with local foreign exchange regulations.

It is important to note that the settlement deadlines for exporting and importing other categories of goods remain 180 days, subject to certain exceptions.

Context

These recent changes have been enacted under the ongoing martial law regime, instituted in Ukraine on 24 February 2022. Martial law has resulted in significant capital outflow restrictions and stricter foreign exchange controls.

Currently, the overall foreign exchange regime in Ukraine remains highly restrictive, and transactions not explicitly permitted by the NBU are prohibited during the martial law period or until the NBU lifts the relevant restrictions.

By Serhiy Chorny, Managing Partner, Bohdan Diakovych, Senior Associate, and Polina Korotka, Junior Associate, Baker McKenzie

The National Bank of Ukraine (“NBU”) further relaxed currency control restrictions allowing Ukrainian borrowers to make early repayments of cross-border foreign currency loans extended after 20 June 2023 to development finance institutions (“DFIs”) and foreign export credit agencies (“ECAs”).

To recap, back in June 2023, the NBU permitted the repayment of cross-border foreign currency loans to DFIs and ECAs, but expressly prohibited early repayments (both voluntary and mandatory). On the contrary, international financial institutions (“IFIs”) (such as EBRD and IFC) are fully exempted from the moratorium on foreign currency cross-border payments.

Please refer to our legal alert for more details on the changes to currency control restrictions effected in June 2023.

These recent changes are expected to remove the hurdles preventing DFIs and ECAs from providing financing for Ukrainian businesses on an equal footing with IFIs.

We will keep monitoring the changes of Ukrainian currency control rules to provide you with further updates.

Additional notes

This LEGAL ALERT is issued to inform AVELLUM clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The information above does not constitute legal or other advice and should not be considered a substitute for specific advice in individual cases.

By Glib Bondar, Senior Partner, and Yaroslav Pavliuk, Associate, Avellum

Integrites has advised the Hypra Fund on its USD 10 million acquisition of a minority stake in US-Ukrainian digital product manufacturer Trinetix.

Hypra is a Ukrainian venture capital fund.

The Integrites team included Senior Partner Illya Tkachuk, Associate Sofiia Movchanets, and Junior Associate Iryna Karazhbei-Truska.

Integrites was unable to disclose further information on the deal.

The forthcoming Consumers’ Rights Protection Law (“Law”) in Ukraine, scheduled to take effect on 7 July 2024 (contingent on the cancellation of martial law in Ukraine), is poised to harmonize Ukrainian consumer protection legislation with key EU norms. This new Law aims to modernize consumer protection requirements, especially in the e-commerce context.

Key takeaways

Expanded scope of application. The Law extends consumer protection requirements to encompass marketplaces, classifieds and price aggregators, placing certain precontractual information obligations on them. Notably, the scope of application is also broadened to include food products, while specific categories such as medical services and gambling are excluded.
In addition, the Law introduces regulations for the provision of digital content and services, as well as the new right of withdrawal for digital content contracts.
​Warranty obligations. For new goods, the Law mandates a two-year warranty period, one year for used goods and 10 years for real estate. However, where the product’s service life is less than two years, the warranty period cannot exceed such period.

Mandatory registration for e-commerce. By 7 July 2026, the Law necessitates the launch of the E-Consumer Portal. E-commerce businesses must undergo mandatory registration through this portal to attain “verified seller” status and display the corresponding badge in their online stores. The E-Consumer Portal is also aimed at facilitating interactions between e-commerce businesses, consumers and the consumer protection authority, including through enabling consumers to file official complaints. Additionally, the Law empowers the consumer protection authority to request ISPs to restrict access to the websites of unregistered e-commerce businesses.

Information obligations. Precontractual information obligations are revised for both online and offline contexts, with an expanded list of required information for distance contracts. Various methods of providing this information to consumers are recognized, including online formats, such as official websites of manufacturers/sellers.

Out-of-court dispute resolution. The Law introduces a new out-of-court dispute resolution mechanism for cases involving products valued up to approximately USD 1,350, breach of warranty repair or replacement requirements, and delivery term violations for off-premises contracts.

Recommendations

The impending Law represents a significant step forward in consumer protection and significantly aligns Ukraine with EU standards. Businesses are advised to adapt their processes to comply with these new requirements before the Law takes effect. Furthermore, continuous monitoring of developments in this field is recommended, as further changes are likely as Ukraine continues its EU integration efforts.

By Oleksiy Stolyarenko, Partner, and Dmytro Skydan, Associate, Baker McKenzie