Category: Ukraine

On 11 April 2023, the President of Ukraine signed Law of Ukraine “On Collective Bargaining Agreements and Contracts” No. 2937-IX, dated 23 February 2023 (“Law”).

The Law aims to fulfil Ukraine’s commitments towards European integration.

Most provisions of the Law will come into force six months after the martial law is lifted.

In particular, the Law:

• provides for the possibility of suspending certain provisions of a collective bargaining agreement (“CBA”), and specifies the conditions and procedure for the suspension and a list of
• force majeure circumstances that may serve as grounds for such suspension;
• determines that at companies with several trade unions a joint representative body responsible for negotiating a CBA should be formed by concluding an agreement between such trade unions. The joint representative body should notify the employer of the same in writing;
• expands the list of possible provisions of a CBA. From now on, among other things, a CBA may contain provisions on:
• professional training, requalification, and advanced professional training of employees;
• prevention of mass layoffs;
• reasonable adjustment of working conditions for employees in need (including persons with disabilities);
• occupational health and safety;
• working conditions, insurance, and medical care for employees; and
• measures to prevent and combat discrimination at work; prevention and counteraction to mobbing (bullying);
• requires that from now on amendments to a CBA be subject to registration by local executive authorities or local self-government bodies; and
• determines that parties to a CBA must report on its implementation at least once a year.

We will be monitoring further updates to the legislation in this regard.

By Bogdana Parkhomchuk, Senior associate, and Yevhenii Ahashkov, Associate, Avellum

The Ministry of Infrastructure of Ukraine is to resume work leading up to the grant of concession of three terminals of the Chornomorsk seaport, one of the largest seaports in Ukraine. In particular, the concession is to cover the first (cargo) terminal, the container terminal, and the fifth (railway and ferry) terminal.

The feasibility study for the project will be financed by the Global Infrastructure Facility, with experts and advisers from the European Bank for Reconstruction and Development and the International Finance Corporation. Following the feasibility study, the state contemplates holding a tender amongst potential investors to transfer the terminals into a concession.

Prior to the invasion of 2022, Ukraine significantly improved the legislative framework for public-private partnerships, namely, by amending the Law “On Private-Public Partnership” and adopting the new Law “On Concession”. The concession of the Chornomorsk seaport is expected to become another landmark public-private sea port project following the successful award of two pilot concession projects in the Kherson and Olvia seaports in 2021, also prepared with the assistance of EBRD and IFC.

By Olexiy Soshenko, Managing Partner, Redcliffe Partners

On 17 May 2023, at the Council of Europe Summit, the European Union and 43 other countries signed the agreement on the Register of Damage Caused by the Aggression of the Russian Federation Against Ukraine (“Register”).

The Register constitutes the first component of a future international compensation mechanism, which is intended to compensate damages caused by the Russian Federation’s aggression against Ukraine.

The signing of the agreement was preceded by the Resolution of the Committee of Ministers of the Council of Europe dated 12 May 2023 establishing the Enlarged Partial Agreement on the Register and the Statute of the Register.

About the Register

The Statute provides that the Register will be created as a legal entity under the national law of the Kingdom of the Netherlands and Ukraine with its seat in The Hague (the Netherlands). The statutory functions of the Register are as follows:

• Receive and process information on damage claims and evidence.
• Classify and organize such claims.
• Assess and determine the eligibility of such claims for inclusion in the Register.
• Record the eligible claims for the purposes of their future examination and adjudication.

As can be seen from the provisions of the Statute, the right to submit a damage claim should be granted to natural and legal persons, as well as the State of Ukraine, including its regional and local authorities, and state-owned or controlled entities that suffered damage, loss or injury that was caused on or after 24 February 2022 in the territory of Ukraine by the Russian Federation’s internationally wrongful acts in or against Ukraine.

It should be noted that the Register should have no authority to adjudicate claims, including determining responsibility and allocating any payments or compensation. Such authorities will be granted to other bodies established within the framework of international compensation mechanism.

Such a mechanism may provide for the establishment of a claims commission and a compensation fund authorized, accordingly, to adjudicate claims and/or pay compensation for damage.

In addition, the document also provides for the establishment of a satellite office of the Register in Ukraine for the purpose of facilitating contact with potential claimants in Ukraine, in particular, with regard to the existence and purpose of the Register, the procedure for filing claims for damage, etc.

Conclusions and recommendations

As of today, the Register is in the creation stage. The Statute of the Register provides that the date from which the Register shall be open for submitting claims will be determined later. It also provides that the eligibility criteria for recording claims in the Register shall be determined in the rules and regulations of the Register.

In light of the above, we recommend following the publication of information on the opening of the Register and the eligibility criteria for the purposes of correct completion and timely submission of claims for damage.

By Ihor Siusel, Partner, Kseniia Prokhur ,Counsel, and Nataliya Lipska, Junior Associate, Baker McKenzie

Avellum, working with Freshfields Bruckhaus Deringer, has advised Aristocrat on its USD 1.2 billion acquisition of NeoGames. Latham & Watkins advised NeoGames.

Aristocrat Leisure Limited is a gaming content and technology company and a mobile game publisher.

NeoGames creates content and technology solutions for the online real-money gaming industry.

Avellum’s team included Managing Partner Mykola Stetsenko, Senior Associate Bogdana Parkhomchuk, and Associates Oleksandr Kozhukhar, Yuliia Seredynska, and Olga Rudevych.

Reconstruction efforts, the relocation and diversification of businesses, currency control restrictions buoying the local M&A market, and the restart of privatizations and concessions are among the key developments in Ukraine’s business landscape, according to Integrites Senior Partner Illya Tkachuk.

“Over the past six months, the most active sectors in Ukraine have been IT and agriculture,” Tkachuk begins. “These two sectors have consistently shown profitability and, even in the realm of M&A, they continue to dominate with the highest number of deals and movements.” He notes that “due to currency control restrictions, it is challenging to transfer money abroad, leading to the accumulation of funds within Ukraine. As a result, businesses in these sectors are utilizing these funds to foster internal growth and development.”

Tkachuk reports that agriculture companies, for example, “are investing in acquiring other farms or undertaking new projects such as biomass, demonstrating their commitment to progress despite facing negative impacts.” He says the IT sector “has been experiencing similar conditions, although some profits are also accumulating abroad. Well-established businesses in this industry actively seek growth opportunities by acquiring new units, hiring new talent, and exploring fresh avenues locally.”

“Another noteworthy trend is the increased interest of private investors and investment funds in the market,” Tkachuk continues. “They are displaying heightened activity, with some focusing on distressed assets while others seek out opportunities that were appealing even before the war.”

“And positive news is emerging regarding the reconstruction and rebuilding efforts in Ukraine,” Tkachuk adds. “The projects underway are progressing rapidly, mainly due to funding from international partners. For instance, the construction of residential houses for temporarily relocated people is already underway. These initiatives aim to stimulate the economy not only through construction but also by creating opportunities in related sectors such as furniture production,” he says.

According to Tkachuk, the participation of international and development financial institutions is a significant step forward. “The US DFC is to mobilize over USD 1 billion for investment projects to support the economy of Ukraine,” he says. “This positive approach is a reassuring sign for the market. As a part of this support, the DFC avowed its interest in participating in Horizon Capital’s new fund and in supporting the Dobrobut chain of hospitals.”

“The government is also striving to resume the privatization process to finance the budget and attract more efficient investors for state assets,” Tkachuk notes. “Additionally, Russian assets in Ukraine are being confiscated, and most of these businesses and assets are now under the temporary administration of state authorities. Apparently,” he explains, “the objective is to transfer them to the management of private investors first and, ultimately, sell them to private companies. This shift towards privatization and asset management will likely contribute to the future growth of the M&A market.”

“Finally, despite the availability of remote work, we have noticed that an increasing number of people are returning to the office,” Tkachuk says in conclusion. “As a law firm, we have also resumed the educational classes we used to have, as part of our efforts to return to normal day-to-day activities and keep our team members connected and motivated. We understand the importance of personal interactions in maintaining a positive work environment.”

Former Counsels Kateryna Tsvetkova and Oleksandr Melnyk have been promoted to Partner, while former Associate Viktoriia Bublichenko became a Counsel and Head of the Tax, Restructuring, Claims, and Recoveries practice at GoLaw in Kyiv.

Tsvetkova focuses on litigation/disputes and labor and first joined the firm in 2015 as an Associate. She later became a Senior Associate in 2017 and a Counsel in 2019. Before joining the firm, she was a Leading Legal Counsel at Global Spirits, from 2012 and 2015, and a Lawyer at URS (TM Beeline) from 2008 to 2011.

Specializing in corporate and M&A and banking & finance, Melnyk has been with GoLaw since 2015, having first joined as an Associate. Melnyk was promoted to Head of the firm’s Odessa branch in 2017, a Senior Associate in 2019, and a Counsel and Head of Corporate and M&A in 2022. Earlier, he was a Senior Legal Advisor at the Odessa Aircraft Plant from 2014 to 2015.

Bublichenko has expertise in tax and first joined GoLaw in 2019 as an Associate. She has a master’s degree in International Law and Legal Studies from the Taras Shevchenko National University of Kyiv, obtained in 2017.

“These new appointments reaffirm our steadfast dedication to investing in the finest legal minds within our firm,” GoLaw Managing Partner Valentyn Gvozdiy commented. “They will undoubtedly fortify our practices and contribute to the sustained growth and development of our firm, enabling us to provide unparalleled service quality to our clients and meet their business needs.”

Sayenko Kharenko has advised the European Bank for Reconstruction and Development on a EUR 10.6 million loan to Khmelnytskyi Communal Enterprise Electrotrans under the EBRD’s Green Cities program.

Electrotrans is the urban transport company of the city of Khmelnytskyi, an urban center in western Ukraine with a population of approximately 270,000.

According to Sayenko Kharenko, “the loan has a maturity of 13 years and, together with a broader finance package which includes an investment grant from the European Union’s Neighbourhood Investment Platform of up to EUR 2.75 million and an investment grant of up to EUR 1.7 million from the EBRD Crisis Response Special Fund (benefitting from a contribution from the government of the United States of America), will be used to finance the purchase of new trolleybuses along with maintenance and diagnostic equipment.”

According to the firm, “EBRD’s financing will improve the reliability and quality of services for public transport users in Khmelnytskyi, as well as improve air quality. The EBRD is the largest international financial investor in Ukraine. The EBRD has made a cumulative commitment of more than EUR 15 billion since the start of its operations in the country in 1993 and pledged to provide EUR 3 billion of support for the country’s economy in 2022-23, with support focussing on vital infrastructure, food and energy security, trade, and support for the private sector.”

Earlier this year, Sayenko Kharenko advised the EBRD on a EUR 25 million loan to the City of Lviv (as reported by CEE Legal Matters on February 10, 2023).

The Sayenko Kharenko team was led by Partner Igor Lozenko and included Senior Associate Oles Trachuk and Associate Vladyslava Mitsai.

Kinstellar has advised Rheinmetall on executing a cooperation agreement with Ukrainian state-owned defense industry concern Ukroboronprom.

According to Kinstellar, “the two major defense manufacturers intend to create joint capabilities domiciled in Ukraine through setting up a joint venture, which is expected to be operational from mid-July 2023. Starting with the maintenance of military vehicles, the parties plan to move to the transfer of technology, joint production of selected Rheinmetall products in Ukraine, to potentially joint development of military systems, including for subsequent export from Ukraine.”

According to the firm, “the entrance of Rheinmetall marks a new exciting chapter in the development of Ukraine’s defense industries sector. Previously monopolized by the state, the sector is now being opened in a significant manner to the participation of major private sector market players.”

The Kinstellar team included Partners Daniel Bilak, Anastasiya Bolkhovitinova, Olena Kuchynska, and Natalia Kirichenko, Of Counsel Igor Kitela, and Associate Larysa Gorbunova.

Editor’s Note: After this article was published, Kinstellar reported that Ukroboronprom had relied on its in-house legal team, headed by Director of Legal Affairs Daniil Fedorchuk, for the deal.

On April 24, 2023, the EU Council consented to applying the Hague Convention on the Recognition and Enforcement of Foreign Judgments in Civil or Commercial Matters (the “Convention”) in relations with Ukraine.

Concluded in 2019, the Convention is an international treaty that commits contracting states to recognize and enforce judgments in civil or commercial matters that were handed down in other states that are parties thereto, but does not extend to revenue, customs or administrative matters.

The decision of EU Council will allow EU citizens and businesses to have rulings issued by a court in the EU recognized and enforced in Ukraine. In turn, it ensures that Ukrainian judgments are recognized and enforced in the EU. Ukraine ratified the Convention on July 1, 2022.

The Convention deals with the procedure for recognizing and enforcing judgments. For example, Article 6 stipulates that a judgment that ruled on rights in rem in immovable property will be recognized and enforced if and only if the property is situated in the State of origin. A judgment may also be enforced if, the defendant expressly consented to the jurisdiction of the court of origin in the course of the proceedings in which the judgment was given, or if the person against whom recognition or enforcement is sought is the person that brought the claim (other than a counterclaim) on which the judgment is based.

Article 9 of the Convention sets out that recognition or enforcement of a severable part of a judgment will be granted where recognition or enforcement of that part is applied for, or if only part of the judgment is capable of being recognized or enforced under the Convention.

Articles 11 and 12 of the Convention define the procedures for approval of judicial settlements and provide that they are to be enforced under the Convention in the same manner as judgments.

Article 15 of the Convention sets forth that the Convention does not prevent the recognition or enforcement of judgments under national law.It is possible, under Articles 17–19 of the Convention, for a State to make a declaration regarding application of the Convention. Specifically, a State may declare that it will not apply the Convention to judgments arising from proceedings to which any of the following is a party –

1. that State, or a natural person acting for that State; or
2. a government agency of that State, or a natural person acting for such a government agency.

Under Article 19 of the Convention, recognition or enforcement of a judgment given by a court of a State that made such declaration may be refused by the requested State, if the judgment arose from proceedings to which either the State that made the declaration or the requested State is a party, to the same extent as specified in the declaration.

We point out that EU Council Decision (EU) 2022/1206 of 12 July 2022, concerning the accession of the European Union to the Convention, provides for the recognition and enforcement of third-country judgments in the Union only where fundamental principles of EU law are respected. Thus, based on the decision of EU Council of 24 April 2023, there are no such fundamental obstacles in respect of Ukraine. This makes the Convention an important instrument in the trade and investment framework between the EU and Ukraine.

The Convention enters into force on 1 September 2023, so EU and Ukrainian businesses need to be mindful of the benefits this development will bring to the legal landscape.

For more detailed information about this development and the possible consequences of its entry into force for you and your business, please contact our corporate and commercial law specialists.

By Oleg V. Batyuk, Ukraine Managing Partner, Igor Davydenko, Partner, and Roman Mehedynyuk, Senior Associate, Dentons

Avellum has advised the Ministry of Finance of Ukraine on a CAD 2.4 billion concessional loan from Canada. Sayenko Kharenko advised the Government of Canada on Ukrainian law-related matters.

“The funds were provided through the mechanism of the Administrated Account of the International Monetary Fund,” Avellum informed. “The repayment period of the loan is ten years, and the interest rate is 1.5% per annum.”

“The financing brings Canada’s total economic, military, humanitarian, and other support to Ukraine to more than CAD 8 billion since February 2022,” Sayenko Kharenko reported.

“These funds are instrumental to finance priority expenditures of the state budget of Ukraine and cope with the economic fallout from the Russian invasion,” Avellum Senior Partner Glib Bondar commented.

In 2022, Avellum also advised the Ministry of Finance of Ukraine on a CAD 500 million 10-year loan from Canada (as reported by CEE Legal Matters on May 13, 2022).

The Avellum team was led by Bondar and included Managing Associate Oleg Krainskyi and Associate Yaroslav Pavliuk.

The Sayenko Kharenko team was led by Partner Igor Lozenko and included Associates Oles Trachuk and Oleksandr Motin.