Category: Ukraine

Kinstellar has advised the European Bank for Reconstruction and Development on a EUR 10 million revolving credit facility for ERU Trading LLC.

ERU Trading is a privately owned gas trader in Ukraine. The credit facility is intended for the financing of its working capital needs. 

Kinstellar’s team was led by Counsel Andriy Nikiforov and included Co-Managing Partner Olena Kuchynska, Senior Associate Anna Makedonska, and Associate Oleksandr Plachynta.

Editor’s Note: After this article was published, CMS informed CEE Legal Matters that it advised the EBRD on English law matters related to the credit facility. Its team was led by Sofia-based Partner and Head of Finance Elitsa Ivanova and Kyiv-based Partner Orest Matviychuk and included Partner and CMS Kyiv Head of Banking & Finance and Associate Ivan Pshyk. 

Kinstellar has advised the European Bank for Reconstruction and Development on a USD 65 million loan to Datagroup for the acquisition of Volia. CMS advised Datagroup on the deal.

Datagroup is a fiber infrastructure and digital services provider in Ukraine, majority-owned by Horizon Capital. Volia is a pay-TV and cable broadband service provider in the Ukrainian retail segment. 

According to Kinstellar, the EBRD is the largest institutional investor in Ukraine. “In the past two years alone, the bank has committed EUR 2 billion to the economy. Investments are combined with support for policies that promote the fight against corruption, good governance of state-owned enterprises, structural reforms, and a more transparent business environment.”

Kinstellar’s team included Partner Iryna Nikolayevska, Counsels Andriy Nikiforov and Oleg Matiusha, Senior Associates Anna Makedonska and Yulia Eismont, Associates Yulia Palaida, Diana Malysh, and Mariana Antonovych, and Junior Associate Olena Kandya.

CMS’s team included Counsel Kateryna Chechulina, Senior Associate Louise Cakar, Associate Khrystyna Korpan, and Lawyer Iryna Kravchenko.

VB Partners has successfully defended the interests of Scania Ukraine in a dispute with a dealer, worth UAH 123 million.

According to VB Partners, “At the end of 2019, one of Scania’s dealers filed a lawsuit against the company to recover UAH 123 million of alleged lost profit and service fees. In September of 2020, a judge of the Commercial Court of Kyiv oblast satisfied the claim in full, despite the complete lack of evidence. A week later, the judge, who made the controversial decision, resigned. That prevented the High Council of Justice from opening proceedings at Scania’s complaint.” 

Further, according to the firm, “the appellate court, composed of various panels, considered Scania’s complaint against this decision for eight months. On June 24, 2021, the Northern Commercial Court of Appeal overturned the decision of the first instance and collected court fees in the amount of more than UAH 1 million from the dealer.”

VB Partners’ team was led by Attorneys Oleksandr Lukianenko and Stanislav Yena.

Editorial Note: On October 23, 2021, VB Partners announced that the “Supreme Court confirmed the unlawfulness of the judgment as taken by the court of first instance to recover UAH 123 million from Scania Ukraine.”

Ilyashev & Partners has successfully represented VAAG in a dispute regarding anti-dumping duties for the import of gas-concrete blocks from Belarus, before the Sixth Administrative Court of Appeal in Ukraine.

VAAG is the Ukrainian Autoclaved Aerated Concrete Producers Association.

According to the firm, “the Sixth Administrative Court of Appeal upheld the decision of the District Administrative Court of Kyiv, by which the Belarusian manufacturers of gas-concrete blocks . . . were [denied the waiver of] the anti-dumping duty imposed on the import of goods to Ukraine.”

Ilyashev & Partners’ team included Partner Olena Omelchenko, Counsel Valeriia Gudiy, and Attorney at Law Oleksiy Gorbatyuk.

Asters has advised the International Finance Corporation on an up to EUR 35 million financing to the City of Zaporizhzhia. 

According to Asters, to support the city’s efforts to improve the quality of life for its citizens, IFC’s investment will help the municipality rehabilitate up to 2 kilometers of roads, purchase modern battery-electric trolleybuses and electric buses, and upgrade the electric transport infrastructure. It will also support the installation of message boards featuring information on traffic conditions that will minimize travel time. IFC will also help install municipal smart city infrastructure to optimize traffic management and enable real-time monitoring of heat and water pipe pressure. The investment consists of EUR 33 million of IFC own-account financing and EUR 2 million in blended finance through the Clean Technology Fund.

Asters’ team included Partner Iryna Pokanay, Counsel Gabriel Aslanian, and Associates Inna Bondarenko and Viktoria Zagreba.

For the purposes of this review below we assume a hypothetical scenario whereas a company is illegally deprived of assets or investments in Ukraine.

Litigation would be the most common way to protect the company’s interests and seek a compensation. However, success much depends on the litigation strategy chosen right at the beginning.

While it is not complicated to commence court proceedings, a number of issues should be considered beforehand. A wrong litigation strategy may reduce other ways to protect themselves for investors.

TIP 1: Litigation and the Anti-Raiding Commissions

For those cases when deprivation of assets occurred due to illegal changes in the state registers (for example, registers of immovable property ownership or a company share register), an application to the Anti-Raiding Commissions at the Ministry of Justice of Ukraine (the ‘Anti-Raiding Commissions’) might be the first choice.

The Ministry of Justice of Ukraine and its particular departments are empowered to withdraw respective amendments from the state registers should the Anti-Raiding Commissions find such registration actions unlawful.

Usually, this remedy can be achieved quicker than obtaining a final and binding court decision.

However, should you already refer the dispute to court, the Anti-Raiding Commissions are no longer empowered to hear the case. This is definitely worth considering while developing a litigation strategy.

TIP 2: Litigation and the ECHR

While planning litigation, further reference to the European Court of Human Rights (the ‘ECHR’) might not be apparent. Nevertheless, keep such option in mind while implementing the litigation strategy to ensure your or your company’s application to the ECHR would be admissible, if needed.

The ECHR deals with the matter after all domestic remedies have been exhausted. That means that by applying to the ECHR, you may not rely on, for example, the lack of an effective criminal investigation if you never raised that issue at the domestic level.

While you are not obligated to name a particular Convention right^[1] being violated during the litigation, your arguments at the court shall at least implicitly refer to such violation so the national courts could have an opportunity to redress the alleged breach.

Ignoring a possible Convention argument during litigation may lead to the fact that the ECHR finds the application inadmissible.

TIP 3: Litigation and international arbitration

In the event of direct or indirect expropriation of investments, a foreign investor may also consider a possibility to refer a dispute against a state to international arbitration.  

Until the claim is brought before the local court, check clauses of the bilateral investment treaty and other relevant treaties Ukraine is a party to. It may help you to define all possible options (fork-in-the-road clauses) to protect your rights and develop the most convenient dispute resolution strategy.

[1] Rights protected under the European Convention of Human Rights (for example, right to a fair trial, and protection of property)

By Olena Solonska, Associate, Sayenko Kharenko

Oleksiy Filatov has joined Aequo as Senior Partner and Head of Dispute Resolution.

According to Aequo, Filatov focuses on cross-border and local litigation and international arbitration, particularly corporate, commercial, and investment disputes. Before joining Aequo, he spent over 11 years with Vasil Kisil & Partners.

Apart from legal practice, Filatov’s professional background includes serving as the Secretary of the Constitutional Commission and Coordinator of the Judicial Reform Council with the President of Ukraine and as his Deputy Chief of Staff. According to Aequo, “at these positions, he led the development of significant amendments to major Ukrainian rules of court proceedings and laws on [the] judiciary as well as the amendments to the Ukrainian Constitution regarding judiciary that were approved in 2016 and highly praised by the Venice Commission and other experts of the Council of Europe.”

“I am happy to join the team of partners with whom we share a long–standing history of professional cooperation,” Filatov commented. 

“We are absolutely honored to welcome Oleksiy Filatov, a leading Ukrainian expert in dispute resolution, to our team,” added Managing Partner Denis Lysenko.

Vasil Kisil & Partners has advised Arcona Property Fund on the acquisition of Secure Property Development & Investments’ two development sites in Kyiv, with a total value of EUR 1.8 million.

Arcona is a Netherlands-based independent owner-managed real estate fund and asset manager, active across Northern and Central Europe. It is listed on Euronext Amsterdam and the Prague Stock Exchange. Arcona is currently responsible for over EUR 645 million of real estate and financial assets on behalf of both private and institutional clients.

According to VKP, “this is the second phase of the three-phase acquisition of SPDI´s property portfolio in Eastern and Southeastern Europe. The estimated value of the whole second stage which also includes Romanian assets is EUR 8.2 million. The purchases should be completed in the second half of 2021.” The firm further informed that “Arcona Property Fund N.V. will acquire the second phase assets by issuing to SPDI its shares and warrants which can be converted into the Fund’s shares if they reach certain price level. The shares will be admitted to listing at Euronext Amsterdam Stock Exchange. SPDI will also provide a seller’s loan of EUR 1 million.”

Vasil Kisil & Partners’ team included Partner Alexander Borodkin, Senior Associate Tetiana Revutska, and Associate Ivanna Rodionova.

Vasil Kisil & Partners did not reply to our inquiry on the matter.

Deputy Director of JSC Ukrainian Railway’s Legal Affairs branch, Oleksandr Diuhovskyi, has moved to BGS Rail as Head of Legal Department.

Before joining BGS Rail in May 2021, Diuhovskyi was Head of Legal Department at PJSC Ukrmmedprom from February 2013 to June 2016, Counselor to the President of the Association of Ukrainian Stock Traders from 2016 to 2018, and Deputy Director at JSC Ukrainian Railway between April 2018 and May 2021.

On May 17, 2021, CEE Legal Matters reported that Asters had advised Ukraine Power Resources on the construction of the first phase of the Dnistrovska wind park. CEE In-House Matters spoke with Peter A. Gish, CEO at Ukraine Power Resources, to learn more about the deal.

CEEIHM: Please introduce Ukraine Power Resources.

Originally reported by CEE In-House Matters.