Category: Ukraine

Dentons has advised the European Federation of Energy Traders on the enforceability of the EFET General Agreement concerning the delivery and acceptance of natural gas and collateral arrangements. 

According to Dentons, the EFET promotes competition, transparency, and open access in the European energy sector. It currently represents more than 100 energy trading companies, active in over 27 European countries.

Dentons’s team included Partners Natalya Selyakova and Maksym Sysoiev, Counsel Nadiya Shylienkova, Senior Associate Artem Lukyanov, and Associate Artur Savin.

Acting on behalf of Swisspan Limited Company, Ilyashev & Partners has initiated an anti-dumping investigation into the import of wood chipboard originating both from the Republic of Belarus and the Russian Federation into Ukraine.

Ilyashev & Partners describes Swisspan Limited Company as “one of Ukraine’s leading wood processing companies and manufacturers of furniture chipboard slabs.” According to the firm, “the company’s parent is Sorbes AG (Switzerland) that owns two wood processing enterprises in West Ukraine.”

According to Ilyashev & Partners, the Interdepartmental Commission on International Trade initiated its anti-dumping investigation on February 20, 2021. According to the firm, “the anti-dumping investigation may take up to 12 months to complete,” and, depending on the results, “an anti-dumping duty may be imposed on import of wood chipboard from the Republic of Belarus and the Russian Federation for the purpose of ensuring fair competition and protecting Ukrainian manufacturers from dumping imports.”

The Ilyashev & Partners team is led by Partner Olena Omelchenko.

LCF Law Group has successfully represented the interests of First Ukrainian International Bank in a dispute with PJSC Ukrainian Railways, regarding its obligation to repay the debt of SE Donetsk Railway.

According to LCF, “the Supreme Court confirmed the [obligation] of PJSC Ukrainian Railways to repay the loan received by SE Donetsk Railway.” 

LCF Law Group’s team included Managing Partner Anna Ogrenchuk, Partner Olena Volianska, and Senior Associates Yuriy Didenko and Denis Sperov.

On February 13, 2021, the Law of Ukraine No. 1116-IX “On State Support for Investment Projects with Significant Investments in Ukraine” dated December 17, 2020 (the “Law”) entered into force. This Law aims to attract high-value foreign investment to Ukraine and defines the principal rules and guarantees for the implementation of investment projects (the “investment project”).

In what sectors can an investment project be implemented?

A Ukrainian or foreign investor can implement an investment project in the following industry sectors:

• Processing industry (except for the production and circulation of tobacco products, alcohol and alcoholic beverages)
• Extraction for the purpose of further processing and/or treatment of mineral resources (except for coal, oil and gas)
• Waste management;
• Transport, warehousing;
• Postal and courier activities, logistics;
• Education, scientific and research and technical activities;
• Healthcare;
• Arts, culture, sports, tourism and resort and recreation

An investment project can be carried out by means of providing construction, modernization, technical and/or technological re-equipment of the investment target, purchasing the necessary equipment and component parts thereto, and it can also provide for the construction of ancillary infrastructure facilities.

What are the criteria of the investment project?

The investment project and the subsequent special investment agreement (the “Agreement”) shall comply with the following requirements:

• The amount of investment shall exceed €20 million.
• The implementation period of the investment project shall not exceed 5 years from the date of entering into the Agreement.
• The total value of the state support to implement the investment project shall not exceed 30% of the amount invested in the project.
• The investment project must create at least 80 new jobs, in which the average salary is at least 15 percent higher than the average salary paid for the relevant activity across the region.

What does the state support of the investment project envisage?

The state support of investment projects can take the following forms:

• Tax benefits such as: (i) exemption from customs charges and VAT for the equipment imported by an investor to Ukraine for implementation of the investment project and (ii) exemption of an investor from corporate income tax for five years. The draft law with respect to the exemption from the income tax and VAT is pending before the Verkhovna Rada of Ukraine and is expected to be passed at one of the upcoming sessions.
• Exemption of equipment and component parts thereto from import duties.
• The right to use (lease) a state- or communally owned land plot in order to implement the investment project, as well as the investor’s right to purchase said land plot upon the expiry of the term of the Agreement.
• The construction, at the expense of the state, of ancillary infrastructure facilities (motorways, communication lines, heat, gas, water and electricity supply facilities, utility supply lines) necessary to implement the investment project.

What is the procedure for the implementation of the investment project?

To apply for support for a qualifying investment project, the investor must submit an application and supporting documents to the special state body or local self-governmental authority (for regional projects). If the  investment project is approved, the Cabinet of Ministers of Ukraine or the local council shall enter into  the agreement that establishes the terms and conditions and the procedure for the project’s implementation. The investment agreement can only be concluded with an investor that has a legal entity registered in Ukraine. If a foreign investor will implement the investment project, it needs to establish a legal entity in Ukraine with 100% of participation interests (shares) belonging to such foreign investor.  

The government has a period of three to six months to consider the application and conclude of the Agreement.

What are the restrictions?

An application for the implementation of the investment project cannot be filed by

• Ukrainian or foreign legal entities, which:
• Are registered or controlled by residents of the Russian Federation or countries included in the FATF list
• Are subject to special economic or other restrictive measures (sanctions) in Ukraine
• Are undergoing bankruptcy proceedings, liquidation or reorganization
• Have tax arrears as of the date of the application
• Are registered in countries (or territories) classified as offshore zones
• Non-profit enterprises, institutions, and organizations;
• State and municipal enterprises, in which more than 50% of shares (participation interests) in the charter capital are owned by the state or territorial community

The Office of the President of Ukraine believes that this Law will help to resume investment activity in Ukraine after the crisis of 2020.

By Oleg Batyuk, Managing Partner, and Valeria Tarasenko, Tax Consultant, Dentons

Sayenko Kharenko has advised DTEK Renewables on its entrance into a contract with wind turbine manufacturer Vestas for the joint implementation of the first phase of DTEK’s Tiligulska wind power project in Ukraine’s Mykolaiv region.

According to Sayenko Kharenko, the first stage of DTEK’s Tiligulska project will have a capacity of 126 megawatts and will be partly financed from the funds DTEK raised through its EUR 325 million green Eurobond issuance (as reported by CEE Legal Matters on December 2, 2019). DTEK’s Tiligulska wind power project will include 21 of Vestas’ wind turbines, with a capacity of six megawatts each. This model is the largest onshore wind turbine in the Vestas portfolio, with a rotor diameter of 162 meters.

DTEK Renewables is the operating company managing the renewable energy assets of DTEK Group, which currently operates the Botievska, Prymorska, and Orlivska wind farms, as well as the Trifanovska, Nikopolska, and Pokrovska solar power plants in Ukraine.

Sayenko Kharenko’s team consisted of Counsel Maryna Hritsyshyna and Senior Associate Natalia Hutarevych.

Kinstellar is advising Ukrainian road construction company Automagistral-Pivden on the preparation of an unsolicited proposal for the construction of the 300-kilometer Krakovets-Lviv-Brody-Rivne motorway, to be undertaken on a public-private partnership or concession basis in accordance with Ukraine’s new PPP and concession law.

According to the firm, a memorandum of cooperation, prepared by Kinstellar’s team in Kyiv, was signed in Kyiv on March 11, 2021, by AMP and the State Road Agency of Ukraine, and was witnessed by the Prime Minister of Ukraine, Denys Shmyhal. According to the terms of the memorandum, AMP will prepare the project proposal with its own resources, including a feasibility study and financial model for the PPP or concession arrangement. Kinstellar is acting as AMP’s legal advisor for the preparation of the project feasibility study. 

According to Kinstellar, “Ukraine’s PPP and concession law gives the state the right to engage investors to develop PPP projects. This instrument is designed to expedite the preparation of PPP projects without the expenditure of budget funds, while maintaining a competitive approach to PPP procurement. The concession law and related regulations provide for the compensation of project development costs to the investor in the event that the investor does not win the subsequent PPP tender. “

Kinstellar’s team includes Senior Counsel Daniel Bilak and Counsel Oleg Matiusha.

Vasyl Andrusyak, Head of Tax at the Moris Group, has been promoted to Partner at the firm.

According to the Moris Group, Andrusyak’s specialization includes tax, representing clients before government agencies, judicial appeals against regulatory authority decisions, white-collar crime, and customs disputes. 

KPD Consulting has successfully defended PJSC Complex Lybidsky against an attempt to unlawfully seize its Loftpark auto center in Kyiv by Mokra Sprava.

According to KPD Consulting, the court not only found that Mokra Sprava had no legal property right on the auto center, but also awarded Complex Lybidsky UAH 153,587 in court costs.

KPD Consulting’s team was led by Managing Partner Igor Kalitventsev, working with the support of Attorneys-at-Law Viktor Ivaniuk and Eugene Litvinov.

Sayenko Kharenko, working with lead counsel Latham & Watkins, has successfully represented the State of Ukraine in a USD 6.1 billion investment treaty dispute with Littop Enterprises Limited, Bridgemont Ventures Limited, and Bordo Management Limited, the minority shareholders of Ukraine’s oil and gas producer PJSC Ukrnafta. The dispute was heard by the Arbitration Institute of the Stockholm Chamber of Commerce.

According to Sayenko Kharenko, the dispute began on June 30, 2015, involving the question of possession of the natural gas pumped by Ukrnafta in the Ukrainian gas transportation system. According to the firm, the dispute also involved certain governmental measures, such as interference with prices and tax increase on oil and gas extraction, allegedly targeted at Ukrnafta and its minority shareholders.

According to Sayenko Kharenko, on February 4, 2021, a tribunal composed of Julian Lew, Yves Fortier, and Rodrigo Oreamuno declined jurisdiction over the claims.

Sayenko Kharenko team consisted of Partners Olexander Droug and Tatyana Slipachuk, Counsel Volodymyr Yaremko, Senior Associate Olesia Gontar, and Associates Alina Danyleiko, Olena Solonska, and Vladlena Lavrushyna.

The Latham & Watkins team reportedly included Hamburg-based Partner Sebastian Seelmann-Eggebert and London-based Partner Charles Claypoole and Associates Daniel Harrison and Thomas Lane.

Former Mriya Agroholding Chief Legal Counsel Sergiy Ignatovsky has joined Redcliffe Partners as a Partner within the firm’s Litigation and Restructuring practices.

Redcliffe Partners describes Ignatovsky as “one of the top professionals in Ukraine focusing on restructurings, high-profile complex litigation and special situations.” According to the firm, “he has previously worked as General Counsel with Metinvest, one of the largest CEE producers of steel and iron ore raw materials. In 2016, Sergiy was appointed by the creditors’ committee as the General Counsel of Mriya Agro Holding. He was responsible for carrying out the complicated, unprecedented, and unique restructuring of the group, which included more than 150 companies, following its USD1.3 billion default. As General Counsel, Sergiy oversaw the handling of hundreds of court proceedings and dozens of bankruptcies throughout Ukraine, and advised on the subsequent sale of Mriya Agro Holding to a strategic investor.”

Ignatovsky is a graduate of the Taras Shevchenko Kyiv National University. Before joining Mriya Agro Holding, he spent two and a half years as a Partner with the LCF Law Group, five years as a Partner at Sayenko Kharenko, and a year as Partner with Arzinger & Partners.

“We previously worked together on the sale of Mriya Agro Holding, where Redcliffe Partners acted as a buy-side counsel, and the team’s performance was stellar,” Ignatovsky commented. “The firm gained a top-tier reputation in advising on the most high-profile projects in the country and offering first-class client services, which makes it an exciting firm to join. I am looking forward to working with the team to help clients to tackle the challenges that I have seen at first hand during my time at Mriya Agro Holding, Metinvest and several other of Ukraine’s largest corporates.”

“Sergiy’s experience as General Counsel of Ukraine’s largest corporations operating in a variety of industries, coupled with a fantastic track record in delivering on highly complex mandates, bring a winning combination to the firm’s capabilities and will greatly enhance our offering to clients,” added Redcliffe Partners Managing Partner Olexiy Soshenko. “We look forward to welcoming Sergiy to the firm.”