U.S. registered Generation Ukraine's $9.4 billion lawsuit against Ukraine was dropped on Sept. 16. The American company has been ordered to pay the government $365,000.
In a monumental ruling on Sept.16 ,the Arbitral Tribunal of the International Center for Settlement of Investment Disputes ruled in favor of Ukraine in a $9.4 billion claim brought by the U.S.-registered company Generation Ukraine. The case, which involved a sum that almost equaled the Ukrainian government’s $10 billion annual budget, was brought to arbitration by Generation Ukraine in July 2000.
The ICSID dismissed all claims, and ordered Generation Ukraine to pay the Ukrainian government $365,000.
ICSID, part of the World Bank Group, was created in 1965 to settle investment disputes between governments and private foreign investors. Ukraine joined the ICSID Convention in July 2000.
The dispute between Generation Ukraine and the government is linked to the construction of the Parkview office building, which Generation Ukraine was set up to build, but failed to complete. The company brought eight claims against Ukraine, accusing Ukrainian officials of directly and indirectly expropriating the company’s anticipated revenues by stonewalling the firm from completing Parkview.
Dispute and delay
In 1992, U.S. citizen Eugene Laka, who was born in Ukraine, visited the country at the invitation of Kyiv city authorities, who encouraged him to invest in commercial construction projects in the capital, Andry Alexeyev, a consultant at Proxen law firm, which defended Ukraine in the suit, said.
In 1993, he established Generation Ukraine in New Hampshire, also setting up its Ukrainian subsidiary Heneratsiya, through which he was to construct the Parkview office building at 32 Tarasa Shevchenka. It took Laka more than three years to obtain the necessary permits from the city.
The investor accused the Kyiv City Administration of obstruction. In response, the city claimed that the investor is ultimately responsible for fulfilling necessary requirements before starting construction.
“Laka complained that the city administration was late issuing papers, but there’s a strict legal procedure for issuing such documents,” said Oleksandr Kudlay, head of the administration’s department on external economic links and investments.
“The main reason for delay was that the investor submitted incomplete documents. The delays caused by the administration were not serious,” Kudlay said.
The Post attempted to contact Generation Ukraine and its subsidiary, but was unable to locate telephone numbers for either company. Laka did not respond to the Post’s e-mail inquiries at the address registered with his Ukrainian Internet service provider, Lucky.Net. Brendan Kilty, a lawyer at The Arbitration Centre in Dublin who represented Generation Ukraine in its ICSID arbitration against Ukraine, said the tribunal’s award is liable to be annulled.
