Some cases involving Ukraine have made world headlines.
The Ukrainian legal environment is certainly a tough one. It’s notoriously cumbersome and overly complicated with many contradictory laws, regulations and court decisions that fuel suspicions of rampant corruption.
These drawbacks are reflected in the Global Corruption Barometer 2010, a recent publication by Transparency International, a corruption watchdog.
According to its findings, Ukraine’s judiciary is on par with Peru’s and is considered the most corrupt in the world.
In the absence of transparency and predictability, players in the legal industry are left looking for clues in order to predict which way the Ukrainian judiciary is moving in the near future.
So the Kyiv Post has decided to name the deals, court rulings and key events of the last year that either influenced the country’s business climate, revealed the unpredictability of the legal environment or played an important role in the way the legal practice is conducted.
1996 constitution returns
In September, the country reverted to a presidential republic when changes in the constitution, made in 2004, were declared unlawful.
The main concern is not only the political motivation of the decision, butits dubious consequences for the political acts and legislation of 2005-2010, experts believe.
State tussles with ArcelorMittal
First the State Property Fund granted Ukraine’s biggest foreign investor ArcelorMittal the right to extend the time needed to fulfill investment pledges made when the company boughtKryvorizhstal steel plant in 2005.
The auction stands today as one of the few competitive and transparent privatizations of formerly Soviet assets, fetching a whopping $4.8 billion.
But last year, the general prosecutor’s office came to the conclusion that such an extension was unlawful and went to court seeking to cancel it, an action that many saw as a prelude to government renationalization of the plant.
After French President Nicholas Sarkozy raised the issues during President Viktor Yanukovych’s visit to France, prosecutors suddenly changed their mind and withdrew the case, further underscoring how politicized the nation’s criminal justice system is.
Kyivstar, Ukraine’s largest mobile provider
Telenor, Altimo in big merger
The deal ended five years of corporate conflicts between Norwegian Telenor and Russian Alfa Group, which finally combined their joint assets in VimpelCom company, the biggest telecommunications operator in the former Soviet Union and Southeast Asia.
The portfolio includes Kyivstar, Ukraine’s largest mobile provider. This case is a prime example of how to resolve a long-running corporate conflict out of court.
No protection for Raffaello
Ferrero sought to preventLandrin from invading the Ukrainian market with itsWaferatto chocolate, which it said copied the famousRaffaello brand. Having succeeded in similar cases in Russia and Georgia,Ferrero nevertheless lost in Ukraine. The local court canceled protection ofthe Raffaellotrademark. Experts believe that theresults may affect intellectual property cases.
Illegal foreign currency loans
An OTP Bank borrower sought to escaperepayments and raised the argument that the bank was not authorized to provide foreign currency loans.
The courts supported him, putting a gigantic amount of loans during the economic boom of 2004-2008 in danger of non-repayment. However, the case is now being reconsidered, which still gives some hope to the banks.
Luganskteplovoz
BrianskMachine Buiding Factory had been struggling for years to buy locomotive factory Luganskteplovoz, one of the best remaining gems yet to be privatized in Ukraine.
The deal was challengedin court, but the investor eventually won, putting an end to at least one of the many privatization controversies in Ukraine.
American investor wins $9.5 million claim
In March, a World Bank arbitration tribunal ordered Ukraine to pay $9.5 million in damages to American businessman Joseph Lemire, owner of Gala Radio station who has been prevented from expanding his radio station’s frequencies since 1996.
The court found that Gala Radio had been hindered by Ukraine from developing into a full national FM network. This is a rare case when a foreign investor has the nerve to claim against Ukraine.
RosUkEnegro wins in Stockholm
The Arbitration Institute of the Stockholm Chamber of Commerce ordered state gas company Naftogaz Ukrainy to return 12.1 billion cubic meters of natural gas to Swiss-registered gas trader RosUkrEnergo, part-owned by Ukrainian billionaire Dmytro Firtash.
Former Prime Minister Yulia Tymoshenko said Naftogaz didn’t seem to put any effort into defending its position because of Firtash’s connections with President Viktor Yanukovych’s inner circle, a charge that the government denies.
Prosecutors raid Magisters
About 30 armed men and investigators from the General Prosecutor’s Office conducted a 14-hour search in the Kyiv office of Magisters law firm, detaining the firm’s staff and taking away documents relating to the Naftogaz case, as well as computers and servers.
The legal community was shocked, and other reports surfaced of similar raids on law firms. Even the International Bar Association came out with a statement against the heavy-handed state harassment and interference in client confidentiality.
Dmytro Firtash on March 24 receives a scroll of gratitude that confirms his admission to the Guild of Benefactors of the University of Cambridge.
Judge dismisses Firtash lawsuit
In February, a London judge dismissed a libel lawsuit filed by Ukrainian billionaire Dmytro Firtash against the Kyiv Post, saying that the link to English jurisdiction was “tenuous in the extreme” and calling the lawsuit “almost an abuse of process.”
The ruling was hailed as a victory for free speech internationally and a blow to so-called “libel tourism,” in which wealthy foreigners use the United Kingdom’s weak libel laws to file lawsuits despite having no substantial connection to England.
Kyiv Post staff writer Kateryna Panova can be reached at [email protected].
