17 September 2021 President of Ukraine V.O. Zelensky
Dear Mr. President,
My name is Tamaz Somkhishvili. As a British citizen and a long-term investor in Ukraine, I would like to express my deepest regard and appeal to you, as the Guarantor of the Constitution of Ukraine and the rule of law in this country, to help protect my legal rights as a foreign investor.
I am one of those foreign investors in Ukraine that you personally make active, consistent efforts to attract to your country. I currently have investments in manufacturing, construction and international trade. Over the many years I’ve been doing business in Ukraine, my investments, and the taxes paid, have amounted to tens of millions of dollars.
The situation I find myself in is a prime example of the kind that worries many foreign investors in Ukraine and jeopardizes your ongoing efforts to attract international investment.
In 2007, a Ukrainian enterprise of which I am the beneficial owner, Kyiv-Terminal LLC, won a competition under the Kyiv City State Administration (KCSA) to reconstruct Kharkiv Square. An investment agreement was signed, within the framework of which the investor fulfilled the ensuing obligations and transferred US $13.5 million to the KCSA account.
Immediately after the agreement was signed, Kyiv-Terminal began active implementation. However, the project required city authorities to provide a parcel of land as part of their obligations under the investment agreement. Since the Kyiv City Council kept delaying this transfer, the investor was forced to go to court. As a result, several years were spent in the courts just to conclude a land lease agreement.
In 2013, the Kyiv City authorities decided to terminate the land lease agreement and withdrew the land parcels previously transferred to Kyiv-Terminal for public needs. This decision also led to the termination of the investment agreement, which meant compensation for losses of Kyiv-Terminal, in accordance with an additional agreement concluded by the parties.
However, the KCSA failed to uphold its obligations and refused to compensate for the losses incurred. For nearly two years, Kyiv-Terminal and I, personally, as the investor, negotiated with Kyiv authorities and with the Government of Ukraine to peacefully settle this dispute. All the government agencies involved agreed that the damages to Kyiv-Terminal should be compensated, but insisted that the actual amount be determined by a court.
In 2018, Kyiv-Terminal applied to the Municipal Commercial Court of Kyiv to protect its rights. In 2019, the court made a decision that partly satisfied the company’s claim, and ordered the city authorities to pay Kyiv-Terminal US $24,460,997 as damages. Unfortunately, the court decision has not been enforced.
Nevertheless, the Department of Economics of the Kyiv City State Administration filed an appeal, which was satisfied by the Northern Commercial Court of Appeal on May 27, 2021, once again completely violating the legal rights of a foreign investor to fair compensation for losses.
Our last chance to protect our rights under Ukrainian law is a fair and objective review of the case by the Supreme Court of Ukraine, scheduled for September 22, 2021. I am confident in the legal position of my enterprise, However, even now the company has faced unscrupulous actions by the Kyiv City State Administration, the Department of Economics and the Kyiv City Prosecutor’s Office, which deliberately sent their legal responses to the wrong address so that the company would not receive them. I hope that my public appeal to you will contribute to an impartial consideration of the case by the Supreme Court, based on the principle of the rule of law.
If, despite everything, I am unable to defend my rights in a Ukrainian court, I will file suit against the State of Ukraine on the basis of the Agreement on the Mutual Protection of Investments between Ukraine and the UK.
Does Ukraine need an international legal case that will not only bring to international attention the kind of dishonesty foreign investors might face with Ukrainian authorities, but also the fact that it is impossible to protect their rights in Ukrainian courts?
Mr. President, I understand that it is difficult to pay attention to every investment dispute, especially given their growing number lately. But the rapid growth of such cases is indisputable evidence that every individual complaint from a foreign investor is part of a single huge problem that requires an immediate comprehensive solution and your, Mr. President, personal control.
After all, if you, the Guarantor of the Constitution and the rule of law, cannot guarantee that foreign investors will be able to defend their rights in fair courts, Ukraine will never realize its investment potential.
Yours sincerely,
Tamaz Somkhishvili
