Contents 4
Editor’s Preface
7
Ukrainian Legal Market
25
Practice Areas and Industries Review
26
Advertising & Marketing
76
Defense
126 Mergers & Acquisitions
28
Agriculture
78
Due Diligence
128 Migration Law
30
Alternative Dispute Settlement
80
E-Commerce
130 Patents
32
Anti-Corruption
82
Energy
132 Pharmaceuticals
34
Antitrust
84
Energy Efficiency
134 Ports and Marine Terminals
36
Assets Tracing
86
Enforcement of Foreign Awards
136
38
Aviation
40
Banking & Finance
88
Enforcement Proceedings
42
Banking Disputes
90
European Law
44
Bankruptcy
92
Family Trusts
46
Business Crime
94
FMCG
144
48
Business Protection
96
Foreign Trade
146 Public Procurement
50
Business Immigration
98
Government Relations
148 Real Estate
52
Commercial Law
54
Competition Investigations
56
Compliance
58
Copyright
60
Corporate
62
Corporate Disputes
64
Counterfeiting & Piracy
66
Criminal Process
68
Cross-Border Debt Recovery
70
Cross-Border Debt Restructuring
72 74
177
Private Clients / Wealth Management
138 Private Equity 140 Privatization 142 Property Rights Public Private Partnerships
100 Infrastructure
150 Regulatory
102 International Arbitration
152 Renewable Energy
104 International Tax
154 Sanctions
106 Internet
156 Sports Law
108 Investments
158 State Aid
110 IT Law
160 Tax
112 Labor & Employment
162 Tax Controversy
114 Land
164 Telecommunications
116 Litigation
166 Trade Remedies
118 Marine Insurance
168 Trademarks
120 Maritime Law
170 Transfer Pricing
Customs Law
122 Mediation
172 Transportation
Debt Restructuring
124 Medicine & Healthcare
174 Unfair Competition
Who is Who in Ukrainian Law by Practice Areas/Industries
178 Agribusiness
226 International Trade: Trade Remedies / WTO, Commodities
184 Antitrust / Competition
230 IT / Telecommunications & Media
188 Banking & Finance / Restructuring
234 Labor & Employment
196 Bankruptcy
238 Litigation
200 Corporate and M&A
248 Pharmaceuticals / Medicine & Healthcare
208 Criminal Law / White-Collar Crime
252 Real Estate, Construction, Land
214 Energy & Natural Resources
258 Retail
218 Intellectual Property
260 Tax and Transfer Pricing
222 International Arbitration
268 Transport: Aviation, Maritime, Shipping
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Editor’s Preface
Knowledge is Power
OLGA USENKO Chief Editor
There is a piece of good news. The period of stagnation is over. The country has inherently entered economic stabilization with gradual revival of business activity and signs of very modest growth, but all the same growth. The number of deals has certainly increased. The performance of legal counsels has improved in comparison with 2015. Since the foreign direct investments that traditionally powered the legal market is still low, the competition for limited transactional work is getting a lot tougher. It forces law leaders to consider alternative offerings, improve operational efficiency and personal effectiveness, leveraging opportunities and searching for blue oceans to enjoy greater first-comer advantages. Accordingly, by exploring new markets and identifying niches where the competition is still weak, law firms are attempting to generate pioneering offers on the market. When uncertainty is a reality, knowledge is the greatest power. Despite some returns from state service, Ukrainian lawyers continue to act as rule-makers rather than rule-takers. Some very important changes have got off the ground. The fifteenth edition of Ukrainian Law Firms. A Handbook for Foreign Clients is traditionally released to examine effective law and legal practice, bringing strong industry and competitive insights for in-house counsels, cross-border legal practitioners, officials and business people. Following the format used over the course of many years, Ukrainian Legal Market synthesizes recent facts and trends, compiling deals and prospects. Practice Areas and Industries Review is the viewpoint on law and practice by legal experts. While the Who is Who in Ukrainian Law section is a landscape of the market across practices and industries, an attempt at market segmentation, revelation of landmark matters, solutions and existing expertise on the ground, achievements of both teams and individuals. We express our deep gratitude to all respondents, experts and information partners, whose efforts as contributors to this volume we sincerely acknowledge. Please visit the Handbook on-line at our new upgraded web-site: www.ukrainianlawfirms.com Happy reading!
The project of YURIDICHESKAYA PRACTIKA Publishing
UKRAINIAN LAW FIRMS 2017. A Handbook for Foreign Clients. ISBN 978-966-8042-70-6. Published by Yuridicheskaya Practika Publishing 25А, "L" Dehtyarivska Street, Kiev, 04119, Ukraine • Telephone: +380 44 495-2727 • Fax: +380 44 495-2777 • E-mail: info@pravo.ua EDITOR: Olga Usenko • RESEARCHERS: Olga Usenko, Alena Chernyavskaya, Oleksiy Nasadyuk, Nikita Kandyba
•
DESIGNER: Mykola Tytarenko
•
COPY EDITOR: Peter Dutczyn
The names of law firms and all lawyers whose nominations were accepted by the editor were listed without charge. It was impossible to buy entry into the Handbook. Contributors and other law firms were invited, but not required, to supply their profiles and “address boxes” which were published upon payment of a fee. The publishers and editors do not accept responsibility for any errors, omissions, mis-statements or mistakes. No responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication can be accepted by the editors, authors or publishers. The Handbook should not be treated as a substitute for specific legal advice concerning individual situations. The omission of any lawyer or law firm from any section of this Handbook does not indicate that they do not practise in the area or are not well regarded. You should do your own research before engaging lawyers in any field. The views expressed in this publication by any contributor are not necessarily those of the editors or the publishers. The publication uses Ukrainian transliteration of geographical names and indications. All names of individuals are written with mixed transliteration (Ukrainian and Russian) at their personal request. Printed in Ukraine. First published in 2002. Electronic version of this publication is available at www.UkrainianLawFirms.com
ISBN 978-966-8042-70-6
Українські юридичні фірми. Довідник для іноземних клієнтів (англійською мовою) Видавець: ПрАТ «Юридична практика» Украинские юридические фирмы. Справочник для иностранных клиентов (на английском языке) Издатель: ЧАО «Юридическая практика»
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ADVERTISEMENT
UKRAINIAN LEGAL MARKET
Ukrainian Legal Market
On the Way to Recovery: Testing Strategies Market Intelligence 2017
As market sources have described our editorial “a deep analytical section” in the most demanded spheres of legal practice as well as “a great instrument for market structuring and organizing of the professional industry”, every year we meet the challenge to produce a true concentrated overview, known on the market as the Handbook, or simply ULF. To quote one Ukrainian lawyer: “It is very important to see where you are in order to decide where to move forward”. That is why, in addition to being a guide for clients seeking professional legal services in Ukraine, this fifteenth edition of the legal directory puts forward some ideas to upgrade both the strategies and tactics of law firms. The research is based on a combination of conventional tools: corporate submissions, individual feedback by practice areas, interviews by phone and one-to-one meetings, as well as available open sources that have been carefully analyzed by the editorial team.
New Entrants
On 1 March 2016 Kinstellar launched its office in Kyiv, headed by Kostiantyn Likarchuk. The same month Axon Partners, the ITfocused firm (former IT practice of Juscutum) announced its launch. It is headed by Dima Gadomsky, a renowned trendsetter in Ukrainian IT law. In May AstapovLawyers International Law Group announced its merger with Baltic Business Group, a European full-service law firm with offices in Germany and Latvia. The companies signed a strategic partnership agreement to operate together in European and CIS markets under the common brand of Eterna Law. In July there were changes in the organizational structure of Law Offices of OMP, namely spin-off and establishment of a separate company named OMP Tax & Legal and headed by Dmitriy Mikhailenko. In August LEMAN International Law Group was founded by two partners: Artem Atepalihin and Volodymyr Vorobiov. In
8
Prior to the launch of the research, we asked market players for feedback and received a request for more precise market segmentation in the production of editorial contents. For example, we were recommended to draw attention to retail, hospitality, sports law, private clients and wealth management. The available data collected from the market enabled us to produce an overview of legal advisors operating in the retail industry, but was not sufficient to reflect the relevant market landscape for other noted fields. At the same time, the International Trade section was structured into trade remedies and WTO, and commodities trade areas. The long-expected insight into cross-border litigation was sufficiently strong to be highlighted in the current edition. The current Handbook contains 18 surveys and 25 rankings. As the initial methodology of the Handbook was designed to create so-called shortlists, it was focused in the main on the high-end market. In the current edi-
terms of practice areas, most attention is paid to international financial law, corporate, contract law. In September 2016 the new dispute resolution boutique firm GENTLS was founded by Oleh Gromovyi. ESQUIRES was established in November 2016 by a group of lawyers, namely Oleksandr Shkelebey, Opanas Karlin, Artem Saprykin, and Viktoria Kovalchuk. Some of the team was previously members of EVERLEGAL, another Ukrainian law firm. Among the firm`s practice areas are dispute resolution, corporate and tax banking, finance and capital markets, business protection, white collar defense and investigations. In December 2016, Ilyashev & Partners opened an office in Tallinn, Estonia, extending its practice in the EU. The office is headed by Vitali Galitskihh, an Estonian expert in corporate, tax, labor law and dispute resolution. On 1 February 2017 Axon Partners opened its office in Lviv and launches the new practice areas of international tax,
tion we extended our findings and identified “Other established practices” in those areas where market development performed the relevant necessity. And more, we extended shortlists for the most widespread legal practices like Corporate and M&A, and Litigation. The criteria of inclusion in the shortlist included a mixture of presented project portfolio throughout the research period, the complexity of matters, client profile, practice diversity, team capacity, reputation. The category “Other established practices” has demonstrated accomplished teams, human capacities, track record over the research period, peers’ reference and expertise recognition. Where appropriate, we continued to single out market authorities — top individuals with unrivalled expertise, exceptionally strong and referred on the market as authorities, establishing certain standards of work. Most of them may be involved in managerial functions and social activities.
corporate and M&A, with a general focus on the IT sector.
Professional Move
Since March 2016 the criminal practice at Ario Law Firm has been headed by new partner Yevgen Grushovets (who worked for state law-enforcement authorities earlier). In May 2016 Arzinger promoted Kateryna Gupalo, Andriy Selyutin and Oleksander Plotnikov to partners. Kateryna Gupalo continued to develop white collar defense practice, as well as tax and customs disputes. Andriy Selyutin is head of the South Ukrainian Branch. Oleksander Plotnikov led banking and finance. Pavlenko Legal Group announced the return of Oleksandra Pavlenko to the partnership of the founding partner of the team in connection with the end of her career as Ukrainian First Deputy Health Minister (2014 — 2016). The Kyiv office of CMS Cameron McKenna promoted Olga Belyakova to a partner.
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In those practices where the shortlists either firms or individuals were inappropriate due to practice specifics or insufficient data, we produced the list of notable firms and individuals in alphabetical order. Traditional deal-making activity for a year-long period is usually presented in a complete and comprehended manner (see Tables 1-4). However, it is not always easy to get hold of information on foreign law counsels, which is perhaps the most valuable part of the league tables for law firm strategists.
Competition Points
The year of 2016 forced business leaders to move out of their comfort zone, introduce a mature management approach and substantively change their partner mindset. It became a period of testing organizational models and partnership financial formulas, rethinking market positioning, sales and HR policies. The major full-service law firms put their efforts into retaining market shares. Meanwhile, the fashion for legal boutiques is becoming more vivid on the market. Deep expertise allows them to compete with full-service counsels and often determines their victory. Accordingly, the Ukrainian legal market is undergoing a process of reorganization and repositioning. Contrary to merger mania as a global trend, in Ukrainian realities law firms
She advises on corporate/commercial and competition matters with a special focus on the technology, media and communication sector. In June Redcliffe Partners launched a full-service compliance practice by hiring a new by counsel, Ario Dehghani, who is an EU-qualified lawyer. Marchenko Danevych expanded its partnership with Oleksandr Aleksyeyenko (competition and IP) from September 2016. In October DLA Piper announced the appointment of Olga Vorozhbyt as partner and head of the litigation and regulatory practice. She joined the firm from CMS Cameron McKenna, where she was a dispute resolution and compliance partner. In December 2016 Asters welcomed back Constantin Solyar after his secondment to Luxembourg, where he practiced international tax in a Big Four firm. In his role as partner he focuses on advising clients on a variety of international tax matters.
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split rather than merge. Repositioning of the already established players is caused in the main by ever-growing competitive pressure from the new budding firms. The latter showcased good dynamics of projects, increased quality, higher speed and lower cost. This is eventually a big advantage in terms of strong budget constraints on the client side. Consequently, new entrants put significant efforts on redefining certain market segments. Competition. In the last couple of years the intensity of price competition has become taut. Severe dumping by big players became a subject of scandals and discussion in social networks. The implementation of the public procurement system based on the ProZorro platform revealed the scope of pricing differences and responsive ability to reach the bottom. There is no doubt that flexible pricing is the “must-have” of legal counsels in the current volatile market conditions. Clients, especially local ones, are very cost sensitive, requesting to fix the price as caps and in local currency. Having faced budgetary restrictions, clients are willing to negotiate a success fee and push for discounts. In turn, client retention was in many instances more important for external counsels than earning profits from the services provided. At the end of the day, all these factors influence the profit of law firms.
In January 2017 Asters strengthened its dispute resolution practice with the arrival of new counsel Dmytro Shemelin (previously — Ilyashev & Partners). He is particularly vividly known for international investment and commercial arbitration. Artem Drozdov, attorney and deputy head of the criminal law department, became a partner of AVER LEX. Kateryna Tkachenko, counsel, was promoted to partner at competition law boutique CLACIS. INTEGRITES expanded its dispute resolution practice. Oleksiy Sluch joined as a partner and head of the team of lawyers specializing in banking disputes and disputes related to commercial contracts. Volodymyr Pavlenko’s team deals primarily with disputes related to bankruptcy and restructuring. Prior to joining Mr. Sluch was a counsel at Vasil Kisil & Partners, while Mr. Pavlenko headed the commercial disputes practice at KPMG Ukraine. In February 2017 Redcliffe Partners announced that Anastasia Usova joined as counsel and head of the antitrust practice.
Youngsters. A challenging business environment is usually a prime time for ambitious lawyers to launch their own firms. The recent splits and fragmentations on the market resulted in the emergence of a number of legal startups that have niche expertise and usually a non-traditional approach to doing business. The last couple of years brought new names like Trusted Advisors, Axon Partners, Gentls, Leman international law group, ESQUIRES. Big Four. The presence of the “Big Four” advisory firms on the legal market is growing. First and foremost, clients often prefer integrated service providers who offer more than traditional legal advice. Accordingly, there are changes in the purchasing patterns for legal services, as the Big Four service providers ensure a seamless synergy of business, financial, legal, tax, and operational expertise. Thus, a multidisciplinary practice has an advantage over mono-service law firms. Even more, international networks are further targeted as a strong advantage of geographical reach, and their legal practices are further developed on a stand-alone basis, but not as only ancillary assistance to other service lines. In a sense, the Big Four are very active in terms of hires and use these turbulent times for completing their legal teams with talented professionals. Referrals. In highly internationalized transactional activity, cross-border capabilities are the key advantage to win a mandate for multijurisdictional work.
In March Vitaliy Kasko (Deputy Prosecutor General of Ukraine from May 2014 to February 2016) joined the firm as a partner to head the white-collar crime practice of Vasil Kisil & Partners. DLA Piper announced that Illya Sverdlov, legal director, has been appointed as head of tax in the Kyiv office effective of 1 March 2017; and Alla Kozachenko, a legal director, and head of the Corporate and M&A practice from 1 May 2017. Redcliffe Partners announced that Olena Polyakova has joined the firm’s banking and finance team as counsel. In March Poberezhnyuk & Partners Law Group added new partner Valeriy Fedichin. He specializes in international transactions, including the use of English law, dispute resolution, including international arbitration and investment disputes. In May 2017 Jeantet Ukraine announced that Igor Krasovskiy (banking & finance) and Illya Tkachuk (corporate and M&A) were named local partners.
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Ukrainian Legal Market
30.0
21.1 18.6
18.3 12.0
Up to 3 years
3-5 years
5-10 years
Leveraging these findings, we hope that law firms may rethink their referral marketing and streamline appropriate BD efforts.
Managerial Agenda
There is a certain call for innovations in the management of law firms, leading the team, client relationships and brand thinking. Market sources admit that the conservative internal structures of law firms are changing slightly. Even agility is being pioneered in the Ukrainian legal business.
10-15 years
More than 15 years
Source: 50 leading law firms in Ukraine 2016, Yuridicheskaya Practika
FIGURE 1. General employment history of lawyers in 50 leading law firms of Ukraine, %
As the Ukrainian market is reasonably unsaturated with international legal names, leading domestic firms consider foreign colleagues as a primary source of high profile work, putting huge efforts into developing international contacts and exploring membership in various networks. Our traditional league tables have always been an extremely valuable source of information, especially from this strategic perspective. Nevertheless, the topic is very sensitive for local leaders, as referral is a subject of not only know-how but a competition. No wonder that such mandates alongside international majors often means high profile big-ticket instructions for sound clientele, often bringing a counsel who is top-ranked. In order to identify the drivers of referrals, we provided special research. Conducting the poll with international law firms that are not present in Ukraine (as part of researching regional desks presence in Ukrainian deals), we asked them to mark the criteria that are important for them when hiring a Ukrainian legal counsel. The most frequently named are the following criteria: — Speed of response/availability, — Industrial expertise, — Experience in certain practice areas — credentials. Secondary importance given to: — Personal contact with appropriate partner, and — Pricing.
Legal Tech. The worldwide trend of Legal Tech is gaining momentum in Ukraine. Firstly, firms are attempting to reach operational efficiency and automate the maximum number of business processes inside the firm. Apparently, professional software and billing platforms, time tracking, CRM and financial analytics are now more important for business. In times when there is a lack of investment in extensive and/or intensive growth, a costcutting strategy is the most relevant thing on a shrunken market. Technology allows deci-
Litigation
1.7
Compliance
Competition
Tax
8.6
0.8
Capital Markets
Labor
18.9
7.3
2.1
Corporate
3.9
Business Protection Debt Restructuring
7.0
4.1 4.5
Bankruptcy
6.0 4.6
International Aribtration
5.3 4.8
5.3
Other
10.3
4.8
Banking & Finance
IP
Source: 50 leading law firms in Ukraine 2016, Yuridicheskaya Practika
FIGURE 2. Aggregate turnover of top 50 leading law firms in Ukraine in 2016 throughout practice areas, %
M&A
Criminal Law
Real Estate, Land
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sion makers to achieve clarity in terms of performed metrics and their dynamics. Other players invest in the development of new technological solutions and client care products, provide legal services online and share knowledge in the cloud with clients. There are precedents of building messenger bots, constructors of contracts, and other applications. Notably, the most well-known Ukrainian startups were actually built inside law firms — Juscutum, Sayenko Kharenko, AEQUO. Sales, business development and PR. The increased competition is a natural incentive for self-identity and smart differentiation on the market. Competition transforms into the area of marketing activities and intensified BD. With managing sales and services production, there is more understanding of the importance of creating a customer experience to win loyalty, referrals and cross-practice sales. Establishment of efficient sales channels, employment of professional sales managers and sales departments and special training for staff are all on the agenda for many law firms. Leveraging costs to win new clientele, firms appeared to make more marketing efforts and expand product lines for existing clients. On the PR front, last year the legal market demonstrated a boost in PR activity and media presence. This is a part of brand recognition efforts. Interestingly, not only are corporate brands promoted but the “personal brand” of leading lawyers too. HR. The main trend in HR policy is closed to well-justified selective hires — in many cases revealed in targeted hunting. Even those companies that grew their headcounts extensively did so carefully with accurate financial calculations and targets for candidates. In order to expand their client base, firms are obviously looking for partners with an existing business caseload. Another recent goal is keeping valuable practitioners on board, implementing bonus and incentive payments, but without expanding salaries and other compensation in overall terms. Law firms are investing more in the soft skills of their teams and sales capabilities than the financial side. At the same time, from the perspective of the employee, it is not only adequate compensa-
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tion but the work-life balance that is gaining greater importance. The Ukrainian legal market is definitely a market of young practitioners with average experience coming to 5-10 years. According to the latest research of 50 leading law firms of Ukraine, almost half of all legal staff have practiced law for no more than 10 years (see Figure 1). The number of partners continued to grow, especially throughout promotions to non-equity partnership. This leads to a consequent decline in the ratio of partners to lawyers (for the record, the average ratio of partners and lawyers in 2016 was 1:4.5).
Practices and Industries: Money Talks
The structure of demand for legal services continues to change by reflecting the developments in the Ukrainian economy. Dispute resolution continues to the most stable and profitable niche (see Figure 2). The main suppliers are large Ukrainian banks seeking recovery of non-performed loans and loading litigation practices with a significant scope of work. The state authorities and national corporations (e. g., The Deposit Insurance Fund, Naftogaz of Ukraine, Ministries of Justice and Finance, Economy and Development) empowered the market with international arbitration, forensic and debt recovery areas, state debt restructuring, trade remedies and trade disputes. International financial institutions (EBRD, IFC) remained the main donors, leading the corporate sector for the last couple of years, and procured legal services related to drafting legislation and reforms. Government reform activity entered its legislative stage, and is changing legal practice substantially in a variety of fields, like competition, corporate law, state procurement, energy. In light of the fall in tax disputes, tax practice leans towards advisory. In the second half of the past year recovery of transactional activity is noted. Thus, the M&A activity in the agrarian sector is due to extension of land banks and boosting of industrial capacities for further export. The ongoing reform of Ukrainian healthcare entailed the interests of private investors to watch potential objects of investment in the near term. The significant demand for the whitecollar crime practice is down in the main to
facilitation of the state’s anti-corruption policy and pressure on business. This specific practice became more visible in the offering of full-service market players.
Visible Prospects
The common view of market players is that it is impossible to make plans and predictions even for the medium term. Performance is closely tied to the volatility of the economic and political situation. At the same time, the market inherently follows economic stabilization and provides signs of modest growth, but albeit growth! Great hopes are being put on ongoing judicial reform. The general market comment comes to expected enhancement of institutional capacity, but not a simple change in faces and pure populism. Another area of predicted growth is in enhancing enforcement of judicial decisions, triggered by the introduction of a private enforcement service in 2017. Large domestic firms and international players are expecting a revival in investment that traditionally loads the legal market. Meanwhile, we would certainly see a big advantage for those domestic firms that have managed to establish cooperation with international powerhouses. The new law on financial restructuring is likely to facilitate financial restructuring projects. The ongoing process of removing insolvent banks from the market and settlement of their debts will determine further demand for forensic, asset freezing and debt recovery projects. 2017 will hopefully be associated with privatization and corporatization of stateowned enterprises. As a result, corporate governance and compliance should receive impetus for development. The growing number of investor-state arbitrations will prompt some players to develop their international arbitration practices. As a legal market consists of profit-driven partnerships, the Ukrainian market is likely to continue to see splits and new entrants, mainly medium and small law firms. But until the revival of domestic growth, law firms may well continue to explore new markets and destinations. Every crisis is a learning opportunity. And the Ukrainian one was not an exception. The mission of the ULF is to review the lessons learned on an annual basis. So let’s consider together what happened in the legal business in Ukraine.
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Ukrainian Legal Market Banking & Finance VALUE
TRANSACTIONS
TABLE 1 LEGAL SUPPORT (UKRAINIAN LAW)
LEGAL SUPPORT (FOREIGN LAW)
USD 1 billion
AVELLUM acted as counsel to the Ministry of Finance of Ukraine; Sayenko Kharenko Issue of 1.471% notes due 2021 fully guaranteed by acted as counsel to Citigroup Global the United States of America, acting through USAID Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. International Plc as underwriters
White & Case acted as international counsel to the Ministry of Finance of Ukraine; Arnold & Porter acted as international counsel to Citigroup Global Markets Inc., J.P. Morgan Securities LLC and Morgan Stanley & Co. International Plc as underwriters
Appr. USD 509 million
Issue of notes and GDP-linked securities (as part of the restructuring of four sovereign-guaranteed loans from Citibank, Sberbank of Russia and VTB Capital to Ukravtodor and Yuzhnoye State Design Office)
AVELLUM acted as counsel to the Ministry of Finance of Ukraine; Sayenko Kharenko advised JSC Sberbank of Russia, Citibank and VTB Capital
White & Case acted as international counsel to the Ministry of Finance of Ukraine; Linklaters advised JSC Sberbank of Russia, Citibank and VTB Capital on English law
USD 500 million (EUR 478.285 million)
World Bank guaranteed revolving facility to National Joint Stock Company Naftogaz of Ukraine, extended by Citibank and Deutsche Bank for purchasing gas from gas suppliers
AEQUO advised Naftogaz of Ukraine; Sayenko Kharenko advised Citibank Europe plc, UK Branch as agent and Citibank, N.A., London Branch and Deutsche Bank AG, London Branch
Allen & Overy advised Citibank Europe plc, UK Branch as agent and Citibank, N.A., London Branch and Deutsche Bank AG, London Branch
USD 500 million
Restatement / roll-over / extension of the preexport financing to Duferco S.A.
Sayenko Kharenko advised BNP Paribas
USD 260 million
Loan facility extended to UkrEximBank by the European Investment Bank (EIB)
Jeantet represented EIB
USD 170 million
Restatement / roll-over / extension of the syndicated pre-export facility for TransOil Group
Sayenko Kharenko advised Societe Generali
Norton Rose Fulbright advised EIB on English law matters
USD 100 million
Secured pre-export revolving loan facility to Myronivsky Hliboproduct Group provided by ING Bank N.V. and Crédit Agricole Corporate and Investment Bank
AVELLUM acted as counsel to ING Bank N.V.
Norton Rose Fulbright advised ING Bank N.V. as to English law; Arendt & Medernach advised ING Bank N.V. as to Luxembourg law; Montanios & Montanios advised ING Bank N.V. as to Cyprus law; Harneys advised ING Bank N.V. as to BVI law
USD 75 million
Senior loan to Nibulon Group provided by the EIB
Jeantet represented EIB
Norton Rose Fulbright advised EIB on English law matters
USD 74 million
Financing provided by EBRD and IFC for the construction of a grain terminal in Odesa sea port by US agricultural giant Cargill and M.V. Cargo, operating in Yuzhny Sea Port in Odesa Region
Redcliffe Partners advised EBRD and IFC
EUR 50 million
Uncommitted trade finance guarantee facility provided by EBRD to Oschadbank as an issuing bank under the EBRD’s Trade Facilitation Programme
Sayenko Kharenko advised Oschadbank
USD 50 million
Financing provided by China Development Bank Corporation (CDB) for purchase by Ukrtelecom of Huawei equipment
Asters represented CDB
White & Case (Beijing office) acted as English law counsel to CDB
USD 50 million
Loan from Turkey to Ukraine to finance needs of state budget
AVELLUM represented the Ministry of Finance of Ukraine
White & Case acted as international counsel to the Ministry of Finance of Ukraine
USD 50 million
Trade finance facility to Quadra Commodities S.A., independent agricultural trading and logistics organization
Integrites advised Rabobank International
USD 40 million
Renewal of secured syndicated pre-export loan facility to the Industrial Group ViOil, a Ukrainian major producer and exporter of sunflower oil
AVELLUM advised EBRD
USD 40 million
Financing extended by EBRD to G.N. Terminal Enterprises Limited for financing expansion of the capacity of a grain and metals terminal in port of Odesa
Redcliffe Partners advised EBRD
Appleby Global was BVI and IoM counsel to EBRD; Hogan Lovells acted as Dutch counsel to EBRD; Watson Farley & Williams acted as English counsel to EBRD
Empty table cells in a foreign legal support column mean that the information is either not available, confidential or there were no foreign law counsels.
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VALUE
TRANSACTIONS
LEGAL SUPPORT (UKRAINIAN LAW)
USD 30 million
Interbank credit facility to a Ukrainian bank from BHF-Bank
Arzinger advised BHF-Bank
USD 30 million
Trade finance facility from EBRD to Credit Agricole to boost the export of products from Ukraine
Integrites advised Credit Agricole Ukraine
USD 27 million
Bridge loan to Mriya Agro Holding to cover working capital needs until harvesting campaign
AVELLUM acted as a counsel to a group of current creditors of Mriya Agro Holding
USD 25.5 million
Trade finance facility to Engelhardt Commodities Trading Partners (formerly known as BTG Pactual Commodities — a global commodity merchant)
Sayenko Kharenko advised Amsterdam Trade Bank
USD 25 million
Working capital loan from IFC to Astarta, one of the largest agricultural producers in Ukraine
Asters represented IFC
USD 20 million
Loan to Astarta Group, Ukraine’s leading agribusiness operator and sugar producer, extended by EBRD
AEQUO advised EBRD
USD 20 million
Loan to the subsidiaries of Industrial Milk Company (IMC Group) provided by EBRD
Sayenko Kharenko advised EBRD
USD 18 million
Loan provided to a Ukrainian agricultural company by UniCredit Bank Czech Republic and Slovakia, a.s.
Arzinger advised UniCredit Bank Czech Republic and Slovakia, a.s.
USD 15 million
Financing to fuel supplier Nadezhda Group, extended by IFC
Asters represented IFC
USD 15 million
Corporate loan to Engie International from Credit Agricole
Jeantet represented Credit Agricole
EUR 12 million
Loan from EBRD to Municipal Enterprise Lvivelectrotrans, a municipal transport company, secured by a guarantee issued by Lviv City Council
CMS Cameron McKenna advised EBRD
EUR 10 million
Pre-export trade finance facility from the financial division of Quadra Group to Agrogeneration S.A.
Integrites advised Agrogeneration S.A.
EUR 10 million
Term loan facility agreement between Credit Agricole Ukraine and EBRD
Integrites advised Credit Agricole Ukraine
EUR 10 million
Secured loan facility from EBRD to a Canadabased oil and gas production company and the subsequent restructuring and release of security
EPAP Ukraine acted as a legal counsel to EBRD
USD 10 million
Financing from IFC to Integrated Agrosystems, a member of Agrofusion Group, the largest tomato paste and industrial tomato producer in Ukraine
Asters represented IFC
USD 9 million
Loan facility to a Ukrainian agricultural company extended by Investment Fund for Developing Countries
Arzinger advised Investment Fund for Developing Countries
USD 7 million
Refinancing for Cement, LLC extended by Levenel Limited
Lexwell & Partners represented Cement, LLC (CRH group)
EUR 6 million
Loan provided by EBRD to Kronospan UA, a wood-based panel producer, to finance its capital expenditure
Sayenko Kharenko advised EBRD
USD 5 million
Financing provided by EBRD to V.V. KISCHENZI LTD
Asters represented EBRD
USD 5 million
Loan facility to DFU Agro, LLC extended by Nordic Environment Finance Corporation
Arzinger advised Nordic Environment Finance Corporation
USD 5 million
Loan to AO ZED provided by STALVEX OU
Gramatskiy & Partners represented AO ZED
USD 4 million
Loan facility to a Ukrainian agricultural company extended by Investment Fund for Developing Countries
Arzinger advised Investment Fund for Developing Countries
USD 3.2 million
Loan to Lavinia LLC provided by ROKSADA TRADING LTD
Gramatskiy & Partners represented Lavinia LLC
LEGAL SUPPORT (FOREIGN LAW)
Cadwalader, Wickersham & Taft advised creditors on English law matters
Allen & Overy (Warsaw) acted as English law counsel to IFC
Arthur Cox acted as English law counsel to CRH Group
>> Continued on page 14
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Ukrainian Legal Market VALUE
TRANSACTIONS
LEGAL SUPPORT (UKRAINIAN LAW)
USD 2.1 million
Loan facility to KSTT Services provided by Markets Limited
Gramatskiy & Partners represented KSTT Services
USD 2 million
Loan to LLC Poltava Sad from Oikocredit
Arzinger advised Oikocredit
USD 2 million
Loan to Megabank from Oikocredit
Arzinger advised Oikocredit
EUR 1.4 million
Loan facility to the Industrial Group KHASK arranged by EBRD
AVELLUM advised EBRD
WND
Cross-border transfer of loan assets from UniCredit Bank Austria AG to UniCredit S.p.A., Italy, as part of the wider transfer of the CEE business, including the shareholdings of CEE subsidiaries
AVELLUM advised UniCredit Group
WND
Loan provided by Ukrgasbank to OREXIM Group
Integrites advised OREXIM Group
WND
Single currency revolving loan facilities extended by ING Bank N.V. to Alfa Trading Limited, the AVELLUM advised ING Bank N.V. subsidiary company of a multinational agribusiness group
WND
Project financing to Rivne city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Kremenchuk city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Lutsk city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Irpin city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Khmelnytsky city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Chernihiv city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Lubny city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Fastiv city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Varash city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to Odesa city council aimed at implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to municipal company of Konotop city aimed at the implementation of energy-saving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to municipal company of Myrgorod city aimed at implementing energysaving technologies
Sayenko Kharenko represented NEFCO
WND
Project financing to municipal company of Ternopil city aimed at the implementing energy-saving technologies
Sayenko Kharenko represented NEFCO
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LEGAL SUPPORT (FOREIGN LAW)
King and Wood Mallesons (London) acted as English legal advisor to EBRD; King and Wood Mallesons (Hong Kong) — legal advisor to EBRD in Hong Kong; Harneys Aristodemou Loizides Yiolitis — Cypriot legal advisors to EBRD; Yust law firm — Russian legal advisors to EBRD
Norton Rose Fulbright advised ING Bank N.V. on English law and Singaporean law; Zaid Ibrahim & Co advised ING Bank N.V. on Malaysian law
WWW.UKRAINIANLAWFIRMS.COM
Debt Restructuring / Liability Management LEGAL SUPPORT (UKRAINIAN LAW)
TABLE 2 LEGAL SUPPORT (FOREIGN LAW)
VALUE
TRANSACTIONS
USD 1.275 billion
Restructuring of Eurobonds due 2024 issued by DTEK Finance Plc, Ukraine’s leading energy holding
Sayenko Kharenko advised DTEK Finance Plc
Latham & Watkins acted as English law counsel to DTEK Finance Plc
USD 600 million
Restructuring of a syndicated loan extended to Ukrlandfarming in 2011 for 5 years by Sberbank of Russia and Deutsche Bank AG
Redcliffe Partners advised Sberbank of Russia and Deutsche Bank AG; Arzinger advised Sberbank of Russia as the new agent and security agent
Clifford Chance (Russia), Herbert Smith Freehills (Russia), Lenz & Staehelin (Switzerland), George Yiangou (Cyprus) advised the lenders
USD 550 million
Restructuring of two issues of Eurobonds for the City of Kyiv due 2015 and 2016
Sayenko Kharenko advised Goldman Sachs
Linklaters advised Goldman Sachs on English law matters
USD 500 million
Restructuring of Eurononds of JSC Ukrzaliznytsia, Ukrainian public railway company, due 2018
Asters represented JSC Ukrzaliznytsia; Sayenko Kharenko acted as counsel to the Ad Hoc Committee of Noteholders
White & Case acted as English law counsel to JSC Ukrzaliznytsia; Cadwalader, Wickersham & Taft acted as English law counsel to the Ad Hoc Committee of Noteholders
USD 436 million
Restructuring of debt of the Ukrainian energy holding to Amsterdam Trade Bank N.V.
Jeantet represented Amsterdam Trade Bank N.V.
Norton Rose Fulbright advised Amsterdam Trade Bank N.V. on English law matters
USD 431 million
Debt restructuring of DTEK under the ISDA Master Agreement
Arzinger advised Sberbank of Russia
Herbert Smith Freehills acted as English law counsel to Sberbank of Russia
USD 404.3 million
Restructuring of a sovereign-guaranteed loan provided by Citibank and Sberbank to the State Road Agency of Ukraine (Ukravtodor) and two sovereign-guaranteed loans provided by Sberbank to Yuzhnoye State Design Office and Ukravtodor
Sayenko Kharenko advised Citibank and Sberbank
Linklaters advised Citibank and Sberbank on English law matters
USD 300 million
Restructuring of Creative Group’s debt under a syndicated credit facility
Arzinger advised a syndicate of banks (UniCredit Bank, ING, Erste Bank, Societe Generale, VTB, Credit Europe Bank, Amsterdam Trade Bank, Intesa Sanpaolo)
Herbert Smith Freehills acted as English law counsel to a syndicate of banks
EUR 244 million
Restructuring of indebtedness under project financing provided to Wind Power LLC (part of DTEK Group) by Landesbank Berlin AG, backed by a guarantee from EKF, a Danish export credit agency
Redcliffe Partners advised Landesbank Berlin AG; Baker McKenzie represented WindPower LLC (Ukraine), DTEK Renewables B.V. (Netherlands)
Clifford Chance (Germany), Clifford Chance (Netherlands) advised Landesbank Berlin AG
USD 118 million
Debt restructuring of PJSC AutoKrAZ before the State Savings Bank of Ukraine
EQUITY1 represented PJSC AutoKrAZ
USD 100.8 million
Restructuring of a sovereign-guaranteed loan by VTB Capital to the State Road Agency of Ukraine (Ukravtodor)
Sayenko Kharenko advised VTB Capital
Linklaters advised VTB Capital on English law matters
USD 100 million
Reprofiling of Oschadbank’s subordinated loan due 2017 in line with the requirements of the IMF’s Extended Fund Facility
Sayenko Kharenko advised Oschadbank
White & Case advised Oschadbank on English law matters
USD 62 million
Debt restructuring of Ahroholding Mriya provided by Alfa-Bank
EQUITY represented Ahroholding Mriya
USD 49.4 million
Bond restucturing of Aviant Plant before the state
Ilyashev & Partners advised State Enterprise Antonov
USD 40 million
Restructuring of indebtedness of Master Avia LLC, one of the leading aircraft ground handling companies in Ukraine, under the loan facility from subsidiary bank of Sberbank of Russia (Ukraine)
AEQUO advised subsidiary bank of Sberbank of Russia
USD 39.8 million
Debt restructuring of PJSC AutoKrAZ to JSC DeltaBank
EQUITY represented PJSC AutoKrAZ
EQUITY (called FCLEX up till June 2017). Empty table cells in a foreign legal support column mean that the information is either not available, confidential or there were no foreign law counsels.
Stelios Americanos acted as Cypriot law adviser to Sberbank
1
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>> Continued on page 16
15
Ukrainian Legal Market VALUE
TRANSACTIONS
LEGAL SUPPORT (UKRAINIAN LAW)
USD 30 million
Debt restructuring of Iventus-Bud LLC to Erste Group Bank AG
Arzinger advised Erste Group Bank AG
USD 30 million
Debt restructuring of Drand Plaza, subsidiary company, before EBRD
Arzinger advised EBRD
USD 22 million
Restructuring of loan facility provided to Creative Group by Landesbank Berlin AG
Arzinger advised Landesbank Berlin AG
USD 21 million
Debt restructuring of Ukrlandfarming to AG GROWTH INTERNATIONAL
Arzinger advised AG GROWTH INTERNATIONAL
USD 6 million
Settlement of loan debt owed by DataGroup provided by VTB Bank Ukraine
Asters represented VTB Bank Ukraine; Baker McKenzie represented Horizon Capital; AVELLUM represented Custos Invest & Finance Inc.
USD 6 million
Debt restructuring of a Ukrainian agricultural company before Marubeni Corporation
Arzinger advised Marubeni Corporation
USD 5 million
Debt restructuring of KSG Agro
Arzinger advised Big Dutchman AG
USD 5 million
Debt restructuring of Regionproduct-Ukraine, LLC
Arzinger advised Big Dutchman AG
USD 5 million
Debt restructuring of TMM to Zeppelin International AG
Arzinger advised Zeppelin International AG
USD 5 million
Loan restructuring of ZED Association extended by STALVEX OU
Gramatskiy & Partners represented ZED Association
USD 4.25 million
Debt restructuring of ZED Association provided by group of foreign lenders
Gramatskiy & Partners represented ZED Association
USD 4 million
Debt restructuring of Agrarian complex Green Valley before PJSC Bank Forum
Ario Law Firm represented Agrarian complex Green Valley
USD 0.7 million
Loan restructuring of Malanlen LLC before Procredit Bank
Gramatskiy & Partners represented Malanlen LLC
USD 0.4 million
Debt restructuring of ILYICH IRON AND STEEL WORKS before SIC SNT LLC
Gramatskiy & Partners represented SIC SNT LLC
WND
Restructuring of indebtedness of the one of the leading car manufacturers in Ukraine before a consortium of foreign and domestic lenders (including Portigon AG, Ukrgazbank and UniCredit Bank)
AEQUO advised a consortium of foreign and domestic lenders
WND
Restructuring of multimillion-dollar financing of PJSC Toronto-Kyiv, which owns and operates Mixed-Use Real Estate property called Toronto-Kyiv Complex in downtown Kyiv. Alfa-Bank Ukraine acquired the respective loan from Bank of Cyprus in the course of its exit from the Ukrainian market
CMS Cameron McKenna advised PJSC Alfa-Bank Ukraine; Sayenko Kharenko advised PJSC Toronto-Kyiv
WND
Corporate, debt and securities restructuring of the international aircraft owner and lessor AWAS due to change of financing partner from BNP Paribas to Wells Fargo Bank
Vasil Kisil & Partners advised AWAS
16
LEGAL SUPPORT (FOREIGN LAW) CHSH acted as Austrian law counsel to Erste Group Bank AG
Allen & Overy advised the lenders on German and Czech law matters
Clifford Chance (USA) advised AWAS on NY and English law matters
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Mergers & Acquisitions, Joint Ventures Establishing VALUE
TRANSACTIONS
LEGAL SUPPORT (UKRAINIAN LAW)
TABLE 3 LEGAL SUPPORT (FOREIGN LAW)
USD 40.5 billion*
Global sale of part of Allergan’s business to Teva
AVELLUM advised Allergan Inc. on Ukrainian law matters
Latham & Watkins acted as employment counsel and Cleary Gottlieb as corporate counsel to Allergan Inc.
USD 6.25 billion*
Acquisition by Canada Pension Plan Investment Board (CPPIB) of a 40% stake in Glencore Agricultural Products
AVELLUM advised CPPIB
Freshfields Bruckhaus Deringer acted as global counsel of Canada Pension Plan Investment Board
USD 4.4 billion*
Acquisition of Playtika Ltd (Playtika), one of the world’s largest social casino gaming company, by Shanghai Giant Network Technology Co. (Giant)
Sayenko Kharenko represented Shanghai Giant Network Technology Co. (Giant)
Fenwick & West and Allen & Overy led the transaction globally
USD 3.55 billion*
Acquisition of Thomson Reuters’ Intellectual Property & Science Business by Onex Corporation and Baring Private Equity Asia
AVELLUM acted as the Ukrainian legal counsel to Onex Corporation and Baring Private Equity Asia
Approx. EUR 2 billion**
Carve-out of the traditional light bulb business at OSRAM, the leading global bulb producer, to separate it from a new brand called LEDVANCE for the production of halogen bulbs, energy-saving bulbs and certain LED
Wolf Theiss advised OSRAM
Wolf Theiss offices in Poland, Bulgaria, Croatia, Czech Republic, Romania, Serbia, Slovakia, Hungary
USD 540 million*
Acquisition of Serena Software, including IT companies in Ukraine, by Micro Focus International
Jeantet representing Micro Focus International
Travers Smith LLP acted as a global legal advisor
USD 533 million*
Acquisition by Arkema S.A., a leading specialty chemicals and advanced materials company, of shares in DBEW Holding B.V., a parent company of Den Braven Group, an international chemicals group
Kinstellar advised Arkema S.A.
Loyens & Loeff acted for Arkema S.A. as lead counsel; Kinstellar and Cuatrecasas acted for Arkema as local legal counsels
EUR 247 million*
Acquisition of Smyk Group by Bridgepoint
Sayenko Kharenko represented Bridgepoint; Redcliffe Partners advised EM&F Group
Clifford Chance advised the Empik Media & Fashion group (the seller); Weil Gotshal & Manges acted on behalf of Bridgepoint; Travers Smith advised the management of Smyk
EUR 175 million*
Sale of Hamé, which specialises in the production of pâtés, ready-meals, ketchup, preserved vegetables, jams and baby food, to Oslo-listed food group Orkla
CMS Cameron McKenna advised DECAPTERUS S.A.R.L.; DLA Piper advised Orkla
DLA Piper advised Orkla
UAH 3.29 billion
Acquisition by the EBRD of 40% of the share capital in UkrSibbank, capital increase of UkrSibbank by UAH 3.29 billion and debt-to-equity swap
Asters represented EBRD
Chadbourne & Parke acted as English law counsel to EBRD; Cleary Gottlieb Steen & Hamilton acted as English law counsel to BNPP
EUR 122 million
Acquisition by EBRD of 30% shareholding in PJSC Raiffeisen Bank Aval, one of the leading universal banks in Ukraine
AVELLUM acted as the legal counsel to Raiffeisen Bank International AG and PJSC Raiffeisen Bank Aval; Redcliffe Partners advised EBRD
Clifford Chance acted as a legal adviser to EBRD
USD 127 million*
Acquisition by McCormick & Company, Incorporated, a global leader in flavours, of 100% of the shares in Enrico Giotti SpA (Giotti), a leading Italian flavour manufacturer
Kinstellar advised McCormick & Company, Incorporated
Shearman & Sterling acted for McCormick & Company as lead counsel
USD 100 million
Joint venture between Cargill and MV Cargo to enable MV Cargo’s construction of a new port terminal in Yuzhny, Ukraine
Baker McKenzie acted as legal counsel to Cargill; CMS Cameron McKenna represented MV Cargo
Baker McKenzie advised Cargill
USD 35 million
Acquisition by Yura-Cement-Fabriken AG (CRH Group) of a 49% stake in LLC Cement on the territory of Ukraine from CIMENTO E PRODUTOS ASSOCIADOS, S.A.
Lexwell & Partners advised Yura-CementFabriken AG
EUR 10 million
Acquisition of company holding important real estate assets in Ukraine by ACP Europe
Jeantet represented ACP Europe
USD 7.6 million EUR (6.8 million)
Sale of subsidiaries of Tikkurila Oyj in Ukraine and Belarus to FarbaHouse OÜ
Peterka & Partners advised Tikkurila
* Global deal, total value in all jurisdictions, where it is disclosable. ** Turnover of lamps business — according to media reports Empty table cells in a foreign legal support column mean that the information is either not available, confidential or there were no foreign law counsels.
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Peterka & Partners (Minsk office) acted as the legal counsel of Tikkurila Oyj in Belarus
>> Continued on page 18
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Ukrainian Legal Market VALUE
TRANSACTIONS
LEGAL SUPPORT (UKRAINIAN LAW)
EUR 3.8 million
Acquisition by AMIC of two Ukrainian companies that are engaged in the business of operating refuelling stations in Ukrainian airports, with some of these stations being the only refuelling operators at the international airports of the cities of Kharkiv and Odesa
Wolf Theiss advised AMIC
EUR 3.5 million
Sale by Erste Bank of its Ukrainian subsidiary
Wolf Theiss advised Erste Bank
EUR 3 million
Acquisition by Zeppelin International AG of 98.0014% of the shares in one of the assets of TMM Group, a local construction giant
Arzinger represented Zeppelin International AG
USD 2.5 million
Acquisition of Grand Village LLC by private investor
Gramatskiy & Partners advised private investor
EUR 1.5 million
Establishment of a joint venture between NAFTA a.s. and Cub Energy Inc., a Houston-based upstream oil and gas company, to pursue a gas exploration project in Western Ukraine, close to the Slovak border
CMS Cameron McKenna advised NAFTA a.s.
USD 0.5 million
Acquisition of entire stock of shares in Aqua Invest Group LLC by Ditrade LLC
Gramatskiy & Partners advised Ditrade LLC
LEGAL SUPPORT (FOREIGN LAW)
Cleary Gottlieb Steen & Hamilton
Linklaters (Warsaw) advised UniCredit on English law matters; Skadden (London) advised Alfa Group on English law matters; DLA Piper Moscow advised ABH Holding
WND
Disposal of 99.9% shares in PJSC Ukrsotsbank, an asset of UniCredit Group in Ukraine, in exchange for a minority stake (9.9%) in ABH Holdings S.A.
AVELLUM advised UniCredit Group; DLA Piper and Sayenko Kharenko advised ABH Holding
WND
Acquisition of a controlling stake in Vinnytsia Agro-Industrial Group, a local group of companies operating a substantial agricultural land bank and several significant silos, by Epicenter K, the largest Ukrainian DIY retail chain
AEQUO advised Epicenter K; Law Offices of OMP advised Vinnytsia Agro-Industrial Group
WND
Acquisition from Akron Investment Central Eastern Europe II B.V. East Gate Logistic, a Class A logistics center (total area of 49,600 sq m), which was managed by Heitman
ANTIKA acted as a legal advisor to Heitman; Integrites advised Dragon Capital Investments Limited; Vasil Kisil & Partners advised the seller in Ukraine
Greenberg Traurig and Stelios Americanos & Co LLC advised Akron Investment Central Eastern Europe II B.V.
WND
Acquisition of Lohika, a software engineering services firm headquartered in Silicon Valley, by Altran, a global leader in engineering and R&D services headquartered in Paris***
AVELLUM advised Altran on Ukrainian law matters; EY advised Altran; AEQUO advised Lohika Inc.
Latham & Watkins acted as the global legal advisor to Altran; Fenwick & West advised Lohika Inc
WND
Acquisition by Farmak of Polish line of business
AVELLUM advised Farmak
Baker McKenzie (Warsaw) advised Farmak on Polish law matters; Marszałek & Partnerzy — Adwokaci advised the sellers on Polish law matters
WND
Increase in the stake held by Horizon Capital in Datagroup from significant minority to over 70%, owed to VTB Ukraine
AVELLUM advised Custos Invest & Finance Inc., one of Datagroup’s shareholders; Baker McKenzie acted as legal counsel to Horizon Capital
Baker McKenzie acted as legal counsel to Horizon Capital
WND
Sale by MTG, a Swedish mediaholding, of its Ukrainian pay-TV channel business subsidiary Viasat Ukraine LLC to Viasat World Limited
Vasil Kisil & Partners advised MTG; AEQUO advised Viasat World Limited
Mannheimer Swartling (Russia) and Ashurst (Sweden) advised MTG; White & Case advised Viasat World Limited
WND
Sale by Eurobank Ergasias S.A., one of the largest banks in Greece, of Ukrainian subsidiary, Universal Bank, to TAS Group, owned by Ukrainian businessman Sergiy Tigipko
Baker McKenzie advised Eurobank Ergasias S.A.
WND
Spin-off of the biopharmaceutical business of Baxter International Inc.
Baker McKenzie advised Baxter International Inc.
WND
Sale of two of its supermarkets in Kharkiv by Billa-Ukraine, one of the largest retail supermarket chains in Ukraine
Baker McKenzie advised Billa Ukraine
Baker McKenzie advised Baxter International Inc.
*** Global deal.
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VALUE
TRANSACTIONS
LEGAL SUPPORT (UKRAINIAN LAW)
Sale of 100% of shares in 1849-Apollo Overseas I Limited (Cyprus), the founder of AtlanticPacific Ventures LLC (Kyiv), which owns and manages the Pyramida shopping centre in Kyiv, to Dragon Capital
Baker McKenzie advised 1849 plc; AEQUO advised Dragon Capital Investments Limited
Acquisition of Todini Costruzioni Generali S.p.A. from Salini Impregilo S.p.A., an Italian Milan-listed company and one of the leading construction companies in the world, by Prime System Kz Ltd
CMS Cameron McKenna represented Orifjan Shadiyev, a well-known businessman in Kazakhstan, and his construction company, Prime System Kz Ltd
Sale of the Ukrainian subsidiary of Adecco Group to Lugera Holding, s. r. o.
Dentons advised Adecco Group
WND
Sale of 70% of shares in KUB-Gas to Burisma, a private natural gas producer operating in Ukraine
Dentons advised Serinus Energy
WND
Acquisition of 29.29% stake in Ukrainian insulin producer JSC Indar from a Polish biotechnological company Bioton S.A., by Luraq Investments Limited, a special purpose vehicle of Georgian Industrial Group
DLA Piper advised Georgian Industrial Group
WND
Acquisition of stakes from the partners for gaining full control over the Karavan chain of trading and entertainment centers by DCH Group
DLA Piper advised DCH Group; Sayenko Kharenko represented Rohatyn Group and Apollo
WND
Acquisition of entire stock of shares in Kepi End LLC by Cadilaca Investment Limited (Cyprus) and Astonra Investment Limited (Cyprus)
Gramatskiy & Partners advised Cadilaca Investment Limited and Astonra Investment Limited
WND
Acquisition of Ditrade LLC by private investor
Gramatskiy & Partners advised private investor
WND
Acquisition of controlling shares in restaurant chains (Celentano Pizza (Kyiv), The Jar Fun Bar, Zheltok Diner Restaurant by Fun Food Family
Gramatskiy & Partners advised Fun Food Family
WND
WND
WND
Aacquisition of a 100,000 sq.m. Class A logistic Integrites advised Dragon Capital center in Kyiv Region (West Gate) by Dragon Capital Investments Limited Investments Limited
WND
Management buy-out of the Ukrainian subsidiary of Huurre Group Oy, a European freezing equipment manufacturer
KPMG advised Huurre Group Oy
WND
Purchase of shares of Lopatyn Fuel Peat Briquette Plant LLC by Ivano-Frankivsktsement Eternit
MORIS GROUP represented IvanoFrankivsktsement Eternit
WND
Partial acquisition of Starco Group business, international producer and distributor of tyres and wheels, by Bohnenkamp, AG, including two Ukrainian subsidiaries of Starco
PwC Legal represented Bohnenkamp, AG
WND
Sale of controlling stakes in Ukrainian Exchange and PFTS Stock Exchange by PJSC Moscow Exchange
Sayenko Kharenko represented PJSC Moscow Exchange
WND
Sale of controlling stake in HDI Insurance, a Ukrainian Insurance company and Talanx AG affiliated company, to Euroins Insurance Group (Bulgaria)
Sayenko Kharenko represented Talanx AG; EY advised Euroins Insurance Group
WND
Acquisition of controlling stake in Allianz Ukraine SLC by the companies of Allianz SE group in the process of corporate restructuring, including regular agreements
Sayenko Kharenko represented Allianz Group
WND
Acquisition of Third Rome Holding, an investment company, from PFH Investment Fund Limited
Sayenko Kharenko represented O.D.D.E Holdings SA
WND
Sale of 100% shares in PrJSC Insurance Company Aegon Life Ukraine to TAS Group.
Sayenko Kharenko represented Aegon Group
WND
Acquisition by MANN+HUMMEL of filter production business of Affinia Group***
Sytnyk & Partners advised MANN+HUMMEL
LEGAL SUPPORT (FOREIGN LAW)
DLA Piper advised DCH Group
Christodoulos Vassiliades & Co. (Cyprus) acted as counsel to Dragon Capital Investments Limited on Cypriot law matters; Schoenherr (Austria) acted as counsel to GLD Holding (seller of majority stake in West Gate)
Oracle Capital Group acted as the seller’s legal advisor
*** Global deal.
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Ukrainian Legal Market Transactions in the Antitrust Area VALUE
TRANSACTIONS
TABLE 4 LEGAL SUPPORT (UKRAINIAN LAW)
LEGAL SUPPORT (FOREIGN LAW)
Approx. USD 160 billion1
Merger clearance for the merger of Pfizer and Allergan
Asters represented Allergan plc.; EVERLEGAL represented Pfizer
Approx. USD 130 billion2
Merger clearance for the merger of The Dow Chemical Company and E.I. du Pont de Nemours and Company
Sayenko Kharenko represented E.I. du Pont de Nemours and Company; Asters represented The Dow Chemical Company
Sayenko Kharenko represented AnheuserBusch InBev S.A./N.V.; Asters represented SABMiller
Freshfields Bruckhaus Deringer and Cravath Swaine & Moore acted as international counsels to AB InBev; Linklaters and Hogan Lovells acted as international counsels to SABMiller
GBP 71 billion
Merger clearance for the merger of Anheuser-Busch InBev and SABMiller
USD 67 billion
Merger clearance for acquisition of EMC by Dell
Sayenko Kharenko represented Denali Holding Inc. and EMC Corporation
Simpson Thacher advised Dell and Silver Lake; Wachtell advised Michael Dell and MSD Partners; Skadden advised EMC
Approx. USD 44 billion
Merger clearance for indirect acquisition by China National Chemical Corporation of shares in and control over Syngenta AG
Asters represented China National Chemical Corporation and Syngenta AG
USD 40.5 billion
Merger clearance for acquisition by Teva Pharmaceutical Industries Ltd of global generic pharmaceuticals business of Allergan plc
Asters represented Teva Pharmaceutical Industries Ltd. and Allergan plc
USD 37.2 billion
Merger clearance for acquisition by Berkshire Hathaway of Precision Castparts
Sayenko Kharenko represented Berkshire Hathaway Inc. and Precision Castparts Corp.
Cravath, Swaine & Moore LLP and Stoel Rives LLP advised PCC’s. Munger, Tolles & Olson LLP advised Berkshire
EUR 22.8 billion
Merger clearance for Boehringer Ingelheim’s asset swap transaction with Sanofi
Sayenko Kharenko represented Boehringer Ingelheim International GmbH; Asters represented Sanofi
Approx. USD 12.5 billion
Merger clearance for (1) concentration in connection with the indirect acquisition by Coty, Inc. of control over Galleria Co. and (2) related arrangements
Asters represented The Procter & Gamble Company and Coty, Inc.
USD 12 billion
Merger clearance for acquisition by Molson Coors of MillerCoors and certain assets of SABMiller
Sayenko Kharenko represented AnheuserBusch InBev S.A./N.V.; Asters represented Molson Coors Brewing Company and MillerCoors LLC
Kirkland & Ellis, Cleary Gottlieb Steen & Hamilton, McCarthy Tétrault, Perkins Coie acted as international counsels to Molson Coors
USD 6.1 billion
Merger control clearance in connection with merger of Konecranes and Terex
CLACIS represented Terex Corporation; Sayenko Kharenko represented Konecranes
Approx. USD 2.8 billion
Merger clearances for acquisition by Accor S.A. of shares in FRHI Holdings Limited company
Asters represented Accor S.A. and FRHI Holdings Limited
USD 2.5 billion
Merger clearance for the acquisition of Glencore Agri by CPPIB
Sayenko Kharenko represented CPPIB Monroe Canada Inc. and Glencore Agriculture Limited
Linklaters LLP provided legal advice to Glencore
Approx. USD 2.4 billion
Merger clearance for acquisition by CMA CGM S.A. of shares in Neptune Orient Lines Limited
Asters represented CMA CGM S.A. and Neptune Orient Lines Limited
Approx. USD 2.2 billion
Merger clearance for acquisition by Nissan Motor Co., Ltd of shares in Mitsubishi Motors Corporation, as well as control over Mitsubishi Motors Corporation
Asters represented Nissan Motor Co., Ltd and Mitsubishi Motors Corporation
Approx. USD 2 billion
Merger and antitrust clearances for (1) acquisition by Francisco Partners of Dell Inc.’s software business (Dell Software Group), and (2) related arrangements
Asters represented Francisco Partners and Dell Inc.
Approx. USD 1.4 billion
Merger clearance for acquisition by Cisco Systems, Inc. of control over Jasper Technologies, Inc.
Asters represented Cisco Systems, Inc. and Jasper Technologies, Inc.
Total enterprise value Combined market capitalization of the company Empty table cells in a foreign legal support column mean that the information is either not available, confidential or there were no foreign law counsels. 1 2
20
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TRANSACTIONS
LEGAL SUPPORT (UKRAINIAN LAW)
Approx. EUR 1.34 billion
Merger clearances for establishment of two asset management joint ventures combining the asset management business of Pioneer Global Asset Management S.p.A. and Santander Asset Management.
Asters represented UniCredit S.p.A. and Banco Santander, S.A.; Sayenko Kharenko represented Warburg Pincus and General Atlantic
SEK 10.9 billion (USD 1.21 billion)
Merger clearance for acquisition by Trelleborg of ČGS
Sayenko Kharenko represented Trelleborg Holding AB, ČGS Holding a.s.
EUR 1.126 billion
Merger control clearance in connection with Terex’s acquisition of block of shares that allows it to exceed 25% of votes in supreme management body of Konecranes
Sayenko Kharenko represented Terex Corporation and Konecranes
Approx. EUR 1.02 billion
Merger clearance for acquisition by Groupe SEB of WMF
Asters represented Groupe SEB and WMF
EUR 925 million
Merger clearance for acquisition of KraussMaffei Group by ChemChina
Sayenko Kharenko represented China National Chemical Equipment Co., KraussMaffei Group GmbH, Guoxin International Investment Corporation Limited
Approx. USD 855 million
Merger clearances for acquisition by P2 Capital Partners LLC of joint control over the company ASP Blade Holdings, Inc.
Asters represented P2 Capital Partners LLC and ASP Blade Holdings, Inc.
EUR 675 million
Merger and antitrust clearances for acquisition of Astellas Pharma by Leo Pharma
Sayenko Kharenko represented Leo Pharma A/S; Asters represented Astellas Pharma
Approx. USD 559.4 million
Merger clearances for acquisition by HNA Aviation Group Co., Ltd of assets of La Compagnie d’Exploitation des Services Auxiliaires Aériens S.A. (Servair) and control over it
Asters represented HNA Aviation Group Co., Ltd. and La Compagnie d’Exploitation des Services Auxiliaires Aériens S.A.
Approx. USD 520 million3
Merger clearances for acquisition by Aspen Pharmacare Holdings Limited of rights to commercialize AstraZeneca Plc portfolio of anaesthetic medicines
Asters represented Aspen Pharmacare Holdings Limited and AstraZeneca Plc
EUR 475 million
Merger clearance for acquisition by AkzoNobel of the industrial coatings business of BASF SE
Sayenko Kharenko represented AkzoNobel N.V. and BASF SE
Approx. USD 462.5 million
Merger clearances for creation by Catterton L.P. and LVMH Moët Hennessy — Louis Vuitton SE of L Catterton partnership combining Catterton’s North American and Latin American private equity operations with LVMH and Groupe Arnault’s existing European and Asian private equity and real estate operations
Asters represented Catterton L.P. and LVMH Moët Hennessy — Louis Vuitton SE
USD 422 million
Merger clearance for acquisition by Modine of Luvata Heat Transfer Solutions group of companies
Sayenko Kharenko represented Modine Manufacturing Company and Luvata Heat Transfer Solutions
EUR 382 million
Merger clearance for acquisition by Marel of MPS
Sayenko Kharenko represented Marel Holding B.V. and MPS HOLDING III B.V.
EUR 335 million
Merger clearance for acquisition by INEOS of INOVYN
Sayenko Kharenko represented INEOS AG and INOVYN Limited
EUR 310 million
Merger control clearance for acquisition of Cimbria Group by AGCO Group
AVELLUM represented AGCO Group
Approx. USD 320 million
Merger clearances for acquisition by Cisco Systems, Inc. of shares in Leaba Semiconductor Ltd
Asters represented Cisco Systems, Inc. and Leaba Semiconductor Ltd
EUR 247 million
Merger clearance for acquisition by Bridgepoint of Smyk group of companies
Sayenko Kharenko represented Bridgepoint Group Limited and Smyk International Sp. z o.o.
Approx. USD 260 million
Merger clearances for acquisition by Cisco Systems, Inc. of control over Cliqr Technologies, Inc.
Asters represented Cisco Systems, Inc. and Cliqr Technologies, Inc.
Approx. USD 240 million4
Merger and antitrust clearances for (1) acquisition by Aspen Pharmacare Holdings Limited of anaesthesia portfolio of GlaxoSmithKline plc, and (2) related arrangements
Asters represented Aspen Pharmacare Holdings Limited and GlaxoSmithKline plc
EUR 175 million
Merger control clearance for acquisition by Orkla of Háme
DLA Piper represented Orkla; CMS Cameron McKenna represented DECAPTERUS S.A.R.L.
VALUE
3 4
Additionally up to USD 250 million after the completion of the transaction (depending on the level of sales) Additionally up to USD 130 million after the completion of the transaction
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Ukrainian Legal Market TRANSACTIONS
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USD 190 million
Merger control and concerted actions filings in connection with acquisition by Deere & Company of Precision Planting LLC, a wholly-owned subsidiary of Monsanto Company
Baker McKenzie represented Monsanto Company; Wolf Theiss represented Deere & Company
USD 180 million
Merger clearance for acquisition by BTA Bank Kazakhstan of 50.0072% stake in BТА Bank (Ukraine) and increase the share in the authorized capital of Ukrainian BTA Bank from 49.99% to 89.99%
Ilyashev & Partners represented BTA Bank Kazakhstan; KPMG acted as independent receiver
Hogan Lovells acted as international counsel to BTA Bank Kazakhstan
EUR 150 million
Merger clearance for acquisition of Monosem’s business by Deere & Company
Wolf Theiss represented Deere & Company and Monosem group of companies
EUR 80 million
Merger clearance for acquisition by Synthos of INEOS Styrenics
Sayenko Kharenko represented Synthos S.A. and INEOS AG
Approx. USD 100 million
Merger control filing in connection with acquisition by Cargill International Luxembourg 2 S.à.r.l. of majority stake in the company that will own and operate a new deep sea grain export terminal within the boundaries of Yuzhny Sea Port
CMS Cameron Mckenna represented MV Cargo; Baker McKenzie represented Cargill International Luxembourg 2 S.à.r.l.
USD 56 million
Merger clearance for acquisition of wiring & controls business of Groclin Group by PKC Group
Arzinger represented Groclin Group, PKC Group
USD 40 million
Merger clearance for acquisition of 53% in Euronews TVchannel by Media Globe Networks S.A. controlled by Sawiris Family
Arzinger represented Mr. Naguib Sawiris, Euronews
USD 16 million
Merger clearance for acquisition by Rozetka of a company owning a warehouse complex in the city of Brovary
EY represented Rozetka
USD 16 million
Merger clearance for acquisition of HeadHunter from Mail. Ru by Goldman Sachs and Elbrus
Sayenko Kharenko represented Goldman Sachs Group, Inc. and Zemenik Trading Limited
EUR 3.8 million
Merger clearance for acquisition of 100% shareholding in LUK AVIA OIL LLC and LUKOIL AVIATION Ukraine LLC by AMIC Ukraine
Wolf Theiss represented AMIC Ukraine and the Ukrainian targets, LUK AVIA OIL LLC and LUKOIL AVIATION Ukraine LLC
EUR 3.5 million
Merger clearance for the sale of 100% shareholding in Erste Group Immorent Ukraine LLC (subsidiary of Erste Group Immorent International Holding GmbH)
Wolf Theiss represented Erste Group Immorent International Holding GmbH; Moris Group represented the acquirer
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Merger clearance for acquisition of control over Road Machinery Co. by Komatsu South America
Sayenko Kharenko represented Komatsu Holding South America Limitada, Road Machinery Co., S.A. de C.V.
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Merger clearance for merger between DENTSPLY and Sirona
Sayenko Kharenko represented DENTSPLY International Inc., Sirona Dental Systems
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Merger clearance for acquisition of Investbank by EDAL Holding
Sayenko Kharenko represented EDAL Holding und Finanzierungsberatung GmbH, PJSC Bank Investbank
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Merger clearance for acquisition by Solvay of Primester
Sayenko Kharenko represented Solvay S.A. and Primester General Partnership
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Merger clearance for acquisition of control over GetBack by Abris Group and Konrad Michał Kąkolewski
Sayenko Kharenko represented Emest Investments sp. z o.o., GetBack S.A. and Citizen of Poland (Konrad Michał Kąkolewski)
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Merger clearance for establishment of Allied Universal by Wendel and Warburg Pincus
Sayenko Kharenko represented USAGM Holdco, LLC and Allied Security Holdings LLC
WND
Merger clearance for acquisition of sole control by Danone S.A. over Dairy JV Holdings Limited
AEQUO represented Danone S.A.
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Merger clearance for acquisition of Signet Group by NCH Capital
AEQUO represented NCH Capital
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Merger clearance for acquisition by Tetra Pak of Laude BV
AEQUO represented Tetra Pak
Ashurst acted as international counsel to Tetra Pak
WND
Merger clearance for acquisition by Apax Partners of LKQ Corporation from Rhiag
AEQUO represented Apax Partners
Ashurst acted as international counsel to Apax Partners; K&L Gates acted as international counsel to LKQ Corporation
VALUE
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LEGAL SUPPORT (FOREIGN LAW)
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VALUE
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LEGAL SUPPORT (UKRAINIAN LAW)
LEGAL SUPPORT (FOREIGN LAW)
WND
Merger clearance for acquisition by Koninklijke Bunge BV of two European oilseed processing facilities from Cargill Group
AEQUO represented Koninklijke Bunge BV, Cargill Incorporated
WND
Merger clearance for acquisition by Dragon Capital Investments Limited of Pyramid Shopping Mall
AEQUO represented Dragon Capital Investments Limited
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Merger clearance for acquisition by Viasat World Limited of Viasat Ukraine
AEQUO represented Viasat World Limited
WND
Merger clearance for acquisition by Koch Industries, Inc. of shares in Guardian Industries Corp.
Asters represented Koch Industries, Inc. and Guardian Industries Corp
WND
Merger clearances for acquisition by KKR & Co. L.P. of control over LGC Science Group Limited
Asters represented KKR & Co. L.P. and LGC Science Group Limited
WND
Merger clearance for the merger of subsidiary of Siemens Aktiengesellschaft with and into Gamesa Corporación Tecnológica, S.A.
Asters represented Siemens Aktiengesellschaft and Gamesa Corporación Tecnológica, S.A.
WND
Merger and antitrust clearances for (1) acquisition by Kansai Paint Co., Ltd of Helios Coatings Group, and (2) related arrangements
Asters represented Kansai Paint Co., Ltd and Helios
WND
Merger and antitrust clearances for (1) indirect acquisition by United Technologies Corporation of shares in Riello Group S.p.A., and (2) related arrangements
Asters represented United Technologies Corporation and Riello Group S.p.A.
WND
Merger clearances for establishment by Teva Pharmaceutical Industries Ltd and Takeda Pharmaceutical Company Limited of business venture
Asters represented Teva Pharmaceutical Industries Ltd and Takeda Pharmaceutical Company Limited
WND
Merger clearances for acquisition by Henkel AG & Co. KGaA of assets of The Procter & Gamble Company
Asters represented Henkel AG & Co. KGaA and The Procter & Gamble Company
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Merger clearances for acquisition by Glusco Energy S.A. of shares in (1) Rosneft Management Company Limited and (2) Fargrade Limited, which are active in management of TNK petrol station chain
Asters represented Glusco Energy S.A.
WND
Merger clearance for acquisition by Hipp Holding AG of sole control over Milchwirtschaftliche Industrie Gesellschaft Herford GmbH & Co. KG
Asters represented Hipp Holding AG and Milchwirtschaftliche Industrie Gesellschaft Herford GmbH & Co. KG
WND
Merger clearance for acquisition by KWS SAAT SE of shares in KWS MOMONT S.A.S. (previous called Societe de Martinval S.A.)
Asters represented KWS SAAT SE and KWS MOMONT S.A.S.
WND
Merger clearances for acquisition by Beauté Prestige International of assets in The Procter & Gamble Company
Asters represented Beauté Prestige International and The Procter & Gamble Company
WND
Merger clearance for acquisition by Vestel Ticaret A.Ş. of Compal Electronics Europe sp. z o.o.
Asters represented Vestel Ticaret A.Ş. and Compal Electronics, Inc.
WND
Merger and antitrust clearances for (1) acquisition by Stet Holland B.V. of conventional seed potato business of KWS SAAT SE, and (2) related arrangements
Asters represented Stet Holland B.V. and KWS SAAT SE
WND
Merger clearances (as part of the establishment of a full function joint venture between Nestlé and PAI, through its subsidiary R&R) for (1) indirect acquisition by Nestlé S.A. together with PAI Partners SAS of control over Froneri Limited, (2) indirect acquisition by PAI Partners SAS of Nestlé S.A. businesses in the sphere of ice cream, frozen food and chilled dairy products, (3) indirect acquisition by PAI Partners SAS of shares in some companies
Asters represented Nestlé S.A. and PAI Partners SAS
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Merger clearances for acquisition by Cadogan Petroleum Holdings B.V. of shares of Zagoryanska Petroleum B.V. and control over Pokrovskoe Petroleum B.V.
Asters represented Cadogan Petroleum Holdings B.V., Zagoryanska Petroleum B.V. and Pokrovskoe Petroleum B.V.
WND
Merger clearances for acquisition of Dobronadiivske KHPP stakes by Hermes-Trading and UkrAgroCom
Arzinger represented UkrAgroCom, Hermes-Trading
WND
Merger clearance for acquisition of an asset of TMM Group by Zeppelin International AG
Arzinger represented Zeppelin International AG, TMM
WND
Merger control clearance for acquisition of PJSC Commercial Bank Center (Ukraine) by Mr. Hamed Alikhani
AVELLUM represented Mr. Hamed Alikhani
>> Continued on page 24
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Ukrainian Legal Market VALUE
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LEGAL SUPPORT (UKRAINIAN LAW)
LEGAL SUPPORT (FOREIGN LAW)
WND
Merger control clearance for acquisition of Lohika Group by Altran
AVELLUM represented Altran Group
WND
Three merger control filings in connection with the second stage of transfer of Baxter International Inc.’s Bioscience Business and certain related assets and corporate rights into a spin-off — Baxalta Incorporated
Baker McKenzie represented Baxter International Inc.
WND
Merger control filings related to establishment of JV between Bunge and Wilmar
Baker McKenzie represented Bunge
WND
Merger control filing for acquisition by Knorr-Bremse of business of Bosch
Baker McKenzie represented Knorr-Bremse
WND
Two merger control filings related to (1) the acquisition of joint control (together with Remington Holding Company, LLC) over Innovative Seed Solutions LLC and (2) acquisition by Remington Seeds, LLC of facility of Monsanto
Baker McKenzie represented Monsanto Company
WND
Merger control filing related to increase in stake of Horizon Capital in Datagroup from a significant minority to over 70%
Baker McKenzie represented Horizon Capital
WND
Merger control clearance for Georgian Industrial Group acting through Luraq Investments Limited in acquisition of 29.29% stake in JSC Indar from Polish biotechnological company Bioton S.A.
DLA Piper represented Georgian Industrial Group
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Merger control clearance for acquisition of Hagie Manufacturing by Deere & Company
DLA Piper represented Deere & Company, Hagie Manufacturing Company
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Merger control and concerted actions clearance related to acquisition of Ukrsotsbank (UniCredit Group) by Alfa Group
Baker McKenzie, DLA Piper acted for ABHH; AVELLUM represented Unicredit
WND
Merger clearance for acquisition of Karavan chain of trading and entertainment centres by Oleksandr Yaroslavskyi’s DCH Group
DLA Piper represented DCH Group
WND
Merger clearance for acquisition of Ferro S.A., listed on the Warsaw Stock Exchange, through Palmyra Sp. z o.o. by IK Investment Partners
Dentons represented IK Investment Partners
WND
Merger clearance for acquisition of LLC Termo-Pak by Comel group of companies
Integrites represented LLC Termo-Pak, Comel group of companies
WND
Merger clearance for indirect acquisition by Robert Bosch GmbH (via Robert Bosch Investment Nederland B.V. ) of shares in RE’FLEKT GmbH
Sytnyk & Partners represented Robert Bosch GmbH and RE’FLEKT GmbH
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Merger clearance in connection with indirect (via Robert Bosch Investment Nederland B.V.) acquisition of joint control over RE’FLEKT GmbH together with IMDA UG, WST-UB UG and Kai Christian Thomas Beteiligungs— und Unternehmensberatungs UG by Robert Bosch GmbH
Sytnyk & Partners represented Robert Bosch GmbH, IMDA UG, WST-UB UG, Kai Christian Thomas Beteiligungs— und Unternehmensberatungs UG and RE’FLEKT GmbH
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Merger clearance in connection with acquisition by Weidmüller Holding AG & Co.KG of shares in Bosch Rexroth Monitoring Systems GmbH
Sytnyk & Partners represented Robert Bosch GmbH and Weidmüller Holding AG & Co.KG
WND
Merger clearance in connection with acquisition by Chervon North America, Inc. of assets in the form of a business division used for manufacturing and selling portable electric power tools, measuring tools and accessories from Robert Bosch Tool Corporation
Sytnyk & Partners represented Robert Bosch GmbH
WND
Merger clearance in connection with acquisition by Chervon B.V. of assets in the form of a business division used for manufacturing and selling of portable electric power tools, measuring tools and accessories from Skil Europe B.V. and Robert Bosch GmbH
Sytnyk & Partners represented Robert Bosch GmbH
WND
Merger clearance in connection with acquisition by Nanjing Chervon Industry Co., Ltd of assets from Bosch Power Tools (China) Ltd
Sytnyk & Partners represented Robert Bosch GmbH
WND
Merger clearance in connection with acquisition by JT International Holding B.V. of shares in La Tabacalera, S. A.
Sytnyk & Partners represented JT International Holding B.V.
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Advertising & Marketing
E-Advertising vs Intellectual Property: A Continuous Tug of War turn, the word “VelVeeda” is almost identical to the “Velveeta” trademark of Kraft Foods. The court recognized such usage as the violation of Lanham Act by commencing dilution of the trademark and banned Stuart Helm from using the word “VelVeeda” as the meta tag.
Tatiana KHAREBAVA
Veronika ZBRYZKA
Counsel, Head of IP, IT & Antitrust Practice, Spenser & Kauffmann
Associate of IP, IT & Antitrust Practice, Spenser & Kauffmann
owadays business, regardless of as size, small and large companies, are directly relevant to the Internet. Some of them use the Internet as a platform for advertisement, the others use it as a trading platform to sell their products and services. Every single day the range of tools and possibilities for Internet-promotion of business is becoming more and more expansive. In particular, among popular tools we can name contextual advertising (Google Ad— Words, Yandex.Direct), search promotion (SEO), social media marketing (SMM), meta tags, banner advertisement (pop-up, pop-under), hyperlinks (linking, framing) and others. All the e-promotion tools mentioned above have their functions and purposes. However, not all companies use the above tools in good faith. In particular, they aim “to increase recognition” using the reputation of a well-known company and applying means of individualization and IP objects of other companies, causing harm. Thus, there are many cases of violation of trademarks (hereinafter — TM), artistic, musical, literary rights and rights for geographical indications as well as cases of misuse of commercial and trade names, etc.
lar services as Google AdWords and Yandex. Direct. A new business usually chooses the names of already promoted brands when launching contextual advertisement. Thus, when users search something they see the website of unfair advertisers but not “original” websites of well-known brand owners. Thus, international practice considers application of the trademark of another company as a key word for advertisement of the product as violation of customers’ rights. Such application may mislead the customer and cause him/her to have doubts regarding the real manufacturer of the product (cases Interflora v Marks & Spencer, Bergspechte v Günter Guni). Meanwhile, owners of the platforms may be held liable only if they neither removed nor restricted access to “forbidden” key words after they had identified infringement of the trademark (case Louis Vuitton v Google).
N
Where on the Internet can Violated IP Rights be?
Contextual Advertisement Trademark rights are often violated in the contextual advertisement within such popu-
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Meta Tags In addition, for the purposes of quick and cheap business marketing on the Internet, companies resort to the use of TM in the website structure, as meta tags. Thus, where the searched word coincides with the meta tags of the website, such website appears in the search results of the user, thereby increasing its search rating, which implies the profitability of the website as well. Accordingly, the dispute between Kraft Foods Holdings, Inc. v. Stuart Helm, who put the word “VelVeeda” as the meta tag of its website, may serve as an example of such usage. In
Banner Advertisement (pop-up and popunder) It is impossible not to mention banner advertisements (pop-up and popunder), which are well known to the ordinary user as annoying pop-ups and pictures, which often make it hard to “get” to the main content. In the vast majority of cases the infringement of IP rights happens where the TM is used as the keyword for the appearance of banner advertising. There are special services (Gator and Whenu.com) that analyze the search information of user and, accordingly to the requests of the user, show him an advertisement. For example, the user is looking for a Honda minibus but instead of this he gets the banner advertisement of the Dodge company with the same type of vehicle. Nevertheless, the courts are very scrupulous as to this category of cases, particularly in case of nonproving of damages caused to the company or non-proof of the use of the trademark as the search word for the banner advertisement, which misleads the users as to the possible connection between the claimant and its rival, the violation is deemed to be absent (1-800 Contacts Inc. v. WhenU.com). Hyperlinks (linking, hot linking, deep linking and framing) Hyperlinks to other websites with the possibility to borrow one’s content (linking, hot linking, deep linking and framing) are more complicated e-marketing mechanisms of business. In particular, deep linking (outer connection) is used to place a hyperlink on the website, which leads to a page from another website, while bypassing the main (starting) page. A hot linking instrument provides the opportunity to include in the content of the website pictures or other content of one’s website. Framing involves the creation of the so-called window of one website (frame) within which the content of the other website is being shown.
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Spenser & Kauffmann
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Address: 7 Klovsky Uzviz, 14th Floor, Kyiv, 01021, Ukraine
penser & Kauffmann is one of the leading full-service law firms in Ukraine. Since its foundation in 2006, Spenser & Kauffmann aims to provide its сlients with the highest standards of legal advice and exemplary service. We represent our сlients in all areas of business law, including mergers and acquisitions, corporate, antitrust, intellectual property, IT, labor & employment, insurance law, banking and finance, capital
In the case of GS Media v. Sanoma (Playboy publisher), the European Court of Justice held that the placement of links to photos from the Playboy magazine by the news resource is violation of copyright law. In the case of Paramount Home Entertainment International Ltd & Ors v British Sky Broadcasting Ltd & Ors, which concerned framing in terms of e-commerce, the court stated that provision of access to films and TV shows through the in-built player is violation of copyright law. National Approach In this regard, it should be noted that such cases are now quite rare in the national jurisdiction. Thus, the vast majority of “e-proceedings” disputes are the “domain” disputes or disputes concerning the infringement of IP rights on the Internet. Such disputes include the case of Citibank v. Sphere-Capital, dispute between Exxon Mobil Corporation v. Ember Ukraine and others. However, even now, when setting out the circumstances of the case, plaintiffs often claim that respondents violate their rights when they place the advertising on the Internet. In example, in Sorbex v. Sorbent, the plaintiff pointed to violations of the rights to the trademark used by the defendant on Internet banners.
How to Protect IP Rights on the Internet?
According to the aforementioned, it is deemed that rival companies are likely to resort to different means of business marketing on the Internet; however, such marketing is not always bona fide and legitimate. In this regard, in order to minimize or protect the company from possible IP infringements, companies or private entrepreneurs need to check whether all IP objects are properly registered and, therefore, protected.
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Tel.:+380 44 288 8383; 288 6707 Fax: +380 44 351 21 55 E-mail: office@sklaw.com.ua Web-site: www.sklaw.com.ua
markets, construction, energy & natural resources, enforcement proceedings, private clients, tax consulting and litigation. Throughout the last ten years, our firm has been recognized among the leaders by various prestigious international and domestic rankings in different legal spheres. Our lawyers speak English, French, German and Czech, which allows us to understand and communicate with domestic and international сlients without psychological or language barriers.
In this way, the trademarks of companies shall be registered according to national and international procedure or the companies shall possess valid certificates. Trademarks can act as mere words, sentences, slogans, whether with drawings or not, pictures, or even melodies. In particular, if your ad contains some unique IP objects (for example, slogans), it is better to register such objects. In order to earn real market and legal advantage famous trademarks could also be acknowledged by the State Intellectual Property Service of Ukraine as well-known among customers of Ukraine. In addition, taking into account countless legal disputes regarding domain names, the registered TM should be the same as your domain name. Furthermore, in case of use of new technologies in advertising or modern business methods, those objects may be patented as the inventions or utility models. Meanwhile, the website interface could be protected as an industrial design and/or a copyright object. As a result, the more sophisticated and comprehensive the ways of protection that are chosen, the greater the advantages to ebusiness they would bring.
What to do if IP Rights have been Violated on the Internet?
Mechanisms for protection of IP rights and interests on the Internet are as follows: — Filing a complaint to Google/Yandex (or other search platform) regarding the unsanctioned usage of your company’s trademark as the keyword. — Filing the complaint to the advertiser in order to remove content that violates your IP rights. — Using notice and takedown measures (where possible). — Initiating court proceedings and/or proceedings on unfair competition with the Antimonopoly Committee of Ukraine.
Of course, each of these defense mechanisms has its advantages and disadvantages. Thus, in each case there must be analysis carried out as to which mechanism would be more effective if the infringement occurred.
How can you Avoid Becoming a Perpetrator Yourself?
Advertising is certainly an efficient way to influence the purchasing power of people. However, such effect on users leads to potential misuse and abuse while advertising a business online. That is why in many states advertising is tightly regulated so as to prevent unfair treatment and control of business. If the company starts advertising, it must comply with a number of laws and regulations that may differ as to the state and may even depend on the content of advertising. There are general issues that the company must consider while starting an advertising company on the Internet. That is, the issue of geographical indications (in particular, there is a need to carefully analyze whether such GI will not mislead users as to the origin of goods or services); other companies’ trademarks (need to check whether your company accidentally uses the TM of others); keywords (it is crucial not to infringe others rights to trademarks and, respectively, not to use them), copyright (there is a need to check whether in advertising the company uses others pictures, drawings, slogans, catchwords, etc.). Therefore, taking into account the growing popularity of the means of business marketing on the Internet in Ukraine, subsequent lawsuits connected to their usage are highly expected in the near future. Consequently, currently it is very important to protect your own IP rights properly and to get acquainted with international trends of judicial practice regarding such issues.
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Agriculture
Ukrainian Land Market Land Not For Sale?
Mykola ORLOV Managing Partner, Law Offices of OMP
I
n Ukraine today there are very few topics that are as fierce as reform of the land market. Indeed, the mention of potential liberalization of the land market usually results in an outcry which can hardly be referred to as discussion in any sense of this word. Nonetheless, the number of landowners willing to sell their land is steadily increasing. Both society and politicians are growing tired of the issue of this long overdue reform and the injustice of the ban on the sale of privately held land. The international donors of Ukraine, particularly the IMF, are also getting impatient at the lack of progress on the issue of the land market. In view of looming land reform, it is important to understand current regulations and practice in the land market. This knowledge provides valuable insights into life after the introduction of free sale of land. Many a myth is ruined by reading what the land law says today. To give just one example, there is sufficient legal protection of tenants in the case of sale of leased land plots. Importantly, the transfer of agricultural land is attainable despite the moratorium. It is also crucial to understand which legal issues are to be addressed for the land market to start functioning properly. Absent thoughtful regulation, the long-awaited land market could turn into a land bubble. This might have a devastating effect on agribusiness rocked by wave after wave of land speculation. Lured by the prospect of quick enrichment, traders in land will try to get as much land as possible from whoever will be willing to sell it. One of the major obstacles will be farmers leasing the target land. Land encumbered with land lease would cost substantially less. Few investors will be happy to wait until the end of land lease and thus pay the full market price for temporarily unavailable land. It is not improbable that landowners will try to push tenants off their land plots just to fetch a higher price for it.
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The Land Code of Ukraine provides for three types of agricultural lands which may not be sold by their legal owners. These include agricultural land formally designated for (i.e. the Moratorium): — commercial/commodity agriculture; and — private/individual agriculture and parceled from the land mass previously cultivated by state or collective farms; and — any agriculture use in case of stateowned or municipal land plots. According to official statistics, the Moratorium covers approximately 96% of Ukrainian arable lands, as follows: — up to 29.2M hectares (72.9M acres) of privately-owned agricultural land (of both commodity and individual designation); and — up to 10.5M hectares (25.9M acres) of state or municipally-owned agricultural land. Contrary to popular belief, not all agricultural land is subject to the Moratorium. Thus, the ever-growing body of land privatized by individuals (with a maximum area of 2 ha available under such procedure) is freely transferable under Ukrainian law.
Purchase Restrictions
The Moratorium set out by the Land Code effectively prohibits sale and purchase agreements, preliminary purchase agreements or any other instruments aimed at the disposal of land plots in future, i.e. in case of the Moratorium being lifted. The latter means that preliminary sale agreements, power of attorneys or other similar documents concluded prior to the lifting of the Moratorium may be deemed void ab initio under Ukrainian law. In addition, the Moratorium prohibits any change of the formal designation (allotment) of related land plots, thus, not allowing the pulling out a land plot out from the Moratorium’s limitations. At the same time, land pots under the Moratorium may be inherited, swapped or boughtout for public needs.
How to Buy Under a Moratorium
With the number of landlords willing to dispose of their land plots steadily growing, both agribusinesses and private investors are actively buying the land that is being offered. Indeed, the sale of land is on the rise. The Moratorium makes the parties look for creative forms of sidestepping it. Presently, there are two main strategies pursued by the parties willing to transfer land ownership: — long-term land use agreements:
— land lease agreements for the maximum allowed term of up to 50 years; and — emphyteusis agreements allowed under Ukrainian law without any limitation on the maximum period of land use (in contrast to land lease agreements). Emphyteuses are often concluded for a period of 100 to 500 years. Furthermore, Ukrainian law allows the sale (transfer) of the right of emphyteusis from one tenant to another without the consent of the land owner (freeholder). The above makes emphyteusis an effective substitute of land sale. — transfer of ownership (freehold) on the basis of land swap agreements. There is no clear cut regulation of such arrangements. However, the current market approach is to swap land plots, which are (i) located within the same district or municipality and (ii) designated for agricultural use, irrespective of the areas of the swapped land plots. Unfortunately, the Ukrainian authorities do not have any consistent policy in their treatment of the above arrangements. While they agree on the lawfulness of long-term land lease agreements, both emphyteuses and land swaps attract criticism on a regular basis. Furthermore, land swaps, which were once the most popular land transfer tool, were recently challenged by the Supreme Court of Ukraine. The court revised its previous case law on the basis of the more than creative interpretation of the statutory provisions regulating the Moratorium. The absence of watertight legal instruments for the transfer of land under the Moratorium mean that lifting the Moratorium appears to be the only viable response to the ever-growing number of landlords willing to sell their land plots.
Key Issues of Reform
More than a decade of debate around land market liberalization has crystalized the few issues which are essential to the proper functioning of the land market. These include the following: permitted buyers; maximum number of hectares which can be owned by one permitted buyer; minimum sale price; preemption rights (right of first refusal); restrictions on resale of land. Permitted Buyers. It is expected that the deal breaker for any parliamentary vote on the land market would be the issue of permitted buyers. The majority of Ukrainians have an irrational fear of foreigners buying all the land and evicting the locals. Consequently, it is widely believed that any land market reform will provide for at least an interim period of 5 or more years during which only Ukrainians will be able to buy and sell agricultural land. Of course, Parliament may at any later time
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OMP
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Address: 79 Tarasivska Street, 4th Floor, Kyiv, 01033, Ukraine
aw office of OMP is one of the leading full-service legal advisors to agribusinesses in Ukraine. We are experienced in advising agricultural holdings and private landowners. Our specialists have been advising farms of different sizes and locations in all regions of Ukraine since 2005. We have audited over 2,000,000 hectares
recognize the need to permit the purchase of agricultural land by Ukrainian legal entities or foreign nationals. It appears quite likely that legal entities registered in Ukraine would also be included among the permitted buyers. However, there may be restrictions on the beneficial ownership of such entities. Restricting the right to purchase to Ukrainian nationals only has an additional benefit of limiting the cash flow in the land market. While there are many investment funds and private investors willing to buy agricultural land in Ukraine, few of those will be willing or even able to use Ukrainian nationals as a vehicle for such investment plans. This might prove beneficial at the start of land market reform and the market will be less overheated and so less likely to spin out of control. Ukrainian society is reluctant to grant foreign residents the right to own agricultural land. It is unlikely that such possibility will arise in the near future. Nonetheless, following the interim period when fears of the unknown land market subside, foreign ownership might well be ushered in. Land Bank Cap. The issue of permitted buyers goes hand in hand with the maximum land bank limitation. Although the latter is less controversial, the popular approach is to limit the land bank held by one individual or legal entity. For individuals, the suggested caps range from 100 to 1,200 ha, for legal entities from 500 to 10,000 ha. There is little theory behind any of the above limitations. As in the case of permitted buyers, it is highly likely that caps will be increased (at least for legal entities if they are ever to be allowed to buy agricultural land). Minimum Sale Price. The rationale behind the fixed minimum sale price is to protect unsophisticated landowners. It is believed that poor rural landowners might be pressed to sell their land plots substantially below their market value. While case studies do not always confirm this theory, the popular consensus is to include such protection. The problem with the minimum sale price is that it can substantially slow down (and even block) reform of the land market. Unfortunately, in such cases landowners will arguably suffer even more. Instead of being underpaid, they
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of agricultural land over the last several years. We have been involved in major M&A projects in the industry. Our experts have profound experience in supporting litigations and arbitrations involving agribusinesses, both in Ukraine and abroad, including LCIA arbitrations. OMP is active in both educational and GR support of agricultural producers.
will not be paid at all. While there are several approaches to setting a minimum sale price, it appears that the easiest and least subjective way is to use market valuation (as is the case with all real estate apart from land). Preemption Rights. In contrast to the previous issues, preemptive rights should protect the agribusiness more than landowners. If the land is to be put to its best use, then arguably those who work it properly should be the first to buy it. The owners of adjacent land plots or family members might have similar rights. While Ukrainian law provides for the right of first refusal of the lessee of the land plot, it is not clear whether such legal safeguards will survive after the start of land market reform. At the same time, their absence might have a major effect on agribusiness. Upon expiry of a land lease, there will no longer be any guarantee that the farmers working the land will be able to stay even if they are ready to match the highest bidder. This might also impact the ability of agribusiness to raise capital on public markets. Restriction on Resale. These provisions are introduced to control speculation on land. Their aim is to discourage any land purchase focused solely on subsequent resale. To that end, the law might provide for heavy taxation of proceeds from the resale of land. Often, the applicable rate during the first years after purchase might peak at 50%. The tax burden will decrease with every passing year, flattening out after 7-10 years of ownership.
What to Expect?
As many other Ukrainian reforms, liberalization of the land market is long overdue. It comes at a time when arable land is in short supply and in high demand. Even without a free land market, agricultural land is at the center of multiple conflicts between agribusinesses and landowners. The price of land lease has been steadily growing over the last 10 years. Currently, the medium term lease of prime agricultural land can easily fetch USD 800 to USD 1,500 per hectare. Freeing up the sale of agricultural land will further fuel the price of land and intensify the competition for it. Unless carefully managed and controlled, the land market could become as volatile and unpredictable as it was prior to 2008 (in the case of land for residential construction in
and around the city of Kyiv as well as major metropolitan or seaside areas in Ukraine). Given the unfettered influx of cash, land speculation would quickly overtake the market. Agribusiness is set to be hit most by land market reform. Farmers will have to decide whether they want or need to buy every land plot offered for sale by their landlords. This will create a massive drain on the finances of their businesses. (Various opinion polls indicate that around 20% — 30% of landowners are willing to sell their land as soon as the ban is lifted.) Unhappy or greedy landlords may try to force agribusinesses off their land. This creates a substantial business interruption risk and will require a swift and firm response from any agribusinesses that are affected. In the absence of sufficient protection from the law-enforcement agencies, private land wars might ensue. On the positive side, liberalization of the land market will improve land management. The land market will kickstart land aggregation with few landowners collecting all or the majority of the land plots in each village. Several years down the line, agribusinesses will have to deal with just several individual landowners, instead of thousands they have to keep happy at the moment. The land market would resolve or at least expedite resolution of several problems plaguing land management in Ukraine. Land aggregation will make it possible to lease whole fields without facing sabotage from the lessees of any interrupting land plots, which is currently often the case. Furthermore, contiguous land masses accumulated by individual landowners will also make any field roads redundant. The roads would be sold by the state, ending the years of controversy over their use and the relevant fiscal liabilities. Both the medium and long-term effects of land reform should be positive. More importantly, whatever the negative consequences, which there could be quite a few of, there appears to be no viable alternative to liberalization of the land market. Both land lease and any other forms of land use, outside of a free market, have proved unreliable in modern day Ukraine. The Moratorium, which has lasted for more than fifteen years, has demonstrated that its overall effect on land management has been largely negative.
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Alternative Dispute Settlement
ADR Practice in Ukraine
Denys KOPII
Dmytro GOVORUN
Partner, TCM Group Ukraine
Commercial Director, TCM Group Ukraine
Roman SEMENETS
Yevhenii SHAMRAIENKO
Senior Associate, TCM Group Ukraine
Associate, TCM Group Ukraine
oing business is in many ways a game that is full of uncertainties and risks, making risk management in business a hot topic. Certainly, past experience urges us to mitigate possible risks through a well-drafted contract before engaging in a business relationship with a counter-party. However, this practice cannot guarantee by any means that the execution of the contract will go smoothly. This article provides some guidance on the ways to protect company’s interests and reduce commercial risks through the careful choice of a dispute resolution method. A relevant question one may ask is which legal instrument should be used to achieve better protection for a company. The conventional approach is to rely on state courts as a dispute resolution forum. Another option could be an arbitration clause in a commercial contract that would refer parties to an independent tribunal. Alternatively, the parties can choose mediation as a more flexible method that is aimed at preserving a working relationship between business partners. Finally, parties can opt for negotiations to
avoid unnecessary expenses and streamline settlement of a dispute. It is important, however, to compare the advantages and disadvantages of the techniques described above. As an effective dispute resolution method that is becoming more and more popular, arbitration may be quite costly. Moreover, engaging in this adversarial proceeding often makes it difficult for parties to settle a dispute on amicable terms. Mediation has proven to be one of the most efficient methods for companies to handle their disputes without damaging a fruitful business relationship with counterparties. Often, a conflict can be resolved by a skilled mediator who guides parties towards a compromise solution that is acceptable for everybody. Due to its remarkable efficiency, there are reasons to believe that mediation will be widely used by Ukrainian businesses in the near future. One more effective means to resolve commercial disputes are pre-trial negotiations. While at first glance this method appears to be relatively easy to use, in contrast to a more technical arbitral procedure and litigation, it actually requires a lot of skill. Often, stakes in
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a dispute can be as high as ten or twenty percent of a company’s annual revenue. Therefore, businesses are strongly advised to retain professional negotiators with extensive practical experience to represent their interests. They will ensure that a company will be able to recover the majority of a disputed sum that can be used to pay salaries, interest to creditors, taxes, trade financing, etc. Let us consider in some greater detail the methods of alternative dispute resolution described above.
Arbitration
Ukraine is considered to be an arbitration-friendly jurisdiction. The legal framework regulating international commercial arbitration in Ukraine is set out by the Law of Ukraine On International Commercial Arbitration. Moreover, Ukraine is a member of the UN Convention on the Recognition and Enforcement of the Foreign Arbitral Awards. Therefore, provisions of the Convention that guarantee smooth enforcement of arbitral awards by state courts form a part of Ukrainian legislation. Moreover, arbitral awards that are issued in Ukraine can be recognized by courts of other members of the Convention through a simplified procedure. It should be noted, however, that while arbitration remains an efficient instrument for resolution of international commercial disputes, some commentators argue that it no longer meets all the essential needs of the modern business. They point at numerous formalities, similar to a certain degree to those of conventional litigation, that do not allow parties to quickly reach a compromise. Another important aspect is the cost of arbitration. For example, in an arbitral proceeding initiated before the International Arbitration Court at the Ukrainian Chamber of Commerce and Industry, a party is expected to pay more than USD 6,000 in arbitration fees, when a disputed amount in a commercial dispute is about USD 105,000.00. However, the overall cost of a proceeding may easily exceed 10% of the disputed sum, when legal fees paid to parties’ counsel and other related expenses are taken into account. Moreover, obtaining a favorable arbitral award does not guarantee that a company will automatically recover its money. The company can easily double its arbitration-related expenses if the losing party starts opposing enforcement of the award.
Mediation
The procedure of negotiations with involvement of independent mediators is
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TCM Group Ukraine
Address: 10A Vozdvyzhenska Street, Kyiv, 04071, Ukraine
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CM Group Ukraine is the Ukrainian office of TCM Group International Ltd., which is a unique alliance of 35 law offices and 110 agencies, practicing international commercial dispute resolution in a total of 145 countries. TCM Group International was established in 1987 and since 2014 has been represented in Ukraine through its office in Kyiv, providing Ukrainian clients with a unique opportunity to access its offices worldwide. At the same time, TCM Group Ukraine represents all foreign offices of TCM Group International in international dispute resolution in Ukraine, building on the Group’s knowledge and exper-
widely used across the globe. Following the successful experience in foreign countries, Ukrainian enterprises start relying more and more on mediation. Besides, it is possible that this method of dispute settlement will be formally regulated by Ukrainian legislation in the near future. However, mediation is far from being ideal for all types of disputes because it is based on the will of the parties to find a mutually acceptable solution. If one of the parties is not willing to cooperate, the mediator has no inherent powers to resolve the dispute independently. Over the past year, no significant changes were introduced to Ukrainian legislation in the area of alternative dispute resolution despite active discussions in the expert community. On 1 November 2016, the Draft Law of Ukraine No. 3665 On Mediation was adopted in the first reading. This Draft Law has a potential to introduce significant changes into regulation of pre-trial settlement of disputes in Ukraine. It should be noted that Draft Law No. 3665 neither sets specific deadlines for mediation, nor obliges participants to comply with any bureaucratic procedures. The advantage of such an approach is that some of the most complex commercial disputes could be resolved in a relatively short period of time, as parties and mediators would be free from excessive formalities installed by law. However, one controversial issue in the bill is the optional nature of mediation clauses. This means that parties could ignore the agreement to settle disputes through mediation and apply directly to courts. We believe that this provision could potentially hinder the overall efficiency of mediation in Ukraine because parties, after consenting to mediation, could skip this procedure altogether. While the Ukrainian market is only starting to understand the benefits of mediation, some law firms with established international
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tise in the following areas: international commercial litigation and arbitration, negotiations and mediations, international commercial debt collection, recognition and enforcement of foreign judgments and arbitral awards, and bankruptcy proceedings. TCM Group offices: Argentina, Australia, Austria, Belgium, Bolivia, Brazil, Canada, Chile, China, Colombia, Cyprus, Czech Republic, Denmark, Dominican Republic, Ecuador, Egypt, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Netherlands, Norway, Poland, Russian Federation, South Africa, South Korea, Sweden, Switzerland, Ukraine, United States of America.
practices are already providing first-class mediation services. The quality of services is guaranteed by codes of conduct and general corporate culture of these law firms.
Negotiations
Tel.: +38 044 228 1338 E-mail: info@tcm.com.ua Web-site: www.tcm.com.ua
Companies can retain professional negotiators as their representatives in commercial disputes. As a rule, the most effective negotiators are attorneys that possess extensive experience in alternative dispute resolution. While guiding the parties to a mutually acceptable solution, they make sure that the interests of their client are protected to the highest degree possible. The advantages of retaining an experienced attorney as a negotiator include, among others, knowledge of local law and languages, wide network of contacts, access to restricted information about the other party and excellent communication skills. As an example, we have successfully represented a client from Hungary that supplies agricultural machinery, in a multi-million dispute over unpaid invoices for delivered machinery to a group of Ukrainian companies. In cooperation with our Hungarian colleagues, we have provided the client with legal advice on applicable law and negotiated on his behalf an amicable settlement of the dispute, as well as the conditions of future agreements with the Ukrainian counterparty and with the state authorities. As a result, we helped the client to avoid lengthy and expensive litigation in state courts and ensured favorable settlement of the dispute. Moreover, we conducted the negotiations on a success fee basis, making them a risk-free option for our client. As each dispute is different, lawyers are often required to think “out of the box”. This is exactly what our international team has achieved in negotiations, where we represented a client from Germany who had an unresolved dispute with a business partner established in a CIS country. In this dispute, the
debtor failed to respect the conditions of the export agreement that eventually led to overdue payments for more than a year. Our attorneys organized personal meetings with the debtor that allowed reaching a complex settlement agreement. First, the debtor agreed to partially pay the debt from its associated assets that we managed to identify. Moreover, our lawyers secured payments from Chinese partners of the debtor that agreed to pay the remaining part of the debt. One of the biggest advantages of resolving commercial disputes through negotiations is that they often lead to further cooperation among partners after a dispute is settled and new agreements are signed. Our practice shows that when an experienced legal adviser controls the implementation of settlement agreements, the risk of them being breached is quite low. This allows the parties to re-establish their business relationship in a win-win manner and build up confidence in each other. Entrusting cases similar to those mentioned above to professional negotiators has many advantages: the client does not spend time on negotiations, factual analysis or legal research; negotiations are conducted by professional lawyers who are specialists in the matter and know how to protect a client’s interests in the best way possible; all information shared by the parties during negotiations is protected; reputation and business relationship between the parties are restored, etc.
Conclusion
The methods of alternative dispute resolution described above often provide more benefit to companies than conventional litigation, such as cost efficiency and possibility of preserving a fruitful relationship with a business partner. We expect that in the near future, following the necessary reform of Ukrainian legislation, these methods will become even more popular in Ukraine.
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Anti-Corruption
Top Management’s Role in Creating Effective Corporate Anti-Corruption Compliance
Volodymyr MONASTYRSKYY
Igor SVITLYK
Partner, Dentons
Associate, Dentons
op managers in Ukrainian companies are������������� ������������ actively involved in many internal processes to keep businesses running well, but not many of them pay noticeable attention to anti-corruption compliance matters. However, some important developments which occurred within the last few years may drastically change this state of affairs. Firstly, the U.S. authorities have begun active investigation and prosecution of foreign companies allegedly involved in bribery of public officials abroad. Ukraine is now on the radar of these authorities, which has already led to several investigations and multimillion dollar fines. Secondly, the Ukrainian Parliament has adopted the new anti-corruption law establishing requirements for the private sector in the field of corruption prevention with specific measures to be implemented. For more details, please refer to our article in the 2016 edition of this journal. Thirdly, three new authorities responsible for corruption prevention (National Agency on Prevention of Corruption), investigation (National Anti-Corruption Bureau) and prosecution (Specialized Anti-Corruption Prosecutor’s Office) have been established. The National Anti-Corruption Bureau has already made it clear that, despite being focused mainly on public corruption, it intends to investigate corruption offences in the private sector too. As a result of these developments, many CEOs are now starting to take anti-corruption
compliance more seriously. However, leadership in some companies still considers compliance policy and related instruments merely a formal process as a pre-condition to participation in public procurement, or a tool needed to have a good appearance in front of its international business partners. Once employees notice such an attitude, it will be extremely hard to convince them that compliance does matter. The compliance process in such companies usually ends up with a so-called “paper compliance”, when one has policies and procedures in place but they are not enforced as neither the CEO nor employees care. It’s not surprising that such “paper compliance” does little, if anything, for real prevention of corruption and potentially may result in very unfortunate consequences for the company. The main reason for that, as we strongly believe, would be the lack of real commitment from the top management to prevent and counteract corruption in company’s activities or, in other words, lack of the right “tone at the top”. The purpose of this publication is to provide a short guidance on how the “tone at the top” should and should not look like and what needs to be done to ensure that the word “compliance” is filled in with real meaning. We hope that the overview below can be used as a reference point for executives which are still determining its approach to the discussed matter.
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What is the “Tone at the Top”?
Do not look for regulation of the “tone at the top” in Ukrainian laws, you will not find
it there. The current Prevention of Corruption Law only mentions that (i) the CEO shall ensure regular assessment of corruption risks and undertake appropriate measures, and (ii) company’s officers shall refrain from behavior that could be interpreted as readiness to commit violation. However, these requirements do not encourage management to set the tone for effective compliance in a proactive way. In our view, the “Tone at the Top” is an expressly declared position of the top management of zero tolerance to corruption in the course of business, as well as visible and consistent commitment to compliance with law and procedures, as continuously demonstrated both internally and publicly. We would distinguish the following key requisites of a CEO’s behavior which, in our view, constitute in unison the right “Tone at the Top”: — it should be visible, so every company’s employee can say that he or she is completely aware of the management’s explicit stance on corruption and compliance with respective laws. As very well said in the Resource Guide to the U.S. Foreign Corrupt Practices Act1, managers and employees always take cues from their leaders; — it should be consistent, so no actions contrary to the previously declared zero tolerance to corruption may be undertaken on any corporate level; — it should be demonstrated���������� on ��������� a continuous basis, rather than once a year at the CEO’s annual speech to employees; and — it should be communicated internally across the company and externally to the company’s partners and the general public.
Why is “Tone at the Top” a Key Element of the Effective Compliance System?
Cynthia Glassman, Commissioner of U.S. Securities and Exchange Commission, concluded her speech2 before the U.S. business community in 2003 with the remark that the ultimate effectiveness of the compliance prohttps://www.justice.gov/sites/default/files/ criminal-fraud/legacy/2015/01/16/guide.pdf 2 https://www.sec.gov/news/speech/ spch040703cag.htm 1
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Dentons
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Address: 49-A Volodymyrska Street, Kyiv, 01001, Ukraine
entons is the world’s largest law firm, delivering quality and value to clients around the globe. Dentons is a leader on the Acritas Global Elite Brand Index, a BTI Client Service 30 Award winner and recognized by prominent business and legal publications for its innovations in client service, including founding Nextlaw Labs and the Nextlaw Global Referral Network. Dentons’ polycentric approach and world-class talent challenge the status quo to advance client interests in the communities in which we live and work. Dentons will help you understand and navigate the complexities of the market. Work with us to help you manage the prevailing economic conditions and understand new reforms in Ukraine. Tap into a pool of lawyers that have
cedures will be determined by the tone at the top: “Adopting a code of ethics means little if the company’s chief executive officer or its directors make clear, by conduct or otherwise, that the code’s provisions do not apply to them.” Indeed, even if the company retains an outside counsel to develop and implement the best possible compliance policy and practices, such instruments may be useless if employees are aware of the management applying them selectively and leaving room for exceptions. Therefore, the “Tone at the Top” should always be considered as a fundamental ingredient, helping to achieve an effective compliance system.
Right and Wrong “Tone at the Top”
As mentioned above, the “Tone at the Top” is conveyed through the actions of the company’s management. Let us cast a look at some practical examples. Bad Practices Making exceptions for yourself. We have been asked by our client to develop and implement a compliance policy and thereafter deliver a practical training for employees to familiarize them with the implemented instruments. The presentation was held in Ukrainian (while the CEO had no knowledge of Ukrainian at all) and the place of training was close to the location of military actions. The CEO nevertheless decided to participate and brought the translator with him to follow the topic. By doing this the CEO showed
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Tel.: +380 44 494 4774 Fax: +380 44 494 1991 E-mail: tetiana.babinska@dentons.com Web-site: www.dentons.com
been serving foreign companies and their local subsidiaries for the last 25 years, ever since Ukraine began attracting foreign investment in the 1990s. With Dentons, you benefit from a partnership that enables you to identify and resolve risks at the earliest possible stage. Dentons provides intuitive thinking to spot commercial opportunities and resolve your problems. Let our Ukrainian and Western lawyers advise you on doing business, from setting up branches to debt and corporate restructuring, from employment to dispute resolution matters. When you are looking for assistance on international matters, you can draw upon our global team to give you cross-border, sophisticated solutions. Let Dentons make your business run more smoothly.
that he did not consider himself an exception. Compliance matters are handled only by lawyers or compliance personnel, while the CEO’s engagement is limited to annual presentation or email communication. Management very often believes that compliance matters are only the responsibility of legal and compliance staff. However, such an approach lacks the behavioral requirement mentioned above — visible and continuously demonstrated commitment by its leadership towards compliance. Practicing double talk. In the infamous Wells Fargo case, senior management established unrealistic sales targets, which, as employees reported, they could not meet without violating the company’s policies. Then, in spite of the declared commitment to compliance, the company’s officers ordered the monitoring of the internal hotline and to pass information on whistleblowers to management. As a result, instead of protecting employees who reported offences, the company was keeping an eye on whistleblowers and subsequently dismissed them on some flimsy grounds. Keeping compliance violations and disciplinary measures in secret. Information on compliance violations is usually very sensitive. However, keeping it under the table may cause harm in the long-term perspective. If the information becomes known from sources other than management, employees may start questioning the leaders’ attitude towards compliance violations and declared corporate values in general.
Good Practices Demonstrating openness to dialogue. The management should not only spell out compliance expectations to employees, but also be ready to talk. Avoiding dialogue on compliance matters and forwarding respective requests entirely to lawyers or compliance officers may send out the wrong signal. Encouraging ethical behavior. A good move from the CEO would be including compliance performance indicators into the annual employee performance reviews. Communicating compliance commitment to internal and external stakeholders. The management should clearly articulate internally and, very importantly, externally to the company’s partners that compliance is one of the core values of the company, rather than that just corporate formalities or paperwork need to be done.
Bottom Line
Before conveying the compliance value to employees, the management should first believe that it is an essential tool for any modern company willing to build a successful and sustainable business. Otherwise, the company may end up with formal compliance incentivized by the fear of punishment rather than by encouragement. Such type of compliance has a much higher risk for exposure. Once the intention is set, it is up to the management whether to apply the discussed approaches or to find its own way in setting the right “Tone at the Top”. But the benefits from creating effective corporate anti-corruption compliance are definitely worth the effort.
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Antitrust
Supply Chain and Antitrust Risks: Recent Trends in Ukrainian Competition Law
Timur BONDARYEV Managing Partner, ARZINGER
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ooperation between manufacturers and legally independent distributors in a single supply chain is widespread due to its cost effectiveness. The latter is based on the combination of distributors’ sales experience at the local level, the existing infrastructure and the orientation in the national standards of doing business, etc. Consequently, on the one hand, such partnership minimizes a great number of commercial risks for manufacturers but, on the other hand, it entails legal ones. In particular, the independence of parties to agreements in a single supply chain (so-called vertical agreements) gives reason for competition authorities to analyze such agreements in terms of their impact on competition.
Legal Regulation and Enforcement: Current Trends of 2016
Legislative regulation of vertical agreements in competition law did not change in 2016. As before, the Law of Ukraine On the Protection of Economic Competition, contains a general prohibition of anticompetitive concerted actions that have led or may lead to preventing, eliminating or restricting competition. This prohibition applies to vertical agreements as well as to horizontal ones in general. However, in order to apply such a prohibition to vertical agreements, the competition authority should prove the existence of anti-competitive effects.
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It is worth noting that the Ukrainian competition authority (the AMCU) has not yet clarified its approaches to the analysis of vertical agreements and applicable restrictions. Nevertheless, the need for detailed regulation of this issue is evident. The comparably scarce enforcement experience in this area shows that neither the national authority nor businesses fully understand how vertical agreements can impact competition. At the same time, the adoption of the mentioned clarifications is Ukraine’s obligation under the Association Agreement between the European Union and its member states, of one side, and Ukraine, of other side, to implement the Commission Regulation (EC) No.330/2010 of 20 April 2010 on the application of Article 101 (3) of the Treaty on the Functioning of the European Union to categories of vertical agreements and concerted practices. A positive trend is the competition authority’s public statement that the project has already been launched. Thus, a business will be able to submit its comments soon, but, for the time being, it should start learning to analyze and anticipate the possible antitrust risks of terms and conditions without waiting for the competition authority to provide its official stance. After all, the authority does not intend to focus solely on rule-making, but will actively perform its most important function — control over compliance with the applicable competition laws.
Red Flags in Goods Supply Business Practices from the AMCU’s Viewpoint
In 2016, the AMCU evaluated supply contracts between exclusive importers (Ukrainian subsidiaries of major pharmaceutical manufacturers) and local distributors of medicinal products for the first time in the history of Ukrainian antitrust enforcement. Through its two decisions taken in respect of Alcon Ukraine and Servier Ukraine Ltd. and their distributors, the AMCU has actually started summing up a large-scale investigation into the Ukrainian market of medicinal products initiated back in 2011. These decisions are expected to be followed by others, as the AMCU keeps investigating a number of other analogous cases.
The importance of the AMCU’s decisions for the pharmaceutical market as well as for other markets where trade is organized in a similar way can hardly be overstated. We can already say that companies at least in the supply chain of electronics and digital technology, automotive, food, cosmetics and household chemicals are already in the sights of the competition authority. In fact, companies should consider the authority’s findings in the mentioned cases as a starting point for analyzing their own business practices.
What Practices Can, in the AMCU’s Opinion, Have a Negative Effect on Competition?
1. Exclusive import and ban on export (reexport) If there is substantial market power, the AMCU considers establishing a model of exclusive import through a single subsidiary while prohibiting export (re-export) by its distributors as an attempt to gain control over the market. Following the AMCU’s logic, exclusive importers, together with distributors, are able to control the volumes of goods on the market and, thus, the prices along the entire supply chain, right up to the prices for end consumers. 2. Distributors’ reporting In its decisions, the AMCU points out that the provision of reports by distributors on product movement allows parties to agreements to further control the directions and volumes of goods supplied. The exclusive import model, export (re-export) restrictions and implementation of reporting mechanisms in the presence of market power are regarded by the AMCU as an integral tool resulting in the overall control of trade flows and saturation of demand and supply. 3. Discounts and bonuses The AMCU may regard purchase price discounts, bonuses for meeting certain additional conditions (e.g. maintaining inventories of products in warehouses, meeting procurement targets, early payments, etc.) as an anti-competitive mechanism. The competition authority is especially concerned by sales promotion tools, which are different for single distributors or specific/unique for
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Arzinger
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Address: Senator Business Center, 32/2 Moskovska Street, 10th Floor, Kyiv, 01010, Ukraine
rzinger is an independent law firm headquartered in Kyiv which has regional offices in Western and Southern Ukraine, in Lviv and Odesa, respectively. Arzinger has for over 14 years been among the legal business leaders providing high-quality legal support to clients throughout Ukraine. Among the firm’s many clients are top representatives of international and local business. Arzinger follows high standards of legal services and is a reliable partner in view of its great experience in a wide range of industries and legal practices: M&A, corporate law, real estate and construction, antitrust and competition, litigation and arbitration, tax, banking & finance. We serve clients operating in the financial services, energy, mining and natural resources, pharmaceuticals, food & beverages, investment banking and corporate finance, telecommunications, retail & leisure, hospitality, aviation and automotive, agriculture, insurance, and infrastructure & transport industries.
a single or group of distributors. Such conditions can discriminate against other distributors, thereby creating unequal conditions for competition at the relevant trading levels in the supply chain. According to the AMCU, specific discounts/bonuses in distribution channels lead to the existence of a “nominal” (contractual) price as the basis for calculating customs duties or trade margins and a “real” price including the discounts/bonuses mentioned above. 4. Unreasonably high prices of goods To sum up, the above contractual relations between exclusive importers and distributors in the presence of significant market power eventually created conditions for economically unjustified price increases for the end consumer.
AMCU’s Further Steps — What Businesses Should do to Avoid or Minimize Antitrust Risks
The AMCU’s existing practice in respect of vertical agreements can certainly not be considered impeccable, as some of its findings remain highly questionable for both the business and legal community. But should we really refer all the unanswered questions solely to the AMCU? We have to admit that the practice of the world’s leading competition authorities regarding this type of cases is largely controversial in general and often lends itself to criticism. It is obvious that the problem lies in the complexity of vertical agreements as economic ties per se, the
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Tel.: +380 44 390 5533 Fax. +380 44 390 5540 E-mail: mail@arzinger.ua Web-site: www.arzinger.ua
Arzinger employs highly-qualified professionals with vast hands-on experience in a wide range of legal matters, deep knowledge and understanding of the local market, international education and background. The firm has a team of over 70 seasoned legal professionals led by 8 partners. All of them are acknowledged among leading experts on the Ukrainian legal market and are recognized by reputable international and local rankings. As a result, Arzinger can offer extensive legal assistance to effectively support a variety of complex and challenging transactions, including cross-border matters. The firm renders tailor-made legal services of unsurpassed quality to meet the client’s expectations. Arzinger cooperates closely with legal advisors from numerous jurisdictions and is a member of international professional organizations, enabling it to engage colleagues from various jurisdictions in cross-border transactions and so provide clients with top-level professional legal advice.
line between their pro-competitive and anticompetitive effects often being quite a thin one. At the same time, the further movement of the competition authority towards developing the practical assessment of vertical restraints looks quite unique. Together with the complexity of the problem, possible liability of companies for the violations committed not only by company executives but also by authorized persons, who take management decisions (for instance, decisions on cooperation), increases antimonopoly risks. This fact is confirmed by the practice of the competition authorities. Thus, all these circumstances cumulatively entail the necessity for companies to unify its internal procedures in accordance with the requirements of antitrust laws. Practice shows that only implementation of internal programs and strict performance of their provisions can guarantee the company lower risks of receiving fines for their activity. The AMCU has made it clear that a particular business practice should be justified by economic considerations and, at the same time, should satisfy the interests of end consumers (a must!). Therefore, companies should review the terms of cooperation with partners carefully and apply a comprehensive approach to the issue of both commercial and anti-trust substantiation of certain terms of contracts. In order to prevent antitrust risks manufacturers should develop internal documents for regulating selection of commercial partners (distributors and/or retailers) as well as the main commercial conditions of coop-
eration with them. Such documents may be implemented in various legal forms: commercial policies, programs, internal rules, etc. These internal documents may vary depending on the business areas, though there are some general principles applicable to all of them. The non-discriminatory principle should be singled out as the first one. It means that commercial conditions should be equivalent to all business partners only if there is an economic justification for different conditions. Such economic justification may include the existence of various purchasing volumes, marketing activities, storage and logistics facilities, etc. Special attention should be paid to the giving of discounts and bonuses. The main rule regarding discounts and bonuses is avoidance of distortion of competition between commercial partners operating on the same market. Similar to implementation of commercial conditions, there should be economically justified approaches to the provision of discounts and bonuses. In some cases the development and implementation of the mentioned internal documents require a lot of effort and resources from the companies. Moreover, the enlisting of qualified lawyers to this process may be considered as highly recommended. These efforts are reasonable, since they help to develop a defence strategy for the case of possible dialogue with the competition authority and significantly mitigate the risks of antitrust violations with imposition of a fine in the amount up to 10% of a company’s annual turnover.
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Assets Tracing
Assets Tracing
Assistance to Foreign and International Tribunals
First of all, we would also like to mention the unique opportunity we have encountered in our practice regarding the United States. In 2016, we acquired an order from the United States Southern District Court of New York granting discovery under 28 U.S.C. section 1782, “Assistance to foreign and international tribunals and to litigants before such tribunals”. This is a federal statute that allows a party to a legal proceeding outside the United States to apply to an American court to obtain evidence for use in a non-US proceeding. This opportunity should be also considered when dealing with international litigation.
Volodymyr BOGATYR PhD in Law, Senior Partner, BOGATYR & PARTNERS. Foreign Lawyer in Russia and Poland
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he legal team of BOGATYR & PARTNERS supports clients in international court cases in countries such as the United Kingdom, Cyprus, Switzerland, Liechtenstein and others in order to protect their interests. We have also succeeded in acquiring refugee status for our clients in a number of different jurisdictions and have represented clients in institutions such as Interpol and the European Court of Human Rights.
Applying the New York Convention
We would like to draw the attention of our foreign colleagues to the practice of use of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) in Ukraine. Foreign arbitration awards are generally easier to enforce in Ukraine than foreign court decisions, as Ukraine is a signatory to the 1958 New York Convention on Recognition and Enforcement of Foreign Arbitral Awards.
A foreign arbitral award will be recognised as binding and can be enforced provided that the appropriate motion is filed with the competent Ukrainian court, unless the losing party proves that: (1) the agreement to arbitrate is invalid under the chosen law; (2) one of the parties was legally incapable of entering into the arbitration agreement; (3) the losing party was not duly notified of the appointment of the arbitrator or the commencement of the arbitration proceedings; (4) the losing party could not submit its explanations for valid reasons; (5) the arbitration award rendered was beyond the scope of the arbitration agreement; (6) the arbitration panel or procedure did not comply with the arbitration agreement or with the rules of the place of arbitration; or (7) the arbitration award did not come into force or was annulled or its execution was suspended by the court of the country under which the laws of the arbitration award were rendered. Similarly, the arbitration award may be unenforceable in Ukraine if a Ukrainian court determines that either the object of the dispute cannot be subject to arbitration under Denied to initiate proceedings/ to satisfy the claim/ motion, complaint/ orders not executed
Order issued (canceled) /proceedings initiated/ the claim/ motion, complaint satisfied/ orders executed
In total
Reviewed (total)
Returned
Left without consideration
2014 Motion for recognition and enforcement of foreign judgment, that have to be coercively enforced
683
604
10
129
82
350
2015 Motion for recognition and enforcement of foreign judgment, that have to be coercively enforced
611
480
113
60
32
2014 Motion for recognition of foreign judgment, that does not have to be coercively enforced
71
60
19
7
267
2015 Motion for recognition of foreign judgment, that does not have to be coercively enforced
71
58
11
10
32
4
Left without consideration by the beginning of the review period
Reviewed (total)
Returned
2016 Motion for recognition and enforcement of foreign judgment
3
11
Motion for recognition and enforcement of judgement of International Courts
2
1
Requests
36
Fulfilled
Reviewed with violation of the time period established by the Criminal Procedural Code
Left without consideration by the end of review period
1
7
-
3
-
1
-
1
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BOGATYR & PARTNERS
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Address: 32/34 Shovkovychna Street, Office 24, Kyiv, 01024, Ukraine
OGATYR & PARTNERS represented both corporate clients and individuals in a wide variety of matters, including fraud claims, white collar matters, challenging sanctions, assets tracing, post M&A disputes, partnership and joint venture disputes and have also provided advice on contractual and insolvency matters as well as issues relating to the enforcement and recognition of judgments in Ukraine and abroad. During this year the firm successfully challenged Interpol Red notices aimed at its international clients and has assisted in the granting of foreign refugee status. The firm has also obtained court orders against extradition from Cyprus and the UK.
Ukrainian legislation or that the recognition and enforcement of such arbitral award contradicts public policy. Thus, if court proceedings in Ukraine are not the case in a dispute between the same parties on the same subject and on the same grounds, the presentation of a foreign court for recognition in Ukraine is not satisfied, the application for cancellation of the award matter of the dispute by the laws of Ukraine shall be subject to judicial review, and the recognition of the said decision does not threaten the interests of Ukraine, then a foreign judgment may be enforced in the territory of Ukraine on the principle of reciprocity (ad hoc). We have also acquired data for Criminal Cases in 2016.
Dealing with Interpol Red Notices
Talking of international litigation, we have to take Interpol into account, since our recent practice shows that the number of Ukrainian citizens being subjected to Interpol Notices has increased. It’s important to keep in mind that quite often in the process of international litigation, especially in cases where Governments are involved, one might find that an Interpol Notice was issued of by the National Central Bureau (NCB) one’s own country. Interpol notices are international requests for cooperation or alerts allowing police in member countries to share critical crime-related information. There are several types of notices: Red, Blue, Green and others. In the case of Red Notices, the persons concerned are wanted by national jurisdictions for prosecution or to serve a sentence based on an arrest warrant or court decision. Interpol’s role is to assist the national police forces in identifying and locating these persons with a view to their arrest and extradition or a similar lawful action.
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Tel.: +380 44 363 7722 E-mail: volodymyr@bogatyr.kiev.ua Web-site: www.bogatyr.com
BOGATYR & PARTNERS are also very actively involved in the process of developing arbitration and intellectual property law in Ukraine and had experience in cross-border disputes. The firm also cooperated closely with a range of legal advisors and investigators from the United States, the United Kingdom, Cyprus, Switzerland, France, Austria, Lichtenstein and other jurisdictions. Moreover, BOGATYR & PARTNERS have created a precedent of recognition and enforcement of judgments by the High Court of Justice in Ukraine. Besides, the firm also had experience of supporting clients facing international criminal charges.
If we look at this issue from one’s point of view, this would de facto mean that you will find it almost impossible to travel between the borders of different countries. You might be subject to arrest following extradition to the country which has requested for the Red Notice to be released. In most cases, we offer our clients a procedure consisting of a number of stages. After receiving the required documents and having signed the Engagement Letter we move on to draft a letter requesting access to files related to our client that are stored in Interpol’s files, addressed to the Commission for the Control of Interpol Files, residing in Lyon, France. At the same time, we write a request to the Interpol NCB of the country which presumably issued the diffusion letter, in order to clarify the details. Thus, we act at both International and National levels. When writing requests addressed to the Commission for the Control of Interpol Files a strict procedure has to be followed for the request to be admissible. It is very advisable that you study Interpol’s Constitution and other documents regulating its activity in order for your request to be successful, as it’s no great surprise that you have to appeal with direct reference to these documents. It is important to keep in mind that the process of communicating with Interpol is a long-term one. The timeframe for a response to a request for access to data consists of four months from the date on which the request was declared admissible, while for a request regarding correction and/or deletion of data it is within nine months from the date on which the request was declared admissible. After we have received an answer from the Commission as to whether our client is subject to a Red Notice, we move on to the next stage. If our client is subject to the Red Notice we begin drafting a request for deletion of
data related to our client, which is stored in Interpol’s files. This process usually takes time, since we have to collect and be ready to present a number of solid arguments for our case. In case our client is not subject to any notice, but believes that he will be in future, we propose to act in advance, by writing a request to Interpol so as to warn of future requests coming from law-enforcement bodies. By doing this the chances are high that these requests will be stopped for investigation prior to their publication. If the end result is successful, Interpol is obliged to remove any information it has on the person in question and inform all National Central Bureaus of this. It should also be stressed that the Parliamentary Assembly of the Council of Europe recently released a Resolution 2161 (2017) with regard to the abusive use of the Interpol system. It states that: “in a number of cases in recent years, Interpol and its Red Notice system has been abused by some member states in the pursuit of political objectives, in order to repress the freedom of expression or to persecute members of the political opposition beyond their borders.” It cannot be stressed enough as to how vital it is to study recent cases regarding this issue in order to successfully achieve the desired result when challenging an Interpol Red Notice.
Conclusion
The legal team at BOGATYR & PARTNERS has huge experience of protecting clients’ interests on both the national and international level. We cooperate with a range of foreign partners and agencies around the world in order to provide our clients with the full spectrum of solutions. We ensure that we stay up to date in order to provide the most innovative ways in battling crime and protecting the rule of law.
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Aviation
Air Passenger Rights
Ievgenii GONCHARENKO Lawyer, ECOVIS Bondar & Bondar
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he Constitution of Ukraine, the rules of which are directly applicable, establishes that the protection of human rights is the main duty of the state. In order to fulfill the above-mentioned obligation legislators adopted a number of legal acts that should ensure the proper and effective regulation of consumer rights, including in the course of air transportation. In particular, on 19 May 2011 the Verkhovna Rada of Ukraine adopted a new Air Code, which is currently the major law regulating the aviation industry in Ukraine, including issues regarding protecting passengers rights. Besides that, for the purpose of bringing national legislation into line with international standards pertaining to ensuring passengers’ rights, on 17 December 2008 the Law of Ukraine On Accession of Ukraine to the Convention for the Unification of Certain Rules for International Carriage by Air was enacted. It should be noted that the Convention for the Unification of Certain Rules for International Carriage by Air signed in Montreal on 28 May 1999 (hereinafter — the Montreal Convention) was adopted in order to enhance the legal regulation of international carriage by air and eliminate legal regulation gaps which were not eliminated by the Convention for the Unification of Certain Rules Relating to International Carriage by Air signed on 12 October 1929 (hereinafter — the Warsaw Convention, ratified by the Ukrainian SSR on 14 August 1959, record number 995-181). The Montreal Convention establishes the following major passenger rights in the course of transportation air: — the right of a passenger to compensation for any physical injury caused; — the right to compensation in case of death of a passenger;
38
— the right to compensation for damage caused in case of destruction, loss, or damage of checked-in baggage; — the right to compensation for damage caused by delay in transportation of passengers or checked in baggage; It is noteworthy that the Montreal Convention provides for a two-tier system of the carrier’s liability for damage caused by the death or physical injury of a passenger. The first tier concerns the objective liability in the amount up to 100,000 special drawing rights (at the moment 1 special drawing right amounts to approximately EUR 1.25) per each passenger regardless of the carrier’s fault. The second tier is based on the presumption of the carrier’s guilt and does not provide for any limitation on the carrier’s liability. Regarding the second tier, the carrier can avoid liability only if it proves that the death or physical injuries of a passenger were not caused through its fault. In addition to the aforesaid regulatory acts, passengers’ rights in the course of transportation air are regulated by the Rules of Air Carriage of Passengers and Baggage approved by Order No. 735 of 30 November 2012 issued by the Ministry of Infrastructure of Ukraine (hereinafter — the Rules of Air Carriage of Passengers and Baggage) and the Law of Ukraine On the Protection of Consumers’ Rights (except for issues regulated under the Air Code of Ukraine, the Rules of Air Carriage of Passengers and Baggage, international treaties of Ukraine). As we can see, quite a lot of attention is paid by the current legislation of Ukraine to the legal regulation of passengers’ rights in the course of air transportation.
What Rights are Granted to a Passenger Using Air Transport, and Does National Legislation Comply with International Standards?
Ratification by Ukraine of the Montreal Convention and analysis of the new edition of the Air Code and the Rules of Air Carriage of Passengers and Baggage give grounds to claims that current Ukrainian legislation complies with international standards pertaining to ensuring passengers’ rights in the course of air transportation. For instance, provisions of Section XII of the Air Code of Ukraine dealing with passengers’ rights are almost completely based on the provisions of Regulation 261/2004
adopted by the European Parliament and the Council of the European Union on 11 February 2004 concerning establishment of common rules on compensation and assistance to passengers in case of being denied boarding, flight cancellations, or long flight delays (hereinafter — Regulation 261/2004). It should be noted that apart from the rights envisaged by the Montreal Convention, current legislation of Ukraine singles out other passengers’ rights as well, including, inter alia, the following: — the right of a passenger to compensation in case of being denied carriage; — the right of a passenger to compensation in case of flight cancellation; — the right of a passenger to compensation in case of flight delay; — the right of a passenger to compensation in case of changed service class in the course of air transportation; As far as it relates to the rights of a passenger to compensation in the event of denied carriage it is, first and foremost, necessary to determine whether such carriage was denied with the consent of the passenger or against the will of the latter. In the first case, the air carrier and the passenger shall voluntarily agree a sum of compensation. In addition to the said compensation, the air carrier shall offer the passenger to choose an option of receiving compensation for the cost of the ticket (and, if required, shall provide for a return flight to the initial point of departure, as soon as possible) or change the route to the destination point. If a passenger is denied carriage against his/her will or a flight is cancelled, the carrier shall, apart from compensation of the cost of a ticket or change of route to the destination point, pay compensation in the following amounts: 1) EUR 250 for a flight of up to 1,500 kilometers; 2) EUR 400 for a flight from 1,500 up to 3,500 kilometers; 3) EUR 600 for a flight of over 3,500 kilometers. At the same time, legislators entitle the air carrier to reduce by 50% the amount of the above-mentioned compensation if a passenger is offered a change of route to the point of destination by an alternative flight, the arrival time of which does not exceed the scheduled one: — by two hours for a flight of up to 1,500 kilometers; — by three hours for a flight from 1,500 up to 3,500 kilometers
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ECOVIS Bondar & Bondar
Address: 3 Rognedinskaya Street, Office 10, Kyiv, 01004, Ukraine
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COVIS Bondar & Bondar is a law company, member of ECOVIS International, a leading global consulting firm operating in over 50 countries around the world. Tailored solutions, high quality, focus on detail, promptness, responsiveness, flexibility, out-of-the-box thinking, practical approach to resolving clients’ issues, cost and time effectiveness — these are the principles that guide us in our delivery of legal services. Among our strengths are: Market Knowledge We have been operating in Ukraine since1998 and we know the Ukrainian market and the people in it. We have longestablished and continuous working relations with the Ukrainian state authorities. International Network As a member of ECOVIS International, we have permanent access to international and interdisciplinary knowledge in dif-
— by four hours for all other flights. One should bear in mind that a passenger will have the right to compensation in the event of a cancelled flight, only if the air carrier failed to inform the passenger of cancellation of such a flight at least two weeks prior to the scheduled time of departure. Certainly, the current legislation of Ukraine makes provision for events when the air carrier can inform a passenger of flight cancellation less than two weeks prior to the scheduled time of departure and avoid the necessity to pay compensation, but only if the air carrier provides an alternative route to the point of final destination. The issue pertaining to the air carrier’s liability for flight delays is also a pressing one, because in reality this situation occurs quite often and it is unlikely that all passengers know the scope of rights granted to them under such circumstances. In case of flight delay from 2 up to 4 hours (depending on the flight distance), current Ukrainian legislation obliges the air carrier not only to provide passengers with meals and cold beverages pursuant to the waiting time for a new flight, but also with a possibility to make two telephone calls or send an email (or fax message), subject to the airport’s technical facilities.
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Tel./Fax: +380 44 537 0910 E-mail: kyiv-law@ecovis.ua Web-site: www.ecovis.com
ferent jurisdictions, which ensures that our clients receive the most realistic and balanced advice on cross-border and local matters. Our Professionals Our lawyers are highly qualified in diverse areas of law and possess excellent knowledge of Ukrainian legislation and international legal standards in the provision of legal services. ECOVIS Bondar & Bondar is a recognized law firm in Ukraine, whose partners are named among the leading lawyers in their respective practice areas according to international and Ukrainian legal directories. ECOVIS Bondar & Bondar focuses its practice on Corporate & Commercial Law, Mergers & Acquisitions, Antimonopoly & Competition Law, Dispute Resolution, Labor Law and Tax. The company represents clients in diverse economic sectors, including in aviation and transportation, insurance, energy, sport, real estate, banking and finance.
Naturally, there are cases when a flight is delayed for a day or more. In such a situation, the air carrier shall provide passengers with hotel accommodation, meals and transfer from the airport to the hotel and back to the airport. In this case, one should bear in mind that if a flight is delayed for more than 5 hours, a passenger has the right to demand from the air carrier compensation of the ticket cost or change of the route to the final point of destination as soon as possible, or later if the passenger wishes so, and if seats are available on board. And finally, let’s imagine a situation when a passenger gets on board the aircraft after all and it seems that nothing can ruin his/her good mood anticipating the coming trip, when suddenly the air carrier informs the passenger that due to certain reasons he/ she will be accommodated in a class lower than the one indicated in the ticket. Under such circumstances, legislators oblige the air carrier to pay compensation in the amount from 30% up to 70% of the fare, depending on the flight distance. It is noteworthy that, in its turn, the air carrier has no right to demand any additional payment if a passenger is accommodated in a class higher than the one indicated in the ticket.
Conclusions
Summarizing the previously mentioned, we believe that current Ukrainian legislation regulating the rights of passengers complies with core international standards and practices of the European Union, although in certain issues Ukrainian legislation regulates areas of aviation business in too much detail. At the same time, further development of the aviation industry demands that legislators continually enhance legal regulation of this industry not only in order to protect passengers’ rights, but also to ensure flight safety of civil aviation. In order to guarantee a balance of interests, the legislator should take into consideration not only the interests of passengers, but also the interests of airline companies. Disproportionate and unjustified increase in the obligations borne by legislators will certainly have an impact on the carriage cost, which in its turn will increase the price of a passenger’s ticket. Furthermore, when enhancing legal regulation of the aviation industry, legislators should bear in mind that it is necessary not only to fix passengers’ rights in official documents, but to also establish real and effective means for exercising proclaimed rights and protecting them from violations by the air companies as well.
39
Banking & Finance
Specific Aspects of Loan Agreements
Oleh MALSKYY
Artem KUZMENKO
Artem KOVBEL
Partner, Head of Corporate and M&A, Eterna Law
Senior Associate, Eterna Law
Partner, Head of Financial Investigations, Kreston GCG
“
Trust, but verify” is a famous dictum of the 40th President of the United States, Ronald Wilson Reagan. This saying is what SME and large business owners should be armed with. Global statistics show that companies lose an average of up to 5% in annual receipts due to wilful misconduct by their employees at senior, middle or junior management levels. Fraud prevention practices will lead you straight to more efficient and higher margin business. Since what you save is what you earn, more earnings could come not only from lower costs, but from ‘wastage and leakage’ optimisation. Statistics also say that those caught in theft are generally first-timers — only 5.3% of thieves have been got caught before, and only 8.3% of those caught were fired. In 40.7% of cases entities do not call in the police for fear of damaging their business reputation. Just 23.1% of cases ended up in civil courts, and the outcome of 80.3% of them was victory for the plaintiffs. The most popular fraudulent schemes still are: — misappropriation of assets; — financial distortion; and — bribery. The fraudulent conduct larger businesses most commonly encounter is corruption, while small entities often suffer from such theft schemes as stealing cash, cheque forgery, and others. In departmental terms, abusive practices are most common among accountants, sales managers, lawyers, top executives, procurement specialists, financial officers, and customer carers.
40
What should Be Done about Theft?
The primary axiom is that you can’t root out theft completely, but you can minimise it through a set of forensic audit procedures.
What is a Forensic Audit?
Forensic auditing is both the art and science of investigating and preventing fraudulent conduct in which managers of major companies are often involved. A forensic audit helps to identify potential problems through financial due diligence or legal due diligence on finances and other issues. Its aim is to examine the business environment, both internal and external (corporate intelligence), investigate related persons, and analyse changes in the CEO’s financial situation. According to statistics, corporate theft is usually deep-rooted and seems to be discovered only after crimes have been committed. Sometimes there are just amusing examples of out-of-the-box thinking. The owners, however, rarely take anti-fraud measures to prevent such practices in the future. We have conducted at least three types of audit in our practice: — open audits — when people know they are being scrutinized; — spontaneous audits — they are sanctioned by shareholders without giving notice to those under examination; and — undercover audits — auditors go undercover to work as new employees in one of the company’s departments. Although the latter requires more time and effort, it is actually more effective and efficient. While working undercover, the “em-
ployee” can try and find out lots of interesting things during quiet, low-profile conversations.
From Words to Practice
Where and why stealing occurs more often. The answer to the “where” question is Procurement, since it has been a thief’s goldmine since the beginning of time. A company could suffer a great deal of financial pain without tendering processes as there are more loopholes for thieves. Close attention should also be paid to the company’s cash transactions (if any). There is a rule among forensic auditors: if you want to find fraud, follow the green stuff. Running due diligence on a counterparty will help identify signs of sham transactions. To do so, you will need inhouse financial controllers who will analyse each and every proposed transaction.
How a Company can Minimise Fraud Threats
The key anti-fraud rules a company can establish are: — rule out cash operations; — implement the KPI incentives for top management to boost profitability. It means that senior executive incentives will depend directly on a company’s financial performance; — create an in-house security service which will report directly to you as the owner; — establish procurement tendering practices in which bidders will be examined at all times; — establish the practice of conducting spontaneous audits at least twice a year; — implement a zero-tolerance approach to fraudulent activity;
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ETERNA LAW
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Address: Sophia Business Centre 6 Rylskiy Lane, Kyiv, 01001, Ukraine
TERNA LAW is a European full-cycle law firm possessing strong expertise in the CIS region. Founded in 2002 in the Ukrainian capital, the firm grew rapidly and currently employs over 100 professionals in 5 active offices (Kyiv, Moscow, Almaty, Riga, Dusseldorf). We are continually named among the leaders of the market for quality, responsiveness and reliability of service as well as for the depth of our expertise. We are a dynamic, client-oriented and solutionfocused firm whose team of energetic, foreign-educated young professionals provides concise and practical legal
— trust no-one, doubt everything; and — engage a reputable international accounting firm to audit financial statements annually. As far as legal exposures are concerned, fraud is more common when: — loan agreements are executed; — title to assets is registered defectively or assets are pledged illegally (through front men, broad powers of attorney, and/or partially controlled non-residents); — intellectual property rights (trademarks, inventions, industrial designs or utility models) are registered defectively; — a customer or counterparty database is stolen and/or personal data regulations are breached; — a long-term exclusive services agreement is burdensome, disadvantageous, and provides for enormous break fees; — no conflict-of-interest checks are run on counterparties and the company’s employees or their relatives; — no cross checks are made in relation to managers appointed by different shareholders to manage different business operations; — hidden, inflated obligations are created to go into bankruptcy or have a freezing order issued over assets. I would like to go into detail about fraud related to business lending procedures. There are both corporate and bank loans which are equally attractive for fraudsters. When it comes to checking a credit transaction for compliance, the parties wonder whether it is worth the time and money to ‘discover’ what they already know. In some cases, they can be right — an audit of loan agreements or related documents does not always identify any adverse circumstances. It should, however, be noted that there are quite significant arguments for the conduct of such audits. Preliminary due diligence is better than court proceedings. Most commonly, the parties to a transaction enter into a loan agreement, relying only on standard warranties
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advice in a cost-effective manner, while not compromising on quality. ETERNA LAW has an extensive history and experience within the CIS region. We understand these diverse markets, which demand international experience from a law firm in unison with knowledge of local business realities and the legal environment. It is for this reason that we consistently act in some of the most high-profile matters in the CIS for a broad range of clients, such as international financial institutions and corporations across various industry sectors, Government entities, non-governmental organizations, etc.
specified in the agreement. If something proves to be wrong, the borrower will keep the money, but the bank will apparently have to take legal action if the borrower refuses to comply with the requirements of the bank. Litigation will take a lot of time and money, and there is no guarantee that the bank will eventually succeed in the proceedings. In addition, even if collateral is available, it does not necessarily means that it will compensate the bank for its loss.
Identification of Wilful Attempts by the Borrower to Conceal Information
Often it is hard to find signs of fraud or important information being hidden. The fact is that an in-house auditor can perform his or her functions as a mere formality and can, in some cases, be in cahoots with fraudsters, while the granting of a loan is preceded by a systemic analysis of how the business was set up and its assets, including pledged ones, were formed, an evaluation of the borrower’s reputation and that of its managers and owners, and checking the existence of any assets, related parties, including in other foreign businesses. The discovery of any previously unidentified problems is crucial to conducting due diligence as part of a forensic audit. Experience has proved that the number of good faith borrowers paying adequate attention to the disclosure of information as may be necessary for obtaining loans is increasing. But not every company engages experts to conduct due diligence on all aspects of its activities and to identify if there are any significant legal risks. A borrower can be under the illusion that his business is doing well until a previously unknown problem is uncovered. Corporate decisions can involve huge legal risks if they are made by unauthorised persons or are in conflict, whether in whole or in part, with procedures for the acquisition of any particular
assets. Practice, however, shows that it can be quite difficult to discover such facts, especially if the borrower is willingly attempting to hide such information. But one thing is clear — if you rely on warranties and indemnities, you will probably overlook signs of fraud or other violations, while preliminary due diligence can point to major legal risks that are likely to affect the closing of a transaction or the extent of necessary warranties. Neglect of collateral quality is a common practice. Such neglect can be due to fraud, carelessness or a lack of knowledge on the part of bank officials. Banks regularly face falsification of collateral documents or resulting pledge releases due to poor risk analysis by management. Legal due diligence will help to uncover any collateral-related risks and to decide whether to grant a loan or set out obligations and warranties to such extent as may be required for the mitigation of risks related to the loss of collateral. For lending purposes, it is also necessary to take seriously the analysis of all of a group’s companies and the loans of borrowers, because cross-defaults under other loan agreements, if any, may result in lost opportunities to enter an international capital market. Another frequent major problem pertaining to due diligence lies in resources, as the analysis of all significant legal risks can be a time-consuming process and the bank could, therefore, experience staff shortages to have the audit conducted using its own efforts. Consequently, many significant risks can go unnoticed, including willingly. The engagement of professional advisors will allow you to ensure that independent legal due diligence will cover major transaction issues. The most important thing is that you should not immediately hold liable a thieving manager you have just uncovered — you’d better take time-out and wait until he or she probably hands over his/her partners in crime. Just remember that a forensic audit is a dish best served cold.
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Banking Disputes
Hazy Prospects for Stabilization of Banking Sector
Ivan MISHCHENKO
Yuriy ZHYLA
Managing Partner, Trusted Advisors
Junior Associate, Trusted Advisors
he situation in the Ukrainian economy continues to be described as complex. On the one hand, military and political aggression from the Russian Federation prevails over the country and, on the other, there is an urgent need for structural reforms in key areas of public life too. As a result, the banking sector of the economy is going through turbulence providing a large amount of arising and ongoing legal disputes involving banks. However, despite the general difficulties in the economy due to objective and subjective factors, there are a certain positive dynamics in the banking sector. In other words, despite the lack of dramatic positive changes and “shock therapy” in the implementation of reforms, Ukraine is slowly “drifting” towards reforms. Moreover, the forecast of the National Bank of Ukraine for 2017 is encouraging and suggests the stabilization and strengthening of the banking sector. Here are several reasons for cautious optimism. Firstly, judicial reform is taking place in Ukraine at the moment. In spring 2017, a new Supreme Court should start with a reshaped make-up of judges, and in the next 1-3 years, similar changes are planned in the courts of appeal and first instance throughout the country. In addition, in the near future, the Verkhovna Rada intends to adopt new procedural economic and civil codes adapted to modern realities. It is expected that the implementation of judicial reform into life will improve the
quality of Ukrainian justice. For the moment, its quality is poor, largely because of the high level of corruption. However, the irony for Ukrainian legislators is that even fair satisfaction of the rights of the injured party via a decision adopted by a court does not mean the actual execution of this judgment. Even the existence of a judgment in the creditor’s favor may not lead to a resumption of violated rights. Second, reform of the State Enforcement Service (bailiffs service) is taking place in Ukraine. By the Law of Ukraine No. 1403-VIII On Bodies and Persons Engaged in Enforcement of Judicial Decisions and Decisions of Other Bodies of 2 June 2016 legislators bring into legal boundaries the institution of private executors, who will enforce judgments along with state enforcement officers. Private executors are limited in a number of categories of judgments they can enforce, but that’s what can give rise to their involvement in execution of court decisions in banking disputes: the benefits of private executors are efficiency, personal interest, and specialization. It is expected that private bailiffs will start work in spring 2017 just like the new Supreme Court. Third, among significant changes, it is necessary to mention the introduction in Ukraine of the so-called attorney’s monopoly, enshrined in the amended Constitution of Ukraine and the Law of Ukraine No. 5076-VI On Advocacy and Legal Practice of 5 July 2012. From 2017 only attorneys will
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have right to represent the interests of clients in courts of cassation (from 2018 — in appeal, in 2019 — the first instance). This innovation may contribute to an improvement in the level of legal services provided by the banks, but also will require extra expenses, as due to the introduction of the attorney’s monopoly banks will face a choice: engagement of external legal advisors, having the status of an attorney, to provide legal assistance in a dispute, or work on getting this status by in-house bank lawyers working in its legal department. A significant factor in the consideration of banking disputes by the courts is the practice of the current Supreme Court, whose legal positions must be taken into account by lower courts. In 2016, the Supreme Court of Ukraine took important legal opinions aimed at protecting both creditors and debtors; you are invited to read below.
Resolution of Supreme Court of Ukraine No. 3-174гс16
The Supreme Court resolved that under the bank account agreement the bank’s monetary obligation to the client (account holder) within the funds deposited in the account, might only occur after the client’s order on the respective sum of money. The legislation does not provide the possibility to change the account holder and as a result making only the claim assignment agreement does not give the buyer the right to claim the money to the bank. As a result, the bank was unable to comply with the orders of the enterprise with regard to current accounts owned by the individual, so that the company did not acquire the money claim to the bank under the application for money transfer and cash withdrawal.
Resolution of Supreme Court of Ukraine No. 6-1562цс15
In accordance with the Court’s findings, in case of cancellation of an illegal court decision on a mortgage’s annulment, pursuant to which the entry encumbrance was excluded’s from the State Registry of Mortgages, the mortgage force shall be subject to
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Trusted Advisors
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Address: 40/85, Saksahanskoho Street, 5th Floor, Kyiv, 01033, Ukraine
rusted Advisors is а full circle Ukrainian dispute resolution law firm that builds strong relationships with Ukrainian and international law firms and can offer extensive legal assistance to effectively support a variety of complex and challenging transactions, including cross-border matters. The firm’s clients range from a variety of small, entrepreneurial companies to large foreign and Ukrainian companies. The firm’s main emphasis lays on corporate disputes, banking disputes (recovery of bad debts, enforcement proceedings and bankruptcy), commercial disputes, and protection of clients in courts of general jurisdiction, as well as in foreign courts and international arbitration tribunals. Trusted Advisors assists clients at all stages of the emergence and settlement of disputes: including pre-trial, trial, and execution proceedings in bankruptcies. Trusted Advisors’ team is made up of qualified professionals with vast experience in a wide range of legal matters, deep knowledge, and understanding of the litigation process in Ukraine and abroad. In both established and emerging markets, the firm’s lawyers are providing its clients insights into the local business environment alongside experience in multiple jurisdictions.
recovery from the date of prime entry, which has been excluded on the basis of the unlawful judgment, as the grounds for the removal of this entry became irrelevant. This means that the mortgage is valid from the moment the entry is included in the State Register of Mortgages.
Resolution of Supreme Court of Ukraine No. 6-216цс14
The Court concluded that the fact of liquidation of the debtor under a loan agreement by including an entry of the termination of a legal entity on the relevant register, in case of the debt existing under the contract, does not constitute grounds for termination of the mortgage agreement, which is concluded for the enforcement of the loan agreement by the debtor. In itself, taking the decision to the economic court on the liquidation of the legal entity — debtor under the main obligation and its exclusion from the Unified State Register of legal entities and individual entrepreneur and civil groups do not entail the termination of the principal obligation. This is because the mortgagor has filed the claim to the mortgagee in adversary proceedings about the foreclosure of the mortgage property as he didn’t properly meet obligations regarding repayment of debt.
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Tel./Fax: +380 44 359 0664 E-mail: info@trustedadvisors.ua Web-site: www.trustedadvisors.ua
Over the past year, the firm has grown professionally too. First, by obtaining several national legal awards and recognitions proving that its performance was recognized by clients who reward the firm with more opportunities to focus on serving clients’ needs and enhancing the dispute resolution practice. Second, for being a socially responsible law firm for preserving the cultural heritage of Ukraine. Trusted Advisors has provided pro bono services to protect the rights of the “Heavenly Hundred” Garden and the Ukrainian community. Third, by covering on a frequent basis actual legislative amendments in the mass media and by public participation at legal conferences. Key clients: Balticus Trade, Ciklum, LLC Technological Agricultural Company United, LLC Agricultural Technology System, DLA PIPER UKRAINE, PJSC Odesa oil and fat industrial complex, PJSC Ilyichevsk oil and fat industrial complex, PC Belgorod-Dnestrovskij kombinat hleboproduktov, LLC Illichivsk grain port, LLC Stroybud Ilychevsk, LLC VITAN, LLC NaftogazAlliance. Managing partner: Ivan Mishchenko Number of partners: 3 Number of counsels: 2 Number of associates: 16 Languages: Ukrainian, English, French, Russian.
Resolution of Supreme Court of Ukraine No. 6-1851цс15
According to Court opinion, Article 392 of the Civil Code of Ukraine does not engender, but confirms the existing plaintiff’s right of property acquired previously on legal grounds if the defendant disclaims, denies or disputes the claimant’s right of property, as well as in the case of the plaintiff’s loss of the document confirming his ownership. In solving this category of cases the courts should find out the existence, or lack of consent, of the mortgagor to the out-of-court settlement of foreclosure of the mortgaged property by the transfer of ownership of the mortgaged property to mortgage towards performance of mortgage liabilities, as well as making the notarial writ of execution as the legal basis for registration of ownership rights of the mortgagee, if such conditions are provided by the terms of the mortgage contract.
Resolution of Supreme Court of Ukraine No. 3-1162гс16
With this decision the Supreme Court of Ukraine defended the rights of the debtor by refusing to satisfy the request of the bank (lender) for review of the Court of Cassation decision. The subject of the case was the claim to invalidate a unilateral deal on offseting. By
refusing, the Supreme Court supported the position of courts of previous instances, confirming the absence of evidence of non-compliance of set-off application with Articles 203 and 601 of the Civil Code of Ukraine.
Conclusion
According to the view of experts, not all banks are adapting to the new conditions of work, so we can expect the market exit of a few more banks, which, in turn, will lead to the initiation of new banking disputes. Unfortunately, the parties to banking disputes, just like before, are faced with a high level of corruption in courts, combined with a lack of real opportunities to enforce the judgment in their favor. However, it should be noted that since the end of 2016, there has been certain stabilization in the banking sector, and the current period of the Ukrainian banking system may be described as rebooting, or a “clearance” period. Be that as it may, the evaluation of current changes in the banking sector, as well as in banking disputes, should be given from a perspective of the next 3-5 years, when it will be possible to notice the first results of reform of the judiciary and the State Enforcement (bailiffs) Service, as well as the gradual economic and political stabilization and recovery of Ukraine.
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Bankruptcy
Bankruptcy in Ukraine In this regard, a large number of experienced economic lawyers, who have extensive experience (over 10 years), are deprived of the opportunity to take part in competition for positions in the Supreme Court because of the said Law. However, in any case, formation of a new Supreme Court composition, which must take place during 2017, should have a positive effect on the entire legal system of Ukraine.
Julian KHORUNZHYI Senior Partner, Ario Law Firm
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016 was quite an eventful year with regard to finding solutions to the problem of bad debts. Thus, the main trends of the year included adoption and entry into force of the Laws of Ukraine On Financial Restructuring, On Bodies and Persons Engaged in Judgments and other Bodies Decisions Execution and the new Law of Ukraine On Enforcement Proceedings. It is also worth noting repeated attempts to push through Parliament Draft Law No. 3132 On Amendments to Some Laws of Ukraine On Increase of Efficiency of Bankruptcy Procedures, Significant Changes to Procedures for Withdrawal of Insolvent Banks From the Market, Especially in Part of Asset Disposal of Such Banks, as well as launching the formation of a new composition of the Supreme Court. Let’s start with the latter, because all but the most important expectations in this and other legal practices are related precisely to reform of the judicial system. Significant expectations that a good deal of candidates not from within the judicial system will agree to take part in competition for positions in Supreme Court fell short. One of main reasons for this were, in my opinion, the restrictions regarding candidates established by the Law of Ukraine On the Judicial System and Status of Judges, namely, that only attorneys-at-law can be candidates. This is due primarily to the fact that lawyers practicing criminal law pursuant to legal requirements were for quite a long time required to have the status of an attorney-at-law, and for lawyers practicing commercial law such an obligation has never been established and most of them began obtaining certificates for the right to advocacy activities only in recent years, when establishment of “attorney-at-law monopoly” for representation in courts loomed on the horizon.
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On Enforcement Proceedings
Another key shift in finding a solution to the bad debt problem is adoption and coming into force of the Laws of Ukraine On Bodies and Persons Engaged in Judgments and other Bodies Decisions Execution, On Enforcement Proceedings, which launched reform enforcement of judgments. Both the pushing of draft laws through Parliament and further implementation of reforms can be described as “per aspera ad astra”. The said laws changed enforcement procedure by removing unnecessary bureaucratic obstacles, improved the whole process of enforcement of judgments and disposal of seized property, automated the majority of actions of enforcers, introduced open Unified registry of debtors, significantly reduced the corruption component. In the plane of reform of the Executive Service (Bailiffs), a mixed system of judgments enforcement was introduced by institute of private enforcers establishing. To avoid risks of abuse by private enforcers, multistage control over their activities was introduced, which, at the same time, should not interfere with their activities, so the institution of private enforcers’ self-government was established. Of course it is important to establish an adequate level for remunerating private enforcers in the amount of 10% of the amounts collected, and for state enforcers (bailiffs) — a bonus payment for actual enforcement of judgments that should encourage enforcers (both state and private ones) to use all available legal tools for the effective and prompt performance of executive actions aimed at full enforcement of judgments. Thus, effective implementation of the described reform must leave behind shameful for the state practice of European political and judicial institutions as to violation of the European Convention on Human Rights by Ukraine in the part of virtual assistance by the state in tolerating non-performance of final and binding judgments.
However, in late 2016 the Verkhovna Rada of Ukraine adopted the Law of Ukraine On the High Council of Justice, which among other things amended the laws of Ukraine that implemented reform of the judgment enforcement system in the part on further narrowing the remit of private bailiffs. Thus, the said Law stipulates that in 2017 a private enforcer shall have the right to take on for execution enforcement documents, under which the sum of recovery does not exceed UAH 6 million. Moreover, a limit was set that during the first three years of a private enforcer carrying out his/her activities, and such private enforcer does not have the right to take on for execution enforcement documents under which the sum of recovery exceeds UAH 20 million. Given these changes and other already existing limitations on a private enforcer’s remit, full-fledged launch of reform in the near future should not be expected.
Bankruptcy Sphere
In 2016 bankruptcy from the regulatory point of view was characterized by repeated attempts to amend the Law of Ukraine On Restoring a Debtor’s Solvency or Declaring it Bankrupt. All of this was not in the least due to relevant requirements by the IMF. Namely, to correct errors and to improve the current version of the Law of Ukraine On Restoring a Debtor’s Solvency or Declaring it Bankrupt. There are a lot of reasons for this. One of the first is non-availability of improvements in the legislative environment. Since 2012, when a new version of the Law of Ukraine On Restoring Debtor’s Solvency or Declaring it Bankrupt (hereinafter — the Law) was adopted, most industry experts pointed out that the Law was unbalanced and needed revision. Instead, the Parliamentary Committee on Economic Policy prepared Draft Law No. 3132 On Amendments to Some Laws of Ukraine (regarding increasing efficiency of bankruptcy procedures), which after its return by Parliament for its additional first reading underwent significant changes and which, in the view of many experts, will have a tremendous negative impact on the bankruptcy sphere. It is true that besides its positive sides, the main ones of which are introduction of ProZorro principles on the disposal of property in bankruptcy proceedings, legalization of the insolvency officer’s income (remuneration in the amount of 5% of redeemed creditors’ claims is set, which is paid out as a priority), elimination of obvious errors, some
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Ario Law Firm
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Address: 7 Panasa Myrnogo Street, Kyiv, 01011, Ukraine
rio Law Firm was established in 2015, and was previously known as Ario Capital Group. At that time the firm was founded by partners Julian Khorunzhyi, Oleksii Voronko, Iryna Serbin and Sergey Kirichenko. In 2015 two more partners joined Ario, namely Yevhen Hrushovets and Dmitry Boiko. Now, Ario provides legal services on commercial, tax, banking and corporate law, litigation, bankruptcy and enforcement proceedings. The number of practices were significantly strengthened and expanded in 2016, namely criminal practice, government relations, business protection, tax & legal consulting services. Particularly, criminal practice together with litigation, bankruptcy and enforcement proceedings and corporate law were the main drivers of the Ario team in 2016. A relatively new practice, tax & legal consulting services, was strengthened by lawyers certified by the Tax Consultants Union of Ukraine. Furthermore, one more advisor joined the Ario team: Olga Reshetnyk. She specializes in tax law, is certified by the Tax Consultants Union, and is a member of the Council of Independent Accountants and Auditors of Ukraine. In a short period of time Ario has been able to achieve noticeable results and gain peer recognition. Ario has been a general partner of the Bar Association of Ukraine since
positive changes in financial rehabilitation procedure, etc., the project contains very high risks. Thus, it is proposed to provide for automatic termination of the moratorium on satisfaction of creditors’ claims in 130 days after commencement of bankruptcy proceedings, to reduce the unreal term for property disposal procedure to 130 days, to remove preventive 30-days period for filing applications with monetary claims by creditors that unbalance a debtor’s liabilities, to delegate all key powers of the creditors’ committee to a meeting of creditors, significantly complicate the procedure of approval of financial
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Tel.: +380 44 537 2290 E-mail: office@ario.law Web-site: www.ario.law
July 2014. Julian Khorunzhyi (No.1 in Leading individuals of bankruptcy by Ukrainian Law Firms 2016. A Handbook for Foreign Clients), as head of the company and professional in the field of insolvency, headed the Coordinating Council of self-regulating organizations of insolvency practitioners, which brings together leading specialized self-regulatory and nongovernment organizations to introduce common rules and approaches to bankruptcy proceedings in Ukraine. The recognition of Ario’s team in 2016 was also associated with successful defense of the State of Ukraine’s interests in a case regarding the bankruptcy of Ukrburshtyn — one of the largest legal amber miners in Ukraine. The Ario team also successfully defended former Deputy Prosecutor General V. Kasko. It also earned an unprecedented victory in the case of Aleksandr Orlow, a Polish citizen who spent almost 5 years in an Odesa jail (Odesa detention facility). Ario also defended the interests of Joint Stock Company The State Export-Import Bank of Ukraine (JSC Ukreximbank) in several insolvency cases. In 2016 the Ario Capital Group joined the Bronze League of Top 50 law firms in Ukraine on the basis of analysis of key performance indicators of the legal market carried out by Yuridicheskaya Practika Publishing.
rehabilitation plan by creditors, but problems of property disposal are almost disregarded, such stage of bankruptcy proceedings as settlement agreement is removed, state and municipal residential properties, which are listed on the debtor’s balance sheet, are allowed to be sold, etc.; taking into account changes suggested by the draft law. If this law were to be adopted, the opposite aim of improving bankruptcy procedures could well be attained. Moreover, some precedent decisions of the Supreme Court of Ukraine, primarily due to lack of practice unity at the Supreme
Court of Ukraine, had a significant impact on bankruptcy proceedings this year. Indeed, there were cases when the Supreme Court of Ukraine adopted decisions with diametrically opposing legal positions in the space of one month. Namely, regarding extrajudicial mechanisms on a levy of execution upon mortgage property, transfer of mortgage to the buyer of mortgaged property in case of acknowledgment of the auction as such that it did not take place, setting the jurisdiction in insolvent banks cases as being economic one day and under administrative legal procedures on another day.
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Business Crime
Criminal Proceeding — a Means of Investigation or Prosecution?
Olga PROSYANYUK
Vitaliy SERDYUK
Attorney, PhD, Managing Partner of AVER LEX
Attorney, Senior Partner of AVER LEX
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ast year was notable for its active implementation of the idea of adaptation of Ukrainian legislation to European standards and, in particular, the practices of the European Court of Human Rights. Most active and planned amendments aim to improve the tasks of a criminal proceeding. Although one of the main important tasks of a criminal proceeding is to ensure that a lawbreaker is brought to account and an innocent person avoids conviction, current legislation can hardly correspond to the above-mentioned. This has a negative influence on a business sphere as well as citizens.
Peculiarities of Special Order of Special Pre-trial Investigation
It is now typical to impose changes to criminal procedure legislation that would facilitate putting the illegal pressure by lawenforcement bodies. You can observe this in application, for example, of a recently implemented procedure of “in absentia” investigation. The Criminal Procedure Code states that in certain cases an investigation can be carried out without a person’s participation, namely: 1) a suspect is hiding from the investigating bodies with the purpose of evading responsibility, and 2) is put on the interstate and/or international wanted list. Such a procedure would create a mechanism that excluded mass application of an “in absentia” investigation and could be implied
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exclusively to lawbreakers hiding from investigation. However, on 12 May 2016 the Verkhovna Rada of Ukraine adopted the Law On Amendments to Some Legislative Acts of Ukraine Regarding Work of the Prosecutor General’s Office of Ukraine No. 1355-VII, according to which temporarily, till 15 April 2017, a special order of a special (“in absentia”) investigation was established. The Law states that one of the following criteria is sufficient for an “in absentia” investigation: (1) if a person is hiding with a purpose to avoid a criminal responsibility and/or (2) is hiding over 6 months and/or (3) there is evidence that a person is outside the borders of Ukraine, on the temporarily occupied territories of Ukraine or in the region of the Anti-Terrorist Operation. Unfortunately, investigating judges often formally evaluate the arguments and the investigation evidence; that is why implementing such changes caused a negative practice, when the means of a criminal procedure are used illegally to achieve personal goals. It means that when a person is going abroad on business or pleasure it can be used to initiate an “in absentia” investigation regarding this person with the purpose, for instance, of settling a business conflict. However, in connection with a short term of a temporary order, in 2016 the Verkhovna Rada of Ukraine repeatedly initiated changes to the Criminal Procedure Code of Ukraine regarding, it would seem, improving the mechanisms of ensuring the tasks of a criminal proceed-
ing. And these draft laws envisage prolonging a term for a special order of a special (“in absentia”) investigation; because, in fact, the law-enforcement system did not achieve the planned results with the help of this procedure. Finally, on 16 March 2017, the Verkhovna Rada of Ukraine adopted the Law of Ukraine On Amendments to the Criminal Procedure Code of Ukraine Regarding Improving the Mechanisms to Fulfil the Tasks of a Criminal Proceeding No. 1950-VIII. The final version that was adopted prolonged the term for the so-called “temporary” order of application of a special pre-trial investigation with certain peculiarities till the day when the National Bureau of Investigation starts its work. As we know, talks on the creation of the National Bureau of Investigation have continued for a long time and nobody knows when this process will finish. In reality so-called “improvements” are made to facilitate the work of law-enforcement bodies and selectness of legislation, but not for protecting the rights of the participants of a criminal proceeding.
Unchangeable Trend of Illegal Pressure on Business
The issue of illegal pressure on business by law-enforcement bodies is still of equal importance. The “victims” are not only Ukrainian companies, but also foreign and with foreign investments companies, which our power representatives are so proud of. One can often observe cases when lawenforcement bodies visit enterprises with searches without any reasons for this, without a preliminary inquiry to provide documents or to receive a temporary access to documents on the basis of a resolution issued by an investigating judge. Moreover, in many cases permission to search premises is received on the basis of formal and pattern arguments. At the same time, when a company does not have qualified legal aid from a lawyer, property that is not indicated in the search permission resolution is confiscated. And its return is complicated by duration and procedural complications. There are also cases when a company’s work is blocked by permanent summons for company management to appear for ques-
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AVER LEX
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Address: 2 Khrestovyi Alley, 5th Floor, Kyiv, 01010, Ukraine
VER LEX is the leading white-collar crime boutique law firm in Ukraine, focused on high-profile economic crimes and politically motivated prosecutions. The firm is focused on defense in compound and complex cases (parallel of the group of parties, in different regions of Ukraine), which demands unrivalled human capacity or experience, knowledge or level of expertise. The majority of cases are unique and first-hearing cases that set precedents for the criminal judiciary system in Ukraine and established practice for future hearings. These cases are highly public; require massive, regular and open communication with the entire spectrum of media outlets in Ukraine. The client portfolio includes state officials and high net worth individuals looking for protection from politically motivated prosecutions, consulting and law firms, big corporate clients (Odesa Portside Plant, Diamant Bank, ZTE Corporation, Bunge Ukraine, BRCM-Nafta, Total Ukraine, LLС UICE Group, etc.). The team consists of 25 specialists in the sphere of criminal law and litigation, including 5 partners, who are actively involved in every project. In 2017 our team was strengthened by the arrival of Artem Drozdov as a new partner due to his ability to generate new business and proficient management skills as well as other well-respected, experienced attorneys.
tioning, and overly frequent requests from it to provide documents, additional data, and to arrest assets. And one reason for such actions can be persuading workers of the company to provide illegal benefit (corruption acts) by a representative of law-enforcement bodies, “putting a contract” on a competitor or an ordinary collection of working “indices”. Besides, legislators do not pay any attention to a great deal of defects. For instance, law-enforcement bodies have the possibility to abuse the right to get a search permit for, because legislation does not determine the strict differentiation of circumstances when one can send an inquiry to the enterprise on providing documents, or initiate receipt of temporary access to documents or initiate a search. Furthermore, the legislation does not determine mechanisms of effective resistance to law-enforcement bodies, when they put pressure on the clerks of an enterprise. The only way out is to make a complaint to a higher hierarchy body. However, very often such complaints receive formal replies. The Criminal Procedure Code of Ukraine states a procedure of a court appeal against not entering any data about a crime by an investigator in the Unified Register of Pre-trial Investigations; it means not initiating a proceeding on the basis of an application. However, there is no appeal procedure against the initiation of a proceeding if it was done unreasonably. It would be very relevant; taking
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Tel.: +380 44 300 1151 Fax: +380 44 300 1153 E-mail: info@averlex.com.ua Web-site: www.averlex.com
All advocates in their work underscore perfection of criminal practice, development of effective and active strategies of defense from illegal revisions by control and law-enforcement bodies in accordance with the specific nature of the business, from their negative consequences, seizure of businesses by raiders, pressure from the law-enforcement bodies via stress searches, arrests or persecution, etc. To ensure the rights of our clients and to prevent them being violated, the Firm cooperates with a number of leading worldwide and local human right organizations within the framework of ongoing matters. These include Amnesty International in Ukraine, Transparency International Ukraine, Ukrainian Helsinki Human Rights Union, Ukrainian Human Rights Union, Amnesty International European Institutions Office etc. AVER LEX is recognized as the leader (Band 1) in “Litigation: White-Collar Crime” sphere by Chambers and Partners 2017, Olga Prosyanyuk and Vitaliy Serdyuk are top-ranked among lawyers. According to Who’s Who Legal 2016, Olga Prosyanyuk has been the only one Ukrainian lawyer named among leading attorneys in Business Crime Defence. Legal 500 EMEA 2017 named AVER LEX and its partners as among leaders in dispute resolution.
into consideration that the means of initiation of a criminal proceeding are not always used within the law. In general, one should mention, for minimizing pressure by law-enforcement bodies to the business sphere, Ukrainian legislation requires the stepping up of court control on ensuring the protection of rights of the participants of a criminal proceeding.
Effective Ways of Protection
It is necessary to take important preventive measures that would minimize the negative risks of pressure by law-enforcement bodies: 1. It is necessary to monitor information regarding an enterprise in the Unified Register of Court Resolutions. 2. If any information on possible revision of an enterprise and its clerks by law-enforcement bodies within a criminal proceeding appears, it is necessary for an advocate to receive an official confirmation or refutation of such information via submission of an advocate’s inquiry to a corresponding body. 3. In the event that information on a criminal proceeding, within the framework of which an enterprise and its clerks are revised, was confirmed, it is important to send an appeal to the pre-trial investigation body and a corresponding court for obligatory involvement of an advocate in any litigation procedures.
4. A representative of an enterprise or an advocate monitors information in court regarding examination of corresponding petitions of an investigator regarding the rights and legal interests of a company and its clerks. 5. If it is impossible to be present during the interrogation at the investigating body, it is necessary to inform an investigator (and to provide corresponding documents) on the significance of the reason for failing to appear. 6. In order to minimize the risks of initiation of a search, it is essential to indicate in the procedural correspondence about the readiness to cooperate with a pre-trial investigation body and to provide necessary data in response to their inquiry. 7. It is important to cover the issue in the mass media, to complain not only to the management of a corresponding investigative body, but also to state officials in the corresponding sphere. Based on the analysis of realities of application of criminal procedure legislation by law-enforcement bodies and the indifferent attitude on the part of representatives of the state bodies to this situation, one can come to the conclusion that legislators are now taking more steps towards “a punishment instrument” rather than towards European standards and encouraging investment to come into the Ukrainian market. That is why a criminal proceeding can be used as a means of prosecution rather than a means of effective investigation.
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Business Protection
Interpol’s Role within the Global Security Architecture
Denys BUGAY Attorney-at-law, Partner, Head of WhiteCollar Crime Practice, VB PARTNERS
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n recent times one of the most important areas of international cooperation for Ukraine has been Interpol, particularly its search database. At the moment, 1,763 persons out of 10,000 are wanted by Interpol at the request of Ukraine.
Structure of Interpol’s Authorities
The management bodies of Interpol are the General Assembly and its Executive Committee, and the General Secretariat. The General Secretariat is the actual management body which adopts key decisions. Interpol’s National Bureaus exist at the local level in each member state and is responsible for carrying out the organization’s tasks in a separate country. A special place in the central office system is occupied by an independent body — the Commission for the Control of Interpol’s Files (hereinafter — the Commission). Its function consists of supervising compliance with the rules of placement, processing and storing information in the Interpol database.
Search Database — System, Requirements, Procedure for Publication
Interpol’s search database means the scope of all data about wanted objects / subjects to whom the appropriate notices (cards) are assigned, depending on the purpose of search: — Red notice means a search of a convicted or accused to extradite him/her; — Yellow notice means the retrieval of missing persons;
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— Blue notice means collection of information about a person, his/her location in the interests of an investigation; — Black notice means unidentified bodies. — Green notice means potential offenders and repeat offenders; — Orange notice means a warning of possible danger to health and property of persons; — Purple notice means the instruments of crime, criminal schemes, etc.; The “red notice” is the most widespread and its placement is subject to the following requirements: 1. The crime for which a person is wanted shall be a crime in most countries throughout the world; 2. Punishment for such a crime is at least two-year imprisonment or the non-served part of a sentence is at least 6 months.
Procedure for Interpol Notice
Publication of data in the search database consists of 5 stages. In the context of Ukraine such a procedure shall be as follows: 1. An investigator/prosecutor sends the request for search to the Ukrainian Bureau of Interpol. 2. The Ukrainian Bureau conducts an initial inspection of the request with regard to compliance with the requirements of international acts, including those as adopted by Interpol. 3. After completion of inspection the Ukrainian Bureau applies to the General Secretariat for publication of the request. 4. The General Secretariat shall re-inspect the request. The specific organs for examination of the “ notices” shall be the Center for Command and Coordination of the General Secretariat and Legal Affairs Office. 5. The General Secretariat shall publish a notice of search and notify all participating countries of this. The “red notices” shall not be published automatically and such publication may be denied. In particular, Interpol rejected the request as filed by the Russian Federation for placing the “red card” in view of I. Kolomoisky, and disallowed the request of Ukraine regarding A. Pavlov (“Motorola”). Moreover, only a short time ago the General Secretariat denied the request for search as filed by the Russian Federation concerning V. Muzhenko, Chief of General Staff of the Armed Forces of Ukraine.
Meanwhile, there is a procedure for “preliminary appeal” against the decision on publication in search, as was used by MP O. Onishchenko. This procedure provides for consideration by the Commission of the complaint about illegality of search of a person prior to publication of the “red notice” by the General Secretariat.
Grounds to Reject the Placement of the “Red Notice” or its Removal
In practice the most common reasons for rejection of placement of the “red notice” or its removal shall be the following: — Expiry of the valid period of sanction (Case of Yu. Ivanyushchenko when the period of ruling for a permit to take him into custody expired), amnesty or termination of criminal proceedings, etc. It should be noted that in the event of repeated resolutions for the arrest warrant, “the red notice” shall be re-assigned, as happened in the Case of Yu. Ivanyushchenko. At this date, as V. Nevolya, the Head of Ukrainian Bureau has stated, tracing requests will be re-canceled, if information about the termination of criminal proceedings against Yu. Ivanyushchenko is confirmed. — Political motives of persecution / prosecution (Cases of D. Yarosh, I. Kolomoisky, М. Abliazov, R. Solodchenko, М. Ketebaiev, T. Paraskevych, etc.); This reason is a strong argument both at the stage of publication of the data about a person (as an example — the above-mentioned “red notice” of I. Kolomoisky), and at the stage of appeal against the already published notices of search (as an example — D. Yarosh). This ground is being actively used by the defenders of V. Yanukovych, V. Zakharchenko, the Klyuiev brothers, S. Arbuzov, A. Klimenko, S. Kurchenko and others. On the other hand, the Commission found no political component in the search of E. Stavitsky. — Commercial reasons of persecution/ prosecution — the criminal prosecution of a person to take possession of his/her assets. For example, Interpol removed the “red notice” of Jordanian businessman F. Almhayrat, after it was proved that the purpose of criminal proceedings, as initiated against him consisted of dismissing him from the position of director and forcing him to transfer his shares to other shareholders.
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VB PARTNERS
V
Address: Business Center Bashnya No. 5 22 Rybalska Street, Porch 13, Kyiv, 01011, Ukraine
B PARTNERS is a legal boutique that mainly focuses on two spheres: criminal law (including Interpol and extradition matters) and dispute resolution.
The key questions that our clients approach us with are the follow-
ing:
— Representation of interests in criminal cases concerning economic crimes. — Corporate and business fraud. — Protection of shareholders and business management in criminal proceedings. — Protection of client and criminal prosecution of unscrupulous business partners. Regarding dispute resolution, we have focused on disputes with the state in privatization / re-privatization, taxation, rent, land use, etc. Thanks to the company’s niche, our clients can count on exclusivity, individual approach and maximum involvement in their problems.
Let’s note that such practice exists in certain post-Soviet states which consists of using Interpol’s tools to criminally prosecute Ukrainian businessmen. The purpose of such persecution consists of the state seizing the assets of suspects. At the same time, Interpol’s channel is used to create public opinion about the suspect’s culpability without, as a rule, reinforcing this with any evidence. Similar persecutions/prosecutions of Ukrainian business are contrary to Interpol’s policy, and by virtue thereof, in our opinion, resolutions for search of Ukrainian entrepreneurs should be reversed. — Risk of violations of human rights — freedom of speech, right to a fair trial, prohibition of torture, etc. In particular, the case of Venezuelan journalist Rafael Poleo, whose right to freedom of speech in the home could be restricted. — The purpose of the “notice “ placement was attained — the location of a person was identified, the person in question was seized or extradited. For example, today we do not see the “red notices” of Y. Kolobov, H. Guta, B. Timonkin
Procedure for Appeal Against the Placement of “Notice” in View of a Person in Interpol’s Search Database
The person, information about him/her is in the Interpol database, (his/her representative) has a right to apply to the Commission for the correction or deletion of personal information. The following practical aspects should be noted here:
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Tel.: +380 44 581 1633 E-mail: office@vbpartners.ua Web-page: www.vbpartners.ua
Benefits of VB PARTNERS: 1. We are not afraid to take up risky, complicated projects. 2. We localize any problems, not allowing them to amount up to tragic consequences. 3. We provide our clients with a sense of security and confidence in victory. The last 5 years, VB PARTNERS has been in the TOP 50 of the best domestic law firms in Ukraine. The partners of the company are consistently placed in the list of leading specialists of the country’s legal market by the most authoritative international and Ukrainian market reviews, including Chambers Europe, Best Lawyers, Who is Who Legal, Legal 500, Ukrainian Law Firms, etc. We are proud to be described as an effective and dynamic law firm.
1. The period for considering such a request is established “as soon as is practicable”. However, the Commission’s meetings are held rarely. Since 2017 the number of the Commission’s members has been increased from 5 to 7, and the number of meetings has been increased from 4 to 6, which, however, cannot significantly accelerate the consideration of thousands of complaints. 2. The Commission does not decide independently, but only gives recommendations to the General Secretariat as the holder of the database. 3. Unless the General Secretariat complies with the recommendations, the Commission has the right to appeal against the General Secretariat’s inactivity to the Executive Committee. Consequently, the procedure for considering the claims pertaining to placement of “red notices” is durable and formalized. I would like to draw your attention to the fact that only a small proportion of “red notices” (about 2%) has been published on the Interpol website. Subject to the foregoing, our guess is that it is necessary to receive written confirmation of removal of the “card” from Interpol’s central office (in particular, such a confirmation was received by the legal representatives of R. Bogatyriova).
Alternatives Ways of Interpol Notice
For example, the national bureau may launch so-called “diffusions” on Interpol’s internal network — notices on the need to arrest a person to be served to a certain circle of other national bureaus and which are not public. The procedure for publishing “diffusions” is not formalized, unlike publication of “red no-
tices” and allows the arrest of a person without all the formalities and requirements of Interpol being complied with. In particular, wanted notices regarding Ukrainian roofers P. Ushevets and G. Tagramadze were issued in line with the “diffusions” procedure.
Countries where Interpol “Will Not Reach”
At the moment, Interpol’s participants are 190 countries — in practice it is the entire globe. However, there are a number of “exotic” countries which do not cooperate with Interpol. For example, North Korea, Palau, Solomon Islands, Federated States of Micronesia, Tuvalu, etc. The Vatican was the last country to join Interpol. The “red notice” issued by Ukraine are often removed, as often the persons detained by Interpol are extradited to Ukraine. So, the restaurateur A. Zadorozhny was extradited from Croatia, and recently the Cherkasy agro-businessman V. Babko was extradited from Serbia to Ukraine. Countries with higher requirements for ensuring human rights and freedoms most often reject extradition to Ukraine. As an example, Italy refused to extradite I. Markov, and Spain banned the extradition of Y. Kolobov. Therefore, Interpol is an organization with whom cooperation can bring many advantages to Ukraine. At the same time, the key of efficient interaction should become the proactive work of Ukrainian law-enforcers regarding justification of non political prosecutions, due prolongation of sanctions and providing the International Criminal Police Organization with the necessary documents.
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Business Immigration
Business Immigration
Halyna KHOMENKO Director, People Advisory Services, Private Client Services Leader, EY Ukraine
I
n these current uncertain times in Ukraine, a key target of High Net Worth Individuals (HNWI) remains to protect their assets and keep their business competitive and flourishing. Automatic exchange of information on residents’ assets and income according to the Common Reporting Standard, unwillingness to lose earned capital, entrenched bureaucracy and absence of a favorable investment climate in Ukraine are driving more and more Ukrainian HNWIs to emigrate to other jurisdictions, or at least to acquire a residency permit in one of the EU countries.
gree of capital protection and information confidentiality. Malta, for instance, offers citizenship to those who are ready to make a non-returnable contribution of EUR 650,000 to the Maltese economy, purchase real estate property in Malta or invest in Maltese bonds for another EUR 500,000. As a result, in addition to Maltese citizenship an investor also receives access to a special taxation regime, the so-called “remittance basis”, where an individual’s foreign income is taxed in Malta only when an individual brings (remits) it to Malta. The United Kingdom has an investor program, which allows HNWIs to get access to permanent residency and, potentially, UK citizenship. Similarly to the Maltese program, HNWIs, who invest in the UK get
access to a special “remittance basis” taxation regime. In comparison to Malta, the UK investor program is much more expensive as the HNWI should be willing to invest at least GBP 2,000,000 in the UK economy. However, as opposed to the Maltese program, there is no need to make a non-returnable donation. Notwithstanding the recent crisis, which led to bank deposit cuts, Cyprus remains one of the most welcoming destinations for business immigrants, allowing the acquiring of permanent residence in Cyprus for investing a minimum of EUR 300,000 into Cyprus real estate or even Cyprus citizenship for investing a minimum of EUR 2,000,000. Moreover, the Cyprus program takes the least time to complete compared to other similar ones. Other countries, which business immigrants should definitely look into, are
Choosing a Country for Business Emigration
The choice of country for business immigration depends mainly on personal goals and the desired lifestyle of the individual, availability of favorable personal taxation regimes, simplicity and swiftness of obtaining residence permits, possibility of obtaining citizenship in the future and, naturally, the cost of immigration. If an individual intends to receive permanent residence in a country of immigration, some additional factors such as ecology, crime level, stable political and economic environment, highquality health care, education and social security should also be considered. Many countries currently have immigration programs designed specifically for business immigration of HNWIs, allowing them to obtain a residence permit or citizenship by investing in a country’s economy. For several years now, Cyprus, Malta and the United Kingdom have been the most popular countries for various forms of immigration of Ukrainian HNWIs, offering a favorable taxation environment, a high de-
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WWW.UKRAINIANLAWFIRMS.COM
EY
E
Address: 19A Khreshchatyk Street, Kyiv, 01001, Ukraine
Y is a global leader in assurance, tax & law, transaction and advisory services with more than 230,000 people based in 150 countries. Our law practice is undergoing global expansion so that we can serve our clients anywhere in the world, now in around 70 countries. EY has a strong full-fledged legal practice in Ukraine, well versed in both local and international legal matters and practicalities and that has an impeccable track record. A team of more than 40 qualified lawyers provides a wide range of services to numerous international and local clients. Our more than 20-year history of operations in Ukraine and the CIS ensures our deep understanding of the local environment and knowledge of Ukrainian business peculiarities. We have strong experience in all major fields of law, particularly in the areas of commercial, corporate and contract law, legal structuring, regulatory compliance, finance, currency control and banking regulations, etc.
so-called “tax heavens”, with 0% personal income tax, wealth tax, inheritance tax and a gift tax. Some of the most popular tax heavens among the Ukrainian HNWIs are Monaco and the United Arab Emirates. In any case, while choosing a destination for business immigration, one should carefully evaluate all the pros and cons of emigrating to a particular country, taking into account all the circumstances. In addition, irrespective of a chosen destination, in order to make an efficient tax planning, HNWIs should also devote particular attention to their tax matters in Ukraine and wrap-up their Ukrainian tax residence.
Ukrainian Tax Residence Status
Being a Ukrainian tax resident means that an individual pays taxes in Ukraine out of his or her worldwide income, as opposed to tax non-residents, who are taxable only on their income sourced in Ukraine. Quite often, the ceasing of Ukrainian tax residence status is part of the tax planning of a Ukrainian business immigrant. To determine an individual’s Ukrainian tax residence status, one should analyze several criteria set out in Ukrainian law — place of residence, place of permanent residence, a center of vital interests and the number of days spent in Ukraine in a particular calendar year.
WWW.UKRAINIANLAWFIRMS.COM
Tel.:+380 44 490 3000 Fax:+380 44 490 3030 E-mail: kyiv@ua.ey.com Web-site: www.ey.com
Key areas of our expertise are tax (consulting and litigation), transfer pricing, corporate, M&A, labor & employment, private clients / wealth management, publicprivate partnership, antitrust/competition and intellectual property. Our industry focus is also diverse covering, among others, energy & natural resources, banking and finance, agribusiness, real estate and construction, retail, FMCG, healthcare, pharmaceuticals and information technologies. We are known for breaking new ground in various high profile and technically complex projects. These range from our unique expertise of working on oil & gas productions sharing and joint activity agreements, restructuring of the largest business groups and state-owned enterprises and supporting several largest transactions in our country to such matters as sale of football players or healthcare system reform in Ukraine. Law leader for Ukraine is Albert Sych, Partner.
However, is it sufficient for a Ukrainian citizen to reside outside of Ukraine for the major part of the year to become a Ukrainian tax non-resident? According to the Ukrainian tax authorities, it is not. The tax authorities insist that citizens of Ukraine are deemed to have a place of permanent residence in Ukraine and, thus, should be considered as Ukrainian tax residents until they pass the official procedure of leaving for permanent residence abroad.
Leaving Ukraine for Permanent Residence Abroad
Ukrainian citizens may formalize their leave for permanent residence abroad by undergoing a special procedure, the main purpose of which is to cancel an individual’s Ukrainian registration and inform various Ukrainian state authorities about an individual’s permanent residence abroad (e.g. the Ukrainian tax authorities, military enlistment office, State Migration Service, etc.). In October 2016, the procedure was slightly changed and made clearer. In the past, at the end of the procedure an individual had to surrender his or her internal Ukrainian passport, while now an individual keeps his or her internal passport with
the stamp of the State Migration Service confirming that he or she has left Ukraine for permanent residence abroad. It is not a mandatory requirement to complete the said procedure. However, it gives sufficient grounds to treat such an individual as a Ukrainian tax non-resident, taxable only on his/her Ukrainian-source income, provided that this individual actually resides abroad. Another very important goal that one could reach by completing the procedure is acquiring the status of a Ukrainian currency control non-resident. This would allow the individual to transfer funds abroad from a personal bank account in Ukraine without limits, as well as purchase real estate or stocks abroad without the necessity to obtain an individual license from the National Bank of Ukraine allowing such an operation. It is worth noting that completing the procedure of leaving for permanent residence abroad does not mean the loss of Ukrainian citizenship or limitation of the individual’s civil rights, but rather ensures settlement of all obligations related to Ukrainian citizenship of the individual when staying abroad. Thus, it is recommended to include completion of the procedure in the plan on business emigration abroad.
51
Commercial Law
Impact of Deoffshorization on Business Structuring
Nikolay OCHKOLDA
Sergey OVCHAROV
Managing Partner, Attorney-at-Law, Legitimus Law Firm
Attorney-at-Law, Legitimus Law Firm
New Milestones — New Rules
Until recently in business there was much room to maneuver between tax rates, modes and statuses in different countries. However, it is difficult not to notice that the latest trend in the world is pressure from regulatory bodies on all existing offshore businesses. In order to increase control, countries around the world gradually supplement their legislation with new requirements to law firms, banks and other financial institutions. Registries of final beneficiaries of companies are created, followed by disclosure of such information to financial monitoring authorities. Credit and financial institutions around the world have already started collecting information within the framework of automatic exchange of tax information. The world is rapidly changing towards deoffshorization and seeks transparency. In light of recent trends international business is forced to look for new schemes that will enable adaptation to new rules of the game. And while in the past one had to pursue answers to “How not to pay taxes?” nowadays the urgent question is “Where is it profitable to pay taxes?”.
What is Pushing Business to Transparency?
Ukraine joined the BEPS plan (Action Plan on Base Erosion and Profit Shifting) implementation program from 2017, which was proposed by the OECD (Organization for Economic Co-operation and Development). Measures stipulated in the plan are aimed at withstanding schemes of tax burden optimization. The main objectives of this policy are: fiscal
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transparency, implementation of “deoffshore” standards in entrepreneurship, globalization of automatic exchange of tax information, etc. By joining the plan Ukraine made a commitment to take efforts to implement these principles into national legislation. It is not yet fully clear how it will work in our country, but one thing is certain, namely that we expect fundamental changes in legislation on relations with non-residents, and it is desirable to be prepared in advance for them. It is worth noting that in 2013 Ukraine had already introduced transfer pricing regulations as one of the tools to combat erosion of the tax base. Regulations on transfer pricing are actually part of the BEPS plan, therefore, after accession of our country to the plan we should expect further changes in national legislation in this respect, taking into account international experience,
What’s Ahead?
Introduction of transfer pricing regulations was the first step taken by Ukraine towards “deoffshorization”. After the accession of Ukraine to BEPS plan, the next steps are likely to be: accession to automatic exchange of tax information and implementation of CFC rules (Controlled Foreign Companies rules). Let’s try to understand the basic principles of these procedures and their effects on business. Exchange of information between banks and tax authorities of countries that acceded to the AEOI agreement (Automatic Exchange of Information) from 2017. This Agreement was signed by a number of countries — OECD members, including the USA, EU countries, and classic offshores: British Virgin Islands, Panama, Seychelles and others. The Agree-
ment provides collection of information about their customers by financial institutions and its submission to the tax authorities. Such information shall include information on investment income (dividends, interests, income from insurance contracts and sales of financial assets, real estate), balance of funds in bank accounts, beneficiaries of trusts, shareholders of companies, etc. It is not yet known whether Ukraine will be among these countries, but given the announced course for deoffshorization one should prepare for the fact that Ukraine will accede to the Agreement, after which fiscal bodies will be able to obtain information from other countries about accounts opened by Ukrainian residents, identify associated persons and possible violations of currency legislation. There is a high probability that simultaneously with the start of automatic exchange of information under the CRS standard (Common Reporting Standard), Ukraine will introduce CFC rules (Controlled Foreign Companies rules). The corresponding Draft Law On Amendments to the Tax Code of Ukraine to Prevent Tax Base Erosion and Profits Shifting Offshore awaits consideration in Parliament now. If adopted, residents of Ukraine, owners of controlled foreign companies, will have to report to regulatory authorities about such companies and their income. Restrictions may affect foreign companies with income from source of origin in Ukraine. State financial control will check whether such companies are actual beneficiaries of profits gained, or whether they are not nominal (verification of office existence and of actual costs for its maintenance, availability of employees, etc.). CFC rules actually stipulate that the tax residency of a foreign company shall be given the same status as the tax residency of directors, authorized persons and beneficiaries who manage it in practice. There is a good chance that automatic exchange of information and CFC rules will be implemented in Ukraine simultaneously. Therefore, when information about beneficial owners of foreign companies becomes available for state bodies, they will have every reason to increase the tax burden for such persons. The world becomes more transparent, information more available and there is a desire to know beneficial owners in person. It is better to start getting ready for global changes related to international deoffshorization now. Some-
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Legitimus
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Address: 49A Volodymyrska Street, Suite 149, Kyiv, 01001, Ukraine
egitimus law firm was founded in 2006. The team includes 14 lawyers, who have considerable experience in various fields of legal practice. Its main principles are professionalism, efficiency, honesty and confiden-
tiality. The principal practice areas of Legitimus include real estate and land law, banking and finance, litigation and arbitration, corporate and M&A, taxation and international trade/foreign investment. Real estate and land law Legitimus law firm provides full legal support in real estate transactions in the interest of the company’s clients, including drafting of agreements with respect to real estate and land deals: advising on the safest ways of acquiring and alienation of real estate rights, support for land plots allotment and ownership rights registration procedures, ownership rights registration procedures for other real estate objects. Litigation and arbitration Our team has a solid litigation experience in courts of first instance, courts of appeal, higher commercial court, higher administrative court and the Supreme Court of Ukraine. In order to provide comprehensive case analysis the company’s attorneys perform a preliminary case review and assess the court prospects of commercial, administrative and civil proceedings, represent and protect the clients interests both in state courts of all instances and international arbitration instructions.
times a reasonable solution for beneficiaries is getting tax resident status in other, more attractive jurisdictions. But one thing is obvious, one will still have to pay taxes somewhere.
Peculiarities of Determining Beneficiaries’ Tax Residence
Due to the new business environment, tax residency of the final owner, a physical person, becomes one of the key factors that will determine the future of your business. Tax residency is a legal bond determining under which legislation and in the territory of which state a person must pay taxes. Note: tax residency and citizenship are different legal statuses that may not coincide. If a person lives in different jurisdictions or he/she has citizenship of different countries, it is necessary to precisely understand a tax resident of which country he/she is and where he/she is obliged to pay taxes. This is due to the fact that after introduction of automatic exchange of information under the CRS standard, the bank, where an account is opened, will exchange data not with all tax authorities of the world, but only with those countries in which the customer has tax residency status. Therefore, it will be tax resi-
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Tel./Fax: +380 44 585 8255/56/57 E-mail: legitimus@legitimus.com.ua Web-site: www.legitimus.com.ua
Tax Legitimus law firm advises and provides legal opinions as to legal entities and individuals taxation in Ukraine, carries out legal analysis of drafts agreements in terms of tax liabilities, develops efficient tax schemes for the business activities of companies. The company represents both legal and individual interests at all stages of tax dispute resolution (reviews, litigations). Corporate Our firm provides a range of services in the field of corporate law which includes registration of legal entities, compliance with regulatory requirements following antimonopoly law while establishing and structuring holding companies, etc. Full legal support of M&A deals, companies legal due diligence and drawing up documents to eliminate and minimize risks and deficiencies; M&A support in compliance with Ukrainian and foreign tax and corporate law, legal support in preventing hostile acquisitions, majority and minority shareholders rights protection, financial institutions registration and financial services licensing support. International trade/foreign investment Legitimus law firm offers legal advice to residents on international business activities, and to non-residents on commercial activity in Ukraine. Our clients include domestic and international companies, investment funds, financial institutions and others. Languages: Ukrainian, English, Spanish, Russian.
dency that shall be the criteria for determining which state personal data will be transferred to. Thus, definition of tax residency of a beneficiary owner requires special consideration when structuring a business. Each state has its own laws, under which it determines whether a physical person is its tax resident. For example, the Tax Code of Ukraine (cl.14.1.213) states that “a resident is a physical person that has a place of residence in Ukraine”. The critical factor in determining tax residency is the place of permanent residence and personal or economic relations (center of vital interests). If it is difficult to determine the center of vital interests, then a person will be considered to be a resident of Ukraine in case he/she stays in Ukraine at least for 183 days (including days of arrival and departure) during a period or periods of a tax year. And if this factor is also uncertain, then citizenship prevails. It should be noted that there are many countries providing favorable conditions for business persons in the form of tax exemptions and convenient programs for acquiring the status of a tax resident. However, every country has a number of features that determine whether any given person is a resident. It is important to understand that the status of a tax resident of another state does not
mean termination of tax residency in Ukraine. To lose the status of a resident of Ukraine it is required not to stay in its territory for more than 183 days and have no close personal or economic relations with the country. Otherwise, there is a risk that the person may be considered a tax resident of several countries simultaneously.
Conclusion
To summarize the above, it can be affirmed that the world continues its development on the path of economic and political globalization. The processes taking place are the basis for transition to a new level of tax cooperation between members of the international community. We are on the threshold of global changes aimed at making business transparent and open. To be one step ahead, it is important to find one’s way in a timely manner and to readjust to new ways. We still have time to prepare business structures for modern conditions: carry out an inventory of the use of companies and accounts, detect risks for beneficiaries, perhaps transfer companies to other jurisdictions or restructure assets so as not to be afraid of information disclosure. Deoffshorization is spreading globally. Start planning your work now.
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Competition Investigations
Legal Professional Privilege in Competition Law Proceedings
Antonina YAHOLNYK Founding Partner, CLACIS
Kateryna TKACHENKO Partner, CLACIS
Anastasiia ZELENIUK
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Attorney, CLACIS egal professional privilege is one of the main tools, which ensures confidentiality of attorney-client relationship and, therefore, helps build an effec-
tive defense without disclosure of sensitive information, which can be used as an evidence against an undertaking. Legal privilege is even more important in cases where the competent authorities conduct on-site investigations. In such cases, legal privilege would help to indicate upfront materials covered by privilege and, hence, falling beyond the competence of the competent authority. One of the most prominent examples of effective application of legal privilege is antitrust dawn raids, i.e. on-site investigations of the premises of an undertaking and employees’ questioning by the competent antitrust authority. The best practices in mature jurisdictions prove the efficiency of legal privilege when such is used to take out certain documents from the scope of an antitrust investigation or, at least, to ban them for use as evidence. In more detail, legal privilege in competition law proceedings has been recognized in the EU since 1982, when this issue was first addressed by the European Court of Justice in AM&S Europe Ltd v European Commission case. Later, in the Akzo Nobel Chemicals Ltd and Akcros Chemicals Ltd v. Commission cases the Court stated that the legal privilege shall cover written communication of an undertaking with an independent lawyer admitted to the bar and subjected as such to disciplinary and ethics control; however, it shall not cover communication and materials prepared by an in-house lawyer due to the lack of independence of such in-house lawyer resulting from labor relations with a company even if such in-house lawyer is a member of a national bar. Additionally, there is no professional work product protection in the EU, which would invoke privilege for materials prepared for the purposes of defence in anticipated litigation. In practice, privilege may cover preparatory materials not exchanged with an external lawyer if such materials were prepared exclusively for seeking legal advice, and internal notes, which report the text or the content of the original lawyer-client communication. As regards communication with foreign lawyers, privilege extends only to communication between the client and a lawyer admitted to practice in any of the EEA member states.
Legal privilege requires competent antitrust authorities to abide with rather clear procedural rules when dealing with allegedly protected materials, including specific processing of such materials and possible involvement of the bar to decide on whether the materials in questions are indeed covered by legal privilege and thus shall fall beyond the scope of any antitrust investigation. Though legal privilege protection in the EU is limited to independent external attorneys admitted to the bar and to the materials qualifying to certain criteria, the EU concept of legal privilege provides for a fair level of legal certainty in respect to the privileged materials, which may be excluded from the scope of antitrust investigation and, even more importantly, which cannot be used as evidence against an undertaking which is being investigated. In its turn, in the USA, legal privilege is even broader. It includes both attorneyclient and work product privilege, with the latter covering materials and documents prepared for a litigation, which in most cases imminently results from an antitrust investigation. In contrast to the EU approach, in the US attorney privilege may also cover communication with in-house lawyers, who are active members of a national bar. To be protected by such a privilege respective internal communication shall be made upon instruction of a senior official and with a clear purpose of receiving a legal advice limited to the scope of employee’s duties, which shall not be made public. It is also important that such type of legal privilege is limited only to legal matters. Similarly to the EU, the status of, and access to, legally privileged materials is covered by special regulations in the US. Thus, refusal to disclose legally privileged materials (both attorney-client and work product) shall not be considered as an obstruction to an antitrust investigation. In addition, in order to obtain any data covered by the privilege the US antitrust authority shall obtain written consent from the US Deputy Attorney General. It should be noted though that in the US criminal liability exists for certain competition law infringements, hence attorney-client privilege gets another level of importance in proceedings of this nature.
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CLACIS
C
Address: Sophia Business Center, 6 Rylskiy Lane, 2 Floor, Kyiv, 01001, Ukraine
LACIS is a leading competition law advisory, which focuses on matters regarding competition law in Ukraine, Russia and Kazakhstan. The services include all aspects of competition law such as investigations, audits, infringement cases, leniency, merger control approvals, competition law, legal due diligence, antitrust litigation, distribution and contract related antitrust issues, public procurement, as well as compliance issues. The team of professionals of recognized competence in unison with regional coverage makes CLACIS a unique law firm. Well-known as a “one-stop-shop”, CLACIS offers its clients high-quality advice on competition law matters in a number of jurisdictions with international capacity through relationships with independent law firms. We regularly advise international companies at regional level on competition law issues arising in the region. Such multijurisdictional expertise in antitrust matters within this region is unique on the market. Both founding partner Antonina Yaholnyk and CLACIS have been highly recognized by such international and lo-
Even though the legal privilege regime in the US is rather liberal and generally protects any type of communication between client and lawyer, there are a fair number of details to be considered on a case-bycase basis. Therefore, litigations between companies and antitrust bodies are not rare and best practices may vary depending on the circumstances of a particular case. Still, US legal privilege proved to be an efficient remedy to preserve privileged materials in official proceedings. Unlike the best practices internationally, the status and criteria of legal privilege in Ukraine, particularly in antitrust investigations, are quite vague. To begin with, the effective competition law of Ukraine does not address the issue of legal privilege at all. Moreover, competition law generally provides for the right of the competent authority — the Antimonopoly Committee of Ukraine (the AMCU) — to have access to confidential information of undertakings; no detailed regulation of this issue is provided further. It basically means that the AMCU has almost absolute power to demand from companies any documents, materials and information, including those with restricted access. Any failure to provide the requested information may be considered an obstruction and lead to a fine. Generally, legal professional privilege is provided by the Law of Ukraine On Advo-
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Tel.: +380 44 392 0102 Fax: +380 44 392 0103 E-mail: yaholnyk@clacis.com Web-site: www.clacis.com
cal legal directories like Chambers Europe, Best Lawyers and ULF. Being one of the leading individuals in the field of antitrust & competition, Antonina Yaholnyk has over 20 years of legal practice, including over 10 years of experience handling antitrust and compliance matters. She also headed Baker McKenzie’s Competition & Compliance Law Practice Groups. Antonina Yaholnyk holds an LL.M. degree from the University of Cambridge (UK), Master’s degree International Law and Economics from the World Trade Institute (Switzerland). Mrs Yaholnyk chaired the European Business Association’s Competition Committee in 2011-2012. She is a member of Noncommercial Partnership “Supporting Competition in the CIS Countries”. Mrs. Yaholnyk was elected a Member of the Council of Competition Law Committee at the Ukrainian Bar Association in 2016. Our lawyers — a team of dedicated professionals in antitrust and antitrust litigation — are graduates of leading local and foreign universities with professional experience in international and regional law firms in Ukraine, Russia and Kazakhstan.
cacy and Advocatory Practice in Ukraine as of 5 July 2012 (hereinafter — the Law). This Law provides for a wide range of matters covering legally privileged matters from the side of an advocate, i.e. attorney having bar admission. However, the Law remains silent with respect to the status of privileged data when it is requested from a client in any official proceedings. As it follows from the Law, even such limited regulation is silent on whether legal privilege may relate to an in-house lawyer if such is admitted to the bar. This leaves significant room for interpretations on the side of the competent authorities to claim disclosure of such information directly from an investigated undertaking. Unlike special treatment and specific procedural rules for such type of materials in the EU and US, this legislative gap in Ukrainian Law presents significant legal risk of involuntary disclosure of privileged data in the absence of the necessary legal remedy. This is even more important taking into account current trends granting authority in court representation only to qualified attorneys. Given this, there is a strong necessity to elaborate on respective approaches on dealing with privileged materials in official investigations, as well as the mechanism of control over the diligent use of legal privilege by attorneys from the side of the Ukrainian bar.
It should be noted that under pending reform in Ukraine, the trend which grants authority in court representation to qualified advocates relates, unfortunately, only to litigation proceedings. Other types of official proceedings are currently beyond the scope of reform. This leaves an important part of official proceedings, for instance, quite specific investigations of the AMCU, uncovered. At the same time, preservation of the legal privilege in AMCU investigations requires special regulation given that such investigations involve commercially sensitive matters as well as extensive powers of the AMCU to investigate: the right to seize documents, servers, search premises, interview employees to name but a few. In view of the legal gaps regarding the status and processing of privileged materials, involvement of an external independent attorney having bar admission to assist with antitrust matters (at least complex ones such as abuse of dominance, anti-competitive concerted actions, leniency and on-site investigations) appears to be highly recommended. Furthermore, a client should feel comfortable that advice being sought on antitrust compliance matters is protected communication. This instrument of protection of communication as privileged and confidential between the client and the attorney will enable an increase in overall advocacy of best practice in competition law compliance.
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Compliance
Anti-Corruption Programme as an Effective Tool of the Risk Management Procedures and nature of the business, as well as any peculiarities of the jurisdiction where its production units are located.
Anna LYPSKA
Evgen BIDNIY
Attorney-at-Law, Head of Compliance Practice, PwC Legal
Attorney-at-Law, PwC Legal
t has been more than two years since the measures, which introduced criminal liability to legal entities, officially came into effect in Ukraine. Since then, the application of criminal liability to a company’s officials for the committing of certain crimes (including corruption-related offences) entails criminal prosecution of the company itself, and can even result in its liquidation. Following these changes, the Ukrainian Parliament adopted the Law of Ukraine On Prevention of Corruption, which officially established the possibility and, in certain cases a “requirement”, to approve anti-corruption programmes in businesses. As expected, local businesses did not pay much attention to this legislation and have been implementing anti-corruption programmes mostly in special circumstances only (for instance, if a company planned to participate in a public procurement process). On the other hand, international companies operating in Ukraine were more responsive to the new legislation. In our view, Ukraine’s aspirations on joining the European Union (EU), requirements put forward by the EU management for liberalization of the visa regime with Ukraine, the establishment of a new body aimed at fighting corruption (the Specialized Anti-corruption Prosecutor’s Office) expressly indicate that anti-corruption regulations as well as the methodology and quality of prosecution of corruption-related crimes are subject to further enhancement.
We are of the opinion that this will lead to more stringent control over unlawful business practices and that the establishment of anti-corruption programmes/procedures will become a matter of vital importance. Taking into account PwC’s expertise and experience in the design of effective anti-corruption procedures, and given international best practices in this field, we have prepared the following outline of the key pillars of an effective anti-corruption programme.
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Firm Decisions and Support From Top Management
As is the case with other company activities, the starting point for the creation of a viable anti-corruption programme is the strong promotion and support of the initiative by senior management. Identification of Areas With High Corruption Risks Companies should assess: which areas of the business have the highest risk of corruption; the reliability of individuals who interact with public authorities on behalf of the company; business strategies used in M&A and other corporate deals; the level of interaction with tax, customs, immigration and other authorities; the business models operating based on joint activity agreements; and the company’s dependence on licenses, permits, etc. Other important aspects that should be taken into account when approving an anticorruption programme are the size, sector
Clearly Defined and Accessible Corporate Policy A company must have in place a number of regulations and rules of behaviour with respect to any activities deemed to be at risk from corruption. These documents should be clear, accurate and accessible for review by each employee and authorised person of the company. It is also important to ensure familiarisation with the anti-corruption corporate policies by persons who are not employed by a company, but authorised to act on its behalf. Both best practice and our own expertise show that the results of an anti-corruption programme depends on the commitment of every person associated with the business (whether employed or not) to follow the requirements of such a programme. Detached Control Function To ensure the proper functioning of the anti-corruption programme, it is advisable to create a special department (consisting of a minimum of 1-2 senior corporate officers), which will be entrusted with the function of control over compliance with anti-corruption policies. To have real influence in the company’s corporate structure, the officers of the anticorruption function should have adequate powers, a certain autonomy in relation to the company’s management, and sufficient resources. In the United States, authorities pay special attention to the adequacy of the ratio of officers and resources available to implement an anti-corruption programme to the size and structure of the company and the type of risks inherent to a particular field of business. Multinational companies operating in a number of countries generally have a centralised anti-corruption compliance unit in addition to local anti-corruption units within each country. Anti-Corruption Obligations of Third Parties An important element of an anti-corruption policy is to ensure compliance by third
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PwC Legal
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Address: 75 Zhylyanska Street, Kyiv, 01032, Ukraine
wC Legal is a team of legal experts with solid experience in local and international legislation within the largest professional network of 2,500 lawyers across 83 countries. PwC Legal is a “full-scope service law firm” which renders services in traditional, as well as innovative legal prac-
parties such as agents, representatives, consultants, distributors, contractors, suppliers and joint venture parties. As a result, we encourage our clients to pay special attention to the careful selection of business partners, the awareness by these partners of the anti-corruption requirements of the company, and an awareness of the importance of compliance by these partners. In our view, it is crucial to execute a thorough study of the business history of potential partners. Such a study includes not only requesting or obtaining documents which certify a counterparty’s standing, but also requires confirmation thereof in publicly available registers and resources, research of the counterparty’s court practice, and research regarding the reputation of the company, its management, founders and beneficiaries. For instance, the World Bank’s recommendations clearly state that any payment made to a business partner must be an “adequate” and “evidenced” compensation for the services rendered or goods supplied. In addition, the World Bank indicates that companies should avoid cooperation with contractors, suppliers and other business partners that have engaged in, or are suspected of engaging in, illegal business practices. Companies usually do not have trained specialists to carry out a proper evaluation of the relevant risks related to a potential counterparty. For this reason, businesses often engage external consultants who, in strict confidence, conduct independent assessment of the described risks. System of Internal Control over Financial and Accounting Processes Another element of an anti-corruption programme is the introduction of a specially
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tices. Our legal team serves different industries with a wide range of services reaching all key areas of legal business practices. In Ukraine we bring together teams of specialists in legal services and other disciplines such as tax, insurance and business consulting to work as your trusted business advisers.
designed system of internal control over financial flows. Such a system should be established to screen any settlements initiated by employees involved in direct interaction with state bodies on behalf of the company. In practice, companies may introduce a reconciliation process of payments made in favour of public bodies or “suspicious” companies which could be incorporated for money laundering schemes or tax evasion purposes. For this reason, the company may engage different control units, including a central anti-corruption department at the head office. Regular Updates and Corporate Training We would also like to emphasize the importance of regular communication and anticorruption compliance training for all employees. For instance, this is also incorporated in the Foreign Corrupt Practices Act (USA). Anti-corruption training should not be of a one-time nature. The world’s leading practices in the fight against corruption indicate that such activities should be carried out on a regular basis and be adapted to the peculiarities of the particular business. It is recommended to conduct separate training sessions for managers of companies that operate in those areas most prone to corruption risks, e.g. public procurement, and interaction with public authorities (including tax authorities). Whistleblower Protection Policy Along with all the above, one of the pillars of a successful anti-corruption policy is to protect employees and third parties that notify or expose corruption (so-called “whistleblower protection”). The best anti-corruption practices include the establishment of policies or regula-
tions for a whistleblower’s activity, the mechanisms for internal audit of the facts received, and confidentiality guarantees. To ensure the effectiveness and safety of such a policy, the collection centre of such information should be located at the centre of a particular business group (i.e. at the central office). Periodic Review of Existing Policies Anti-corruption policies are subject to periodic testing and updating. This is necessary due to regulatory changes, the emergence of new corruption risks or the removal of previous corruption risks, a change in the business model of a company, etc. For example, to enhance the effectiveness of existing programmes, provisions of the Foreign Corrupt Practices Act envisage the conduct of a wide range of benchmarking studies (i.e. comparative tests) of the anticorruption practices of other companies. The best practices include such grounds for reviewing existing anti-corruption programmes as a study of the opinions of staff about the effectiveness of anti-corruption programmes, and holding “control checks” of the compliance of staff with such programmes. Our experience confirms that the creation and implementation of anti-corruption programmes and policies is a multifaceted task, which requires special knowledge, sufficient experience and the availability of staff with the right training. We are convinced that the top anti-corruption compliance models are not merely a set of static rules but, on the contrary, should be a flexible, constantly modifiable mechanism, which reacts appropriately to rapidly changing circumstances.
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Copyright
Copyright to Works Made for Hire. Legal Regulation and Foreign Experience
Oleksandra ODINETS Attorney-at-law, Konnov & Sozanovsky
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n the way towards integration with the European Union with the aim of accession to the Single European Information Space, we have accepted obligations as for the harmonization of the national legislations with European standards, especially legislation in the field of intellectual property. Of the various types of intellectual property rights, copyrights are the most easily obtained, but arguably the most misunderstood. The main directions of improvement of national legislation as for the exceptions and restrictions in the field of copyright and related rights were aimed at further harmonization of national legislations with EU standards, namely: Ukraine — European Union Association Agreement (hereinafter — the Association Agreement), the Directive of European Parliament and Council On Legal Protection of the Computer Programs of 23 April 2009. There are many legal disputes in the field of copyrights to works made for hire. The legal regulation of copyrights to works made for hire is a really problematic issue in Ukraine due to the existing conflict of law between the Civil Code of Ukraine and the special law — the Law of Ukraine On Copyright and Related Rights (hereinafter — the Copyright Law). Namely, Article 429 of the Civil Code of Ukraine provides that an employee, an author of the intellectual property object created in the course of his/her employment, holds personal non-proprietary rights to this object. The Code also states that a special law may provide cases when some personal non-proprietary rights to such an object may belong to an employer.
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According to the Civil Code proprietary rights to an object created under an employment agreement is vested jointly with the author (the employee) and the employer — a legal entity or individual, unless otherwise stipulated by an employment agreement. The respective provisions applied to any intellectual property object created under an employment relationship, such as: copyright object, trademark, industrial design, invention, utility model. In opposition to the Civil Code the Copyright Law provides that the exclusive proprietary rights to the copyright objects made for hire belong to the employer, unless otherwise provided for by the labor contract and (or) civil contract, concluded between the author and the employer. We have reviewed the respective judicial practice in this field. The Plenum of Supreme Court of Ukraine in its Resolution On the Application of Legal Provisions in Copyright and Related Rights Protection Cases (the Resolution of Supreme Court) No. 5 of 4 June 2010, concluded as follows: “if a work is created under an employment agreement and within its term of validity, i.e. within employment and under an instruction of the employer personal non-proprietary rights belong to the employee. The proprietary rights to an object of copyright and (or) related rights created under the employment agreement belong to the employee who created the object and legal entity or individual-employer jointly, if otherwise provided by the agreement”. According to the Resolution if an employment or civil agreement between employer and employee doesn’t provide for another procedure to perform proprietary rights to the created object, they both have the joint right to receive a certificate of copyright registration and use the intellectual property object. In case of assignment of all exclusive rights by the employee to the created object he loses his exclusive proprietary rights. However, personal non-proprietary rights are inalienable. Thus, the above Resolution confirms the provisions of the Code as being of higher priority, regardless of the provisions of the special law — the Copyright Law. The other problem issue is the legal recompense of the author’s remuneration for
the creation of the copyright object under an employment agreement. The arguable point is the employer will pay additional remuneration to the author of the copyright object, or will the salary be treated as sufficient payment for his/her work? The Copyright Law and the Civil Code stipulated that the amount of the author’s remuneration for the creation and use of the course-of-duty work, as well as the relevant payment procedure shall be settled in the respective employment agreement and/or civillaw contract. In this regard the Resolution of Supreme Court stated that the payment of the salary to the employee is not similar to payment of author’s remuneration to him/her for creation of the copyright object under the employment agreement, because the salary is the payment for the work performed depending on certain conditions, whereas an author’s remuneration are all kinds of remunerations and compensations which are paid to the authors for usage of their creations, which are protected within the limits prescribed by copyright law. If there is no agreement among the parties regarding the amount of the author’s remuneration the courts, when calculating such remuneration, shall be governed by the provisions of the Resolution of Cabinet of Ministers of Ukraine No.72 On Approval of the Minimum Rates of Remuneration (royalty) for Use of Copyright and Related Rights Objects of 18 January 2003. Legislators shall endeavor to settle the above-mentioned conflict of laws. There is Draft Law No. 4579 of 4 May 2016 developed by the Cabinet of Ministers of Ukraine On Amending Certain Legislative Acts Regarding Acquisition, Disposal and Protection of the Copyright and Related Rights (the Draft) aimed at regulating the issues of legal regulation of the copyright to works made for hire and harmonize national copyright legislation with European standards. Among other provisions, the Draft Law stipulated the following amendments to the Copyright Law: — if there is no condition regarding proprietary rights to a work created for hire in an employment agreement or civil law contract, the proprietary rights to such work belong to the author; — proprietary rights to the work created for hire created under an employment rela-
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Konnov & Sozanovsky
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Address: 23 Shota Rustaveli Street, Suite 3, Kyiv, 01033, Ukraine
onnov & Sozanovsky is a full-service law firm oriented towards providing comprehensive legal advice to Ukrainian and international clients. Since 1992 it has proved to be rightfully recognized as one of the leading law firms in Ukraine. Konnov & Sozanovsky advises clients in the most popular business areas of law: agrarian law, banking and finance law, copyright and media law, commercial law and contracts, competition law, corporate law, intellectual property law, labor law, real estate, construction and land law, tax law, and has represented clients in large-scale mergers and acquisitions and litigation cases. The firm practices an individual approach in each case, taking into consideration the peculiarities of a client’s business and its preferences. The firm’s rich experience covers legal advice on matters in such industries as advertising and design, agriculture, banking, energy and power, food industry, insurance, investment and the equity market, light industry, media and telecommunications, pharmaceuticals, publishing, real estate and construction, software, spirits industry, tobacco industry, trade and distribution, veterinary production. Konnov & Sozanovsky is highly involved in the activities of the business community and is a full member of the American Chamber of Commerce in Ukraine (ACC), Ukrainian Bar Association (UBA), European Business Association (EBA, Ukraine),
tionship with a government authority belong to the government authority; — proprietary rights to a computer program, database, created in connection with the execution of an employment agreement belong to the employer, unless otherwise stipulated by an employment agreement; — proprietary rights to the work made for hire belong to the author of this work, unless otherwise stipulated by the agreement; — proprietary rights to the computer program made for hire belong to the customer, unless otherwise stipulated by the agreement The aim of the Draft Law is to harmonize Ukrainian copyright legislation with the Association Agreement, namely with regard to the authors rights to databases and computer programs. Article 181 of the Association Agreement provides that if a computer program is created by an employee in connection with the execution of his/her official duties all proprietary rights to such a program belong to the employer, unless otherwise provided by the employment contract. However, the Draft Law has not yet been considered by the Verkhovna Rada. Let’s briefly review foreign practices in the area of legal regulation of the copyright to works made for hire or created under an employment relationship. In USA, generally, the author of a work is the owner of the copyright to such a work.
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Tel.: +380 44 490 5400 Fax +380 44 490 5490 E-mail: kleshchenko@konnov.com Web-site: www.konnov.com
Association of European Businesses (AEB, Russia), International Trademark Association (INTA). Konnov & Sozanovsky is an exclusive member of First Law International (FLI) — the specialized international legal network, which has been operating on the legal market since 2003 and has already succeeded in integrating the most competitive law firms from more than 40 countries from all over the world. This enables FLI members to provide high quality legal assistance to clients in all major legal systems, thereby saving clients considerable time and resources, while maintaining service quality and confidentiality of information transferred. Therefore, the client receives not only service but also a reliable business partner and legal advisor across three continents. The firm conformity to international service quality standards is annually recognized by such legal research directories as Chambers and Partners, Legal 500, PLC Which Lawyer, IFLR 1000 and Who Is Who Legal. High appraisals are built on our clients’ recommendations, favorable competitors’ reviews as well as the opinions of leaders of key industries. In unison with international recognition, Konnov and Sozanovsky is a multiple nominee and holder of the national awardwinning Law Award of the Year and for many years has been in the TOP-10 leading law firms in Ukraine according to Yuridicheskaya Practika Publishing. According to Ukrainian Law Firms a Handbook for Foreign Clients, both partners and lawyers are acknowledged as leaders in various branches of law.
Under the Copyright Act of USA a work is a “work made for hire” only if: — it is prepared by an employee within the scope of his employment; or — it is specially ordered or commissioned from an independent contractor pursuant to a written agreement. For works created by employees, courts apply general principles of agency and employment law to determine whether an individual is an “employee” and whether the work was created within the “scope of employment.” Courts generally apply a three-prong test to determine whether a work is an employee-created work made for hire: — whether the work is of the kind that the employee is employed to perform; — whether the work occurs substantially within authorized work hours; and — whether the work is performed, at least in part, to serve the employer. If a company is uncertain whether an individual is an employee or whether the creation of the work falls within the scope of such individual’s employment, it should obtain a written agreement from the individual expressly assigning the copyright in the applicable works to the company. German law parallels French law in that the initial owner of copyright in a work is always the individual person who created the
work. Furthermore, in accordance with the Berne Convention, German law establishes a presumption of authorship based on a customary indication of such on the work. In the United Kingdom the law varies based on the type of work at issue. The Copyright, Designs, and Patents Act of the UK governing the primary grouping, literary, dramatic, musical, and artistic works stipulated that when a work is made in the course of employment, copyright will belong to the employer, otherwise it will belong to the author. We can conclude that despite the fact that most of the countries mentioned above lack a definitive copyright classification of “works made for hire”, the general approach to such works is rather similar. Most countries acknowledge, at least on a limited basis, copyright to an employer when the employee creates the work within the scope of his employment. Ukrainian legislation in the field of copyright to works made for hire shall be harmonized with judicial practices and European standards. The employee and employer should also take into consideration all the possible risks and specify in an employment agreement or civil law contract the provisions with regard to proprietary rights to the respective intellectual property object and draw attention to the provisions, specifying the royalty payment to the author of the copyright object.
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Corporate
The Core Issue of Corporate Law in Ukraine: Fighting Raiders brief outline of certain law requirements applicable to the protection of foreign business from corporate raiders.
Business Registration in Ukraine
Ernest GRAMATSKIY President, Gramatskiy & Partners Attorneys at Law
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t is no secret that Ukraine has great business potential: geographical location, its large internal market, diverse natural resource base, well-educated people and, of course, cheap labor. Therefore, the Ukrainian economy has always been attractive for foreign investors seeking a possibility to expand their business. Despite all the challenges and obstacles that may arise during registration and conducting of business, investors still want to operate on one of the largest markets in Europe. Unfortunately, Ukrainian legislation is too complicated and difficult to understand for use by foreign investors. Frequent amendments to laws do not facilitate the process of doing business in Ukraine. Moreover, such a tendency creates a big threat for successful corporate activity. Ukraine has publicly announced its course aimed at simplifying the start-up and conducting of business. For the last few years Law of Ukraine No. 755-IV On State Registration of Legal Entities, Individual Entrepreneurs and Non Governmental Organizations has been dramatically amended. De facto, those amendments aimed at simplifying the process of business registration were frequently used by raiders to gain absolute control over corporate assets. The business community was concerned and required the state authorities to take radical steps to improve the business environment in Ukraine. Fortunately, recent amendments to the above mentioned Law have been met with optimism and this article aims to give a
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When a foreign investor considers a possibility to open up a business in Ukraine, a number of issues should be resolved. First and, probably, the most fundamental one, is choosing an appropriate legal form of business. Ukrainian legislation grants investors autonomy to choose the legal form of business at their own discretion. However, of course, it contains some obligatory requirements. For example, banks shall be created exclusively in the form of a public joint stock company. Sometimes, it is reasonable to register a representative office. However, in this case the investors will not enjoy all those rights that are attributable to other forms of business, since the representative office is not considered a separate legal entity and, what is most important, cannot carry out business activities. Generally, the most fundamental requirements for establishing legal entities in Ukraine are contained in the Civil Code of Ukraine, the Economic Code of Ukraine, On Business Association Law, On Joint Stock Companies Law. At the same time, as practice shows, one of the most commonly used legal forms of legal entities is a limited liability company. There are many reasons for such choice including but not limited to: the authorized capital (share capital) is divided into parts (shares); there is no limit to the minimum and maximum size of authorized capital (share capital); it may be incorporated by a sole participant (shareholder); the investors’ liability is limited by parts (shares); and, the most important, a limited liability company may carry out almost any business activities. The Law of Ukraine On State Registration of Legal Entities, Individual Entrepreneurs and Non Governmental Organizations governs the process of establishing a limited liability company in Ukraine and contains the full list of documents required for successful registration of a legal entity with the State Registrar. There is no need to name them all. However, it should be noted that the
fundamental statutory document of limited liability company is its Charter (Articles of Association), where all those issues concerning authorized capital (share capital), participants (shareholders), etc., are detailed. Generally, the process of establishing a limited liability company is less timeconsuming compared to the registration of other legal entities and takes no more than two-three business days (state registration should be done within 24 hours). However, the registration of a legal entity does not guarantee its successful business activity, as there are many problem issues that should be resolved. For example, establishing an effective corporate structure for the company will definitely increase its efficiency. Another crucial issue is control over the activities of the company’s managers who, in turn, run the day-to-day affairs of the company. In case investors fail to take the above-mentioned steps, the risk of losing their assets will be radically increased. One of the most common methods among raiders is using gaps in Ukrainian legislation aimed at illegal takeover of a company, usually by amending the company’s statutory documents contained in the Unified State Register of Legal Entities, Individual Entrepreneurs and Non Governmental Organizations of Ukraine (hereinafter — the State Register).
Amending Statutory Documents, the way things were
In 2015-2016 the process of amending the company’s statutory documents was too simple and only required submitting the full package of documents to the State Registrar. The Law of Ukraine On State Registration of Legal Entities, Individual Entrepreneurs and Non Governmental Organizations contained no obligatory provision requiring entrepreneurs to prove the validity of their signatures. Moreover, it is not necessary to notarize the agreements of purchase and sale of parts (shares) and use the company’s corporate seal. All of these gaps were commonly used by corporate raiders who could easily counterfeit documents and submit them to the State Registrar. Another problem is that the State Registrar does not have the right to
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Address: 16 Mikhailivska Street, 2, 3rd Floor, Kyiv, 01001, Ukraine
ramatskiy & Partners is known as a trustworthy law firm, which has been successful in provision of legal assistance to its clients in various areas of law since its foundation. Gramatskiy & Partners is recognized as one of the leading law firms in Ukraine introducing high standards of legal services and performing with exceptional proficiency. From the moment of its foundation in 1998, Gramatskiy & Partners has acknowledged business legal practice as its own professional vocation and a mission of its serving the public. The unique experience of a vast legal practice allows the firm to advise today more than a hundred Ukrainian and foreign companies providing complex aid and assistance in legal matters, combining classic legal practice traditions with modern international standards of the legal services market. Being a universal law firm, Gramatskiy & Partners has made its name in a capacity of a qualified provider of comprehensive legal service. Combining a scrupulous approach and customer-centered orientation in terms of rendering legal assistance enables the firm to individualize a wide range of its services for the business of every client. For more than 17 years Gramatskiy & Partners has been successfully developing its practice in the field of business (commercial) law, foreign economic activity, and the practice of international private law.
examine the validity of such documents and may only suspend the procedure of state registration of amendments in case the package of documents is not complete. According to various estimates, hundreds of legal entities came under attack from corporate raiders in Ukraine in the last two years. Some of them were able to protect their business, but some of them, unfortunately, were not and lost their money. The business community was stressed, concerned and unprotected, so the situation had to be changed. Therefore, the Verkhovna Rada of Ukraine recently adopted routine amendments to the Law of Ukraine On State Registration of Legal Entities, Individual Entrepreneurs and Non-Governmental Organizations, which were, by the way, met with optimism.
All New is well forgotten Old
Trying to find the best way to solve the problem of protecting investors’ interests, Ukrainian MPs decided to restore the former provisions of the Law On State Registration of Legal Entities, Individual Entrepreneurs and Non-Governmental Organization. Henceforth, any decision adopted by a company’s superior body (General Meeting of Partici-
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The pride of the firm is its staff — a team of professionals who had stood at the outset of the firm and have worked their way up from its foundation on the local and foreign legal service market and who continue working for the benefit of the firm and its respected clients. The firm’s experts provide tailor-made advice on many different practice areas, including commercial, corporate, tax, foreign economic activity and foreign investments, copyright, mass media, labor, securities and stock market, disputes resolution, mediation, insolvency. Furthermore, many of the firm’s clients have been successfully represented before public authorities and courts in civil, commercial, administrative and criminal cases. Pragmatism and practical orientation are among the distinctive features evinced by Gramatskiy & Partners in all the projects it was involved in; the firm bears responsibility for every memorandum and for every legal opinion, presented to the client. Gramatskiy & Partners structures and describes every legal procedure, as if the firm itself were to implement it in practice. In addition Gramatskiy & Partners pays special attention to the issues of confidentiality of the projects in which it assists because the law firm realizes the importance of information secrecy for clients.
pants (Shareholders) aimed at amending the company’s statutory documents, shall be subject to prior notarization. It means that the authenticity of the signatures of founding members and/or their authorized representatives and/or the chairman and secretary of the General Meeting of Participants (Shareholders) shall be notarized, otherwise the State Registrar will not change the company’s data contained in the Unified State Register. However, the notary-authenticated signature requirement shall not apply to any other decision of the company’s superior body unless such decision is subject to state registration. According to valid Ukrainian legislation a notary is obliged, prior to notarization of signatures, to identify the person in question, examine his/her civil capacity and capability and to check the powers of representatives. Thus, it has become too difficult to amend the company’s statutory documents without the prior consent of its founder(s) or their authorized representatives. The new edition of the abovementioned Law contains other provisions directed at simplifying the process of business registration, such as: notaries and an accredited public entity are able to perform state registration; state registration can be
performed irrespective of the registered address of legal entities; the list of data included in the State Register has been extended; the virtual office has been introduced.
Recommendations for the Protection of Corporate Rights
Ukrainian legislation is subject to frequent amendments. Thus, nobody can guarantee the stability of the Law of Ukraine On State Registration of Legal Entities, Individual Entrepreneurs and Non Governmental Organizations and introduction of new provisions or abolition of existing ones may be possible. Therefore, it is highly recommended that you protect your business in any manner appropriate. One of the most efficient solutions for protecting your business is drafting an effective company Charter. The founders may include in the Charter a requirement to notarize the authenticity of the signatures on all those documents that are subject to state registration. The adoption of such provisions will result in improving the efficiency of state registration of any amendments to the company’s statutory documents and will reduce the number of illegal takeovers of businesses.
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Corporate Disputes
Corporate Action as an Indicator of Investor Protection Expansion Capabilities Claim
Oleg MALINEVSKIY
Serhiy CHUYEV
Partner, EQUITY
Partner, EQUITY
Pending Reforms
Investment in the capital of Ukrainian enterprises has traditionally been considered a risky deal. Obsolete, sometimes controversial corporate law, the generally low legal culture of participants of business relationships coupled with the inefficiency of the judicial system have created a dangerous mixture that has easily undercut the most sophisticated business plans, without guaranteeing investors at least a return of their investment, not to mention expected profits. Litigation in corporate relations has become commonplace, an inherent part of doing business in Ukraine. Imperfect legal means to prevent and resolve corporate conflicts take the leading position in the list of the main reasons for the weak position of Ukraine as a partner in the international capital market. Thus, according to the world rankings of investment attractiveness made by the Hamburg Institute of World Economy International Business Compass, our country occupied 130th position out of 174 countries in 2016, and has become “the biggest loser”, with a fall of 41 positions (89th place in 2015). The decline in confidence in Ukraine has formed several negative trends. The first is that preference is given to foreign jurisdictions with a much richer tradition in the corporate sector (United Kingdom, Cyprus, the Netherlands and others), especially as it relates to a valuable commercial asset, and as a consequence an increase in the share of disputes considered by foreign courts or arbitration courts. It is pertinent to mention a dispute submitted for consideration to the High Court of Justice in London; that is, a multimillion dispute between Ukrainian oligarchs Igor Kolomoisky and Victor Pinchuk
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about unpaid dividends of a ferroalloy holding, which includes the Nikopol, Zaporizhia and Stakhanov ferroalloy plants, Marganets and Ordzhonikidze GOKs. Another, more frustrating trend is the development with investors of a sustainable reluctance to invest, and often fear of investing, in Ukrainian companies. The current trend is especially notable against the background of demonstration by the domestic economy of signs of recovery. Indeed, despite the low value of assets and the objective prospects for overall economic growth, no investment boom has been observed yet. We believe that the most effective recipe for improving the situation and correcting these negative trends is to conduct systemic legal reforms of the corporate sector aimed at the creation in Ukraine of a corporate environment in which every conscientious investor would feel confident and secure. Given the current pan-national trend of reforming the key areas of social and economic life, and taking into account the politicians’ awareness of the role of investment in the business, the prospect of necessary legislative changes is more than real. Despite the optimism caused by the elaboration of important legislation in certain substantive aspects of corporate relations (e.g., for limited liability and additional liability companies, corporate agreements, etc.), prevention and resolution of possible legal conflicts still remains a super important and underdone aspect of the reform. Proceeding from the logic of the ancient Roman expression “Si vis pacem, para bellum” ( “If you want peace, prepare for war”), legislators must think ahead of the curve to prevent corporate fraud to the maximum possible extent.
For situations where violation of rights of a participant of corporate relations cannot be prevented, legal instruments of court protection become especially important. For the time being the means to protect corporate rights are mainly determined by general rules, in particular Articles 16, 98, 215 of the Civil Code of Ukraine, Article 20 of the Commercial Code of Ukraine. De facto, the first special legislative act regulating instruments of judicial protection of investors was the Law of Ukraine On Amendments to Some Legislative Acts of Ukraine Concerning Protection of Rights of Investors, which came into force on 1 May 2016, and which entered the institution of a derivative claim. That type of claim was positioned in the national law system as a novel way of protecting the rights of a minority shareholder, whereby a legal entity filed a court claim against officials of such an entity for damages caused by unlawful actions of officials of the legal entity. Thus, there were expectations of establishing, through a court procedure, the right of minority shareholders to influence management of the legal entity, while protecting both their rights as shareholders and the rights of the legal entity. However, although the legislator tried hard to promote this way to protect rights, in practice it has not found sufficient demand as only 13 derivative claims were filed throughout Ukraine since the time of the law coming into force (which is more than 11 calendar months). By comparison, the total number of corporate disputes brought before the Commercial Court of Kyiv in 2016 amounted to 274 cases, and only 3 of them — upon derivative claims. This unpopularity of the derivative court action can be explained by its narrow spectrum of action, and ultimately — by its inefficiency. Indeed, collection of money from a director in favor of the enterprise cannot be considered an adequate satisfaction to the person injured in a corporate conflict, who will remain outside the management of the company. Neither can a derivative court action provide protection to issues that are more important for a minority shareholder, in particular, access to dividends, contesting the validity of company contracts that contradict the interests of the company and, accordingly, minority members (shareholders), and others. If the question of the invalidity of the contracts of a debtor is more or less settled
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EQUITY
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Address: 14D Bekhterevsky Lane, Kyiv, 04053, Ukraine
QUITY is one of the leading law firms in Ukraine which advises clients (the largest local and international companies) in core practice areas. The firm enjoys a reputation as professional legal practitioners possessing the most challenging legal experience and a deep specialization in the fields of Litigation, Debt Restructuring (Bankruptcy), White-Collar Crimes, Tax Law & Tax Disputes, Banking and Finance, Corporate and M&A. The EQUITY law firm team consists of more than 40 lawyers, including six partners and four counsels. Many of them have been working in the company for over 10 years. EQUITY Lawyers conduct comprehensive support of client projects: from the moment of receiving the task to full implementation of the solutions in favor of the client. Recognition In 2017 EQUITY firmly established itself as a leading law firm in such practice areas as Litigation, White-Collar Crimes and Bankruptcy. In particular, EQUITY has become the holder of a prestigious Legal Award — “Best Law Firm in 2016 in Litigation”. We also became finalists (TOP 5 law firms) in the
by unstable court practice of application of Article 215 of the Civil Code of Ukraine, which allows for qualification of a minority member as “... another person concerned”, who has the right to contest the validity of a juridical act made by the company, the situation with the protection of the right to receive dividends is much worse. After all, the court practice, applying a formal approach, follows the path of “no decision of the meeting — no dividend”, thereby depriving a member (shareholder) of not only a fundamental right to get profit, but also of the possibility to enforce the right (Paragraph 3.1. of the Regulation SECU Plenum On Certain Issues of Resolving Disputes Arising from Corporate Relations No. 4 of 25 February 2016). The above example shows that a significant improvement in the security of members (shareholders) of the company seems to be impossible without certain legislative changes in the institutions of ways to protect violated rights, including through direct legislative provisions of the right of a member to: 1) recovery of damages caused to the member (shareholder) of the company as a result of illegal actions or omission of the company or its member (shareholder). This mechanism will be particularly relevant in cases where the company unlawfully and by abuse, often with the participation of one of the members (shareholders), avoids the distribution of profits and payment of dividends. 2) contest the validity of contracts made by the company with a third person and which violate the law, interests of the company or rights of the member.
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nomination “Best Law Firm in 2016 in Bankruptcy”. EQUITY was included to the TOP-13 leading law firms in Ukraine in 2016 according to the results of annual research TOP-50 Leading Law Firms of Ukraine. 10 of the disputes supervised by EQUITY lawyers, entered the TOP-50 largest litigations in Ukraine in 2015 according to Yuridicheskaya Practika Publishing. EQUITY was recommended as one of the leading Ukrainian firms in Dispute Resolution, Banking & Finance, Tax, Real Estate and Corporate by Legal 500 EMEA 2017 and was recognized in Litigation and Bankruptcy by Chambers Europe 2017 and in Energy and Infrastructure, Banking and Finance and M&A by IFLR 1000 2017. Clients Among the firm’s clients are the following leading companies: Azovmash, National Bank of Ukraine, Concorde Capital, Knauf, Furshet, AIS Group, Vernum Bank, TrustBank, Ukrainian business group, RwS Bank, Agroholding Mriya, Ferrexpo AG, NEST Corporation, ACME-Color, AutoKraz, Arterium Corp, Terra Bank, Platinum Bank, Zaporizhtransformator, Ukrferry, Deposit Guarantee Fund, Cristalbank, SOTA Cinema Group, etc.
3) obtain information, in the scope necessary for the timely prevention and effective protection of violated rights. In preventing possible abuse on the part of the plaintiffs, the above-mentioned rights should only be given to members (shareholders) who possess a significant holding in the capital of the company — a share of at least 10% of its capital.
Unification of Jurisdiction
A corporate dispute is a dispute between shareholders (members), in fact, owners of an enterprise, which consists of a number of diverse categories of disputes: a dispute about ownership of a share, setting aside a decision of the general meeting, invalidity of agreements made to the detriment of the interests of a shareholder, etc. However, at the legislative level the notion of a corporate dispute is narrowed, including that artificially by court practice formed over a considerable time. Ignoring the specifics of corporate disputes and their complexity leads to ineffective protection of the rights and interests of shareholders and, therefore, impossibility of real legal protection of such rights. In the initiation of a corporate conflict and/or protection, shareholders resort to a complete range of available legal mechanisms, including: — replacement of a director through the appointment of a new one or reinstatement of the previous director; — imposition of a ban on the right of a state registrar to amend information about a
legal entity in the Unified State Register of Legal Entities and Individual Entrepreneurs; — seizure of assets of entities; — initiation of claims for recognition of ownership of shares (share of holding); — recognition of decisions of the general meeting as invalid; — recognition of contracts made to the detriment of a shareholder as invalid; — redress to company officials; — recognition of constitutional documents as invalid and termination of a legal entity. However, consideration of such disputes in accordance with current legislation should be carried out in compliance with the rules (depending on the category of a dispute) of economic, civil, and administrative jurisdiction. Thus, corporate disputes in Ukraine are almost always accompanied by a set of trials in all jurisdictions. In our opinion, not referring disputes about ownership of shares (share of holding) to corporate disputes is a serious mistake, since any dispute upon the results of which a member (shareholder) of the company is deprived of corporate interest, is primarily of a corporate nature. We hope that with the improvement in the legal regulation of corporate areas the complexity of corporate disputes as one of the main features of such disputes has to be taken into account. We believe that the concentration of all aspects of the contentious relationships of the parties within the same proceedings will enable us to protect the participants of corporate relations more effectively and efficiently.
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Counterfeiting & Piracy
Indemnification of Damages as a Deterrent for Infringers
Alexander PAKHARENKO Partner, Pakharenko and Partners IP and Law Firm. Alexander Pakharenko is an Attorney-at-Law, registered Patent Attorney and a Partner with Pakharenko & Partners in Kyiv, Director of the Ukraine Alliance Against Counterfeiting and Piracy. Graduate of the Kyiv Polytechnic Institute, Kharkiv Institute of Intellectual Property, Law Faculty of the Interregional Academy of Personnel Development in Kyiv, Academy of Advocacy of Ukraine. He possesses more than 15 years practice in the field of IP, which encompasses consulting on all aspects of IPR protection, licensing and enforcement, representing clients in law-enforcement and customs agencies, civil and commercial courts, legal counseling on anti-counterfeiting and anti-piracy measures and developing anti-counterfeiting and anti-piracy strategies. Alexander takes an active part in conducting training sessions for lawenforcement and customs officers.
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ndemnification of damages in the cases relating to IPR infringements performs two functions. The first one is compensation of property damage caused as a result of infringements and the second one is deterrence for potential infringers.
Are There any Respective Legislative Provisions in View of the EU-Ukraine Association Agreement?
The Articles 240, 240 of the Agreement on Association between Ukraine and the EU are implementing in Ukrainian legislation the provisions of Article 13 of the Directive 2004/48/EC of the European Parliament and
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Evgeniy KOMPANETS Deputy Head of Legal Department, Pakharenko and Partners IP and Law Firm. Evgeniy Kompanets has three majors (including intellectual property). Between 2002 and 2005 he worked in the state system of intellectual property protection. He joined Pakharenko and Partners IP and Law Firm in 2005. His practice in the field of IP encompasses consulting on the issues of protection and enforcement of IP rights. Mr. Kompanets is particularly focused on anticounterfeiting work in the framework of criminal and civil proceedings as well as customs law. Evgeniy also takes an active part in developing recommendations aimed at improving legislation in the field of IP and enforcement. He is a regular contributor to specialist publications and gives lectures to audiences.
Council of 29 April 2004 on the enforcement of intellectual property rights (hereinafter — the Directive). According to these provisions Ukraine shall ensure the availability of the compensation that shall be paid to the right holder in the extent compatible to the offense in order to indemnify the costs incurred by the right holder for elimination of the consequences of this infringement. In particular, the Article 240 of the Agreement on Association between Ukraine and EU determines as follows: “1. The Parties shall ensure that when the judicial authorities set damages: (a) they shall take into account all appropriate aspects, such as the negative economic consequences, including lost profits, which the injured party has suffered, any
unfair profits made by the infringer and, in appropriate cases, elements other than economic factors, such as the moral prejudice caused to the right holder by the infringement; or EU/UA/en 299 (b) as an alternative to subparagraph (a) of this paragraph, they may, in appropriate cases, set the damages as a lump sum on the basis of elements such as at least the amount of royalties or fees which would have been due if the infringer had requested authorization to use the intellectual property right in question”
What is the Current EU Practice in This Sphere?
The EU Observatory on Infringements of IP Rights under the EUIPO decided in 2009 on the necessity to study the IPR enforcement practices existing in EU countries and evaluate the overall effectiveness of the legislative framework with regard to all categories of IP rights. In the framework of this work the report titled “Damages in Intellectual Property Rights” was published in 2010, which was further updated in 2014. It is particularly noted in the report that in some EU member states the compensation of damages is not ordered for all respective types of damages, limiting the types and amounts of the damages that may be recovered. Some courts in EU member states are not willing to order compensation of damages that had apparently been caused, but which are difficult to calculate precisely. It is emphasized in the report that as a result of these legal and practical deficiencies a certain part of the profit is often retained by an infringer, even if the civil proceedings initiated by a right holder were “successful”. In this case the legal costs or other costs spent for addressing this offence are usually covered by a right holder. As a result, economically, the right holder is the losing party, while the infringer is the winning one despite the court ruling (on recovery of damages) taken in favor of the right holder. According to the authors of the report, such situation is not a deterrent for potential infringers of IP rights since if the civil proceedings end up with such small amounts of economic punishments an infringer’s profit will be much bigger than the amount of the compensation he would have to pay to the right holder, and therefore such punishment will rather encourage infringers to commit further offences. As a result, the researchers
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PAKHARENKO & PARTNERS
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Address: 72 Chervonoarmiyska Street, Olimpiysky Business Centre, Kyiv, 03150, Ukraine
P and Law Firm Pakharenko & Partners was established in 1992 and has offices in Kyiv and London. As a firm providing full IP service coverage we are keen to develop successful protection and enforcement strategies for our clients, covering the development of IP portfolio, acquisition of IPRs, commercialization of IPRs, enforcement and management of IPRs including patents (inventions and utility models), designs, trademarks and geographical indications, domain names, copyright and related rights, plant breeders’ rights at both national and international levels. The firm provides assistance to national and foreign clients in securing and enforcing their intellectual property rights in Ukraine and CIS countries. The company’s lawyers have been involved in anti-counterfeiting and anti-piracy activities since the implementation of the relevant provisions on IPR enforcement in Ukrainian legislation. Our staff also possess expertise in pharmaceutical law, competition law, media law, corporate and commercial law, commercial litigation.
conclude that the small amounts of compensation ordered by European courts are incompatible to the extent of the respective offences and the threats posed by counterfeiting and piracy, therefore taking such judgments not only fails to compensate the damages caused to right holders but also fails to prevent counterfeiters from committing offences and may even encourage counterfeiting and piracy economically.
Are There any Ways to Improve the Situation?
The experts participating in the European study propose the following measures. It is necessary to provide such rules for ordering compensation of damages under which no economic advantage shall exist for the infringer carrying out their illegal activity in the manufacture and distribution of counterfeit and pirated products. At the same, time the experts emphasize that such an approach should not be viewed as “punishing” but rather as “compatible” remedies that provide compliance with the requirement of the Directive regarding ordering compensation of damages that are to be “deterring”, and no “reward” should be left for the infringer either in the form of profit or any economic advantage. Upon calculation of damages almost all EU member states are taking into consideration the right holders’ lost profit, which is normally determined as the profits that could have been obtained by the right holder in the absence of any infringement or the profits that could be reasonably expected. In most EU member states compensation of damages is also ordered in the cases where counterfeit
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Tel.: +380 44 593 9693 Fax: +380 44 451 4048 E-mail: pakharenko@pakharenko.com.ua Web-site: www.pakharenko.com
We are able to service our clients’ needs around the world through our established network of associates. The special relationships developed by our company with many attorney firms in key foreign markets provide ongoing, substantial benefits to our internationally focused clients. Main practice areas: Intellectual Property Law, Anti-Counterfeiting and AntiPiracy Operations and Legal Support, Media Law, Advertising Law, Competition Law, Pharmaceutical Law, Corporate Law, Customs Law, Commercial and IP Litigation Membership in organization: The company and its members are actively involved in the operation of a number of national and international intellectual property associations, such as: AIPPI, INTA, FICPI, LES, MARQUES, PTMG, ECTA, ACG, IACC, ICC/CIB, ICC Ukraine, IBA, European Business Association (EBA), American Chamber of Commerce (ACC) in Ukraine, Ukrainian Patent Attorney’s Association (UPAA), Ukrainian Alliance Against Counterfeiting and Piracy (UAACP) which is a member of the GACG Network, CIOPORA.
goods were seized prior to entering the market. Upon calculation of damages the quantity of the infringing goods is multiplied by the price of goods determined by the court, and in cases where the damages caused cannot be actually calculated, the court sets the damages as a reasonable lump sum (royalty) for each product which shall be considered as minimal compensation. Moral prejudice caused to the right holder shall also be considered, which is also the part of the actual damage caused. Since this kind of damages is difficult to assess, in most cases the amount of compensation is ordered at the discretion of the judges which tend to order that the moral prejudice be compensated as a lump sum. Also, the right holders may claim compensation of damages resulting from destabilization of the market, from damaging their image and business reputation, damages from the decrease of distinctiveness of trademarks, reduction of average prices for the products if they can support these claims with concrete and objective evidence.
What is the Situation in Ukraine?
Under Articles 16, 432 of the Civil Code of Ukraine, the right holder has the right to demand compensation, in particular with regard to the lost profit and moral damage, caused as a result of the infringement of IP rights. As a rule, the experts appointed by the investigator/court calculate the damages in the form of shortcoming in revenue based on the evaluation procedure of the accrual of revenue/ income (by multiplying the quantity of the revealed and seized fake goods by the price of
original goods) and the method of royalties. In this case the provisions of Article 22 of the Civil Code of Ukraine are applied, under which if a violating person receives incomes in this connection, the amount of lost profit to be indemnified to a person whose right was violated may not be less than incomes received by a violating person. It is particularly worth mentioning that, unlike in most EU member states, some experts and judges in Ukraine maintain the position according to which the indemnification of losses cannot be ordered if counterfeit goods were seized before entering the market. In practice, it is very difficult for a right holder to recover the costs/compensation, since most infringers realize the illegal character of their actions and are aware of the possible responsibility for the offence and, therefore, they do not register any movable or immovable property in their names, which makes it impossible to recover any costs from them (usually unemployed). Currently, the recovery of damages/compensation is rather an exception than a regular practice, but we may say that there is some progress. Professionals understand that the conscious actions of infringers are aimed at illegal profits and avoiding responsibility through property retention.
As a Conclusion
Implementation of the deterrence function of damage recovery in cases related to IPR infringements shall contribute to the overall decrease in the scale of counterfeiting and piracy and creating favorable conditions for improving the investment climate in Ukraine.
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Criminal Process
Criminal Process in Ukraine
Viktor BARSUK
Taras POSHYVANYUK
Senior Partner, EQUITY
Partner, EQUITY
n 2014, after the Revolution of Dignity in Ukraine, a major shift occurred in geopolitical priorities. The Verkhovna Rada of Ukraine and the President of Ukraine declared their commitment to Ukraine’s integration into the EU. However, our European partners have set an indispensible condition for Ukraine’s integration — eradication of corruption. In early 2016, Ukrainian President Petro Poroshenko said that the country had all the prerequisites to combat bribery and corruption. To that end an entirely new and politically independent anti-corruption bodies have been created such as the National Anti-Corruption Bureau of Ukraine and the Specialized Anti-Corruption Prosecution. In addition, reform has been carried out by the structural units of the Ministry of Internal Affairs of Ukraine to create the National Police of Ukraine. It should be noted that the activities of anti-corruption bodies marked a new milestone in the development of the criminal law practice in Ukraine. This development is primarily due to the fact that in comparison with other bodies of preliminary investigation, the National Anti-Corruption Bureau of Ukraine has started broader use of procedural instruments determined by the Code of Criminal Procedural of Ukraine, particularly in the part regarding use of new technologies, acquiring information through international cooperation, etc. It should be noted that such procedural actions do not always meet the requirements of current criminal procedural legislation of Ukraine which is, in turn, rather often and successfully used by the defense, and it is under such conditions that new judicial practice in criminal law is being formed. A striking example of what is mentioned above is the formation of court practice on
appeal by a person concerned against a sentence approving a plea bargain. Thus, the provisions of the new Code of Criminal Procedure provide for the possibility of making, at any stage of the criminal proceedings, a plea bargain. It should be noted that such provision was absent in the Criminal Code of 1960, and, thus, pre-trial investigation bodies, without having full understanding of the benefits of the deal, were reluctant to use that legislative novelty. In carrying out pre-trial investigation, detectives of the National Anti-Corruption Bureau of Ukraine, on the contrary, exercise the option of making a plea bargain on every occasion in order to obtain a judgment (sentence). Despite the guilty plea by, for instance, the chief of a state enterprise, who said the decision will declare the fact of pressure on him by a representative of a state body, in whose jurisdiction the enterprise is located. Later, this sentence will have a prejudicial meaning in proving the guilt of the official of the state body, who allegedly exerted pressure. In this case, such official will, because of the requirements of Article 394 of the Criminal Code of Ukraine, be unable to appeal against the sentence approving the plea bargain and declaring the fact of committing a criminal offense. However, court practice went another way, different from what is provided for by the Criminal Code of Ukraine. Thus, by this time a number of decisions of appellate and cassation instances have been made under which sentences approving plea bargains are canceled upon a claim by a person who is not a party to such a bargain, provided that the person proves violation of his or her rights and interests by the bargain. Therewith, the legal grounds for appeal by the person concerned of the decision approving the plea bargain, as referred to by the
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courts, are provisions of Article 6 and Article 13 of the European Convention on Human Rights, which are superior to national procedural law of Ukraine. Quite interesting and, at the same time, contradictory is court practice on the dismissal of criminal proceedings on the basis of a court ruling of the investigating judge due to omission by investigators or detectives during the preliminary investigation. Thus, justifying the violation of the terms of the preliminary investigation after the announcement, the suspected person’s lawyer or the suspect himself apply to the pre-trial investigation body with a request to dismiss criminal proceedings, in which case they usually receive denial or such a request simply remains unanswered. Afterwards, the applicant applies to the court with the motion about omission by the preliminary investigation body, and asks to cancel the notification of suspicion and to adopt a ruling to dismiss criminal proceedings. According to court practice, there are already numerous cases where such kind of motions were granted and decisions obliging a pre-trial investigation body to dismiss criminal proceedings were adopted. Continuing the topic of the formation of court practice in the investigation of crimes bearing elements of corruption, it should be noted that in recent years the Verkhovna Rada of Ukraine has adopted rules that stepped up criminal liability for corruptionrelated offences. In addition, the notion of “corruption offence” was defined. An example of the abovementioned rules of criminal law, which set increased liability of persons for corruption-related offences may be the recent instigations of criminal prosecutions of inclusion by Ukrainian MPs of false information in the declarations of their property or other objects subject to declaration (Article 366-1 of the Criminal Code of Ukraine). Lawmakers also excluded the possibility of exemption of persons who committed corruption-related offences from criminal liability due to their active confession of guilt (Article 45 of the Criminal Code of Ukraine), reconciliation of the offender and the victim (Article 46 of the Criminal Code of Ukraine), release of persons on bail (Article 47 of the Criminal Code of Ukraine), and change of circumstances (Article 48 of the Criminal Code of Ukraine), as well as the appointment of a milder punishment than that provided for by law (Article 69 of the Criminal Code of
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EQUITY
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Address: 14D Bekhterevsky Lane, Kyiv, 04053, Ukraine
QUITY is one of the leading law firms in Ukraine which advises clients (the largest local and international companies) in core practice areas. The firm enjoys a reputation as professional legal practitioners possessing the most challenging legal experience and a deep specialization in the fields of Litigation, Debt Restructuring (Bankruptcy), White-Collar Crimes, Tax Law & Tax Disputes, Banking and Finance, Corporate and M&A. The EQUITY law firm team consists of more than 40 lawyers, including six partners and four counsels. Many of them have been working in the company for over 10 years. EQUITY Lawyers conduct comprehensive support of client projects: from the moment of receiving the task to full implementation of the solutions in favor of the client. Recognition In 2017 EQUITY firmly established itself as a leading law firm in such practice areas as Litigation, White-Collar Crimes and Bankruptcy. In particular, EQUITY has become the holder of a prestigious Legal Award — “Best Law Firm in 2016 in Litigation”. We also became finalists (TOP 5 law firms) in the
Ukraine) and release with probation (Articles 75, 79 of the Criminal Code of Ukraine). This means that the courts, in compliance with the requirements of criminal law, started to pass sentences with award of penalties specified in the sanction part of relevant articles of the Criminal Code of Ukraine without using the rules on exemption from punishment, which existed until recently. A characteristic feature of 2016 is that, despite the large number of criminal proceedings instigated for committing corruption-related offences, the number of cases of illegal seizure of enterprises (businesses) has increased significantly. The root cause of these regrettable statistics was the adoption in 2015 of a number of laws and regulations on decentralization of powers in the sphere of state registration of legal entities and state registration of rights in immovable property. The adoption of those regulations was well intentioned — to simplify doing business in Ukraine by giving notaries public the authority of the state registrar, eliminating a linkage to a particular administrative-terri-
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nomination “Best Law Firm in 2016 in Bankruptcy”. EQUITY was included to the TOP-13 leading law firms in Ukraine in 2016 according to the results of annual research TOP-50 Leading Law Firms of Ukraine. 10 of the disputes supervised by EQUITY lawyers, entered the TOP-50 largest litigations in Ukraine in 2015 according to Yuridicheskaya Practika Publishing. EQUITY was recommended as one of the leading Ukrainian firms in Dispute Resolution, Banking & Finance, Tax, Real Estate and Corporate by Legal 500 EMEA 2017 and was recognized in Litigation and Bankruptcy by Chambers Europe 2017 and in Energy and Infrastructure, Banking and Finance and M&A by IFLR 1000 2017. Clients Among the firm’s clients are the following leading companies: Azovmash, National Bank of Ukraine, Concorde Capital, Knauf, Furshet, AIS Group, Vernum Bank, TrustBank, Ukrainian business group, RwS Bank, Agroholding Mriya, Ferrexpo AG, NEST Corporation, ACME-Color, AutoKraz, Arterium Corp, Terra Bank, Platinum Bank, Zaporizhtransformator, Ukrferry, Deposit Guarantee Fund, Cristalbank, SOTA Cinema Group, etc.
torial unit in the commitment of registration actions (so-called extraterritoriality of business registration) and others. However, in reality the effect of the abovementioned Law has led to the revival of such already partially forgotten phenomenon as raiding, i.e. illegal takeover of enterprises. In order to eliminate those negative effects, the Verkhovna Rada of Ukraine adopted amendments to the Criminal Code of Ukraine and strengthened criminal penalties both for the individuals directly involved in illegal takeover of enterprises and for the people who actually acted as accomplices, namely state registrars and notaries. In addition, in late 2016 legislators corrected the mistake, which caused many illegal takeovers of enterprises, through the adoption of a law that abolished provisions of extraterritoriality of commitment of registration actions. Special consideration should be given to the trends in court practice in the sphere of criminal law awaiting us in 2017. Currently, there are firm grounds to say that the current year will be one of the most
active in the field of criminal justice. This is because of the long-awaited completion of pre-trial investigation and transfer of high-profile criminal proceedings for trial. For example, the case of the shooting of protesters during the Revolution of Dignity, the case against former Ukrainian President Viktor Yanukovych, which are currently being considered by the Prosecutor-General’s Office of Ukraine. In addition, the public will require some definite result from the work of newly-established anti-corruption agencies, namely the National Anti-Corruption Bureau of Ukraine and the Specialized Anti-corruption prosecutors, because two years of pretrial investigation is more than sufficient to transfer a case to court. However, the most important event that will have a direct impact on the further development of court practice will, no doubt, be the professional competitive process of selection of candidates for posts of judges of the new Supreme Court and, in fact, the very beginning of the activity of the said court.
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Cross-Border Debt Recovery
Cross-Border Debt Recovery
Yuri BOTIUK Partner, Grosvenor Law, London. Yuri has been acting in complex litigation and arbitration arising out of Ukraine, Russian, Kazakhstan and the Former Soviet Union for the past 15 years. Yuri regularly appears as an expert at conferences regarding FSU disputes issues and is also the Chairman of the British-Ukrainian Law Association
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conomic and political crises generate disputes in which often one party is a creditor and other is a debtor who owes money or other assets to the creditor. This involves not only defaults on loans, but also disputes which arise from joint venture agreements, sale and distribution contracts, corporate conflicts, etc. Often, the recovery of the debt is problematic or even impossible within Ukraine. Usually, this is due to one or a few of the following circumstances: (i) lack of enforceable assets, including dissipation of secured assets; (ii) complex offshore structures; and (iii) inefficiency of Ukrainian courts and enforcement authorities. Unfortunately, the chances for a creditor to obtain recovery do not increase even when the debtor’s actions involve fraud or other wrongdoing. In such situations, a creditor should consider debt recovery measures outside Ukraine. Such international actions are particularly relevant in high value claims where the debtor’s business activity, or at least corporate structure, is not limited to Ukraine. The Courts of England & Wales are, rightly, considered as particularly helpful to assist in finding the international assets of Ukrainian debtors.
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Iurii RYBAK Associate, Spenser & Kauffmann
What support can be provided or gained through English courts of law?
In order to receive support from an English court, the claimant does not always need to show that the underlying case is governed by English Jurisdiction. The High Court of England & Wales has well established practice of issuing orders, including freezing injunctions, in support of foreign proceedings, including in Ukraine, and arbitrations. Two of the most useful interim remedies available from an English court are: 1. Disclosure Orders/Norwich Phamacal Orders, which force third parties to disclose the flow of money/assets; 2. Worldwide Freezing Orders, which secure a debtor’s asset once they are discovered. Pursuant to a Norwich Phamacal Orders innocent third parties that were dealing with the debtor must disclose information about the debtor. Such third parties are frequently the companies and/or persons providing nominee services. So, a Norwich Pharmacal Order is particularly useful for tracing assets through a complex web of corporate structures/trusts. A Worldwide Freezing Order (WFO), can have a significant effect on a debtor since it:
(i) freezes assets not only in England and Wales but worldwide; (ii) freezes assets owned both directly and indirectly; (iii) usually includes an obligation to disclose the information about assets, including those owned indirectly; (iv) breach of the order can result in contempt of court and imprisonment of up to 24 months. Another aspect that distinguishes interim orders in England and Wales is the fact that they are usually granted ex parte, i.e. without notice of the party against which it is issued. Hence, a person, who is the ultimate beneficial owner of the business only gets to find out about the WFO when the order is already issued and is immediately effective. The debtor will have the opportunity to set out his case at the return date. However, in the meantime, he will be at risk of imprisonment if he deals with his assets.
When Should You Consider Going to English Courts?
Even though an English court is flexible in establishing its jurisdiction, it needs to have reasonable grounds for doing so. Below is a non-exhaustive list of potentially relevant issues that the court may consider relevant: — the debtor has (or there is reasonable expectation) assets in England and Wales; — all or one of the debtors are located in England and Wales; — respective documents/contracts are issued under English law; — fraud (at least in part) took place in England and Wales; — there are related arbitration proceedings in England and Wales. Establishing the jurisdiction of an English court is an important step towards receiving a WFO, but is not wholly determinative. The creditor also has to show to the court that he has a good arguable case and there is a risk of dissipation of the debtor’s assets.
When to issue First Instance Proceedings?
If a debtor is resident in England and it appears there is little prospect of him returning to Ukraine, first instance proceedings can be issued in England for breaches of Ukrainian law/contracts. The defendant cannot deny the jurisdiction of the English court and the English court will (subject
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Spenser & Kauffmann
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Address: 7 Klovsky Uzviz, 14th Floor, Kyiv, 01021, Ukraine
penser & Kauffmann is one of the leading full-service law firms in Ukraine. Since its foundation in 2006, Spenser & Kauffmann aims to provide its сlients with the highest standards of legal advice and exemplary service. We represent our сlients in all areas of business law, including mergers and acquisitions, corporate, antitrust, intellectual property, IT, labor & employment, insurance law, banking and finance, capital
to certain conditions) apply Ukrainian law (Civil Code and/or contract) with the assistance of expert evidence to determine the dispute. The idea is that the debtor should not be able to run away from justice by “hiding” in England.
How to make it Work?
Preparation, preparation and more preparation is the key ingredient for success in a case involving an obtaining interim remedy from an English court. To be successful, in addition to having an excellent English and Ukrainian legal counsel, a creditor will usually need to engage an investigation firm in order to trace the debtor’s assets. The assistance of
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Tel.:+380 44 288 8383; 288 6707 Fax: +380 44 351 2155 E-mail: office@sklaw.com.ua Web-site: www.sklaw.com.ua
markets, construction, energy & natural resources, enforcement proceedings, private clients, tax consulting and litigation. Throughout the last ten years, our firm has been recognized among the leaders by various prestigious international and domestic rankings in different legal spheres. Our lawyers speak English, French, German and Czech, which allows us to understand and communicate with domestic and international сlients without psychological or language barriers.
other international lawyers (Cyprus and the BVI are common jurisdictions) to assist with enforcement of the order may also be required. The efficiency of an English court in debt recovery actions has been shown in practice in a number of cases, including those related to Ukraine and other former Soviet Union countries: in JSC Mezhdunarodniy Promyshlenniy Bank and Another v Pugachev the High Court in London sentenced Russian businessman Sergei Pugachev to two years in prison for contempt of court (Mr Pugachev was found to have breached several worldwide freezing orders made by the High Court relating to money he allegedly stole from the Bank); in BTA Bank v Ablyazov and Vs-
eukrainskyi Aktsionernyi Bank v Maksimov an English court was heavily involved.
Conclusion
An English court considers its role as supportive of other jurisdictions in exercising its powers, but it does not seek to supersede them. English courts provide a number of tools to assist in effective asset recovery with respect to Ukraine-related matters. To be effective in obtaining interim remedies provided by an English court, a client will need an efficiently run, professional team of both Ukrainian and English lawyers working together with investigators/accountants.
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Cross-Border Debt Restructuring
Cross-Border Debt Restructurings in 2016
Glib BONDAR
Anna MELNYCHUK
Senior Partner, AVELLUM
Associate, AVELLUM
n 2016, Ukrainian business and foreign investors expected to see more nimble structural reforms in the Ukrainian economy, which would boost long-awaited fresh financing by the private sector. Nevertheless, some Ukrainian corporates managed to launch or even complete restructuring of their debt resting upon the sovereign and quasi-sovereign debt restructurings accomplished at the end of 2015 and beginning of 2016. From public sources, among Ukrainian-based companies, which were either involved in cross-border debt restructurings in 2016 or are still on the restructuring path are DTEK, Metinvest, Mriya and Ukrlandfarming. In this article, we will look at the restructuring efforts of some of the key players in the Ukrainian economy focusing on the main features of the recent debt restructurings and Ukrainian law driven transactional challenges in the restructuring process.
dissenting creditors. In other words, it allows to accomplish debt restructuring without consent from all the creditors. On its latest restructuring deal, DTEK once again resorted to the UK scheme of arrangement. This time, the scheme applied to all of its outstanding Eurobond debt and provided DTEK’s bank lenders an option to exchange their debt into the new notes, issued by DTEK as a result of the scheme. Similarly, Metinvest debt restructuring is being implemented through the scheme of arrangement. But unlike DTEK’s restructuring, it covers both bank and bond debt. Under the Metinvest scheme, the existing notes should be exchanged into the new notes and the existing bank debt should be consolidated into a single amended loan. Both DTEK and Metinvest debt restructurings included moratorium schemes and standstill agreements, which provided for temporary moratoriums on enforcement actions by the noteholders and banks, respectively, and thus, were necessary for effective negotiations with creditors. Recent debt restructurings generally involved financial instruments and transaction structures, which are standard for the deals governed by English law. Yet, some of them became more nuanced either due to the scope of debt restructuring or Ukrainian legal developments. In 2016, corporate debt restructurings were particularly complex given that they covered essentially all of the borrowers’ long-term debt and included both bond and bank debt, or allowed exchange of one instrument into another. Thus, the priority of creditors’ claims, sharing of payments as well as management and sharing of security, became more complicated. Among these issues, Ukrainian lawyers were par-
I
Big Picture of Debt Restructurings in 2016
The previous year began with a number of quasi-sovereign and sovereign-guaranteed debt restructurings. Ukrzaliznytsia reprofiled its debt under its Eurobonds by exchanging the outstanding loan participation notes into new notes. Yuzhnoye and Ukravtodor sovereign-guaranteed debt was exchanged into a combination of notes and GDP-linked securities issued by Ukraine. Meanwhile, corporate cross-border debt restructurings followed the English law scheme of arrangement route, which was paved in 2015 by DTEK, PrivatBank and Avangard. The beauty of the scheme of arrangement is in the possibility to cram down
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ticularly busy with security structuring. By way short background, in financing deals with multiple creditors that are governed by English law, security is often held in trust for the benefit of creditors (e.g., a syndicate of banks in case of bank lending or bondholders in case of Eurobond issuance). Given that civil law jurisdictions do not recognize the concept of security trust, financing documents often employ either parallel debt or a joint and several creditor structure, or a combination of both. Even though Ukrainian courts have had no say on the parallel debt yet, this concept continues to be regularly used in cross-border financing deals with a Ukrainian element. Additionally, recent cross-border debt restructurings were complemented with a number of security related features, which were previously not common for debt restructurings of Ukrainian businesses (save for a few exceptions). For example, Ukrainian law security was shared among different classes of creditors (i.e., bank lenders and bondholders). Given uncertainties under Ukrainian law as to whether different secured lenders can have an equal priority with respect to the same security, the security structures incorporated English law concept of a “common security agent” who held Ukrainian security covering both bank and bond debt. Moreover, Ukrainian law on security was not frequently used in previous Eurobonds issuances by Ukrainian business groups.
Ukrainian Court Practice and Legal Developments
In 2016, there was a notable development in Ukrainian court practice in relation to Eurobond transactions. The concept of trust was finally tested in a Ukrainian court. Typically, in Eurobond deals governed by English law, the bondholders have no direct contractual relationship with the issuer and guarantors/surety providers. Payment obligations of the latter are owed to the trustee acting in its own name in the interests of all the bondholders. Thus, the trustee is entitled to bring legal proceedings against the issuer and guarantors/surety providers. Although in Eurobond offerings, governed by English law, trust should not be considered from the Ukrainian law perspective, its application in the past created significant uncertainty in connection with the enforcement of Ukrain-
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AVELLUM
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Address: 38 Volodymyrska Street, Kyiv, 01030, Ukraine
VELLUM is a leading Ukrainian full service law firm with a special focus on finance, M&A, and dispute resolution. The firm covers capital markets, competition, corporate/M&A, dispute resolution, employment, banking and finance, energy and infrastructure, real estate, restructuring and insolvency, and tax. AVELLUM’s goal is to be the firm of choice for its clients with respect to their most significant business transactions. Its team is responsible, commercially minded, solution orientated and cost effective. The firm brings the most advanced Western legal techniques and practice, which, coupled with first-hand knowledge, broad industry experience, and an unparalleled level of service, will help the clients achieve the best results in their business endeavours. AVELLUM’s lawyers work seamlessly in integrated teams with premier US, UK, and European law firms in the course of multijurisdictional transactions. The firm offers its clients a highly individual focus on their matters, and is relentless when it comes to observing deadlines.
ian suretyships in Ukrainian courts. A few months ago, the Ukrainian court recognised claims of the trustee against Ukrainian surety providers under Eurobond offerings. This court practice does not ensure that Ukrainian courts will consistently recognise claims of the trustee against Ukrainian obligors under Eurobonds in the future, yet it gives more comfort in case of default scenarios. Apart from the scale of the restructuring, some transactional challenges were brought by recent developments in Ukrainian corporate law, including changes in regulation of interested party transactions. Since May 2016, an affiliate of a joint stock company’s shareholder may be considered an interested party if the joint stock company and an affiliate of a joint stock company’s shareholder are parties to the same agreement. Considering that recent restructurings require a rather sophisticated documentation package (in terms of the substance and number of transaction documents) and involve multiple obligors within a particular group, these developments introduced some tweaks into the corporate authorisation process and structuring of the transaction documents. From the currency control perspective, the National Bank of Ukraine (the NBU) did not change the rules substantially. At the end of 2016, the NBU predictably extended tem-
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AVELLUM’s clients include international and domestic companies, government authorities, financial institutions, investment funds and investment banks seeking specialised legal advice and transactional skills from legal experts in the above practice areas. AVELLUM’s clients include AGCO, Allergan Inc, Altran, Baring Private Equity Asia, Onex Corporation, Boehringer Ingelheim GmbH, Canada Pension Plan Investment Board, CNBM International Corporation, Deutsche Bank, Deutsche Beteiligungs AG, EBRD, Farmak, Ferrexpo, ING Bank, Kernel, MHP, the Ministry of Finance of Ukraine, Novartis, Raiffeisen Bank International AG, UDP, Unicredit Group, and others. The firm’s employees received their education from top Ukrainian and Western universities. The team consists of 31 highly-qualified attorneys, including three partners, Mykola Stetsenko, Glib Bondar, and Dmytro Marchukov, who are actively involved in every transaction. AVELLUM is recognized as one of the leading law firms in Ukraine by various international legal directories and Ukrainian legal publications such as Chambers & Partners, IFLR1000, Legal500, International Tax Review, Ukrainian Law Firms, and others.
porary currency control restrictions, but this time for an indefinite period. Even though these temporary measures have been already factored into the debt restructurings, the restructuring process could be much more efficient but for the NBU restrictions.
Alternative Route
The intricacies of the restructuring process and uncertainties related to Ukrainian business and Ukrainian economy in general make some creditors sell their exposures to Ukrainian borrowers. Even though such transfers are done under standard English law documents, they often have to be supplemented with a number of steps due to Ukrainian currency control restrictions. Foreign financiers typically buy and sell claims under loans by means of the Loan Market Association trade confirmation. An existing lender and a new lender further sign a transfer certificate (or another instrument), which brings into effect the transfer of rights and obligations to the new lender. On top of that, the parties might need to conclude an amendment agreement to register a change of the lender with the NBU. However, recent changes to the registration of loan agreements with the NBU add more complexity to this process. Since the beginning of 2016, in case of assignment of the lender’s claims,
the NBU and a servicing bank must look at, among other things, an economic rationale behind the transaction and can require additional documents for these purposes. Further uncertainties with the NBU registration arise when domestic loans to Ukrainian business groups are included into the scope of the cross-border debt restructuring and need to be assigned to a foreign entity. Another issue foreign lenders often need to handle is the borrower’s failure to register amendments (including change of the lender) with the NBU. Under the existing NBU registration rules, only the borrower can initiate registration of the loan agreement as well as changes to the loan agreement. Thus, in the absence of the borrower’s cooperation, the sale of loans extended to Ukrainian borrowers may not be practicable, given that change of the lender is subject to registration with the NBU. Overall, Ukrainian business continues to make significant efforts to restructure its existing debt as well as to raise new financing. Notably, Kernel successfully completed its debut Eurobond issue at the beginning of 2017. Nevertheless, Government support in the form of decisive structural reforms and consistent currency control liberalisation would significantly improve financing options for Ukrainian business.
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Customs Law
What Should be Done with the Ukrainian Customs System?
Ivan SHYNKARENKO Partner, Ph.D. in Economics, KM Partners
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he Ukrainian Customs Service requires reform. This is what we hear constantly for the last few years. The year 2016 was probably the busiest in terms of establishing various groups of experts dedicated to customs reform and visits by foreign missions including customs specialists of International Monetary Fund and U.S. Customs & Border Protection. What was the result? Plausible but questionably efficient efforts by the Cabinet of Ministers of Ukraine to make the “single window” customs clearance concept operational, mobile groups for fighting customs offences (so-called “mytni sotni”) and amendments to Regulation No. 450 of 21 May 2012 On Issues, Related to Customs Declarations adopted in early January 2017 (Regulation of the Cabinet of Ministers of Ukraine No. 27 of 11 January 2017). These measures were hardly sufficient to overcome the major problems present in the Ukrainian customs system. It would not be much of an exaggeration to say that it is broken. It is bad for the business sector (at least those that operate officially) and does not ensure the basic protection of the Ukrainian market from smuggling and other types of illegal import. The last couple of years produced many recipes for fixing the customs system with varying degree of “comprehensiveness”. Neither of these recipes seems likely to provide quick wins. Comprehensive customs reform is definitely required. Such reform is a difficult task that will take years to implement.
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Hence, it is probably worth starting with the specific steps aimed at fixing major flows seen by the naked eye. A non-exhaustive list of such fixes may be described as follows. Embarrassing problems with getting refund of customs payments after the unlawful adjustment of the customs value (after such adjustment was cancelled by the courts) remain unresolved. A reminder that during the last couple of years, customs offices often created obstacles in getting refunds of overpaid taxes after final cancellation of the decision on customs value adjustment. The stance of the Supreme Court of Ukraine, which denied the right to claim straightforward collection of overpayment from the budget, made the situation even worse. In effect, the customs valuation was transformed into the perfect instrument of raising money for the budget. The customs office revises the customs value and irrespective of the grounds for revision (whether they were sound or not at all) monetary funds remain in the budget with little chance of them being returned. Some of the amendments to Regulation of the Cabinet of Ministers No. 450 of 21 May 2012 On Issues, Related to Customs Declarations adopted in early January 2017 seem to target this problem. Namely, this relates to the rule that cancellation of the decision on customs value adjustment should be the basis for amending the customs declaration. Yet, we are rather skeptical that such changes will be helpful. The question is not with the amendment of customs declarations as such. The customs offices block repayment, referring to the ambiguous Procedure of interaction among local bodies of the State Fiscal Service of Ukraine, local financial authorities and local bodies of State Treasure Service of Ukraine in the process of reimbursement to taxpayers of amounts paid by mistake or in excess (Order No.1146 of 15 December 2015 of the Ministry of Finance of Ukraine). Hence, it is by amending this particular act that the deadlock may be broken. It would be sufficient to stipulate in this Procedure that cancelling the decision on customs value adjustment shall be unconditional grounds for the Customs Office to file the confirmation to the State Treasury about the sum of overpayment.
The other point relates to the messy non-tariff regulation, which is one of the major problems of the Ukrainian customs system. Phytosanitary, radiological and other controls are, in their current condition, doing more harm than public good. They are hampering the fully-fledged operation of the “single window” approach to customs clearance, which is a vital step needed for improving the Customs Service. As well as proper functioning of the preliminary customs declarations of type “EA” (which is an advanced instrument ensuring efficient logistics of cross-border shipments). There will be few objections to the opinion that the majority of such non-tariff measures are not efficient in terms of protecting the Ukrainian market from undesirable imports. With this in mind they need to be either reformed or cancelled all together. There are no reasons at all to retain these bodies in their present form. Starting from adoption in 2012, the Customs Code of Ukraine contains provisions regarding authorized economic operators. Yet, since then the respective rules have remained idle. The status of an authorized economic operator is one of the best international practices aimed at trade facilitation. It would provide Ukrainian responsible business with an instrument for significant simplification of their foreign economic activity primarily on the Ukrainian side but with the potential to extend to the EU (if the status is recognized there). Draft Law No. 4777 On Amending the Customs Code of Ukraine with Respect to Authorized Economic Operator and Simplification of Customs Formalities was submitted to the Verkhovna Rada in early summer 2016. So why not adopt it? One of the big challenges facing importers of consumer goods is the huge inflow of goods brought into Ukraine without customs control and import taxes with application of various schemes exploiting flaws in Ukrainian customs regulation. One of the most widespread (specifically, on the Western border) schemes of tax-free import is the splitting of dispatches. It exploits the loophole in the law, created by the rule on taxfree import to Ukraine of goods with a value below EUR 500 and/or weight below 50 kilos (for entry points other than by air) carried by citizens.
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KM Partners
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Address: 5 Pankivska Street, 5th Floor, Kyiv, 01033, Ukraine
he law firm was established in 1999 by former senior employees of one international auditing, tax and consulting services organization. Since that time the firm has been operating successfully on the Ukrainian legal services market. Today, the reputation of multispecialized company is maintained by 4 partners and 25 qualified and experienced lawyers. KM Partners is the legal advisor of choice in the areas of tax, customs, transfer pricing and disputes resolution for many international leading companies and their subsidiaries in Ukraine, mid-sized businesses, as well as Ukrainian companies in various industrial sectors. Real estate, construction, land, M&A, labor and commercial law are also among the firm’s strong practice areas.
Mobile groups for fighting customs offences created by the Cabinet of Ministers ensured some positive shifts in combating such illegal import. Yet, without closing the loopholes in customs rules, significant progress in fighting such schemes of tax-free import is unlikely. The State Fiscal Service of Ukraine has supported amendments to the Customs Code of Ukraine, suggested by the business community, aimed at fighting the schemes of tax-free import following the practice of the EU, USA and Canada. These amendments introduce extra conditions for tax-free import — a citizen may apply the relief once a week and on condition of absence in Ukraine at least 48 hours before entry. SFS has sent the respective Draft Law to the Cabinet of Ministers for submission to the Verkhovna Rada. If finally adopted, such amendments would be a powerful step towards preventing tax-free import using the scheme of splitting dispatches (deliveries). Yet, the amendments were shelved at the Ministry of Finance without making significant progress. The Ministry of Finance’s official position is that it is working on a comprehensive solution. Yet, why not begin with a proven recipe?
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Tel.: +380 44 490 7197 E-mail: admin@kmp.ua Web-sites: www.wts.ua, www.kmp.ua
Two legal entities operate under the trademark KM Partners: WTS Consulting, LLC and KM Partners Attorneys at Law. As a member of WTS Alliance, KM Partners provides comprehensive legal support of complex international projects where legal expertise in foreign legislation is required. Services related to Criminal Law are provided by KM Partners Attorneys at Law, which renders services on defense of clients’ officials in criminal proceedings on white collar crimes, tax evasion, embezzlement, sham business, forgery, criminal negligence and others. KM Partners has for years been recommended among the most competent Ukrainian law firms by world-wide legal publications like Legal 500, Chambers Europe, International Tax Review (World Tax and Transfer Pricing), Ukrainian Law Firms and others.
The other point that seems not to be working properly are the rules on liability for customs offences, as set out in Articles 458542 of the Customs Code of Ukraine. Extremely high penalties (e.g. 300% of the amount of underpaid taxes or 100% of the customs value of goods with their seizure) were a trade-off in return for de-criminalization of liability. Time has shown that such penalties are not efficient in terms of fighting persistent offenders but are applied against benevolent businesses in most cases. Hence, it is necessary to fix these rules too, at least by excluding discretionary rules triggering corruption risks. Last but not least, institutional reform is hardly required. Strong governance in the field of customs requires a strong central office with competent and motivated staff in sufficient numbers. This is required for appropriate analytical work and monitoring of the territorial offices. Yet, reportedly, current “institutional reform” longs more in the direction of cutting the number of officers in charge of customs (the direction started by Mr. Klymenko following unification of the tax and customs services). Such an approach is
not a sound one and would hardly be helpful in ensuring the proper functioning of the customs system. Moreover, against this background, it is difficult to expect speedy revival of the customs post clearance audit function. Yet, without an efficient post clearance audit, one can hardly expect any real simplification of customs clearance at the border. The entire burden of control over shipments will be placed on the formalities during the customs clearance process. The above list is not exhaustive and provides a rather subjective review of improvements. Other customs practitioners may add to this list. The basic idea is that the small steps in the current situation are also necessary and may provide quick wins in terms of reviving the Ukrainian customs system, irrespective of pursuing comprehensive customs reform. There is no need to reinvent the wheel, proven recipes are available and in some cases even already adapted to the Ukrainian legal system. Hesitation on the part of the state authorities with required amendments is unexplainable.
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Debt Restructuring
Debt Restructuring: New Government Vector
Sergey BOYARCHUKOV Managing Partner, Alekseev, Boyarchukov and Partners
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nfortunately, the economic situation in Ukraine showed no significant improvements in 2016. However, business is slowly stabilizing, and while in 2015 the vast majority of companies suffered some losses, in 2016 we saw a tendency towards strengthening of position. Of course, there are a number of reasons for that. First, the law-making body adopted a series of regulatory acts last year, which were aimed at supporting businesses, including the Law of Ukraine On Financial Restructuring, which will be further referred to, and several interesting initiatives are under consideration or development and may turn into laws in the near future. Second, almost all the companies of various sectors understand the need for mutual support. While in the past the easiest way to settle bad debts was recovery by a court of law, now mutual concessions, such as restructuring, discounts, deferred/ instalment payments etc., are very common. It is because it has become clear that the execution of judgement in today’s conditions may take months and result in the bankruptcy of a contractor. The relationships with banking institutions have the same features. The desire to sue is also discouraged by new court fees and advance fees introduced in case of applying for a state enforcement officer (bailiffs), which results in additional costs for the injured party, while there are no guarantees that violated rights will be recovered and money returned. Third, judicial practice states that debtors have an advantage, namely that if the law allows ambiguous interpretation, in the majority of cases courts will decide in the debtor’s favour. This tendency particularly remains in disputes
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regarding foreclosure on the mortgage or pledge, which, after debt collection, are the most common ones involving banks. Speaking about the most significant changes in the field of restructuring during the last year, the Law of Ukraine On Financial Restructuring should be noted first. The idea of its creation is not new, and it is inspired by the disappointing statistics of bad debts. The Law came into force on 19 October 2016, and will be valid for three years. It was decided to establish the temporary state institution with the participation of the National Bank of Ukraine, Deposit Guarantee Fund, Ministry of Economic Development and Trade of Ukraine, etc., which would become both a curator and a guarantor in legal relations between debtors and creditors. The law-making body has developed and established a procedure for the creation of special agencies, such as the supervisory board, the secretariat, the arbitration committee, where a person who arrived at a decision to settle bad debts should apply. First, the application of this law will enable the solving of a problem without initiating legal action, and this will save several hundreds of thousands in court, attorney and others fees, as well as your time. Second, financial restructuring will result in a solution that will suit both the debtor and the creditor, and the execution will be guaranteed by the temporary state institutions above. While the litigation results in a decision to recover the debt, which still has to be enforced. And during the trial the debtor can make maximum efforts to conceal the property belonging to him and avoid responsibility. The debtor and its creditors will negotiate and, as a result, conclude a restructuring agreement, which may also envisage involvement of investors to address financial issues. When the procedure is being implemented, a moratorium will be put on satisfaction of creditors’ monetary claims, so the debtor will be released from the additional burden and will be able to focus efforts on paying off his/ her existing debts in the future. The debtor himself may come to the secretariat and apply for the restructuring if no action of solvency has been brought against him and no pre-judicial penalty is applied to him. After that it is necessary to involve the creditors, who jointly develop a restructuring plan. This plan may contain almost any condition as long as it satisfies all creditors and is intended to address financial issues.
The financial restructuring plan may not work and the debtor will have to initiate bankruptcy proceedings. Here I would like to note that existing laws on bankruptcy allow to review and declare invalid agreements / deny the debtor’s actions with his property committed one year before initiation of the bankruptcy. This provision aims to return the property, which the unscrupulous debtor alienated with the purpose of working himself into bankruptcy, to the liquidation estate. However, if these agreements are concluded as part of the restructuring plan, they shall not be declared invalid. Thus, the law-making body guarantees the rights of investors involved in the process of restructuring. The above Law has not been applied yet because all the necessary institutions are not fully established, so we look forward to its active force next year. In addition, we would like to highlight two important legislative initiatives, namely: Draft Law On Restructuring of an Individual’s Debt or Declaring Him/Her Bankrupt (socalled consumer bankruptcy), and the Draft Law On Mediation. Both institutions are used quite successfully around the world, so the need for their implementation in Ukraine has been discussed for a long time. For example, the Draft Law On Consumer Bankruptcy, which is not the first attempt to resolve this issue, was put before Parliament back in 2015, but it is still under discussion and finalization. However, the need for its adoption is very acute, so changes are coming. In Ukraine, an individual is unable to settle his bed debts. The hryvnia currency crash, job cuts, and reduction in public paying capacity lead to the fact that an ordinary person actually has no possibility just to repay an existing debt to the bank, but see any prospects for himself or his family, because sometimes debt repayment requires 10-20 or more years with paying not a part, but almost a person’s entire income, to the bank. Many countries have a personal bankruptcy institution, as a result of which a person is released from his burden and gets a chance to start over. Loans may be granted to such person in the future, but under a certain condition: a bankruptcy case against him may be recommenced, at least, 5 years after the date of the previous case. This procedure is also necessary for banks, because the record keeping of actual bad debts, which
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Alekseev, Boyarchukov and Partners
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Address: Shota Rustaveli Street, 3rd Floor, Kyiv, 01001, Ukraine
lekseev, Boyarchukov and Partners is one of the leading law offices in Ukraine. It is known as one of the most successful law firms with wide practical experience in representing clients in the questions of bankruptcy and debt restructuring, corporate management, litigation and settlement of disputes in courts of arbitration. The gistory of the firm began in 2000. Sergey Alekseev and Sergey Boyarchukov decided to create their own firm after they had successfully prevented the merger of JSB Energobank where they were working at the time. In 2003 partners established the attorney’s association XXI Century which specialized in litigation. In 2005 Sergey Alekseev and Sergey Boyarchukov founded Law Offices Alekseev, Boyarchukov and Partners specialising in questions of bankruptcy and debt restructuring,
are repaid at the rate that the financial institution barely notices them, is also a burden for them. And further litigation and enforcement also increase expenses. It is envisaged that personal bankruptcy proceedings will be considered by commercial courts that already have extensive experience in these matters, though with legal entities. On commencement of bankruptcy proceedings, the debtor’s asset authorised manager, who will coordinate the conclusion of property alienation agreements, is appointed. The debtor’s asset management procedure takes 115 days and may be extended by a court in certain circumstances. At this time, the debtor shall submit the debt restructuring plan, which contains either restructuring or repayment of debts or an amicable agreement with creditors. If the debtor has only one creditor, for example, a bank issued the mortgage, the procedure may be simplified. In November 2016, the Draft Law On Mediation was adopted in the first reading. This law provides the possibility of mediation in any conflicts/disputes, including civil, family, labour, economic, administrative and criminal proceedings, as well as administrative offence cases.
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Tel.: +380 44 235 8877, 537 1828 Fax: +380 44 235 8827 E-mail: office@abp.kiev.ua Web-site: www.abp.kiev.ua
corporate management, litigation and settlement of disputes in courts of arbitration. In November 2014 Sergey Alekseev left the company as he was elected to the Parliament of Ukraine of the 8th convocation as an MP, leaving management to his partner Sergey Boyarchukov. Today, Law Offices Alekseev, Boyarchukov and Partners is a team of 30 lawyers who work in the areas of banking, financial, tax, corporate, competition, antitrust, labor, land and criminal law. We offer innovative legal solutions to Ukrainian and international companies, banking and financial institutions, Government agencies and individuals. Strong professional experience and thorough understanding of Ukrainian business environment allow us to offer our clients the most effective solutions for their business within the shortest period of time.
Parties will be able to include the mediation clause into a contract they conclude between each other. This clause will not prevent them from initiating legal action. That is, the involvement of a mediator at the stage when the dispute is past avoidance and either party insists on initiating legal action will not be seen as possible. The mediator may be a person who meets the statutory requirements and has a certificate. The main difference between the mediator and the judge, including arbitrator, is that the mediator does not define the guilty party in the conflict or offer the best dispute solution for either party. The mediation may result, among others things, in the restructuring of any form. And this is agreed at the lowest cost. Unlike court proceedings, the parties in mediation are not limited to procedural mechanisms. We would like to especially note the institute of “pre-judicial recovery.” It was introduced in January 2013 in connection with the adoption of the new version of the Law On Bankruptcy. However, it was only last year that this procedure was intensively applied. Pre-judicial recovery provides for the settlement of bad debts before the commencement of bankruptcy proceedings. It is somewhat similar to the financial restructuring
referred to above, but in this case the “curator” is the commercial court. The pre-judicial recovery may be introduced upon the written consent of the debtor and creditors, whose total amount of claims does not exceed 50% of the total debt, and if a recovery plan agreed by the creditors is in place. Despite its simplicity and appropriate legislative response, pre-judicial recovery is not very popular in practice. Ukrainian businessmen, regardless of whether they take the position of debtor or creditor, take innovation with caution or even fear. So as long as either mechanism is not widely used, it hardly receives any attention. In this light, we should thank the transparency of the Register of Judgements. Indeed, the case of approval of the pre-judicial recovery plan for S. Ordzhonikidze Kharkiv Tractor Plant JSC examined by the Kharkiv Region Commercial Court (Case No. 922/1882/16) was made public in 2016. This case, in particular, helps to comprehend how pre-judicial recovery works in practice. Debtors, asset managers and creditors have an opportunity to “learn from the mistakes of others”. In general, we can say that 2016 was a year of restructuring. And there is good reason to believe that this tendency will remain over the next few years.
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Defense
Defense
Anastasiya BOLKHOVITINOVA
Artem HRYTSAK
Legal Director, DLA Piper
Associate, DLA Piper
I
n 1991, with the dissolution of the Soviet Union, Ukraine inherited one third of the Soviet military-industrial complex. That is, 1,840 enterprises and approximately 2.7 million workers1. Despite such a vast inheritance, severe economic contraction, pervasive corruption and poor corporate governance have all contributed to significant obstacles preventing the transformation of the Soviet-era defense industry into a modern technological power2. Military action in Eastern Ukraine highlighted the dire need for reform within national defense industry, which is now an urgent matter of the national security and territorial integrity for Ukraine. In addition to clear strategic necessities, reform of the defense sector holds tremendous potential from an economic point of view. According to the Global Aerospace and Defense Sector Outlook 20173 report, an increase in international demand for defense and military products stemming from the resurgence of global security threats and rising global tensions is likely to result in strong augmentation of the global defense industry, with positive revenue growth for market participants. Such a positive outlook might represent numerous opportunities for economic development and attract investment to the Ukrainian defense industry. Leonid I. Polyakov: U.S.-Ukraine Military Relations and the Value of Interoperability, 2004 2 Olga Oliker, Lynn E. Davis, Keith Crane, Andrew Radin, Celeste Gventer, Susanne Sondergaard, James T. Quinlivan, Stephan B. Seabrook, Jacopo Bellasio, Bryan Frederick, Andriy Bega, Jakub Hlavka — Security Sector Reform in Ukraine, Rand Corporation, 2016; Alexandra Mclees, Eugene Rumer: Saving Ukraine’s Defense Industry, July 2014 3 Deloitte: Global Aerospace and Defense Outlook 2017 1
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Brief Overview of the Industry and Legal Framework
Ukraine’s defense industry is organized principally around state-owned enterprises (the SOEs) managed by Ukroboronprom (the UOP), which is the largest state defense holding group with over 130 subsidiaries operating in five major industries as well as in R&D and export-import activities. There are also more than 90 privately-owned entities across the sector. During the last few years a number of strategic documents regulating the sector were adopted, which have laid down solid groundwork for the development of the sector for the next several years. Unfortunately, these documents do not provide a sufficient basis for the current effective functioning of the sector and the adoption is required of numerous acts of secondary legislation, such as the State Target Program of Reforming and Developing the Defense Industry for the period till 2020 .
Major Problems/ Challenges in the Industry
1) Lack of Transparency and Clear Corporate Governance in SOEs According to Transparency International, the defense industry, with its huge contracts and high secrecy, poses unique corruption risks4. In fact, it is estimated that every year at least USD 20 billion is lost because of corruption in the sector through single-source contracts, overpaid agents and other forms of corruption5. In Ukraine, the defense industry is generally perceived as a highly opaque sector, a fact that discourages large investors from entering the market. One particular example of such a lack of trans-
parency is that procurement of more than 90% of armaments and military equipment is designated as a “state secret” by Ukraine’s defense authorities6. As a result, the lion’s share of goods and services under the State Defense Order of Ukraine is procured through single-source contracts tending to result in excessive prices and lower quality of goods7. Another significant problem is the lack of clear corporate governance and the fragmentation and scattering of state ownership among numerous stakeholders (Ministry of Defense of Ukraine, Ministry of Internal Affairs of Ukraine, State Space Agency of Ukraine, etc). This lack of central control over the sector tends to result in the frequent overlap of powers, numerous conflicts of interest and poor quality management. 2) Rigid Legislation and Numerous Legal Restrictions Strong cooperation between market players, especially cooperation between SOEs and private enterprises, is considered to be one of the key factors for successful growth of the defense industry. It facilitates the implementation of new technologies and solutions, which might not be otherwise affordable to companies working independently with their own resources. In Ukraine, there are still no effective mechanisms for cooperation between SOEs and private investors. Worse still, there are a number of outdated legal restrictions preventing the establishment of such mechanisms. For example, the CMU’s Decree No.24-92 of 31.12.1992 stipulates that Ukrainian SOEs, with some minor exceptions to those in the aircraft and construction industries, are not allowed to found any type of enterprises. Another notable example is the legal prohibition for the establishment of commercial enterprises on the basis of state-owned property unless the Government’s share in such enterprises exceeds 50%. In our view, Transparency International UK Defense & Security Program: Raising the Bar, Good Anti-Corruption Practices in Defense Companies, June 2013 5 Transparency International Defense and Security Page 6 Viktor Plakhuta: Project to reform Ukraine’s Defense Procurement System, Presentation, December 2016, Transparency International Ukraine, Ukrainian Freedom Fund 7 Transparency International — Corruption Risks Series, Single Sourcing, A multi-country analysis of non-competitive defense procurement; Olga Oliker, Lynn E. Davis, Keith Crane, Andrew Radin, Celeste Gventer, Susanne Sondergaard, James T. Quinlivan, Stephan B. Seabrook, Jacopo Bellasio, Bryan Frederick, Andriy Bega, Jakub Hlavka — Security Sector Reform in Ukraine, Rand Corporation, 2016 4
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DLA Piper
D
Address: 77A Velyka Vasylkivska Street, Kyiv, 03150, Ukraine
LA Piper is a global law firm which has a presence in more than 40 countries throughout the Americas, Asia Pacific, Europe and the Middle East, providing a broad range of legal services to local, regional and international clients. Areas of practice in Ukraine The firm’s Kyiv office specializes in the following fields: Antitrust and Competition: permits for concentration; for concerted practices, leniency program advice; advice on protection from unfair competition, compliance advice and audits, obtaining preliminary conclusions from the AMCU; abuse of dominant position; advice on commercial agreements and trade practices, natural monopolies and public procurement; support during investigations by the AMCU, as well as competition litigation. Corporate and M&A: setting up and termination of businesses, corporate governance, M&A, including due diligence, corporate restructuring and reorganization; corporate investigations and compliance and legal support of day-to-day operations. Finance and Projects: M&A and regulatory work in the banking and finance sector, asset, debt and capital markets transactions, structured finance, project finance, real estate finance, aviation finance, debt restructuring projects, infrastructure and PPP projects, litigation in debt and insolvencyrelated matters. IP and Technology: registration and protection of IP in Ukraine and overseas, IP portfolio management, IP due dili-
these as well as many other regulations of a similar nature significantly restrict the ability of private market players to form strategic partnerships with SOEs and do not provide investors with sufficient protection. 3) Need to Revamp the Export/Import Control System The priority issue that needs to be addressed here is the role of UOP in export/ import control activities. Specifically, according to CMU Resolution No. 838 of 8.06.1998, business enterprises seeking to export military goods must coordinate all transactions related to military goods with UOP, obtain the UOP’s consent for entering into certain types of contracts and, in some cases, agree preliminarily with UOP on the approximate price of military goods. Given that UOP is not only a regulator of the system but also a key player on the defense market, this might be considered a serious conflict of interest. The issue of limiting the UOP’s authority has been actively discussed on the market in recent
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gence, structuring of IP ownership and commercialization of IP, unfair competition issues, parallel import and counterfeits, licensing and assignment agreements, IT outsourcing, Internet, e-commerce, domain names and telecommunications, data protection, software and hardware, technology transfer. Labor: employment contracts, personnel policies, employment law audits and due diligence reviews, data protection, employee rights, employment-related tax issues, termination matters, employment litigation. Litigation, Arbitration and Investigations: all types of dispute resolution including cross-border litigation and international arbitration; global investigations including FCPA and UKBA driven; fraud investigations, white-collar crime, contentions and non-contentious compliance, AML and other regulatory checks and investigations Real Estate and Construction: acquisition/sale and lease transactions for real estate and land; registration of associated rights; establishment of business presence, expansion and structuring of retail business, construction and planning matters, industrial and infrastructure projects, real estate due diligence, structuring of real estate transactions and construction investment projects, real estate contracts, mortgage lending and environmental issues. Tax: corporate tax, VAT and customs, tax driven restructurings (domestic and international), as well as M&A transactions from the tax perspective, tax due diligence, reviews of tax profiles of entities, tax controversy, litigation and transfer pricing.
times with a number of proposed potential solutions to the problem, but unfortunately, there is no unanimity on this issue between the state bodies responsible for reforming the sector. Another issue on the export/import reform agenda is updating the Ukrainian export control lists of goods so that they conform to the items controlled on the multilateral export control regime lists.
and/or ineffective and are not defined as strategic is a wise move. The goal, therefore, should be to have privatized (without Russian ownership, as provided by legislation) SOEs through open competition tenders, which will help to transform them into companies that buy/sell/seek investment in developed world markets.
4) Privatization of Non-strategic SOEs in the Defense Sector Management of a large number of SOEs in Ukraine by different stakeholders has, as stated above, proved to be inefficient. Furthermore, the maintenance of SOEs comes at a high cost for the Government and subsequently ends up being paid for by Ukrainian taxpayers. Although there is a general understanding of the necessity to privatize SOEs in different sectors, SOEs in the defense sector are currently carved out from privatization. We, believe that the privatization of all SOEs which are unprofitable
Despite the enormous inherited and acquired potential of the Ukrainian defense sector, it is generally not regarded as an attractive area of business at the current time. Comprehensive reform of the sector should be conducted, which should help connect the Ukrainian defense industry with 21st century processes already developed and implemented in NATO countries, making it more transparent, accountable and efficient. Fortunately, there are numerous international best practices that can be followed to facilitate the implementation of such reform and to maximize its results.
Conclusion
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Due Diligence
Anti-Corruption Due Diligence
Illya TKACHUK Local Partner, Jeantet. Illya Tkachuk specialises in investment projects, crossborder transactions, corporate and M&A, foreign investments, securities, contractual and labor law. He has broad experience in structuring and implementation of foreign investment projects metallurgy, renewable energy, insurance, telecommunication, food production, farming, start-ups, establishing joint ventures, corporate restructurings, securities, contractual and labor issues.
O
ur initial understanding of due diligence brings us to an M&A transaction when a buyer or investor seeks to investigate a potential investment or acquisition target. However, due diligence was not always understood as meaning a review of a company’s legal and financial affairs prior to making a decision to purchase it. As a concept, it was first mentioned in the Securities Act of 1933 (USA) as a defense available to underwriters participating in a registered securities offering, and was referred to as reasonable investigation. In fact, the concept of due diligence found its application in an ever-expanding number of fields and callings, one of which is the fight against corruption. Indeed, more and more countries intensified their efforts to fight corruption on different levels. Many countries, which ratified the OECD Anti-Bribery Convention1 and/or the UNCAC2, implemented in their national laws OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions 1997. 2 United Nations Convention against Corruption (UNCAC) 2003. 1
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the requirement for businesses to conduct properly documented, risk-based due diligence on third parties as part of anti-corruption compliance standards. Failure to comply with this may result in criminal liability. Ukraine signed and ratified the UNCAC and also adopted the Anti-Corruption Law3 which contains Chapter X fully dedicated to the anti-corruption rules for legal entities. This Chapter even refers to due diligence to be conducted by legal entities for examination and removal of corruption risks. At the same time, the Anti-Corruption Law is structured more as an element of the fight against corruption Government authorities and their officials. Possible measures which can be taken by legal entities to prevent corruption are mostly limited to internal regulations and relations between the company and its employees. Unfortunately, Ukrainian businesses are not always particularly attentive to anticorruption measures when choosing business partners and counterparties, something which is extremely important for American and European companies.
Third-party due diligence
One of the best examples of national anti-corruption measures is the Foreign Corrupt Practice Act (FCPA), a United States federal law, according to which any person may be held liable for making a payment, “while knowing that all or a portion of such money or thing of value will be offered, given, or promised, directly or indirectly, to any foreign official, to any foreign political party or official thereof, or to any candidate for foreign political office”. The aim of this provision is to encourage businesses to be more careful with their contractors, consultants, suppliers, service providers and other third-party partners. For example, while choosing a service provider a commercial company needs to understand its business and reputation on the market. In case the market links this service provider with a Government authority or the Government authority recommends a specific service provider, there is evidently a corruption risk. A Resource Guide to the US FCPA prepared by the Department of Justice (DOJ) and the Law on Preventing Corruption No. 1700-VII, dated 14 October 20114, as amended. 3
Securities and Exchange Commission (SEC) names such type of audit of a counterparty third-party due diligence. According to the Guide, companies should undertake some form of ongoing monitoring of third-party relationships. Where appropriate, this may include performing due diligence periodically, exercising audit rights, providing periodic training, and requesting annual compliance certifications by the third party. Similar provisions exist in the UK Bribery Act, which states that this is a “defence” for a company against an offence in case it proves that an “adequate procedure” was implemented to prevent associated persons from conducting prohibited actions. While explaining this rule in more details, the Guidance to the UK Bribery Act prepared by the Ministry of Justice dedicates an entire chapter to due diligence. In particular, the Guidance prescribes commercial organizations to apply due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organization, in order to mitigate identified bribery risks. The PACI Principles for Countering Bribery went even further and developed template questionnaires for conducting of internal and external due diligences, as well as provided for key risk indicators. Whenever the indicator shows a high risk, the business should conduct third-party due diligence. One of the best examples of the risk indicator is the geographical location. According to the Transparency International Corruption Perceptions Index 20164, Ukraine ranks 131st out of 176 countries. This automatically puts all Ukrainian companies into the high risk position, with the need to be additionally audited. It is worth noting that the PACI Principles also use other indexes, including the Tax Justice Network’s Financial Secrecy Index and the Transparency International’s Bribe Payers Index. Another example of implementation of the PACI Principles’ indicators is when a counterparty proposes a compound http://www.transparency.org/news/ feature/corruption_perceptions_ index_2016?gclid=Cj0KEQiAw_DEBRChnYiQ_562g sEBEiQA4LcsshGvp8skcB_PZhg65fvn7vdsmdgT90JCbf9bMnzucUaAiZe8P8HAQ 4
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Jeantet
J
Address: 4 Volodymyrska Street, Kyiv, 01001, Ukraine
eantet, a leading French international law firm, launched its office in Ukraine in November 2015 by taking over a very experienced team of lawyers under the supervision of Karl Hepp de Sevelinges and Bertrand Barrier, both of whom have been present in Ukraine since 2006. Jeantet Ukraine makes it easier for foreign investors as well as local companies to do business in Ukraine and navigate its market. First-rate legal services are provided to clients in an often unstable legal and regulatory environment while promoting the firm’s best international practices. The client-focused approach and quality service are evidenced by the large number of successful deals and transactions closed by the firm since 2006, when our team first got together.
and unusual structure of compensation. For example, when the settlements under the agreement are to be done to different accounts or a part of the compensation is to be paid as a contribution to a non-profitable organization. This should serve as a ground for anti-corruption due diligence of such a counterparty. As an alternative to third-party due diligence, the PACI Principles suggest including anti-corruption representations and warranties to a contract with counterparties. This solution can be especially effective when complex assessment of all key risk indicators showed low or medium risk.
Pre-acquisition Due Diligence
Apart from third-party due diligence, guidelines to both the US FCPA and the UK Bribery Act differentiate a pre-acquisition due diligence. This type of due diligence is more common for Ukraine. However, anti-corruption measures are not always properly investigated. In fact, there has existed a tendency in Ukraine in recent years to limit the scope of due diligence to the most important assets of the target company. Naturally, the parties to the M&A transaction are willing to reduce their costs, including by skipping the due diligence in exchange for substantial representations and warranties from the seller.
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Tel.: +380 44 206 0980 E-mail: bbarier@jeantet.org Web-site: www.jeantet.fr
As a testament of dedication to its clients as well as extensive knowledge and experience, Jeantet Ukraine is regularly ranked by international industry guides, while some of its lawyers were featured as leading experts in their respective fields. The firm’s main focus of expertise is Agricultural Law, Banking, Finance and Capital Markets, Banking, Finance and Capital Markets, Bankruptcy Law, Competition and Distribution, Employment Law, Energy — Environment, Intellectual Property, Telecommunications, Media & Technology, Litigation and Arbitration, Mergers, Acquisitions and Privatisations, Public Procurement, Public-Private Partnerships, Real Estate, and Taxation. Our lawyers advise in Ukrainian, English, French, German, and Russian.
This, however, cannot fully protect the buyer from possible risks. Let’s consider the following situations: 1) a company conducts its business on the basis of contracts concluded through bribes. It is obvious that such contracts bear a risk of being invalidated in a court, which has an impact on the company’s value; 2) a company’s business is structured on regular bribe payments. In this case, cessation of such criminal practice may kill the company’s business too; 3) a company’s main asset was acquired from the state without an action in exchange for a bribe. The company may lose the asset if its acquisition is challenged in court. The Resource Guide to the US FCPA encourages companies to conduct pre-acquisition due diligences in order to: — accurately value the target company. Identifying risks before an acquisition allows companies to better evaluate any potential post-acquisition liability and so properly assess the target’s value; — reduce the risk that the acquired company will continue to pay bribes. Proper pre-acquisition due diligence can identify business and regional risks and can also lay the foundation for swift and successful postacquisition integration into the acquiring company’s corporate control and compliance environment; — handle consequences of potential violations uncovered through due diligence by
the parties in an orderly and efficient manner through negotiation of the costs and responsibilities for investigation and remediation.
The “To Do” List for Ukraine
Although Ukraine is currently exerting a lot of efforts to fight corruption, there is still a long way to go. We are currently at the beginning of big changes in the country and society. New progressive legislation should be supported by the willingness of businesses to comply with new rules. Even if it entails burdensome changes to the business model, such changes will bring more benefits in the future as Ukraine moves closer to the EU. In particular, it is important to develop anti-corruption legislation and to make comprehensive guidelines explaining in detail the importance of both third-party and pre-acquisition due diligence. Businesses should understand that due diligence is not only an additional expense but an effective mechanism devoted to the protection of their interests. Moreover, the fact that Ukraine has not yet sufficiently improved its ranking in various corruption indices should not prevent foreign investors from developing their projects in Ukraine. It should only show the need of careful investigation of potential targets and business partners in Ukraine.
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E-Commerce
E-Commerce in Ukraine: Practical Application, Novelties and Difficulties
Oleg PANTIIA Counsel, ECOVIS Bondar & Bondar
Development of E-Commerce Legal Regulation in Ukraine
According to estimates by local researchers, namely the Ukrainian Internet Association (www.inau.ua), the number of Internet users in Ukraine by March 2017 totaled 64.8% of the country’s population (the occupied territories of Crimea, Donetsk and Luhansk Regions are excluded from the research). The level of the Internet audience in Ukraine during the last 15 years has been constantly and steadily growing. Despite the late implementation of 3G mobile networks, the development of mobile platforms and wireless data transmission technologies is expected to further increase the numbers of this audience. So, the share of e-commerce within the national market is growing continually. In recent years a number of legislative acts were adopted in Ukraine to regulate the spheres of e-governance, public procurement, distrained property auctions, online business registration, access to public registers and other information. The development of such systems is carried out both by the State and independent volunteers’ projects (for instance, the ProZorro project — an electronic public procurement system which is accepted by the State as the basis to handle public procurements). On 3 September 2015 the Ukrainian Parliament adopted the On Electronic Commerce Law of Ukraine, which is absolutely new to Ukraine. The new Law was not passed in complete absence of legislation on E-Commerce. Both before and after the adoption of this
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Law, the participants of E-Commerce were subject to the Civil and Commercial Codes of Ukraine, the Laws of Ukraine On Electronic Documents and Electronic Document Control, On Electronic Digital Signature, On Consumer Protection, On Payment Systems and Money Transfer in Ukraine and others. However, E-Commerce businesses were forced to adapt or mimicry in the face of the rules which were designed without taking into account the realities of E-Commerce, and were based in the main on two basic forms in civil law transactions: verbal and written. The new Law was drafted with the essential participation of the market players and, to a great extent, reflects existing Ukrainian best practice and uses the forms that business has already chosen for the sale of goods and the rendering of services with the use of information and communication systems. Thus, the On Electronic Commerce Law of Ukraine has become the fundamental piece of legislation that rendered business with transparent “rules of the game”, which have been adapted to its particularities. The issues in the field of emission and turnover of electronic money are beyond the scope of the new Law and are subject to the authority of the National Bank of Ukraine. Unfortunately, in its attempts to keep the financial system of the country in balance, the National Bank of Ukraine still preserves a number of payment system limitations which effect the deceleration of further development of electronic payments. However, these limitations tend to mitigate.
Basic Provisions of the Law
The key provision of the new Law is the definition of an electronic transaction and an electronic contract that was established at the level of the law and is equal to the provisions of the Civil Code of Ukraine. An e-transaction is defined as an action of a person focused on the acquisition, modification or termination of civil rights or obligations, conducted with the use of information and communication systems. An e-contract is defined as an agreement of two or more parties executed with the use of electronic means. The Law has defined the following parties of the transactions in the field of e-commerce: (1) the Seller — a person who sells
goods, performs works or provides services using electronic and communication systems; (2) the Buyer — any person who orders goods, works or services; (3) the Supplier of the services of an intermediate nature — a person who provides data transmission and/ or data storage services and the assigning of network identifiers services. It is important to emphasize that the Law is applicable strictly to commercial relations. The Law grants special attention to the provider of services of an intermediate nature and distinguishes him from the seller. Such a service provider may be the Internet services provider, the registrar of domain names, the owner of a website hosting private property sale ads, the owner of online stores, which is the only venue to host the sale of goods for other businesses (a common form in Ukraine) and others. Such a provider is not a party to the contract of sale of goods, works or services of the other vendor and, on the basis of Article 9 of the Law On Electronic Commerce, is released from liability for its quality, if he did not initiate the transmission of data and does not choose its recipient and cannot change the content of the contract. Thus, the Internet provider, the registrar of domain names etc. do not bear any liability for the actions of the Internet user or the owner of the site. The owner of the web-site for private ads shall not bear responsibility for the quality of goods supplied by the person who placed an advert on a web-site, etc. The Law On Electronic Commerce has established the order of execution of econtracts which are deemed to be executed by means of exchange of electronic offer to make a contract and electronic notice on acceptance of such an offer. The Law prescribes the amount of information which must be exchanged by the contracting parties. The contract shall be signed by the parties through means of: Electronic Digital Signature; Electronic Signature in form of single identifier (typically generated by sale-of-goods system); Analogue of a handwritten signature (facsimile reproduction of signature, another analogue of a handwritten signature — the least common form). Under the new Law, an e-contract executed in accordance with the established rules, is deemed to be equal to a contract made in
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ECOVIS Bondar & Bondar
Address: 3 Rognedinskaya Street, Office 10, Kyiv, 01004, Ukraine
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COVIS Bondar & Bondar is a law company, member of ECOVIS International, a leading global consulting firm operating in over 50 countries around the world. Tailored solutions, high quality, focus on detail, promptness, responsiveness, flexibility, out-of-the-box thinking, practical approach to resolving clients’ issues, cost and time effectiveness — these are the principles that guide us in our delivery of legal services. Among our strengths are: Market Knowledge We have been operating in Ukraine since1998 and we know the Ukrainian market and the people in it. We have longestablished and continuous working relations with the Ukrainian state authorities. International Network As a member of ECOVIS International, we have permanent access to international and interdisciplinary knowledge in dif-
writing. This provision is important for further use in business transactions under the laws of Ukraine, where the written form of contract prevails.
Remedies Available in the Area
Since the Law On Electronic Commerce does not provide for any special or particular means of remedies for the parties of e-transactions, the remedies are applied under the general rules existing under the civil and/or economic regulations. Section 3 of Article 6 of the Law On Electronic Commerce allows the parties to design their own rules of ethics in this sphere. The main way to seek remedy is to file a claim to state courts in an ordinary judicial procedure. One of the key problems in these procedures in Ukrainian courts remains proof via evidence in a dispute, arising from relationships established with the use of electronic means. The courts, according to the existing Ukrainian rules of procedure, accepted the material or written evidence, oral testimony, expert opinion, etc. However, neither courts nor the parties of disputes were ready to use electronic evidence. That was particularly evident in domain disputes.
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Tel./Fax: +380 44 537 0910 E-mail: kyiv-law@ecovis.ua Web-site: www.ecovis.com
ferent jurisdictions, which ensures that our clients receive the most realistic and balanced advice on cross-border and local matters. Our Professionals Our lawyers are highly qualified in diverse areas of law and possess excellent knowledge of Ukrainian legislation and international legal standards in the provision of legal services. ECOVIS Bondar & Bondar is a recognized law firm in Ukraine, whose partners are named among the leading lawyers in their respective practice areas according to international and Ukrainian legal directories. ECOVIS Bondar & Bondar focuses its practice on Corporate & Commercial Law, Mergers & Acquisitions, Antimonopoly & Competition Law, Dispute Resolution, Labor Law and Tax. The company represents clients in diverse economic sectors, including in aviation and transportation, insurance, energy, sport, real estate, banking and finance.
The essential novelty is that the Law On Electronic Commerce equates the electronic document (notice) associated with the electronic transaction with written evidence in court when considering a matter between the parties of an e-transaction. Despite the fact that the procedural codes governing the order of dispute resolution were not respectively amended, such novation grants the participants of e-commerce an opportunity to defend their rights, which is equal to the one that the parties to other civil transactions have. After enactment of the Law On Electronic Commerce the electronic evidence, including electronic correspondence, becomes more usual and acceptable. For example, the Kharkiv Economic Court of Appeal in its resolution of 5 May 2016 (case No. 922/5978/15) ruled to accept as evidence Skype correspondence between the parties which, in turn, formed the grounds for the decision in dispute. Likewise, the Economic Court of Dnipropetrovsk Region accepted the evidence existing only in electronic form as proof of the agreement (case No.904/146/17, decision of 28 February 2017). These decisions share the same basis, namely, the provisions of the Law On Electronic Commerce and collateral
amendments implemented into the Ukrainian Civil Code and other pieces of legislation. At the same time, the participants of economic turnover, both entrepreneurs and customers, often do not observe the basic requirements of the Law On Electronic Commerce, and thus forfeit the means for legal remedies. The most common breach by entrepreneurs of legislative requirements is the lack of contact data on the web-site in a scope that is sufficient to draft and lodge a claim against the entrepreneur in accordance with Ukrainian procedural rules. This gap often becomes an obstacle for the majority of inexperienced customers.
Summary
The Ukrainian of e-commerce market has, to some extent, adjusted to the new regulations. Nevertheless, there are some gaps in state regulation of legal remedies, especially in the field of protecting consumers rights. For the vast amount of officers of justice and law-enforcement this sphere remains terra incognita. Thus, the basic direction in further development of the legal support of the e-market in Ukraine is improving the justice system and the means for protecting the rights of customers.
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Energy
Legal Developments in Energy Laws reliable mechanism protecting the rights of energy consumers’.
Licensing Conflict
Bate C. TOMS
Natalia VIETOSHKINA
Managing Partner, B.C.Toms & Co. Legal education: Yale Law School (J.D., 1975); Magdalene College, Cambridge University (Law Tripos I; 1972-1973). Mr. Toms is admitted to legal practice in the District of Columbia and Virginia, USA, and in France.Chairman, British Ukrainian Chamber of Commerce
Associate, B.C.Toms & Co. Legal education: Kyiv National Economic University (Commercial and International Law, Master’s Degree, 2008), Ukrainian Bar Association (Certificate of advocate, 2010)
he Ukrainian natural gas and oil market became subject to European style regulation in 2016 and 2017, and thus more transparent, due to the adoption of new legislation in the energy sector.
tion Committee consisting of five members, each appointed for a three year term, as follows: — two members are appointed by the President, — two members are appointed by the Parliament (with one recommended by the Committee on the Fuel and Energy Sector and one recommended by the Committee on Housing and Public Utilities), and — one member is appointed by the Government (based on the recommendation of the Ministry of Energy). Under the New Law, NEURC members are appointed for six year terms and shall not serve for more than two terms. The New Law introduces administrative and criminal liability for improper interference with the work of NEURC members and staff. It is stipulated that NEURC members and staff shall act independently from any private business interests and shall not own any equity interests in any entities involved in the energy business. It is also required that potential candidates for a position with NEURC must have at least five years of professional experience in the energy sector or with utilities, including at least two years of experience in managerial positions. Further, the New Law obligates the Cabinet of Ministers of Ukraine to submit to Parliament a Draft Law On the Energy Ombudsman by 1 July 2017. The main need for the Energy Ombudsman is the absence of any
T
New Legislation on NEURC
The Law of Ukraine On the National Commission for the State Regulation of Energy and Utilities, No. 1540-VІІІ, of 22 September 2016 (the New Law), that came into force on 26 November 2016, greatly reduces the virtually unlimited control over the National Commission for the State Regulation of Energy and Utilities (the NEURC) that the President previously exercised under the President’s Decree On Approval of the Statute of the National Commission for the State Regulation of Energy and Utilities, No.715, of 10 September 2014 (Decree No.715), that is still valid. The New Law introduces an amended appointment procedure of NEURC members, and a number of new requirements that such members need to comply with as well as guarantees of NEURC members’ independence. Under Decree No.715, the members of NEURC are appointed and dismissed by Presidential decree. The New Law modifies this by introducing a two-stage procedure for such appointments, whereby the NEURC members are selected on a competitive basis by a Selec-
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Presently, under Ukrainian law, a license is required to supply natural gas to an ultimate consumer in Ukraine, whether residential or non-residential, and whether the sale is from abroad or within Ukraine, based principally on the Law of Ukraine On the Natural Gas Market No. 329-VIII, of 9 April 2015 (the “Gas Market Law”). However, this was not always clear, since the Law of Ukraine On the Licensing of Commercial Activities, No. 222VIII, of 2 March 2015 (the “Licensing Law”, adopted earlier than the Gas Market Law) (described further below), previously permitted the unlicensed supply of natural gas by foreign and domestic sellers to ultimate consumers that could purchase under unregulated tariffs, generally meaning to commercial businesses as customers. Based on this (and despite the conflicting provisions of the later adopted Gas Market Law), NEURC in practice continued to permit such unlicensed supply to consumers under unregulated tariffs until the New Law was enacted. The adoption of the New Law resolved the conflict between the Licensing Law and the Gas Market Law, by amending the former so that all gas supply activities became clearly subject to the prior receipt of a license, as provided by the Gas Market Law. Under the Gas Market Law, a license is obligatory for all types of gas supply activities for ultimate consumers in Ukraine, whether residential or non-residential and irrespective of the applicable tariff.
License Conditions
1.1. New Licensing Conditions NEURC has initially adopted the Resolution On Approval of the License Conditions for Economic Activity in the Natural Gas Market, No. 201, of 16 February 2017 (the License Conditions Resolution), as required by the New Law. The License Conditions Resolution obligates entities that carry out or intend to carry out economic commercial activity related to the transportation, storage, distribution and supply of natural gas, irrespective of the legal form and ownership, to obtain a license within three months of the date of the official adoption of the License Conditions Resolution. The License Conditions Resolution was published on 5 May 2017, so entities are able to continue to carry out activities for gas supply, transportation, storage and distribution
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B.C. Toms & Co
B.
Address: 18/1 Prorizna Street, Suite 1, Kyiv, 01001, Ukraine
C. Toms & Co is a multinational law firm of Ukrainian and Western lawyers specializing in Ukrainian law. It was the first Western law firm to open a Kyiv office, having focused its practice on Ukraine at its independence in 1991. The firm has handled, for example, land leasing for many of Ukraine’s largest agricultural and oil and gas projects, as well as acquisitions of land for commercial property developments. We also handled the legal work for the first, and the most, IPOs to raise funding for Ukrainian companies, as well as the first true project financing in Ukraine. Based on our over 25 years of experience in Ukraine, we can provide, with our legal advice, practical commercial advice on how to establish and develop a business in Ukraine. The firm has recruited and trained its Ukrainian lawyers from students at Ukraine’s leading law schools, most of whom have also studied at UK and US law schools as Chevening, Pinchuk, Fulbright and Muskie fellowships. Based on the firm’s practical experience, it has written numerous articles on Ukrainian law, including the legal section of the book Doing Business in Ukraine.
for another three months , but must apply for and receive a license for such activities after three months, i.e. by 5 August 2017, to continue activities without interruption. 1.2. No License Required for Gas Exports The Government of Ukraine adopted the Resolution On Approval of the List of Goods that are Subject to Licensing for Export and Import and Quotas for 2017, No. 1009, of 28 December 2016 (“Resolution No. 1009”), that came into effect on 1 January 2017. The list of the products subject to licensing for export from Ukraine was revised by Resolution No. 1009 to eliminate natural gas (as well as coal) effective 1 January 2017. Thus, licenses for the export of natural gas (and coal) are no longer required. However, persons and entities are still required to obtain permission from the Ministry of Economy for the re-export of natural gas that was previously imported into Ukraine.
The Gas Security Reserve Stock
On 22 September 2016, the Law On Amending the Natural Gas Market Law, No.1541-VIII (the Amendment Law) was adopted (on the same date as the New Law, described above). The Amendment Law entered into force and amended the Natural Gas Market Law on 1 November 2016. It reduces the size of the gas security reserve stock required to be kept in Ukraine by natural gas suppliers from a maximum of 50% down to a maximum of 10%. The previous gas security reserve stock requirement of 50% of the planned monthly
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Tel.: +380 44 490 6000, 278 1000 E-mail: kyiv@bctoms.net Web-site: www.bctoms.net
The principal practice areas of B. C. Toms & Co include real estate and land development, energy, natural resources, agriculture, banking and finance, M&A, environmental, labor, bankruptcy and administrative law. The firm also has a successful litigation and arbitration practice, having successfully handled many of Ukraine’s most important cases, including in all Ukrainian courts and before the Permanent Court of Arbitration in The Hague. The firm regularly advises on Ukrainian tax law, including from a multinational tax planning perspective. B. C. Toms & Co has prepared a wide variety of documentation for clients, including Ukrainian law share purchase agreements, asset purchase agreements, joint venture agreements, construction contracts, project financing documentation, production sharing and oil and gas license agreements, airport investment and management agreements, hotel management agreements, private placement agreements, real estate acquisition agreements, loan agreements, leases and agency, distribution, franchise and licensing contracts.
volume of deliveries for each supplier of natural gas to consumers for the next month, was introduced by the Cabinet of Ministers’ Resolution On Approval of the Establishment of the Security Reserve Stocks of Natural Gas, No. 795, of 30 September 2015. To implement the reduction in the gas security reserve stock permitted by the Amendment Law, the Cabinet of Ministers adopted the Resolution On Establishing the Size of the Gas Security Reserve Stock, No. 860, of 16 November 2016, which entered into force on 30 November 2016, that generally provides for a 0% gas security reserve stock requirement. However, gas suppliers may still be obliged to provide for a 10% security reserve stock in exceptional circumstances, such as the occurrence of an emergency situation in the natural gas market in Ukraine. The criteria for such an emergency situation is defined by the Ministry of Energy’s Decree No. 687, of 2 November 2015, that states that it can be declared where the forecast demand for natural gas in Ukraine is higher than the potential maximum supply, and pressure in the gas transportation system is at a critical level, so as to justify temporary special safeguard measures.
The More Favorable Tax Regime for Oil and Gas Production
The Parliament of Ukraine adopted the Law On Amendments to the Tax Code of Ukraine for Balanced Budget Revenue in 2017, No.5132, on 20 December 2016, which came into force on 1 January 2017. This Law reduces the rate of royalty fees for oil. Notably, the royalty rate for oil extracted from fields fully or partially
lying at a depth beyond 5,000 meters is 29% (previously 45%). Presently the Tax Code of Ukraine stipulates the following royalty rates for production of hydrocarbons: (i) for extraction of natural gas (of any origin): — 29% of the tax assessment base applicable for the extraction from deposits fully or partially lying at a depth beyond 5,000 meters; — 14% of the tax assessment base applicable for the extraction from deposits fully or partially lying at a depth below 5,000 meters; (ii) for extraction of oil: — 29% of the tax assessment base applicable for the extraction from deposits fully or partially lying at a depth beyond 5,000 meters; — 14% of the tax assessment base applicable for the extraction from deposits fully or partially lying at a depth below 5,000 meters.
Foreign Natural Gas can be Stored under the “Customs Storage” Regime
The Ministry of Finance of Ukraine adopted a Resolution that gives non-resident suppliers of natural gas an opportunity to store gas under the ‘customs storage’ regime. The Resolution On Approval of Amendments to Several Regulations of the Ministry of Ukraine, No. 292, of 27 February 2017 (which came into force on 4 April 2017) allows the storage of natural gas in Ukraine for up to three years without the need of pay the 20% import VAT that would otherwise apply. Previously, foreign suppliers could store natural gas only under the transit customs regime and only for 31 days.
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Energy Efficiency
ESCO Market in Ukraine: Development Problems
Alexander BURTOVOY
Alexander TRETIAKOV
Partner, ANTIKA Law Firm. Member of the Public Council of the State Agency on Energy Efficiency and Energy Saving of Ukraine
Senior Associate, ANTIKA Law Firm
he ESCO market in Ukraine is highly limited although it has significant potential. Particularly, according to different evaluations, the total market volume varies from USD 4 billion right up to USD 8 billion. But, even such an evaluation is general because the experience of other countries shows that applying the ESCO model is a highly effective measure to implement energy saving technologies without significant expenditures for the company. For instance, the annual ESCO market turnover in the USA is about USD 6 billion and the total market size is about USD 20 billion. Taking into account the fact that in Ukraine the vast majority of property assets suffer from extreme deterioration and their construction was carried out at least 20-30 years ago, even implementing simple energy efficiency measures will have a significant economic effect. It is important, first of all, for the public sector, because Ukraine does not have significant funds that could be used as investment in energy saving when the saving of energy (considering the necessity to increase the energy independence of the state) is one of the most important priorities of state policy. Therewith, today the ESCO market in Ukraine in the public sector does not function as it is and the commercial market is relatively limited because there is no extensive experience of application of this mechanism. State support in the energy savings field is unable to solve even a small part of currunt problems. For instance, the budget for
2017 included financing that was for about UAH 800 million and UAH 400 million out of this sum were allocated to establish the Energy Efficiency Fund. As the required amount of financing is USD 20-40 million (according to estimates made by different experts), state support in this case cannot even boost development of the market. The main legislative regulation of ESCO market consists of two laws: the Law of Ukraine On Introduction of New Investments Opportunities, Guarantees of Rights and Legitimate Interests of Businesses to Conduct Large Scale Energy Sector Modernization of 9 April 2015 No. 327-VIII (so-called Law on ESCO) and the Law of Ukraine On Introducing Amendments to the Budget Code of Ukraine Related to Introduction of New Investments Opportunities, Guarantees of Rights and Legitimate Interests of Businesses to Conduct Large Scale Energy Sector Modernization of 4 April 2015 No. 328-VIII. In order to execute these Laws, three subordinate acts were adopted: — the Decree of the Cabinet of Ministers of Ukraine On Approval of the Model Energy Service Contract as of 21 November 2015 No. 845; — the Order of the Ministry of Regional Development, Building and Housing and Communal Service of Ukraine as of 27 June 2015 No. 178 On Accepting National Standards of Ukraine Б А.2.2-12:2015 Energy Efficiency of Buildings. The method to calculate energy consumption during heating, cooling, ventilation, lighting and supply of heating water, that approves the procedure to calculate the base line;
T
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— a number of Decrees of the Ministry of Finance of Ukraine that amended the economic classification of expenditures from the budget, namely, introduced new indices for ESCO services; All the stated documents were approved at the end of 2015. At the beginning of 2016 the first developments and negotiations related to pilot projects of ESCO started in public buildings. They have now been terminated due to amendments made to legislation related to public procurement. The provisions of the Law On ESCO refer to the old Law of Ukraine On Public Procurement Performance that became invalid on 1 August 2016 when the Law of Ukraine On Public Procurement was adopted. The new law does not include peculiarities for procurement or implementation of energy saving measures through application of the ESCO mechanism. In practice, due to the lack of conformity between the provisions of Laws, it is impossible today for a state-funded institution to purchase ESCO services, which is why even those projects, the development of which started in 2016, had to be terminated. In order to manage the situation the Draft Law related to amendments to the Law of Ukraine On Introduction of New Investments Opportunities, Guarantees of Rights and Legitimate Interests of Businesses to Conduct Large Scale Energy Sector Modernization (related to the mechanism of energy service procurement) was developed. It provides for bringing into conformity the procedures of ESCO services purchase and the provisions of the Law of Ukraine On Public Procurement, sets out the features to perform purchase of ESCO services, tender documentations content, tender bid evaluation, evaluation criteria, etc. Moreover, the Draft Law provides for introduction of a number of other amendments taking into account previous work on the practical application of the law’s provisions. Thus, the maximum term for an energy performance contract is prolonged from 10 years to 15 years, the peculiarities to conclude agreements related to the objects administered by several budget holders are stipulated, the mandatory minimum level of economy that the client should experience is cancelled. The Draft was approved by the Verkhovna Rada of Ukraine during the first sitting in autumn 2016, but it was not submitted for con-
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ANTIKA
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Address: 12 Khreschatyk Street, 2nd Floor, Kyiv, 01001, Ukraine
NTIKA was established in 2010. Since its formation, the firm has built a strong reputation as an independent law firm and continues to grow on the Ukrainian legal services market. According to the results of research of the legal services market undertaken by reputable international and Ukrainian guides to legal profession like The Legal 500 EMEA, Chambers Europe, IFLR1000 Energy and Infrastructure, Best Lawyers, Ukrainian Law Firms, A Handbook for Foreign Clients, Top 50 Law Firms of Ukraine, Client Choice. The Top-100 Best Lawyers in Ukraine, the firm has been recommended in antitrust, dispute resolution, corporate / M&A, banking, finance and capital markets, real estate, land, energy, subsoil use, energy efficiency and energy saving. The firm received the Legal Award 2012 in the nomination Law Firm — Breakthrough of the Year. The firm is a finalist of the Legal Awards 2013 in the field of Antitrust, Litigation and Real Estate, in 2014-2016 — in the field of Energy. ANTIKA’s team includes 15 lawyers, who have significant experience of various legal practices and provide a full range of legal services to national and international companies that do business in Ukraine, as well as abroad in the following fields: telecommunications, heavy machinery, chemical and food industries, automotive, complex develop-
sideration at the second hearing. Another attempt to approve the law was made in March 2017. The Draft was included on the agenda. At the same time, taking into account the fact that its consideration was scheduled for the end of a daily sitting (that made it close to unlikely to be adopted), it seems that lawmakers had more topical issues to resolve, and to develop a market for the implementation of energy saving technologies in Ukraine was not one of them. It should be mentioned that adoption of the stated Draft Law does not solve the key problem of ESCO’s functioning, namely the problem of its financing. It is necessary to understand that today ESCO companies in Ukraine are quite small engineering and project organizations. They do not have resources at the expense of which it would be possible to implement projects because it needs to be remembered that the existing ESCO scheme does not include such implementation at the expense of ESCO. It is possible to solve the problem with the help of bank financing, but, taking into account the loan rates at Ukrainian banks, the cost of a project will increase 5-7 fold within 10-15 years due to the cost of financing alone. The situation also becomes more complicated because when giving finance for an ESCO project, the bank should rely on the
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Tel.: +380 44 390 0920 Fax: +380 44 390 0921 E-mail: office@antikalaw.com.ua Web-site: www.antikalaw.com.ua
ment, construction and real estate, subsoil use, wholesale and retail, media and sports, banks and financial services market, energy efficiency and energy conservation. The firm’s key practices include antitrust, litigation and arbitration, corporate, construction and real estate, subsoil use, energy and energy efficiency, legal expertise. The firm’s main principles are the provision of high quality and timely legal services, strict confidentiality and a bespoke approach to every client’s project. The following are representative clients: AWT Bavaria, ArcelorMittal Kriviy Rih, Cadogan Petroleum, Cargill, Chernomorneftegaz, Deposit Guarantee Fund, Enesa a.s., Esan Eczacıbaşı Industrial Raw Materials, Energobank, FC Dnipro, Ghelamco, Heitman, Henkel Ukraine, Henkel Bautechnik Ukraine, Ibis Group of Companies, Imperial Tobacco, International Resources Group, Lantmannen Axa, MF Telecom, Nadra Ukrayiny, Nasosenergomash, ViDi Group, Ukrnafta. The firm also advises the World Bank, EBRD, USAID, TACIS, UNDP, KfW, NEFCO on energy efficiency, utility and the implementation of other projects in Ukraine. ANTIKA is a member of the Ukrainian Chamber of Commerce and Industry, the American Chamber of Commerce in Ukraine, the Canada-Ukraine Chamber of Commerce, the European Business Association, and the International Turkish Ukrainian Businessmen Association.
qualification of the ESCO company whose calculations related to the economic efficiency of the project and its income. Today, the banks do not have the experience and knowledge to check ESCO calculations, even in crude terms. This creates certain obstacles to receiving bank loans. Consequently, the market needs very badly needs some cheap and available financial resources that ESCO companies would attract to implement projects. The offering of state support to ESCO projects is one such possible mechanism. Today, the Government of Ukraine promotes and actively promulgates the concept of establishing the Energy Efficiency Fund. It should accumulate all measures of state support in the field of energy efficiency. Today, persons that can possibly become the clients of the Fund include a condominium, private person — owner, etc. ESCO are not included in this list. The Fund gives assets straight to the owners in order to fulfill the required measures. In our opinion, it would be reasonable to include ESCO in such a list. First of all, it would increase the economic efficiency of implemented measures for a certain object. These measures would be implemented not because “everyone does this”, but because implementing this measure will provide certain influence on the economy.
In addition, such an approach would enable the Fund to monitor the targeted expenditures with the help of information on factual economy attained that ESCO would collect during the monitoring and verification of implemented projects. Another effective mechanism appeared to be a partially subsidized bank loan by the state paying part of the interest, or through providing banks with certain financing at the expense of which the banks could give loans on a preferential basis and at a lower rate of interest. Moreover, a relatively effective supportive mechanism could be the Fund providing guarantees to ESCO companies, which will use them as a guarantee to obtain bank loans. It will enable the cost of the load funds to be reduced because the guarantee from the Fund will be considered a high one. Another possible support option is the repurchase of state guarantees by the Fund during the performance of payments based on ESCO contracts through forfeiting. Thus, an ESCO company can receive funds for a performed project, which will also decrease its cost. The most important thing is that using such mechanisms will give the Fund an alternative method for financing, in addition to receiving funds from the budget and donors and, potentially, becoming self-sufficient.
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Enforcement of Foreign Awards
Enforcement of Foreign Interim Orders: Recent Trends
Dmytro MARCHUKOV
Serhii UVAROV
Partner, AVELLUM
Senior Associate, AVELLUM
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krainian assets frequently appear as subjects of disputes in foreign courts. The larger the dispute the greater the number of jurisdictions usually involved. Interim orders by foreign courts and arbitral tribunals often constitute an important part of such legal battles. This should come as no surprise. It is well known that interim reliefs are of great importance towards maintaining the status quo, preventing dissipation of assets, and ultimately to make sure that many years of legal fights produce a useful result. However, to obtain an interim relief in a multijurisdictional litigation is only half the battle. Another, equally important half, is to bring them into effect in all relevant jurisdictions. It may be easier to do so outside of Ukraine. Very often, however, respondents, their owners or directors, or the ultimate assets that are the subjects of the legal battles, are located in Ukraine. In such case, the applicants may either hope for voluntary compliance with the interim orders by the parties concerned (on penalty of the contempt of court or adverse inference), or try to recognize and enforce them before a Ukrainian court. Ukrainian courts have recently seen several quite remarkable cases on recognition of freezing orders issued by foreign courts and interim reliefs granted by arbitral tribunals. They demonstrate that Ukrainian courts tend to consider foreign interim orders as generally enforceable. At the same time, they show
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that the general recognition procedure quite poorly fits foreign interim orders, which in their essence are meant to be urgent and immediate (or, at least, without undue delay) enforceable reliefs.
Enforcement of Interim Measures Granted by Courts
Ukrainian courts will recognize and enforce a foreign judgment (i) provided that there is an effective international treaty on recognition and enforcement of judgements between Ukraine and the state where the judgment was rendered; or (ii) on foot of reciprocity. Ukraine has not concluded international treaties on mutual recognition of judgments with the majority of jurisdictions where Ukrainian businesses get used to resolving their disputes (UK, US, most off-shore jurisdictions, etc.). It is worth noting that Ukraine has signed and is due to ratify the Convention on the choice of court agreements. In the long run, this may become a powerful tool for bringing into effect interim orders issued in European jurisdictions (of course, if the parties have expressly conferred jurisdiction to respective courts by their agreement). In the meantime, in recognizing foreign interim reliefs in Ukraine, the parties should mostly rely on the principle of reciprocity. And this is where the first pitfall lies. There has been controversy as to how reciprocity should be determined. Some courts took an extremely conservative approach — widely
criticized by practitioners — that no reciprocity exists if, at least, once recognition and enforcement of the Ukrainian judgment in that state was refused. However, the practice has developed to an extent in recent years. The latest jurisprudence seems to confirm that in order to prove reciprocity between Ukraine and the other state, one only need to show that Ukrainian judgments may be recognized in that state. In particular, in several cases the courts found that reciprocity between Ukraine and the UK does exist. Second, Ukrainian law does not provide for separate procedure for recognition and enforcement of interim measures, for example, injunctions or freezing orders granted by foreign courts. However, the Civil Procedure Code of Ukraine defines a foreign judgement broadly and judicial interim orders fall within the plain text of such definition. The court practice also confirms that interim orders issued by foreign courts may be recognized in Ukraine, at least as a matter of principle. In particular, on 5 August 2013 the Holosiivskyi District Court in Kyiv recognized the worldwide freezing order issued by the English High Court of Justice in BTA Bank v. Abliazov et al. In another recent case, the Kyiv-Svyatoshynskyi District Court of Kyiv Region in VAB Bank v. Maksimov et al., on 2 June 2016 also implicitly confirmed enforceability of freezing orders issued by foreign courts. However, if the court finds that reciprocity exists and confirms that the interim order of a foreign court may be recognized in Ukraine as a matter of principle, it still may refuse to enforce it based on a number of grounds set forth by law. One such ground, which is particularly important for interim orders, is lack of proper notification. This means that orders issued ex parte are hardly enforceable in Ukraine. Furthermore, the burden is on the applicant to provide evidence and to prove that the process was properly served on the parties who did not participate in the proceedings. Therefore, even if the debtor was aware of the proceedings before the foreign court, failure to comply with all formalities and mandatory procedures may impede recognition of the order in Ukraine. This issue was fiercely fought in VAB Bank v. Maksimov et al. Both Kyiv-Svyatoshy-
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AVELLUM
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Address: 38 Volodymyrska Street, Kyiv, 01030, Ukraine
VELLUM is a leading Ukrainian full service law firm with a special focus on finance, M&A, and dispute resolution. The firm covers capital markets, competition, corporate/M&A, dispute resolution, employment, banking and finance, energy and infrastructure, real estate, restructuring and insolvency, and tax. AVELLUM’s goal is to be the firm of choice for its clients with respect to their most significant business transactions. Its team is responsible, commercially minded, solution orientated and cost effective. The firm brings the most advanced Western legal techniques and practice, which, coupled with first-hand knowledge, broad industry experience, and an unparalleled level of service, will help the clients achieve the best results in their business endeavours. AVELLUM’s lawyers work seamlessly in integrated teams with premier US, UK, and European law firms in the course of multijurisdictional transactions. The firm offers its clients a highly individual focus on their matters, and is relentless when it comes to observing deadlines.
nskyi District Court of Kyiv Region and the Appellate Court of Kyiv Region refused to recognize the English court order based on an alleged lack of evidence that respondents had been properly notified of the proceedings at the High Court of Justice. The courts found that in the absence of an agreement on legal assistance between Ukraine and the United Kingdom, which would stipulate the procedure of notification of the parties to a dispute, the English court should have relied on the provisions of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 1965. Thus, in the courts’ opinion, only a letter of request, instruction of the Ministry of Justice of Ukraine and postal notification of the relevant person could be proper evidence of the serving of the process upon such person. The High Specialized Court for Civil and Criminal Matters, when reviewing the decisions of the lower courts, disagreed (decision dated 24 February 2016). It came to quite a progressive conclusion. In particular, it stated that requirement of notification, which is mandatory for final judgments, does not necessarily apply to interim orders. Second, even if it does, the courts — instead of requiring service under the Hague Convention — must find out what was the applicable procedure in the courts that rendered the respective order and whether it was complied with. Unfortunately, having expressed such position, the High Specialized Court did not decide the matter on its own but, rather, re-
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Tel./Fax: +380 44 591 3355 E-mail: info@avellum.com Web-site: www.avellum.com
AVELLUM’s clients include international and domestic companies, government authorities, financial institutions, investment funds and investment banks seeking specialised legal advice and transaction skills from legal experts in the above practice areas. AVELLUM’s clients include AGCO, Allergan Inc, Altran, Baring Private Equity Asia, Onex Corporation, Boehringer Ingelheim GmbH, Canada Pension Plan Investment Board, CNBM International Corporation, Deutsche Bank, Deutsche Beteiligungs AG, EBRD, Farmak, Ferrexpo, ING Bank, Kernel, MHP, the Ministry of Finance of Ukraine, Novartis, Raiffeisen Bank International AG, UDP, Unicredit Group, and others. The firm’s employees received their education from top Ukrainian and Western universities. The team consists of 31 highly-qualified attorneys, including three partners, Mykola Stetsenko, Glib Bondar, and Dmytro Marchukov, who are actively involved in every transaction. AVELLUM is recognized as one of the leading law firms in Ukraine by various international legal directories and Ukrainian legal publications such as Chambers & Partners, IFLR1000, Legal500, International Tax Review, Ukrainian Law Firms, and others.
ferred the case for new consideration to the local court. By the time of the new consideration before the local court, a final award in the dispute was already rendered and the interim order was no longer effective or necessary. Thus, without opposition from the applicant, the recognition was refused due to a number of reasons (including improper notification). Therefore, notwithstanding the quite progressive approach shown by the High Specialized Court, proper notification is still one of the major considerations for the application to enforce a foreign interim order in Ukraine. To make sure that recognition of proceedings is not a moot (and still expensive) exercise, a party seeking interim relief against its debtor should ensure his proper notification in compliance with the provisions of effective international treaties, irrespective of how burdensome they may be.
Enforcement of Interim Measures Granted by Arbitral Tribunals
Foreign arbitral awards are recognized and enforced by Ukrainian courts under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (the New York Convention). The New York Convention is silent on whether interim reliefs granted by arbitral tribunals or decisions of emergency arbitrators fall within the scope of the convention. Nor does Ukrainian law shed more light on the issue.
In 2015-2016 Ukrainian courts, for the first time, considered an application for recognition and enforcement of the decision of an emergency arbitrator rendered under the Rules of the Arbitration Institute of the Stockholm Chamber of Commerce (JKX Oil et al. v. Ukraine). In the most recent decision of the Kyiv City Appellate Court (decision of 21 December 2016), the recognition was rejected on a number of grounds, including improper notification, non-compliance of the procedure with the parties’ agreement and contradiction to public policy. Broad interpretation of these grounds is alarming. At the same time, the courts did not express doubts that recognition of interim awards is encompassed by the New York Convention, and that such award must be recognized in Ukraine, unless grounds for refusal exist. Finally, this case once again showed how protracted consideration of the application for enforcement of interim order might be. Similar to the Maksimov case, in the JKX case consideration of the enforcement application in Ukrainian courts took longer than deciding the case on the merits. To conclude, Ukrainian court practice related to enforcement of foreign interim reliefs has developed in the past few years. Recent jurisprudence confirms the enforceability of judicial interim orders, as well as interim measures issued by arbitral tribunals. However, Ukrainian courts still remain formalistic on many issues, and the parties (and their legal advisors) should be mindful of such pitfalls.
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Enforcement Proceedings
General Overview and Main Threats for Effective Debt Recovery
Oleksiy SLUCH
Maksym ZAMIKHOVSKIY
Partner, Head of Litigation practice, Integrites ILF
Senior Associate, Integrites ILF
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t is a well-known fact that a court victory in favor of an aggrieved party is not enough to truly restore the violated rights of the latter. The excitement of victory will soon be replaced by routine work with a view to enforce a particular court decision. Enforcement proceedings are currently of especially high interest for Ukraine as court decisions are in general not fulfilled voluntarily by the party that is in breach. Since in Ukraine legal awareness is relatively low and access to civil remedies is open, the pressure on the court system is huge. It leads to a situation when a considerable number of decisions are supposed to be executed by compulsory means. It is worth mentioning that the means for compulsory execution are provided mostly for recovery of debts and related issues. Court decisions with non-property mandatory provisions are binding by its nature and ensured by criminal prosecution in case of its malicious disregard. Until recently the legal basis for the procedure was provided by the Law of Ukraine No. 606-XIV On Enforcement Proceedings, which stipulated the terms and conditions for compulsory execution, as well as powers and restrictions for authorized public officials. According to the provisions of the law, an enforcement proceeding as final stage of the delivery of justice was considered as a state monopoly and which is to be performed only by the State Enforcement (Bailiff) Service of Ukraine.
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However this approach proved to be ineffective and was accompanied by an enormous amount of incoming complaints both from businesses and watchdog organizations. Statistics provided by the Ministry of Justice of Ukraine confirm that the rate of executed court decisions is lower than 30% of the total. Moreover, it is quite an optimistic estimate, since according to unofficial data it’s no higher than 10%. This is due to a number of reasons. A part of them is quite objective. The sheer number of writs of execution, insufficient government funding and shortage of staff. Yet, a great part of the responsibility lies on the State Enforcement Service. The absence of transparency, inaction and unwillingness to meet the deadlines specified by the legislation to perform enforcement actions make an enforcement proceeding inconvenient for the creditor. Another specific problem is dishonest ways of doing business and limited powers of the enforcement officials, which allow the hiding or transferring of assets promptly from the borrower to the affiliated entity even before the Enforcement Service is able to seize assets and impose other restrictions.
Brief Overview of Remedies in the Framework of Enforcement Proceeding
In order to initiate the enforcement proceeding, an enforcement writ of commercial court along with an application shall be filed with the Enforcement Service. A person on whose favor the court decision shall be
executed is entitled to file an application within three years from the date of issue of the enforcement order. The creditor has the right to include in the application information about the debtor’s bank account(s) and other property which belongs to it and should be arrested in order to secure an enforcement proceeding. In this case the seizure of assets and funds should be performed on the day after the above-mentioned information was obtained. If no information about bank accounts is provided, enforcement officials shall request information about the existence of the debtor’s bank and deposit accounts from the tax authorities. The creditor has the right to choose a place of execution of enforcement proceeding: it shall be either the place of the debtor’s location or location of the debtor’s property. The procedure itself shall be commenced on the next day after proper submission of an application in that respect. In the event the debtor’s assets are insufficient to execute a court decision in full, the enforcement officials shall levy mandatory execution upon the debtor’s funds in hryvnias or in foreign currency, including bank accounts and deposits in the first place. Secondly, execution shall be levied upon the debtor’s moveable and immovable property. The debtor has the right to suggest which property should be collected first. As a general rule, assets that are not used directly in manufacturing shall be sold in the first place. Starting from 30 September 2016 all sales shall be performed by means of electronic auctions via web-site https://setam.net.ua/. Thereafter, real estate and equipment, principle assets, raw and other materials intended for use in production will be sold. All sales proceeds shall be directed to cover outstanding debt subject to recovery under a court decision, enforcement fees and procedural expenses. In case property was not sold at auction, its initial price shall be reduced by 15% for real estate and 25% for movables and an additional auction shall held. If the additional auction was also unsuccessful price shall be further reduced by 15% for real estate and 25% for movables and third auction shall be held. If the property remains unsold, the creditor has the right to keep the property on account of debt repayment.
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INTEGRITES
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Address: 1 Dobrovolchykh Batalioniv Street, Kyiv, 01015, Ukraine
NTEGRITES has a solid network of operating offices in the CIS (Kyiv, Moscow, Almaty, Astana, Karaganda, Aktau, Atyrau) supported by an international office network in London, Munich, Amsterdam and Guangzhou. The firm offers its clients complex legal advice in the CIS region. In 2016 The Lawyer recognized our work in the CIS with the award “Law Firm of the Year: Russia, Ukraine and the CIS.” We provide legal services for our world-known clients: Rabobank International, EBRD, VTB Bank, ProCredit Bank, Mitsubishi Group, Concern Toyota, Agrogeneration S.A., Credit Agricole, Nestle, COFCO Agri, LTk Capital, Dragon Capital, ADM, Louis Dreyfus Company, Soufflet Group, Сredit Agricole, Burisma, Aspen Pharmacare Holdings Ltd., Shell, DuPont, Bank of China, DHL, China Development Bank etc. Main industries: Agribusiness, Capital Markets, Construction and Land, Energy and Natural Resources, Information Technologies, Medicine and Healthcare, Telecommunications. Main Practices: Antitrust and Competition, Banking and Finance, Bankruptcy, Corporate, M&A, Criminal Law and White-Collar Crime, Intellectual Property, International Arbitration, International Trade and Trade Remedies, Labor and Employment, Litigation, Real Estate, Retail, Tax.
Latest Changes and Anticipated Impact on the Enforcement Procedures
On 2 July 2016, two laws aimed at improving and reforming the enforcement proceeding were adopted, namely the Law of Ukraine No. 1404-VIII On Enforcement Proceedings and the Law of Ukraine No.1403-VIII On Authorities and Individuals Carrying Compulsory Enforcement of Court Decisions and Decisions of other Authorities. Most of the provisions of the abovementioned laws came into force on 5 October 2016, with some exceptions related to procedural and organizational matters. In general, the procedure itself and stages of compulsory execution were left without significant changes. Most of the novelties deal with elimination of legislative gaps, efficient methods of control over the correctness of the enforcement proceeding and establishing private enforcement officers — an alternative to the traditional State Enforcement Service of Ukraine. Private enforcement officers have the same powers as state officers but with some exceptions. In particular, decisions rendered against the state, state companies and legal entities, decisions of administrative courts and the European Court on Human Rights shall be enforced only by the State Enforcement Service of Ukraine. According to estimates by the Ministry of Justice of Ukraine, private enforcement
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Tel.: +380 44 391 3853 Fax: +380 44 391 3854 E-mail: info@integrites.com Web-site: www.integrites.com
Our firm is also represented by international offices: United Kingdom 1 King Street, EC2V 8AU, London, UK Tel.: +44 203 713 1750
Germany Maximilianstrasse 13, 80539, Munich, Germany Tel.: +49 892 030 061 50
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officers won’t start until the second half of 2017 due to qualification procedures. This approach is expected to bring competiveness and cut the workload of public officials. Besides, private enforcement officers are expected to be more motivated and result-oriented as their fee is correlated to the amount of debt actually collected. A part of the truly necessary amendments relates to substitution of paperwork by the Electronic System of the Enforcement Proceedings which is expected to become a platform for performance and storage of all documents in the course of proceedings. That should enable indication of issuing dates of the documents together with information regarding the dates of dispatch and receipt of correspondence. As a result, impartial control over enforcement proceeding shall be ensured. Online interaction between fiscal, enforcement bodies and officials authorized to register property rights and restrictions was another urgent problem that needed solving. Under the adopted amendments, enforcement officers should be provided with direct access to official state databases and registers to obtain information on debtors’ assets, income and funds (including confidential information) and shall have the right to register the imposition and removal of arrests by themselves. With the aim of making information about commenced enforcement proceedings publicly accessible, the Unified Register of Debtors was launched. However, it is focused on the future
and shall contain information only about the procedures started after 5 January 2017. Records shall prevent performance of transactions regarding a debtor’s property by notaries and/or state registration authorities. Another part of the amendments was aimed at reducing the discretionary powers of enforcement officials and provide straightforward scenarios for them. Some of the lapses that have been eliminated related to determination of specific terms within which certain actions can be taken and stipulation of the exhaustive list of grounds for suspension of proceedings. The above-mentioned lapses often triggered undue performance of obligations by enforcement officers. In order to guarantee the commencement of the enforcement proceeding, the creditor is obliged to pay in advance for monetary claims 2% of the debt but not more than 10 minimum salaries (not more than UAH 32,000 from 1 January 2017). *** The amended Laws are expected to create a strong legal basis for the efficient execution of court decisions and protection of creditor rights. Execution of court decisions is the final stage of delivery of justice and its success is crucial to convince creditors that the whole litigation process wasn’t a waste of time. We are pinning our hopes on the institute of private enforcement officers as an efficient and prompt instrument on the path of modernization of enforcement proceedings in Ukraine.
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European Law
National Bank of Ukraine to Implement EU Free Movement of Capital Directive
Ario DEHGHANI Counsel, Head of the Compliance and EU law practices of Redcliffe Partners. He has unparalleled experience of advising businesses on preventing, identifying, eliminating and mitigating compliance risks at both the national level and globally. He specialises in advising clients on all types of compliance matters and in conducting internal investigation, amongst others related to FCPA and UK Bribery Act issues.
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kraine retains a very restrictive currency control regime, introduced by the National Bank of Ukraine (NBU) as a provisional measure to prevent the outflow of foreign currency from Ukraine. In accordance with the most recent NBU currency control Regulation No.410 of 13 December 2016, the NBU admitted that the applicable currency control restrictions will remain in effect until such time as the NBU, in the absence of any circumstances affecting the stability of the banking and/or finance system of Ukraine, adopts a separate resolution lifting them.
1. National Bank’s Concept for New Foreign Currency Regulations
On 1 December 2016 the National Bank of Ukraine published a detailed Concept for new foreign currency regulations that it intends to develop in the following years (the Concept),
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provided that, amongst other things, the economic conditions in Ukraine are stabilised and cooperation with the International Monetary Fund moves forward. The principal point of the Concept consists of developing a new consolidated act on foreign exchange which will replace the multitude of regulatory acts setting out the foreign exchange rules that currently apply. A first draft of such new consolidated act is to be presented as early as the second quarter of 2017. As a next step, the Concept would include reforms to the relevant tax and money laundering legislation based, as regards the former, on implementation of OECD base erosion and profit shifting recommendations. Eventually, as is stated in the Concept, the restrictive currency control rules would be replaced by efficient tax regulation. Overall, the Concept is expressed to include the relevant provisions of the European Union law, including in particular Directive 88/361/EEC of 24 July 1988 (the Directive).
2. Directive 88/361/EEC: an Analysis
The Directive is a rather dated but prominent piece of European Union law. It is the first piece of community legislation to set out an express obligation on the part of member states to ensure that capital movements are not restricted within the community. To this effect, Article 1 of the Directive obliges member states to abolish restrictions on movement of capital taking place between persons resident in member states. Most importantly, however, Article 7 of the Directive obliges member states to attain the same degree of liberalisation in respect of movements of capital to or from third countries, as that which applies to operations with residents of other members states. The Directive does not provide a definition of capital movement. At the same time, Annex I to the Directive sets out a nomenclature of capital movements, in respect of which member states are obliged to abolish all applicable restrictions.
The nomenclature set out in Annex I to the Directive provides a list of examples of what constitutes a capital movement, with an express reservation that such list should not be interpreted as restricting the scope of the principle of full liberalisation of capital movements. The European Court of Justice relied upon the nomenclature provided in Annex I to the Directive to define whether a particular transaction is or is not regarded as capital movement for the purposes of the Directive1.
3. Ukraine’s EU Assocication Commitments Relating to Financial Services
Harmonisation of domestic law with European Union law is an important part of the 2014 Association Agreement between Ukraine and the European Union (the Agreement). The Agreement is notable, among other things, for setting out detailed obligations for Ukraine regarding implementation of European Union law. In particular, under Article 133 of the Agreement Ukraine shall ensure that its existing laws and future legislation relating to financial services will gradually be made compatible with European Union law. Furthermore, under Article 145(3) of the Agreement, Ukraine is obliged to complete the liberalisation of capital movements equivalent to the liberalisation in the European Union. A positive assessment by the European Union of the Ukrainian legislation on capital movements, its implementation and continued enforcement is a necessary precondition of a decision by the Trade Committee2 to extend the same treatment to Ukraine with respect to financial services as that which applies between member states of the European Union. See, for example, Joined Cases C/163/94, C-165/94 and C-250 Criminal proceedings against Lucas Emilion Sanz de Lera, Raimundo Diaz Jimenez and Figen Kapanoglu, Case C-222/97 Manfred Trummer and Peter Mayer. 2 Trade Committee is an administrative body established under the Agreement monitoring and assessing its implementation by the parties. 1
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Redcliffe Partners
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Address: 75 Zhylyanska Street, 13th Floor, Kyiv, 01032, Ukraine
edcliffe is a legal adviser to multinational companies, investors, financial institutions and project developers operating or investing in Ukraine and the CEE. The core legal team of Redcliffe worked together for more than seven years as the Kyiv team of Clifford Chance, handling many of the region’s most sophisticated transactions. Redcliffe’s capabilities across practice areas and industry sectors Redcliffe focuses primarily on Antitrust, Banking and Finance, Capital Markets, Compliance, Corporate/M&A, Debt Restructuring and Insolvency, EU law, International Arbitration and Dispute Resolution, Litigation and Real Estate. Redcliffe offers legal advice across industry sectors such as Agribusiness, Energy/Oil & Gas, Financial Institutions, FMCG and Retail, Food and Beverage, Infrastructure, Pharmaceuticals and TMT. Reputation Redcliffe is recommended for Banking and Finance, Capital Markets, Corporate law, M&A, Debt Restructuring and Energy
4. Assessment of Future Developments
Implementation of the nomenclature set out in Annex I to the Directive is an express obligation of Ukraine under Appendix XVII-2 to the Agreement. The said Appendix enumerates the specific provisions of the European Union law which Ukraine is obliged to implement in order to obtain the same treatment in respect of financial services as the treatment which applies between European Union member
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by all international legal directories including Chambers Global, Chambers Europe, the Legal 500 and IFLR 1000. In 2015 and in 2016 Redcliffe’s team was named among the Top 3 advisers by number of the largest public deals in Ukraine, according to ranking of Yuridicheskaya Practika Publishing. Clients Redcliffe’s clients are major international and local companies from various industry sectors, global private equity houses and financial services institutions, including Abbott Laboratories, Amadeus IT Group, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, EBRD, IFC, ING, J.P. Morgan, Monsanto, Morgan Stanley, Raiffeisen Bank, UniCredit Bank, Vitol. Global network Redcliffe has access to a global partner network and the know-how of some of the world’s leading law firms. These relationships help the firm offer seamlessly coordinated multijurisdictional teams for supporting its clients worldwide. Languages English, German, Russian, and Ukrainian
states. In respect of the nomenclature set out in Annex I to the Directive, the Agreement reserves a 5-year period, upon expiry of which the Trade Committee shall take a final decision on the timeline of implementation. Such 5-year period commences on the date of the entry into force of the Agreement, which as of the date of this publication has not yet come into force and applies on a provisional basis. Given that harmonisation of domestic law, in particular as regards the complicated
industry of financial services, is a long-term undertaking, the NBU’s present decision to include use of the Directive as a framework for new currency control legislation should be viewed as a positive signal. However, in practical terms much would depend on whether the turbulent economic conditions would stabilise sufficiently to allow for liberalisation of currency control measures. And, whether the Ukrainian Parliament would agree with the NBU on the need to liberalise them.
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Family Trusts
Family Trusts in Ukraine
Alina PLYUSHCH
Dmitriy RIABIKIN
Counsel, Sayenko Kharenko. Ms Plyushch specializes in M&A, corporate law, corporate finance, capital markets and private wealth management. She is one of the leading experts in Ukraine in the field of wealth management and possesses extensive experience in advising clients on the protection of the interests of beneficial owners of business, both national and international, including corporate restructurings and the building of trust structures
Associate, Sayenko Kharenko. Mr Riabikin specializes in corporate law, private wealth management, M&A, capital markets and securities market. Dmitriy advises clients on various private wealth management issues, including protecting the interests of the beneficial owners of Ukrainian and foreign businesses by means of corporate restructuring and setting up trusts and foundations
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amily trusts are currently becoming a more and more popular mechanism to protect and effectively manage the assets of wealthy Ukrainian individuals. A trust is created, inter alia, when a person called the “settlor” transfers property (money, shares, real estate, etc.) to a person known as a “trustee” who owns and manages such property for the benefit of the “beneficiaries”. A trust is often mistakenly referred to as a separate body corporate (like a company) but it is not. A trust is a relationship between a trustee and beneficiaries imposing obligation binding trustee to deal with the trust property for the benefit of the beneficiaries. The trustee is obliged to deal with property in a manner described in the document called the “trust deed” (signed by the trustee and the settlor) or the “declaration of trust” (when the trust is unilaterally proclaimed by the trustee). Trust deed or declaration of trust provides the terms and conditions of management of the trust property by the trustee, distribution of profit to the beneficiaries, etc. In addition to trust deeds and declarations of trust, trusts may also be created through a will. The terms of a trust deed depend on the purpose for which such trust has been created. For example, a trust may be cre-
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ated for charitable purposes. However, one of the main purposes for creating a trust is distribution of benefits (which may include monetary and non-monetary benefits) from exploitation of the trust property to the beneficiaries (e.g. members of the settlor’s family). Family trusts are created to protect family assets by transferring title to such assets to a trustee of a family trust. Transfer of title to several assets to the trustee means that the settlor ceases to be the legal owner of such assets. One of the main purposes for creating a family trust is to ensure that certain assets, for example shares in a family business, real estate, etc., will be safely transferred to beneficiaries (being the children and other relatives of a settlor), on the demise of the settlor. Other reasons for creating a family trust are to: — separate a part of the settlor’s assets to procure that such assets are managed by a professional trustee for the benefit of children of the settlor (e.g. that such funds shall be used for the purposes of education, startup of business, etc. of the settlor’s children); — protect the assets from possible claims against the settlor; — ensure that the settlor’s children (and not their spouses) will benefit from the trust’s assets;
— procure possible optimisation of inheritance and gift taxation. Wealthy businessmen often create family trusts to ensure that their descendants shall benefit from the part of the settlor’s assets transferred into trust. At the same time, such a businessman can utilise the remaining assets without concerns about his family wellbeing (e.g. invest in risky securities, purchase luxury items or simply spend the money). The terms of a trust deed may provide that the family business, or assets, or specific amount of money shall be transferred to the settlor’s heir only after such person reaches a particular age (typically 18 or 21 years). For example, Princess Diana in her will created a trust for the benefit of her sons. The main part of her estate was left in equal shares to Prince William and Prince Harry, with the shares being held in trust until each prince reaches the age of 25. Afterwards, upon the request of Princess’s mother and sister, the will was amended by the High Court of Justice in a way that both princes were able to obtain their part in the balance of the estate at the moment each of them reaches the age of 30. However, when each prince turned 25, he was given access to all of the income from his trust as well as the power to change the final disposition of his trust if anything remains at the time of his death. The concept of a “trust” typical in the common law system is not recognised in Ukraine. Moreover, Ukraine has not yet ratified the Hague Convention On the Law Applicable to Trusts and on their Recognition of 1 July 1985. In addition to the absence of the concept of “trust” in Ukrainian law, there are a number of other regulatory issues affecting beneficiaries, settlors and trustees of family trusts in Ukraine. Ukrainian currency control regulations are the principle issue affecting family trusts with a Ukrainian dimension in more than one way. Usually Ukrainian settlors transfer into foreign family trusts such assets as shares in foreign companies, real estate abroad and monetary funds held in foreign bank accounts. As a matter of common practice professional trustees usually verify the sources of funds used for acquisition of the assets to be transferred into trust. Furthermore, professional trustees prior to acceptance of the assets into the trust usually require a legal opinion from Ukrainian lawyers that the acquisition and transfer of assets have taken place in compliance with Ukrainian law,
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SAYENKO KHARENKO
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Address: 10 Muzeyny Provulok, Kyiv, 01001, Ukraine
ayenko Kharenko is a leading law firm in Ukraine with an internationally oriented full-service practice. It is currently one of the largest law firms in Kyiv. Most recently, Sayenko Kharenko collected three of the most prestigious professional excellence country awards, more specifically, Law Firm of the Year by each of IFLR European Awards 2017, Who’s Who Legal Awards 2017 and Legal Awards 2017. In early 2017, the firm was also shortlisted in Law Firm of the Year category by The Lawyer European Awards 2017 and Chambers Europe Awards 2017. The firm is top-ranked in multiple specialised practice areas according to all international legal directories, including Chambers Global, IFLR1000 and The Legal 500. About Private Wealth Management Practice Sayenko Kharenko has been regularly advising clients on a variety of private wealth management projects over the last few years. Responding to the needs of clients, the firm’s lawyers help to create effective holding structures for operational business, which enable the protection of accrued wealth. Sayenko Kharenko’s team helps clients to determine successful business development models and to create them by developing effective
which raises additional barriers for Ukrainians willing to create a foreign family trust. Acquisition of shares in a foreign company and/or real estate outside Ukraine requires the Ukrainian resident to acquire an individual foreign investment license from the National Bank of Ukraine (NBU). Moreover, in order to place monetary funds on a foreign bank account a Ukrainian resident needs an individual NBU license to place foreign currency on an account in a bank outside of Ukraine. The next factor affects the use of family trusts by Ukrainian public officials, who are obliged by law while holding their office to transfer the management of their business to other persons in order to avoid any conflict of interest. Transfer of the shares to a family trust may seem to be an option. However, due to the legal gap any further distribution received by such public official or his family members from the trust may be considered as a gift under Ukrainian anti-bribery legislation. The Law of Ukraine On Prevention of Corruption stipulates that the total value of gifts that can be given to an official by one individual or company (group of compa-
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Tel.: +380 44 499 6000, 389 5000 E-mail: info@sk.ua Web-site: www.sk.ua
strategies, which include, inter alia, tax advice or optimization, assets protection, risks mitigation and asset management. Sayenko Kharenko’s team advises clients on all issues related to private wealth management: — creating wealth management structures; — developing corporate structure for operating clients business; — сomplete and/or limited due diligence of the existing corporate structures in order to determine the historical risks and help to eliminate them; — analysis of different tax issues, currency control and competition regulation; — drafting supporting documentation, e.g. sale-purchase agreements, corporate documents, etc.; — supporting corporate restructurings, including assistance in the incorporation of holding, trading, financial and IP companies as well as developing effective internal control and management structures to protect the interests of owners; — supporting fund-raising processes following corporate restructurings, including debt financing, private placement, IPO, etc.
nies) in the course of a year may not exceed UAH 3,200 (circa USD 114) and the value of a single gift may not exceed UAH 1,600 (circa USD 57). The only exemption is that gifts may without limitation be presented to public officials by close relatives, while distribution from a family trust (not being a close relative) will be subject to the anti-bribery limitations described above. Another issue that seriously affects the use of family trusts by Ukrainian residents, particularly for confidentiality reasons, is the recent development of ultimate beneficial owners’ disclosure regulations. The coming launch of the automatic exchange of tax information in accordance with the Common Reporting Standard (CRS) along with European Union (EU) anti-money laundering initiatives, seek to limit the beneficiaries of foreign trusts in their confidentiality protection. Ukraine has not yet committed itself to participate in the CRS, so technically information on Ukrainian beneficiaries of foreign trusts (at least in the near future) will not be available to the State Fiscal Service of Ukraine. However, it will hardly be possible to maintain that status quo for long.
The President and the NBU recently announced upcoming Ukrainian participation in the CRS and several draft laws on its implementation into the Tax Code were prepared in 2016 and may be adopted shortly. The use of foreign family trusts is also affected by the Fourth EU Anti-Money Laundering Directive, according to which all members of the EU are obliged to maintain registers of beneficiaries of companies and trusts. With regard to trusts, such registers shall include information on settlor, trustee, protector (if any), beneficiaries and other individuals, who control the trust in another way. These registers may be publicly available or available only for the authorised bodies at the discretion of each EU member. This requirement strongly affects the possibility for Ukrainian individuals who are not prepared for such a disclosure to use EU-based family trusts. Despite all the factors that negatively affect the use of family trusts by Ukrainian residents for the purposes of wealth management and planning, family trusts will remain an efficient and reliable option for wealthy businessmen when structuring their family assets for years to come.
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FMCG
Specific Problematic Issues in the Conclusion of Lease Agreements on Commercial Real Estate which is why it is extremely important to keep in mind numerous details when concluding real estate lease agreements.
“Term of the Lease Agreement” vs. “Lease Term”. Requirements for Notarization Kristina KOLCHYNSKA Associate in Business Consulting Practice, GOLAW. Kristina Kolchynska has in depth of theoretical knowledge and practical experience in commercial, tax and labor law. The associate specializes in issues related to contractual relations, including the development and maintenance of commercial real estate lease agreements. The basic areas of Kristina’s activities are consulting entities on foreign trade transactions, taking into account the requirements of customs legislation and currency regulation. She has successful experience of solving commercial disputes, as well as representing clients during pre-conflict resolution and enforcement.
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ne of the most dynamic and fast growing areas in the Ukrainian economy is real estate. At the same time, this sphere is one of the most problematic. Owners of shopping malls are trying to lease their premises on the most advantageous conditions for them. Lessees, on the other hand, are trying to get the most attractive location in the shopping mall at the lowest price. In most cases the outcome of such a “race” is the conclusion of lease agreements with various ambiguous conditions that give rise to number of court disputes. Ukrainian court practice has a high degree of unpredictability and inconsistency,
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It is important to differentiate the concept of “lease term” from that of “term of the lease agreement”. The term of the lease agreement includes the entire period, from the moment of conclusion of the agreement to its termination. While the lease term is a more narrow term and includes only the term of use of the premises. If under the lease agreement the mentioned definitions are equated and the lease term will correspond to the term of the lease agreement, it can lead to the situation when the lessor is obliged to pay a rent fee for the entire period from the moment of conclusion of lease agreement till its termination, including the period during which he did not actually use the premises. As such, it is advisable to ensure that the lease agreement contains a detailed description of the procedure for, and the timing of, the handing over of the real estate for lease and its return to the lessor. It would be beneficial for the tenant to stipulate in the agreement extra days for vacating the premises after expiry of the lease term during which time rent will not accrue. According to the Civil Code of Ukraine, any agreement on lease of premises for a term of three or more years must be attested by a notary. To avoid the expense of notarization, which is often quite huge, the parties usually conclude a lease agreement for a term of 2 years and 11 months. On one hand, it helps to save money on notarization, but on the other hand it may lead to higher expenses for the tenant. Such a situation can occur if the tenant invests a lot of money in preparing the premises for lease and the term of 2 years and 11 month does not provide the possibility to obtain enough profit
in order for repair expenses to be covered. In such cases tenants, on the basis of oral agreements with landlords, are confident that after the end of the term of the lease agreement they will be able to conclude a new agreement on a new term. At the same time, tenants often do not take into consideration that the preferential right before other persons to conclude a lease agreement for a new term, provided by legislation and the agreement, is not unconditional. The lessee can use it only under certain circumstances as: — if the tenant properly performed his duties under the lease contract; — if the landlord intends to lease out the premises; — if the parties come to an agreement on all the terms of the new lease agreement. Thus, actually after the termination of the lease agreement the lessor may propose to conclude a new contract on less favorable conditions for the lessee or refuse to lease the premises altogether. Consequently, in some situations savings on notarization may lead to greater losses for tenants. If, irrespective of the aforementioned, the tenant wants to avoid notarization and to lease property for more than three years, it can be done under the general provisions of the Civil Code of Ukraine. According to Article 764 of the Civil Code of Ukraine, if the tenant continues to use the property after the expiry of the lease agreement, then in the case of absence of objections by the landlord within one month, the contract shall be renewed for the period that was previously established by the contract. Thus, the parties may conclude the lease agreement for 2 years and 11 months. After expiry of this term the tenant should continue to use the premises and landlord should refrain from any objections for one month. In such case, the lease agreement shall be deemed as extended for the same term and on the same conditions. The parties are not obliged to notarize the agreement in such a situation.
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GOLAW
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Address: 19B Instytutska Street, Suite 29, Kyiv, 01021, Ukraine
OLAW is one of the leading Ukrainian full service law firms. The firm was founded in 2003 and currently has offices in Kyiv, Lviv, Odesa (all in Ukraine) and Berlin, Germany. The firm’s lawyers are widely recognized for their skills and extensive expertise. The GOLAW team focuses on efficiently resolving issues facing clients, communicating effectively on their behalf, assisting them in navigating the nuances of Ukrainian law, and avoiding costly legal traps. The firm’s client portfolio includes large and medium-sized, national and foreign companies, banks and financial institutions, as well as private investors doing business in Ukraine or entering local markets. GOLAW provides sophisticated legal advice and reliable legal assistance in all major sectors, including agribusiness, retail and FMCG, healthcare and pharmaceuticals, financial services, energy and natural resources, transportation and infrastructure, Internet technology and real estate. GOLAW has developed a top tier tax practice which includes issues regarding tax functioning in Ukraine, strategic advice on tax planning, tax and fiscal controls, as well as professional contacts with the tax authorities at all levels. The firm represents its clients in dispute resolution and litigation in general, economic, and administrative courts of all levels, along with support for international commercial disputes. Our deep expertise in white collar defense and investigations enables GOLAW attorneys to successfully represent clients in criminal legal proceedings, advising them on the wider
How to Handle a Security Deposit
A specific feature of lease agreements is the application of a particular method of securing the obligations of the tenant (e.g. timely payment of rent, reimbursement of damages to property, etc.) by way of obliging the tenant to prepay a “security deposit” normally equal to the amount of one month’s worth of rent or another amount assessed based on the value of the leased property. While the effective laws of Ukraine do not regulate matters of use of security deposits, the lease agreement should specify in detail all matters pertaining to its prepayment and utilization and repayment by the lessor. In the first place, the lease agreement must provide an exhaustive list of situations where the lessor is entitled to make use of the security deposit obtained from the tenant. The agreement should outline a detailed step-by-step procedure for advising the tenant of the intention to use the security deposit, for application of the security deposit and a term for replenishment by the tenant of the sum of the security deposit.
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commercial, regulatory and image implications when there are allegations of fraud or corruption. GOLAW professionals advise clients across a broad spectrum of corporate work including M&A, joint ventures and corporate restructuring, as well as general commercial, antitrust, and corporate governance issues. The effective combination of transaction skills combined with our unique expertise including antitrust, employment, environmental, intellectual property, and taxation, enables the firm to handle issues that can arise from any single corporate transaction. In banking and finance, the firm successfully represents clients regardless of whether it is a trade, export, finance deal, M&A, or any other financial project; we also provide advice on civil, banking and currency laws. Our firm is a leader in representing financial services institutions in contentious insolvency and regulatory matters. The firm’s team of lawyers utilizes unrivaled local knowledge of the demands of operating in increasingly international and volatile markets, with a deep understanding of the issues impacting the energy and natural resources sectors. The firm’s clients are involved in commodities, power, oil & gas, nuclear, mining, metals & minerals, renewable and clean-technology energy industries. GOLAW covers the full range of labor and employment matters, including: whistleblower litigation, labor-management relations, benefits, collective agreements, and employment of foreign citizens.
Additionally, the procedure of VAT taxation of security deposit depends on the order of its usage provided by the lease agreement. Let us consider a few examples: 1. A security deposit is credited against the payment of a rent fee (for example, against the payment of rent fee for the last month of lease). In this case, the tax obligation of the lessor and the right on the tax credit of the lessee — VAT taxpayers, arises on the date of payment of the security deposit (according to the rule of “first event”). In case of early termination of the lease agreement, the security deposit is usually used as compensation of losses incurred to the lessor by the lessee. If in this case the amount of the security deposit is classified by the parties of the contract as a penalty, then charged tax obligations and the tax credit should be adjusted. This is due to the fact that penalties are not included in the VAT tax base. 2. A security deposit shall be returned in full at the end of the lease term. In this case, such payment is only a means to enforce obligations and the deposit does not lead to the occurrence of income and expenses in accounting and is not subject to VAT.
3. Sometimes, during the execution of a lease agreement, the parties change the second option to the first (i.e., the security deposit is to be credited against the payment of the rent fee). Then, at the date of change of direction of using the security deposit (for example, on the date of signing of an additional agreement to the lease agreement), the landlord must charge VAT obligations and write out a VAT invoice. The tenant shall have the right to a tax credit on the basis of a VAT invoice. Practice shows that the most appropriate option for the parties is to establish in the lease agreement a security deposit (including VAT), and the procedure of its usage on repayment of an overdue rent fee and the cost of other services, which are included in the VAT tax base. In any case the interests of each party to the agreement will be fully guaranteed if the parties agree in such an agreement on all essential terms and conditions, established by legislation, and specify to the maximum possible extent the procedures for interaction between them in the course of its fulfillment.
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Foreign Trade
International Trade: Private Focus New Opportunities and Challenges
Ivanna DORICHENKO
Olena PEREPELYNSKA
FCIArb, Partner, Integrites. Ivanna started her career in 2002 alongside Black Sea commodity traders and expanded her client base to the Middle East, China and Southeast Asia. She is an international trade expert recognised both inside and outside Ukraine who regularly trains, writes and speaks internationally on trade topics.
FCIArb, Partner, Head of CIS Arbitration Practice, Integrites. President of Ukrainian Arbitration Association. Acted as counsel and arbitrator in over 100 arbitral proceedings.
he last few years have not been easy for the majority of Ukrainian businesses. Yet, while certain historically strong industries and sectors have experienced a little turbulence, both in terms of the clients’ focus and required legal support, some managed to stay quite busy and demonstrated steady progression, such as international trade or foreign economic activity as per its Ukrainian descriptor. And while in Ukraine the term has customarily been used in the public context of intrastate trade arrangements based on bilateral or free trade agreements, one should not underestimate the importance of the core business of private B2B trading between national and international players, which defines Ukraine as a trading partner to the world, and the challenges faced on that private level.
as against readymade products with the key categories of exported goods being agricultural produce (with sunflower oil and corn leading the game), metals and products of the machine-building industry. At the same time, as the historically acclaimed title of the bread basket of Europe, Ukraine remains a strong top 10 player in grain export worldwide, competing predominantly with some of its European neighbors (mainly France and Russia) and major international origination markets such as LATAM, the USA and Australia. However, the deep turmoil on commodity markets over the past two years and very low prices caused by relatively good harvests worldwide, resultant oversupply and weakened international demand made competition for the main consumer markets much stronger. National traders, therefore, have to work quite hard to maintain their image as reliable suppliers and to create competitive advantages for Ukrainian commodities. Providing value for money or supplying goods of contractual quality is no longer enough; one now needs a greater degree of adoptability to the constantly changing requirements of buyers or the import regulations of their countries, increasing regulatory and compliance pressures and the overwhelming number of rules that may come into play.
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Key Facts and Figures
Despite the overall decline of export volumes in the current marketing year amid hopes for increase of export flows to the EU pending the entry into force of the free trade agreement with Ukraine, the export figures nevertheless remain quite high and even record ones in certain sectors. The overall structure of Ukrainian export is now largely led by the supply of raw commodities
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The geographical coverage of Ukrainian exports, particularly in the agricultural sector, also gets wider every year. In addition to our traditional markets such as the EU, which takes about a third of the overall export share, and MENA where Egypt and Saudi Arabia are leading demand, a stronger proportion of business goes towards China, Southeast Asia (Korea, Indonesia) India, Bangladesh and Pakistan. With booming opportunities in those markets, business still becomes much riskier due to major differences in mentality, business customs, local laws and the overall approach to international commerce. An increasing number of issues also arise due to the lack of communication, or vastly different interpretation of contractual terms and obligations, as well as the lack of knowledge and understanding of key international trading terms and commonly used rules.
Evolving Role of Trade Lawyers
All the above factors lead to the logical conclusion that the role of lawyers in the international trade sector is also evolving. It is no longer enough to recite laws or draft academic legal opinions which may often be detached from business reality; one is expected to be both an international business advisor and a risk manager who must be fully engaged from day one, demonstrate solid commercial awareness and guide trading clients through all the hurdles of international commerce. Indeed, some of those hurdles are still quite traditional. First of all, it is the variety of different rules of the game, not just the chosen law of the contract but local export and import regulations, customs and tax regimes, trade agreements and international conventions where applicable, area specific business customs, port rules, bank regulations and many others. Secondly, international trade contracts are usually foreign law based (predominantly English), and while foreign law expertise is widely offered on Ukrainian legal market the devil is indeed in the detail. The lack of a fine touch unfortunately does become evident when one wrongly placed word changes the outcome of a multimilliondollar dispute and adversely affects the party’s position. Thirdly, dispute resolution forums are often outside Ukraine and may involve concepts very different to those associated with the
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INTEGRITES
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Address: 1 Dobrovolchykh Batalioniv Street, Kyiv, 01015, Ukraine
NTEGRITES has a solid network of operating offices in the CIS (Kyiv, Moscow, Almaty, Astana, Karaganda, Aktau, Atyrau) supported by an international office network in London, Munich, Amsterdam and Guangzhou. The firm offers its clients complex legal advice in the CIS region. In 2016 The Lawyer recognized our work in the CIS with the award “Law Firm of the Year: Russia, Ukraine and the CIS.” We provide legal services for our world-known clients: Rabobank International, EBRD, VTB Bank, ProCredit Bank, Mitsubishi Group, Concern Toyota, Agrogeneration S.A., Credit Agricole, Nestle, COFCO Agri, LTk Capital, Dragon Capital, ADM, Louis Dreyfus Company, Soufflet Group, Сredit Agricole, Burisma, Aspen Pharmacare Holdings Ltd., Shell, DuPont, Bank of China, DHL, China Development Bank etc. Main industries: Agribusiness, Capital Markets, Construction and Land, Energy and Natural Resources, Information Technologies, Medicine and Healthcare, Telecommunications. Main Practices: Antitrust and Competition, Banking and Finance, Bankruptcy, Corporate, M&A, Criminal Law and White-Collar Crime, Intellectual Property, International Arbitration, International Trade and Trade Remedies, Labor and Employment, Litigation, Real Estate, Retail, Tax.
Ukrainian judicial system. Among the few are wider evidence base, different rules on admissibility of evidence and the concept of disclosure, which may greatly surprise a party unwilling to share with courts or arbitral tribunals any information at all, let alone evidence “potentially harmful” for its case. In addition, as a result of operating in the current highly competitive and unpredictable environment and in an attempt to get the best price, parties often even forget about the “usual” reserves and do not conduct even basic due diligence. This may prove quite detrimental at a later stage. Therefore, entry level checks of names, addresses, business affiliation and authority to sign documents are no longer necessary as they are a given and it is strongly recommended that these are extended even further. Early bank compliance procedures clearing funds, personal guarantees by UBOs or parent companies of the group, performance bonds, export insurance — these are just a few of the ticks that ought to be on the trader’s checklist.
State Factor
The state regulation of the foreign economic sector is embodied in the Law of Ukraine No.959-XII On Foreign Economic Activity of 16 April 1991 (FEA Law) and subsequent legal instruments. The regime itself is relatively mild, largely permissive and reflects quite a few free trade principles (freedom of contract, choice of law, etc). However, some of the instruments of interference and
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Our firm is also represented by international offices: United Kingdom 1 King Street, EC2V 8AU, London, UK Tel.: +44 203 713 1750
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China R&F Ying Sheng Plaza, MaChang Road 16, Tianhe district, Guangzhou city, Guangdong, China. Tel.: +86 185 0204 0880
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the way in which they are being employed by the state lead to a lot of tensions on the international market affecting both individual exporters and the overall image of the state, even when they have truly justifiable reasons.
Trade Restrictions and Force Majeure
Export and other trade restrictions are some of the most popular and equally detrimental instruments. For example, the last grain export restrictions saga, back in 2010, caused an unprecedented number of defaults, made Ukraine a negative hot topic in trading circles for a long time and fed various London lawyers for almost five years. While it is commonly understood that trade restrictions or prohibition of export should fall under the definition of force-majeure, this may not always be the case on evidence. Some international contracts usually contain detailed clauses dealing with force-majeure events, their confirmation and consequences (e.g., standard GAFTA or FOSFA contracts). However, some do not and refer to a broad definition of “anything usually understood as forcemajeure”, while certain legal systems do not even have force-majeure as a legal concept, making that contractual reference crucial. Yet, on many occasions the restrictions are “unofficial”, meaning no formal confirmation to that effect or available evidence to rely on by either side, leaving national exporters with no practical means of protecting their rights against unhappy buyers.
Special Sanctions
Another limiting state mechanism is the regime of special sanctions set by Article 37 of the FEA Law. Such special sanctions are imposed by the Ministry of Economic Development and Trade of Ukraine for various violations of law and contract and come in the form of penalties, individual licensing or temporary ban on foreign economic activity. The most common violation being the so-called “nonpayment of earnings in foreign currency”, which occurs if the full payment for the exported goods does not reach the exporter’s account within the specified time, irrespective of the amount of shortfall. Hence, an unlucky trader who delivered the goods but ended up being unpaid has a dual problem: the need to spend time and resources pursuing a rogue counterparty for payment and the punishment from the state for gross violation of currency laws, which occurred through no fault of his own. Such an unduly punitive approach is very disturbing, since international traders widely use various commercial mechanisms for settling contractual difference (offsets, washouts and discounts) and it greatly limits the national exporters’ ability to resolve disputes without recourse to courts or ADR, saving a lot of time and expense. We hope that with the increasing knowledge of issues and less interference from the state, both Ukrainian exporters and their international counterparties will be ready to face and overcome the new challenges and make their trade deals a mutual success.
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Government Relations
Immersion. Lobbying: How does It Really Work?
Oleksandra PAVLENKO Attorney-at-Law, Managing Partner, Pavlenko Legal Group
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n recent years, more and more calls to regulate the activities of lobbyists have been heard more often in Ukraine. I must admit that we worked hard to give this topic totally different coverage in Ukraine, for it to be more positive and real. The post-Soviet world has got used to living with slogans and evaluations of form, but not its essence, as well as to attaching labels, reading only the headings and the terms. This is how the fate of comprehension of “lobbying” looks like in Ukraine. We got used to hearing about business interests in the Government and corruption, about the use of hidden mechanisms of influence and, in fact, the eventual publishing of national decisions, adopted with a bias towards merely certain interests. However, we cannot live behind a closed curtain and continue echoing the same, when the world is developing and going forward for the benefit of countries, their citizens and business as a driving force of the economy. At the end of 2016, for the first time ever a draft law was registered in Ukraine aimed at regulating the activities of interest groups and lobbyists. As of now a total of three draft laws have been submitted. One of our most important achievements is the open dialog that takes place between the business environment, community and politicians. We, the experts working in the field of government relations in Ukraine for over 10 years, would like to draw attention to European and world practice, which enables the choosing of a single approach to development of civilized legitimate lobbying in Ukraine. We often hear that European countries have chosen different approaches to the issue
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of lobbying legalization. Each country independently decided, “whether its community is ready to the adoption of law” and “what consequences may the state corpus have as a result of lobbying legalization”. In any event, it is more appropriate to set the tone for the rules than to name any action as corrupt and not to hold anyone liable for any of the episodes. Is it complicated because distinguishing real corruption from civilized lobbying requires clear criteria? And who better than the state is able to answer the question: what are these criteria? Yes, probably each country decides independently on which lobbying strategy to choose, but this will not stop the processes, occurring in the world, whether or not we want this. Ukraine has every chance, being in the period of building its nationhood again, to follow the path chosen by European institutions. Today, business groups are acting agressively and against the rules, but such behavior is possible only when one does not want to establish or play the rules. In the meantime an expert group in GR sphere is actively consulting the executive bodies regarding the implementation of individual reforms; it is creating working groups in the ministries for improvement of legislation for businesses; it is moderating such groups, supporting and “hosting” communication with business in the interests of ministries. During the period of reform, it is not possible to implement changes without such support. Many people have started to realize that communication between the state and the business is not a drawback. On the contrary, such communication helps the Government not to lose the sense of reality and enables it to understand the reaction regarding particular draft changes before their publishing. Each state official or politician is a servant not only to the population that elected him, but a representative of business interests in the Government corpus. The ability to alter state and business interests is the task and the obligation of the country’s administrative corpus. Now, during these turbulent times (both political and economic), it could not be denied that only support to business may increase the country’s indicators and raise it to another level. With such an approach, the instruments of civilized lobbying are a chance to hear the business sector with its problems and needs.
We are undergoing a period of transition from fiscal and punitive state policy to supporting policy. A gap in dialog between the business and the state is no longer possible. EU practice related to implementing the civilized institution of lobbying or Government Relations may become priceless for us. Not only are certain laws of other countries of great interest to us, but so are the acts of European institutions. Thus, Recommendations of the Assembly of the Council of Europe No.1908 (2010) contain a lot: — “... society members are fully entitled to self-organizing and lobbying their interests”. — “... however, such phenomenon as unregulated hidden lobbying may undermine democratic principles and proper governing...” In the meantime, special attention is given to those countries, where the processes of political shaking are not yet complete and society does not properly control the level of corruption. Thus, the Council of Europe clarifies that: — “…unregulated hidden lobbying may undermine democratic principles and proper government in those countries where democratic traditions are not yet rooted, and where there is the danger of absence of an effective system of checks and balances by civil society”. Generally, it is our case. How are we going to reslove the problem? Do we really think that anti-corruption laws and lawenforcement bodies will provide a proper reaction? Over several recent sessions of the Ukrainian Parliament, MPs who believe that the legislative body should work exactly in this way — to collect ideas from “clients” behind doors, consign populism to them and move them forward through voting, are regularly elected. Nobody creates the rules within Parliament. In its current edition, the Law On the Rules of Procedure of the Verkhovna Rada of Ukraine does not, unfortunately, answer these questions. According to many European constitutionalists: 1) lobbying should be clearly defined in order to distinguish lobbying as a professional paid activity from the activities of civil society organizations; 2) transparency in lobbying should be improved;
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Pavlenko Legal Group
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Address: 23A Zolotoustivska Street, Kyiv, 01135, Ukraine
avlenko Legal Group is a law company founded in 2008 by the famous attorney at law Oleksandra Pavlenko. The company now finds itself among the national leaders of the legal business. In December 2014 the team launched a major rebranding campaign. The team of attorneys at Pavlenko Legal Group implements a new approach to delivery of services, offering not only legal support, but also generation of personalized, nonstandard solutions, based on objective information — the legal picture, situation on the market and political background. The company specializes in providing the following services — government relations (GR), legislative work in various spheres, judicial protection, asset protection from hostile takeovers, corporate law, taxes and financial planning. Company founder Oleksandra Pavlenko is an attorney practicing in the field of government relations (GR) since 2000, who interacts constantly with the state authorities with respect to implementation of new regulations, changes to legislation, advise to Government bodies on various legal issues, also implementing business projects with a public component.
3) the norms which shall be applied to politicians, civil clerks, members of pressure groups and commercial enterprises, including the principle of potential conflict of interests and defining the time period passed since dismissal of such official from his/her position, i.e. during which the lobbyist activities should be prohibited, should be defined; 4) individuals participating in lobbyist activities should be registered; 5) preliminary consultations should be held with lobbyist organizations regarding any draft law in the relevant field; 6) substantial, transparent, and fair lobbying should be supported in a way to improve the public image of persons involved in these activities.
What could Lobbying bring the Country, Business and Politicians?
The main component of the benefit list is improving the quality of draft laws and adopted laws. Being obliged to conduct consultations with lobbyists’ expert groups, registered with Parliament, a Member of Parliament cannot ignore professional recommendations, provided by the experts of the core market, as often happens in Ukraine. When opening the adopted law, business rather often won-
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Tel.: +380 44 281 06 00, 281 06 01 E-mail: office@plglaw.ua Web-site: www.plglaw.ua
Pavlenko Legal Group team members are active participants of professional legal community, members of business associations, such as EBA ACC, CCA and IBA, participants of Government and departmental working groups on various legislation issues. The appointment of Oleksandra Pavlenko in 2014 to the Cabinet of Ministers to work in the health care field was special recognition of her professionalism and achievements. Expert legal assessment provided by the company’s attorneys is highly demanded by leading Ukrainian legal and business publications. Team members are ranked in various national and international ratings. The company is recognized as being among the Top 50 law firms of Ukraine. The company’s overall success consists of the personal achievements of our attorneys and lawyers. Each of them is not only a competent and experienced specialist in one or more areas of law, but also a full member of the team, working together to solve complex issues. Our internal task is synergy for the result. We assist to take on the challenge.
ders to itself “who advised the Government?” As a rule, broad mandatory consultations are never held. The draft law arrives on the desk of parliamentarians after going only through the hands of the MP who initiated the draft. The low level of professional education of our MPs does not allow assessment of the quality of the potential impact of such a draft on the operation of the general market. The norms that oblige parliamentarians to take into consideration the expertise of a core market, a professional association or an expert group, who act as the lobbyists of the market, is one of the serious chances to leave stupidity behind the doors, not allowing it to be voted, or on the contrary, enabling light to be shed on really qualitative provisions. Publishing all the opinions provided by lobbyist groups on the official website of the Verkhovna Rada would enable the initiative of a particular MP and his/her open counteraction with the market to be openly observed. Cooperation for the sake of development should be established. European business has had an explicit impact on qualitative regulation through civilized lobbying. The European Parliament has become the first European institution to regulate the activities of lobbyists within its walls. The register of lobbyists has been created and the Code of Eth-
ics has been adopted. In addition, opening by the European Commission of the first register of European lobbyists in 2008 became an important step towards standardization of such activities in Europe. Over the last 8 years, it has strengthened the culture of dialog between business and the Government, heightened the value of consultations between European parliamentarians and the market, increased transparency and finally improved the negative opinion of the community about lobbyists. Moreover, it is worth noting that highquality services in the GR field include not only interaction with officials, deciding on adoption of a particular legal act, but largely on the strategy with the use of legal component, information policy, public opinion and the work of expert groups. It is essential to step forward and understand that only through regulation of the rules for civilized lobbying and making most processes associated with establishing dialog between business and Government transparent, will we finally separate corruption and clearly understand that business is mostly ready to work openly with Parliament and the Cabinet of Ministers for the benefit of economic development. There is a long-standing market and GR experts are in demand, whether we like it or not.
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Infrastructure
Financing Public-Private Partnership Projects in Ukraine Since non-recourse project financing is a very risky enterprise, the lenders’ decision on whether or not to finance a project will normally be preceded by an extensive due diligence review and thorough consideration of the allocation of risks between the project parties. The “bankability” of the project will be determined as a result of such review and risk assessment.
Recent Developments Dmytro ORENDARETS Senior Associate, Kyiv office of Baker McKenzie
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ublic-private partnerships (PPP) are widely used in many parts of the world as a means of undertaking large infrastructure projects. Such projects usually require specific technical expertise and significant financial resources. Therefore, for the implementation of such projects, national and local governments often attract private partners that possess the required knowledge and experience and are able to arrange for the necessary financing. Financing PPP projects involve three main funding mechanisms: government funding, equity contributions and debt financing. Debt financing can be attracted either through senior and/or mezzanine loans or by means of issuing debt securities on capital markets. Given that Ukrainian public finances are weak and the national capital market is not big enough to attract significant amounts of money, while international capital markets are not always available to Ukrainian issuers, bank loans appear to be the most realistic way of financing PPP projects in Ukraine.
Project Finance
One of the most common and efficient arrangements for financing PPP projects is project financing. This type of financing usually takes the form of lending to a special purpose vehicle (SPV) designated to carry out the project. Project financing can be extended on either a non-recourse or limited recourse basis. In a non-recourse financing, the financiers rely fully on the cash flow generated by the project, whilst limited recourse allows the financing parties access to the assets of the sponsors or the Government.
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Until recently, due to underdeveloped PPP legislation and a lack of political will, it was virtually impossible to originate a bankable PPP project in Ukraine. Therefore, one can hardly name any PPP success story since the adoption of the Law of Ukraine On PublicPrivate Partnerships No. 2404-VI of 1 July 2010 (2010 PPP Act). Fortunately, the situation has been slowly but steadily improving in the past couple of years. The Government seems to have recognized the benefits that PPP can provide to the country and its economy. As a result, to motivate investors to commence PPP projects in Ukraine, the Government has undertaken certain reforms, including making certain changes to the 2010 PPP Act. Those changes, the most significant of which we discuss below, have made project financing of PPP projects achievable.
SPV Structure
When extending project financing to a project company, the lenders will expect such a company to be fully dedicated to executing the project and free from any historic liabilities. Therefore, the availability of a project SPV is of utmost importance for PPP financing. Nonetheless, prior to being amended in 2016, the 2010 PPP Act had stipulated that only the winner of a PPP tender, which would often be a significant local or international company, could act as the private partner in a PPP project. According to the latest changes to the 2010 PPP Act, an SPV created by the winner of a PPP tender can act as a private partner, provided that the winner retains, directly or indirectly, an interest of more than 50% in the SPV’s charter capital for a certain period of time, specified in the PPP agreement. In addition, even if the project is carried out by an SPV, the winner of the PPP tender will remain jointly liable with the SPV and will bear full responsibility for the due fulfilment of the PPP agreement.
Creating Security
Another distinctive feature of a project finance structure is that the financing parties will want to take as much security for the financing as possible. Such security will normally comprise, amongst other things, security over shares in the SPV, charges over project assets and project agreements, security over insurance proceeds and project accounts. Given this, it is essential that applicable law permits the lenders to obtain such security. Ukrainian law recognises most types of security arrangements which are considered to be customary for PPP projects. Furthermore, as opposed to the previous version of the 2010 PPP Act, the current version permits the private partner to become an owner of the assets that it creates or acquires in pursuance of the PPP agreement. However, such assets must be transferred to the public partner before the relevant PPP agreement terminates. The ability of private partners to own project assets creates the necessary framework for implementing BOT (buildown-transfer) PPPs and establishing security over assets of such projects in connection with their project financing.
Step-in Rights
For a project-financed PPP project, the lenders largely depend on the financial success of the project. Therefore, the lenders will want the private partner to duly perform its obligations under the PPP agreement. If the private partner does not perform its obligations in the specified manner, the financing parties should be in a position to step in the rights and obligations of the project company or replace the private partner with another party having the requisite experience to successfully complete and operate the PPP project. Ukrainian legislation permits the financing parties to be a party to a PPP agreement on the side of the private partner and initiate the replacement of the private partner if it underperforms under the PPP agreement. The procedure for such replacement is still to be approved by the Cabinet of Ministers of Ukraine (CMU). However, pursuant to the currently available draft of the relevant regulation, a replacement partner will be determined though a tender offer procedure. If the CMU adopts the final regulation as currently drafted, this will likely exclude the possibility of the lenders “stepping into the
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Baker McKenzie
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Address: Renaissance Business Center 24 Bulvarno-Kudriavska Street, Kyiv, 01601, Ukraine
aker McKenzie’s Kyiv office has maintained a leading market position in Ukraine for 25 years. We offer a full range of legal services and business solutions. The quality of our work is reflected in the number of domestic companies, multinationals and financial institutions that seek our advice on high-profile transactions and legal representation in Ukraine. In close cooperation with Baker McKenzie offices worldwide, we provide the guidance and support clients need to achieve their commercial objectives in practice areas like Antitrust & Competition, Banking & Finance, Corporate,
shoes� of the relevant failing partner or nominating a replacement partner in their sole discretion by way of exercising their rights under the available direct agreements or security over project contracts. Unfortunately, when the latest changes were introduced to the 2010 PPP Act, market participants did not manage to persuade MPs to provide a more flexible step-in mechanism in the law.
State Support
In a project-financed transaction, the lenders will also want to ensure that the financed project performs as expected and the cash flow it generates is sufficiently protected. Therefore, in developing countries such as Ukraine, where project risks are usually higher than in developed countries, it would not be uncommon for private partners and financiers to require some sort of state support for a PPP project. The State of Ukraine can support a PPP project in a number of ways, including by granting sovereign guarantees, paying completion fees or acquiring a minimum volume of goods produced or services rendered under
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a PPP agreement. Furthermore, if the prices for goods or services produced or rendered under a PPP agreement are subject to state regulation, the state is required to ensure that such prices include an investment return component sufficient to reimburse the private partner for the investments made in the PPP project.
Other Guarantees
In order to provide prospective investors and project financiers with additional comfort in undertaking PPP projects in Ukraine, Ukrainian PPP legislation has been amended to specifically allow the parties to a PPP agreement to submit any disputes arising under such an agreement to arbitration in a foreign arbitration court. In addition, the 2010 PPP Act now explicitly permits the state to waive its sovereign immunity in PPP agreements in which the CMU acts as a public partner.
Conclusions
Tel.: +380 44 590 0101 E-mail: kyiv@bakermckenzie.com Web-site: www.bakermckenzie.com/ukraine
Despite the significant progress made by the Ukrainian Government in improving
national PPP legislation and making PPP projects more attractive for big international players, a great deal still remains to be done. Infrastructure, including motorways, power lines and pipelines, remains a heavily regulated industry. This, together with the existing restrictions on private ownership of certain infrastructure objects, makes the implementation of PPP projects in this field difficult, requiring detailed planning and consideration. That said, current Ukrainian PPP legislation provides prospective private partners and financiers with the minimum required instruments for undertaking PPP projects and arranging financing for such projects. Some international financial organisations are already assisting the Government to execute a number of pilot PPP projects in order to test and improve available PPP regulations and to create success stories that will increase confidence among investors. Given this, and taking into account the growing political will to develop PPP in Ukraine, the country has all the prerequisites for seeing more successful PPP projects in coming years.
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International Arbitration
Service of Procedural Documents in Arbitration and Cross-Border Litigation
Olexander DROUG
Olesia GONTAR
Counsel, Sayenko Kharenko. Mr Droug specializes in dispute resolution and restructuring with a special focus on arbitration and commercial litigation. He advises local and foreign clients on all stages of dispute resolution proceedings, including in complex multijurisdictional proceedings, as well as arbitration under arbitration rules of all major international arbitral institutions.
Associate, Sayenko Kharenko. Ms Gontar specializes in international commercial arbitration. She has been involved in a number of proceedings, including multiparty and multicontract arbitrations under the GAFTA, LCIA, SCC and NAI Arbitration Rules.
rbitration and cross-border litigation usually entail proceedings involving several jurisdictions with distinct rules of procedure and court practice. This also requires cooperation between lawyers from different countries who know the intricacies of each particular jurisdiction. One of the issues which may require advice from a foreign counsel is the service of procedural documents to a respondent that refuses to take part in proceedings. Incorrect service of process in such a situation may not always preclude issuance of an arbitral award or a court judgement, but will almost certainly put at risk any subsequent enforcement of such an arbitral award or court judgement. This is because usually both national legislation and relevant international treaties stipulate as ground for refusal of recognition and enforcement of a foreign court judgement or an arbitral award due notification of a respondent on the process. If a respondent is successful in challenging the recognition and enforcement of a relevant judgement or an arbitral award, then all efforts, time and money invested in the respective proceedings could be wasted and a
claimant might be required to start fresh proceedings. In addition, improper service might also result in the setting aside of an arbitral award at the place of arbitration or challenge of a court judgment with a court of higher instance. Therefore, a party initiating arbitration or litigation shall invest appropriate efforts into making sure that a respondent is duly notified of the proceedings.
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Service of Process in Litigation
Hague Convention In litigation, the parties are bound by the local procedural rules at the place of a court, which usually provide for a high standard for the service of procedural documents to a respondent. One of the most widely used international instruments dealing with the service of procedural documents is the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters of 15 November 1965 (Hague Convention). The Hague Convention will apply if a relevant state where the court is located, and a state where a respondent resides or where it is registered, are parties to this Convention.
The Hague Convention provides for quite a formalistic approach to the service of judicial documents through the official authorities of the relevant states. For example, Ministries of Justice or higher courts, which then arrange for the service of procedural documents based on the procedures established by each particular state. The Hague Convention also provides for the possibility of the simplified service, including via the direct dispatch of documents by post. However, the simplified service is not available for the majority of countries, which are parties to the Hague Convention, including Ukraine. In addition, service under the Hague Convention may take a relatively long period of time (in Ukraine, the average time for completion of service is two to four months). For this reason, the parties sometimes try to employ alternative methods of service, as discussed further below. Other International Mechanisms In case the Hague Convention does not apply, then the service of procedural documents in litigation shall be made under bilateral international treaties between the respective states, usually mutual legal assistance treaties. Such treaties provide for similar procedures for the service of procedural documents as the Hague Convention through the competent authorities, but may also provide for certain specific conditions under which the relevant court judgment may be recognized and enforced if rendered in the absence of a respondent. In case there is no bilateral international treaty between the relevant states, then the service of procedural documents shall be made under the procedural rules of the state where the respective court is located, which may or may not require that such service be made under the laws and regulations of the respondent’s state. Alternative Service of Process In some countries, for example the United Kingdom and Cyprus, local procedural rules permit the service of process under the methods alternative to the methods permitted under the Hague Convention or other bilateral international treaties. In practice, such an alternative service is permitted if service under international instruments was not successful
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SAYENKO KHARENKO
Address: 10 Muzeyny Provulok, Kyiv, 01001, Ukraine
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ayenko Kharenko is a leading law firm in Ukraine with an internationally oriented full-service practice. It is currently one of the largest law firms in Kyiv. Most recently, Sayenko Kharenko collected three of the most prestigious professional excellence country awards, more specifically, Law Firm of the Year by each of IFLR European Awards 2017, Who’s Who Legal Awards 2017 and Legal Awards 2017. In early 2017, the firm was also shortlisted in Law Firm of the Year category by The Lawyer European Awards 2017 and Chambers Europe Awards 2017. Sayenko Kharenko — recommended advisor for international arbitration Sayenko Kharenko boasts a unique team of arbitration lawyers experienced in international commercial and investment arbitration. The team advises clients on all aspects of international arbitration, including the choice of arbitration
for a substantial period of time and there are prospects that alternative services will effectively bring the claim to the attention of a respondent. The alternative methods of service may entail various ways to notify the respondent of the proceedings and sometimes the only restriction is express prohibition under the laws of the country where respondents reside as to a particular method of service. Such methods for service of procedural documents on Ukrainian respondents should, however, be treated with caution, especially if a respondent does not react to the successful alternative service of process and in the end still fails to appear before the court. To ensure a fully enforceable arbitral award or a court judgment, it might still be prudent to await completion of the service under the Hague Convention or other bilateral international treaty. Service of Process Agent in Litigation in English Courts In case of litigation in English courts, which is a popular jurisdictional choice in transactions involving Ukrainian parties, it is possible to agree already at the stage of entry in a contract on the appointment of the socalled service of process agent that can facilitate service of procedural documents to those parties, which do not reside in the United Kingdom. This will significantly speed up and simplify English court proceedings involving non-UK respondents.
Service of Process in Arbitration
Relevant regulations for the arbitration proceedings generally include the New York Convention on the Recognition and Enforcement of
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Tel.: +380 44 499 6000, 389 5000 E-mail: info@sk.ua Web-site: www.sk.ua
forum and applicable law, advising on the risks and possible outcome of the arbitration, representation in the course of the arbitral proceedings before different international arbitration institutions all over the globe, enforcement of arbitral awards and other matters. Sayenko Kharenko’s arbitration lawyers have unprecedented insight into arbitration proceedings in Ukraine and abroad built on their experience of serving as party appointed arbitrators, sole arbitrators, chairmen of the arbitral tribunal, and legal counsel to a party to arbitration. The firm’s team handled over 90 arbitrations under a variety of international institutional and ad hoc arbitration rules, covering all major spheres of international business, including relating to contractor agreements; international sales of goods; maintenance and construction of ships; agency and distribution contracts; joint venture agreements; oil & gas supply contracts; and represented clients in corporate, maritime and trade commodities international disputes.
Foreign Arbitral Awards of 1958 (New York Convention), local legislation governing arbitration proceedings at the place of arbitration and relevant arbitration rules agreed by the parties. The New York Convention provides that a respondent should be given a “proper” notice of the arbitration proceedings, which shall enable such respondent to present its case. Otherwise, recognition and enforcement of the arbitral award may be refused by a local court. Arbitration rules usually provide for standard rules of delivery of notices to email and postal addresses. For example, as agreed by the parties in the arbitration agreement or in the relevant contract, by email, registered mail or courier. Therefore, while serving the request for arbitration and other procedural documents, it is necessary to verify the compliance of such service both with the relevant arbitration rules and the agreement of the parties. For example, as confirmed by the Supreme Court of Ukraine, servicing of documents on a defendant in the arbitration by email, that was not agreed by the parties as a permitted method of communication in their contract, will not constitute a proper service although such method of communication is usual for arbitration proceedings. If a respondent does not appear and defend its case, most arbitration rules provide that the arbitral tribunal may proceed with the arbitration and make the award. In such case, a claimant shall ensure that a respondent was “properly” notified of the arbitration proceedings as required by the New York Convention. Given that the New York Convention does not establish the test for a “proper” notice, claimants in the arbitration should be very cautious with simply sending a request for arbitration to the last known address of a re-
spondent or respondent’s address indicated in the contract. There are different considerations, which shall be taken into account for different types of respondents, e.g. corporations or individuals. For corporations, it is advisable to obtain information on the up-to-date registered address of a respondent in the country of its registration. In case the up-to-date registered address is different from the one which is last known to the claimant or which is indicated in the contract, a request for arbitration and other procedural documents shall be sent to both addresses. For individual respondents, making a “proper” service will be complicated by the need to locate the up-to-date place of residence of such an individual, which is sometimes difficult due to local rules on personal data protection. If the respondent does not cooperate, it might be necessary for a claimant to make enquiries with the competent local authorities in the respective countries to obtain information on the up-to-date address of a respondent or, alternatively, search for his current place of work in order to effect a “proper” service.
Summary
Servicing of process in each particular case depends on the type of proceedings (litigation or arbitration), the level of cooperation of a respondent, as well as the jurisdiction of a respondent’s registration or residence. In each case, it is advisable for claimants to devote all the necessary and available efforts to obtain evidence of a proper notification of a respondent of the proceedings so as to make sure that the final arbitral award or court judgment can be effectively enforced against the respondent.
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International Tax
Changes in the Foreign Trading Structures of Ukrainian Business Due to TP Amendments
Pavlo KHODAKOVSKY
Denys SIIUSHOV
Partner, Attorney-at-Law, Arzinger
Associate, Arzinger
do not provide a full and timely exchange of tax and financial information upon queries from the Ukrainian tax authorities; 4) transactions with non-residents of Ukraine which do not pay taxes in jurisdictions of their residence (including from income obtained abroad) and/or which are not tax residents in the jurisdiction where they are registered as legal entities. Oddly enough the Government of Ukraine should issue a list of legal forms of such entities by each jurisdiction and not the list of instances where this criterion should be taken into account (where a purpose to avoid paying taxes exists).
n recent years it has become a tradition in Ukraine to adopt significant amendments to tax laws at the very end of the year and, what is more, to make such amendments effective right at the start of the coming year. The year 2016 was no exception. In particular, the rules of the Tax Code of Ukraine regulating transfer pricing were substantially modified, which, in our opinion will have a major impact on the trading structures traditionally utilized by Ukrainian companies. The aim of this article is not to analyze the adjustments to the methods of determination of the arm’s length price of transactions; rather the purpose is to study the amended list of controlled transactions and to define the potential impact of recent (and anticipated) amendments in transfer pricing regulations on the trading structures of Ukrainian businesses.
b) such jurisdiction has not concluded an international treaty with provisions on exchange of tax information with Ukraine. Furthermore, a transaction has not been recognized as controlled if the following criteria have not been simultaneously met: a) the total annual income of Ukrainian taxpayer has exceeded UAH 50 million (about EUR 1.7 million); and b) the total volume of the above transactions with one such nonresident party has exceeded UAH 5 million (around EUR 170,000). Starting from 1 January 2017 the above thresholds were increased to UAH 150 million (close to EUR 5.1 million) and UAH 10 million (approx. EUR 340,000), respectively. Moreover, the list of controlled transactions has been altered and supplemented. At the same time, the list does now include the following transactions: 1) transactions with related non-residents; 2) foreign economic transactions on the sale and/or purchase of goods and/or services with the use of non-resident commissionaires. Thus, any transaction involving the sale or purchase of goods or services is considered as controlled by itself if performed through a non-resident commissionaire, irrespective of whether or not such commissionaire or another party to a transaction is a related party or a resident of a low-tax jurisdiction; 3) transactions with non-residents registered in low-tax jurisdictions. The criteria to put a jurisdiction into the “low-tax list” have been supplemented with the following: a jurisdiction, the competitive authorities of which
Recent amendments show that the purpose of the Government of Ukraine was to exclude relevantly small Ukrainian companies from the burden of preparation and submission of transfer pricing documentation; at the same time, the Government has broadened the base. It has determined as controlled the transactions which are used, or could be used, to avoid transfer pricing requirements. However, the extension of the list of such transactions must have been carried out with consideration not to catch the completely lawful economically substantiated structures and not to place an unjustifiable TP burden thereon. In particular, inclusion of such a ground for the Government of Ukraine to recognize a low-tax jurisdiction as non-cooperation in exchange for tax and financial information with Ukraine seems rather hasty. The reasons why many jurisdictions (including countries like the Netherlands, UK and Switzerland) do not provide tax information to Ukraine is either due to groundless queries by the Ukrainian tax authorities and/or inability of Ukraine to ensure safe storage and confidentiality of the data received. It is also unclear how many denials to provide respective information or untimely/inaccurately provision thereof must be considered by Ukrainian tax authorities to recognize the jurisdiction as non-cooperative and low-tax — hence such discretion on the part of the Government to decide on the list of jurisdictions seems unreasonable.
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Previous and Present Regulations
Before 1 January 2017 the list of controlled transactions included the following: 1) transactions with related non-residents; 2) foreign economic transactions on the sale of goods with the use of non-resident commissionaires; 3) transactions with non-residents registered in so-called low-tax jurisdictions. The list of low-tax jurisdictions was approved by the Government of Ukraine based on either of: a) the general corporate tax rate in such jurisdiction being five percentage points or more below the corporate tax rate in Ukraine; and/or
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Potential Recognition of High-Tax Jurisdictions as Low-Tax to Qualify Transactions as Controlled
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Arzinger
A
Address: Senator Business Center, 32/2 Moskovska Street, 10th Floor, Kyiv, 01010, Ukraine
rzinger is an independent law firm headquartered in Kyiv which has regional offices in Western and Southern Ukraine, in Lviv and Odesa, respectively. Arzinger has for over 14 years been among the legal business leaders providing high-quality legal support to clients throughout Ukraine. Among the firm’s many clients are top representatives of international and local business. Arzinger follows high standards of legal services and is a reliable partner in view of its great experience in a wide range of industries and legal practices: M&A, corporate law, real estate and construction, antitrust and competition, litigation and arbitration, tax, banking & finance. We serve clients operating in the financial services, energy, mining and natural resources, pharmaceuticals, food & beverages, investment banking and corporate finance, telecommunications, retail & leisure, hospitality, aviation and automotive, agriculture, insurance, and infrastructure & transport industries.
What is more, following Ukraine joining the automatic exchange of financial information based on the common reporting standard certain jurisdictions might expressly refuse to exchange financial information with Ukraine on the reasons envisaged by the CRS. Would this be grounds for the Government to recognize a really high-tax jurisdiction (e.g. Austria) as a low-tax one? In any case, the good news is that transactions with the resident of such jurisdiction will be considered controlled only starting from 1 January of the year following the year when the respective jurisdiction is recognized as low-tax. Hence, tax planning opportunities due to the extension of the described criterion are narrowed but not eliminated.
Highly Suspicious Counterparties for the Purpose of Recognition Transactions as Controlled
The new criterion for the purpose of qualification of transactions as controlled implies that a non-resident counterparty is either not resident in the jurisdiction of its registration or it does not pay taxes in the jurisdiction of its residence. It seems that Ukraine treats such non-residents as suspicious, meaning that transactions with them are more likely to be used for the purpose of tax avoidance. However, there are some thoughts on why establishment of this criterion has been too rather a hasty decision. First of all, transfer of residence is a completely normal adequate procedure which is allowed by laws of many jurisdictions and which is usually carried out mainly for commercial reasons and not for the sole purpose
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Tel.: +380 44 390 5533 Fax. +380 44 390 5540 E-mail: mail@arzinger.ua Web-site: www.arzinger.ua
Arzinger employs highly-qualified professionals with vast hands-on experience in a wide range of legal matters, deep knowledge and understanding of the local market, international education and background. The firm has a team of over 70 seasoned legal professionals led by 8 partners. All of them are acknowledged among leading experts on the Ukrainian legal market and are recognized by reputable international and local rankings. As a result, Arzinger can offer extensive legal assistance to effectively support a variety of complex and challenging transactions, including cross-border matters. The firm renders tailor-made legal services of unsurpassed quality to meet the client’s expectations. Arzinger cooperates closely with legal advisors from numerous jurisdictions and is a member of international professional organizations, enabling it to engage colleagues from various jurisdictions in cross-border transactions and so provide clients with top-level professional legal advice.
of tax avoidance. Of course, tax considerations are always taken into account when transferring tax residence but again when the tax planning is not its sole or its main purpose there is nothing illegal about following the procedure for changing the tax residence established by the laws of respective jurisdictions. The analyzed provision could entail a situation when a law-abiding company resident of a respectable jurisdiction (even though primarily registered in another jurisdiction) paying taxes in such jurisdiction will be deemed suspicious by Ukraine and will, therefore, cause its Ukrainian counterparty to fall under the TP regime. Secondly, the mere fact that a company does not pay taxes in the country of its tax residence does not by itself mean that such a company is established (and transactions are carried out with it) for the purpose of tax evasion. Upon close examination of the wording of the analyzed provision, we can conclude that this criterion refers to non-payment of taxes in general irrespective of the presence of income whatsoever. Therefore, a wide approach to interpretation of this wording could allow Ukrainian tax authorities to bring under this provision (to recognize a transaction as controlled) any company which does not pay taxes (including companies which have obtained no income in the reporting period). Special attention should be given to the part of the analyzed provision referring to non-payment of taxes from income sourced outside of the jurisdiction of residence of such a company. We believe it to be a very controversial decision to consider as suspicious the residents of jurisdictions with a territorial system of taxation.
Taking into account the above conclusions and suggestions, we believe that a new criterion which is aimed at recognizing as controlled transactions with non-resident companies considered suspicious by Ukraine, might not work properly in practice. Inaccuracies in the wording of the criterion, as well as the large discretionary powers held by the Government to establish a list of organizational forms of non-resident companies (and the need for such a list is very debatable in principle) and of the tax authorities could lead to the recognition as controlled of transactions performed by fully independent companies with the necessary level of substance and other attributes of businesses that do actually operate.
Anticipated Amendments
Apart from the newly-adopted TP regulations, further amendments to the transfer pricing rules are anticipated. In particular, the following measures could be implemented in Ukraine: — introduction of the obligation to submit country-by-country reports in Ukraine as well as group master files; — imposition of rules on disclosure of information on taxpayers’ related parties involved in the sale of goods chains (up to the first unrelated counterparty); — imposition of special rules for intragroup services rendered within a group as well as some other measures. In view of the stated, the “anti-BEPS” Draft law amending the tax laws of Ukraine is expected to be adopted by the end of 2017, and its main provisions will come into operation no earlier than 2018 (except for certain urgent measures). However, no specific time frame has yet been announced by Parliament or the Government.
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Internet
Internet ISPs from sending the notices back and forth to their in-house or outsource counsels. Moreover, we believe that the original U.S. DMCA agent mechanism is quite underestimated by Ukrainian businesses targeting the U.S. market. Considering no limitations as to the place of residence of a DMCA agent, we see some potential in developing this service in Ukraine too.
Denys BEREGOVYI
Orest GAVRYLIAK
Partner, Co-founder, Axon Partners
Partner, Lviv Branch, Axon Partners
n 2016 the index of Internet penetration in Ukraine reached 62%1, while in the largest Ukrainian cities this index reaches 70% — an average for the majority of European countries. Nevertheless, the Internet industry landscape is still more of a hotchpotch, where large telecom companies and gigantic (in the scale of Ukraine, at least) international e-commerce projects work side by side with rather small companies, startups and traditional businesses, exploring the possibilities of going more digital. It is a safe bet to say that Internet-related businesses in Ukraine grew in 2016. Some of the highlights are: the launch of Uber and its Russian competitor Yandex.Taxi, the acquisition of Aukro marketplace by Prom.ua, Netflix entered the Ukrainian market, while local streaming service Megogo has indicated 5-fold growth in paid services. The year 2016 also become a year when FS.to and Ex.ua, the websites often accused of streaming illegal content, voluntarily closed. However, obstacles for the market remain in areas of Internet infrastructure development, lack of e-commerce regulation, unclear perspectives of cyber security measures, as well as constant risk of pressure from the police, tax and regulatory authorities. Those Ukrainian businesses aiming to access foreign markets now face a portion of new regulations to comply with as well. Below we address the issues, which may come under the spotlight of the Ukrainian Internet business.
discussed for several years, especially upon publishing of U.S. Trade Representative Special 301 Report where Ukraine is traditionally watch listed as a “pirate” country. While most of the market players involved do understand the need for copyright protection, there are significant differences in views on the mechanism to be implemented. For instance, Draft Law No. 3081-d On Support of Cinematography, supported by local media holdings, provided for DMCA-like notice-takedown procedure for the infringing content. However, this Draft Law was heavily criticized by Internet services providers (Internet and hosting providers) as well as website owners, who are opposed to non-court based content blocking, as well as a 24-hour notice processing deadline. Moreover, ISPs were disturbed by a high risk of over-blocking and Internet censorship, as well as possible expense of takedown notices processing. As a result, Draft Law No. 3081-d was vetoed by President Poroshenko after it successfully passed the second reading in Parliament. However, a few months after the veto and we are seeing attempts by MPs to get Draft Law No. 3081-d back to the table. Thus, we can predict the tug of war on content blocking this year between ISPs and copyright holders to continue.
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Website & Content Blocking
The blocking of infringing content and websites is not a new topic at all. It has been According to research conducted by Ukrainian Internet Association and Factum Group Ukraine. 1
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“DMCA Agent” Mechanism Could be Helpful in Ukraine Another issue, ignored by the current Draft Law On Support of Cinematography is the lack of competence to process the notices on the side of ISPs. Considering the required speed of notice processing, the introduction of a DMCA agent-like mechanism is worth mentioning — it would enable the official assignment of a person or a firm to process takedown requests on behalf of the ISP. Such a solution could possibly prevent over-blocking and would save
Cybersecurity
Another hot topic over the next few years in Ukrainian legislation on the Internet will probably be cybersecurity. Obviously, Ukraine has reasons to take this issue seriously, taking into account Crimea’s annexation and the ongoing war in the East. Moreover, there were a handful of incidents recently which were alleged cyberattacks: an energy company was hacked in Western Ukraine (which left 80,000 people without electricity) in late 2015, while in December 2016 the Ukrainian State Treasury and other Government sites were attacked (resulting in delayed processing of state budget payments). In addition, Ukraine still remains under obligations to implement the Council of Europe Convention On cybercrime of 23 November 2001 (Budapest Convention). In particular, the Budapest Convention requires establishing the respective mechanism of storage and collection of traffic data for the purposes of criminal proceedings on cybercrime. As a result, the National Security and Defense Council (NSDC) approved the Cybersecurity strategy in early 2016, which was followed by Draft Law No. 2126a On the Main Principles of Ensuring Cybersecurity in Ukraine (this Draft is being prepared for its second reading in Parliament). Apart from that, in December 2016 the NSDC approved another resolution, On Threats to State Cybersecurity and Immediate Measures to Neutralize them. Both the Cybersecurity strategy and the December NSDC resolution are about to be enacted by the President. The main concerns of 2017 in this sphere will be the mechanism of website blocking (yes, again), as well as introduction of traffic data storage and access system, which might require ISPs to invest funds in the setting up of one. Another point of risk might be the powers of the Security Service of Ukraine and the police’s cybercrime units, that are prone to broadening in this context.
Privacy Shield and Data Protection
While data remains “the oil of the 21st century”, we are witnessing unprecedented activity
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Axon Partners
Address: Projector School & Coworking, 34a Vozdvyzhenska Street, Kyiv, 04071, Ukraine Tel.: +380 44 578 2337
A
xon Partners provides quality legal services with a unique approach. We work how truly modern professionals carry out their own business: humane, creative and making the most of technology. We follow a simple philosophy: creativity is the key to innovation. We gave up on the conservative corporate hierarchy, replacing it with dedication and devotion. Every single member of our team is a self-sufficient, creative unit, providing his/her unique input into the overall result. We do exactly what we’re passionate about and we are truly engaged in our work. As a result, we do not work “for” the client, we work together with our clients. Our expertise is at the intersection of technology and creativity. We advise on legal issues in: — high-tech — intellectual property — venture investment — electronic and crypto-currencies — e-commerce — media — international taxation — incorporation and operation of companies in foreign jurisdictions — commercial agreements Among our clients you will find all types of tech companies: big and small IT companies, tech startups, online marketplaces and services, gamedev studios, musicians and
in the development of data protection regulations around the world. What is more intriguing is that the EU has been convincing enough to make the U.S. comply with some of the EU requirements on data collection and processing, especially by state authorities — the EU-U.S. Privacy Shield — even though the new Administration in the U.S. might not be happy about it. While joining the Privacy Shield is not mandatory, early birds among our clients have already started the Privacy Shield compliance audit. Considering the close ties of many Ukrainian tech companies with the U.S., we see the Privacy Shield as one of the trending issues for those who deal with E.U. and U.S. customers, service providers or are simply incorporated there. Taking of Ukraine’s data protection rules, we do not expect much of an improvement (unless cybersecurity regulations will offer some novels). On the one hand, the current Law On Personal Data Protection is broad enough to match the core principles of EU data protection legislation. On the other, we still lack a data protection authority that would act to both regulate and oversee the application of best data protection practices. Instead,
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producers, production studios and movie directors, designers, photographers and other members of the creative class. We are proud to call great companies such as BlaBlaCar, Innovecs, TripMyDream, Datas, Kuna Bitcoin Agency, DOU, Grossum,rabota.ua, Wishround, MLSDev, Clickky, Confidence, Gera-IT, ISM e-Company, Visco, Yalantis, Vitagramma, Stanfy, Rialto, Vertamedia, InvisibleCRM, Heliclub, 908.vc, MyHelix, Ecois.me, and ProZorro our partners. Axon Partners heads the legal committee of the Lviv IT Cluster, is a member of Bitcoin Foundation Ukraine and represents Ukraine in the European Legal Tech Association (ELTA). Partners of the company have been ranked in the Top-5 Best Lawyers in IT, Telecom and Media according to the allUkrainian study The Choice of Clients 2017 and named an excellent, forward-thinking legal practice in Intellectual Property by Legal 500 EMEA in 2017. The firm has been shortlisted for The Lawyer Business Leadership Awards 2016 in two categories, namely Best agile working initiative and Innovation in project management. As a responsible member of society, our team holds a variety of university courses in Ukraine (e.g. National University of Kyiv-Mohyla Academy, Kyiv University of Law of National Academy of Science of Ukraine, Kyiv National Economic University and Kharkiv National University of Radio Electronics), conducts online courses for entrepreneurs on the Prometheus web platform, and advises tech startups for free each Friday. We dare to be different, we dare to be ourselves.
data protection powers are split between the Ombudsman (shall be notified of each controller of sensitive personal data) and even the State Service of Communication and Information Protection of Ukraine, which manages the CSSI procedures — complex system of information security. The CSSI is a set of technical measures required and to be further certified by the State Service in case of transfer of sensitive personal data, etc. Unfortunately, this system is not at all effective or practical. Moreover, Ukraine lacks the practice of data protection enforcement, which is a significant point of reference in other jurisdictions.
E-commerce
IHub Lviv, 9 Zamknena Street, Lviv, 79016, Ukraine E-mail: poke_us@axon.partners Web-site: www.axon.partners
In 2015 Ukraine adopted the Law of Ukraine No. 675-VIII On Electronic Commerce in order to catch up with what the market has reached on its own already — it recognized ecommerce as a separate industry, and set out the rules of e-commerce trade, similar to best practices of flagships on this market. Since then, however, little has changed in terms of legislation — it is easy to notice that a more detailed framework should be adopted. For instance, while storing transaction docu-
ments in electronic form, as provided under the E-commerce Law, is very convenient, it may still raise nasty attention from the tax authorities due to the lack of a unified legal framework. Some goods are still not available for sale via the Internet (for instance, medicines). There are, as well, attempts to restrict the sale of consumer electronics by requiring sellers to provide the customer with a sales receipt (which is quite expensive for small sellers to maintain). A similar situation exists in transborder e-commerce — it is likely to grow, unless either (a) the customs exemption for the value of mail up to EUR 150 is lowered or (b) Ukraine adopts Draft Law No. 5419, which provides for national exhaustion of IP rights.
Epilogue
Social networks have become a place where not only entertainment and random chatting takes place, but the world of politics is also formed. Luckily, Ukraine is catching up with this trend as well. So when there are fair concerns regarding state regulations — whether those designed to help business or vice versa — there is a good chance that at least the most ridiculous proposals will not be adopted.
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Investments
Investments
Andrei KOLUPAEV
Ivan ZIEVAKOV
Partner, Lexwell & Partners
Senior Associate, Lexwell & Partners
n 2016 the same destabilising factors that had had a negative impact on the Ukrainian economy in the previous two years remained in place. Although in general terms the Ukrainian economy adapted to the conditions that emerged in 2014 (due to loss of control over a large area of territory by Ukraine and the related loss of a substantial part of its manufacturing sector), attracting foreign investment and creating favourable conditions for business are of a great importance for the country. It is worth noting that the Ukrainian Government took certain steps toward economic reforms with the aim of improving the investment climate in Ukraine. But the results of these efforts have been quite modest so far. Despite notable improvements in the legal regulation of some industries, the overall situation is rather complicated. The Ease of Doing Business rankings for 2016, according to which Ukraine occupied 80th place among 190 countries (improving its previous result by just three positions), is yet more proof of this. 2016 brought no fundamental changes in the legal regulation of investment activity in Ukraine. Moreover, many of the restrictions that were imposed by the Government in previous years, due to the difficult economic and political situation, were continued for 2017. Thus, for instance, the National Bank of Ukraine, by its Decree No. 410 of 13 December 2016, continued restrictions on the money and foreign exchange markets of Ukraine introduced in 2014-2015. Thus, the requirements for the mandatory sale of 65% of incoming hard currency, a 120-day deadline for payments for exported and imported goods and the ban on early repayment of loans from non-residents etc., remained in place. However, some restrictions were lifted in 2016. For example, since June 2016 the Na-
tional Bank of Ukraine has allowed the purchase and transfer of foreign currency abroad to return dividends on interest/shares for 2014 and 2015 to a foreign investor (though subject to certain conditions to be met simultaneously).
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Abolition of State Registration of Foreign Investments in Ukraine
On 31 May 2016, the Ukrainian Parliament adopted the Law On Amendments to Certain Legislative Acts on Abolition of Mandatory State Registration of Foreign Investments. It is important to note that the basic legal act that defines the legal status of foreign investment in Ukraine is the Law of Ukraine On Foreign Investments (the Law) adopted in 1996. The Law (as further amended) provides for a number of state guarantees and privileges applicable to foreign investments in Ukraine, as follows: i. If there were a change in laws relating to the guarantees for foreign investments protection, the state guarantees provided by the law may be applied in the next 10 years if a foreign investor requested so. ii. Protection against expropriation. Foreign investments in Ukraine shall not be subject to nationalization. Also, foreign investment shall not be requisitioned except for as an emergency measure taken in the event of natural disasters, accidents, epidemics, epizootic situations. iii. Foreign investors have the right to recover damages, including lost profits and moral damage, caused to them due to the actions, omissions or improper performance of their legal duties relating to a foreign investor by public bodies of Ukraine or their officials. Interest is charged from the day when the right to compensation arises to the day of its actual payment on the amount of compen-
sation to be paid to a foreign investor at the LIBOR rate. iv. In the event of termination of investment activity, within six months from the date of termination, a foreign investor has the right to return an investment in kind or in cash in the currency of an investment in the amount of an actual contribution with no requirement to pay any state fee or duty, as well as to the return on these investments in cash or as commodities at their real market price at the date of investment. v. After payment of taxes, duties and other mandatory fees, foreign investors are guaranteed a free and prompt remittance abroad of their profits, revenues and other funds in the foreign currency obtained legally as a result of foreign investment. Regretfully, the Law provided for the state registration of foreign investments under a special procedure. Essentially, the registration was not mandatory as no penalty was provided by the Law in case of failure to register a foreign investment. The Law, however, determined that unregistered foreign investments got no right to the privileges and guarantees stipulated by the Law. Furthermore, even though the procedure for the state registration of foreign investments was not too burdensome, the ambiguity of Ukrainian laws regarding the types and forms of investments often led to a failure to recognize certain types of foreign investment as an investment in terms of the Law and, hence, a denial in their state registration in practice. In addition, there were cases when a foreign investment was excluded from protection with reference to the fact that the investment is not registered. This situation clearly worsened the status of foreign investors and, therefore, the complete abolition of the state registration of foreign investments is certainly a positive step. Moreover, this institution was no good for investors or the country.
Creation of New Support Mechanisms to Boost Investment Activity
In 2016, the Cabinet of Ministers of Ukraine made efforts to create institutional mechanisms that would function within Central Government and promote investment and protect the rights and interests of investors. Thus, several public offices were established that apparently were intended by the Government to facilitate cooperation between the Cabinet of Ministers of Ukraine
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Lexwell & Partners
L
Address: Sophia Business Centre, 5th Floor, 6 Rylsky Lane, Kyiv, 01001, Ukraine
exwell & Partners is a full-service professional law firm dedicated to providing efficient, innovative and commercially driven legal solutions. The firm has earned an excellent reputation on the Ukrainian legal market among clients and peers. The professional level of Lexwell & Partners as well as the projects in which the firm has been engaged is highly ranked by Ukrainian Law Firms, LexQuorum, The Legal 500, IFLR 1000, Kyiv Post, Yuridicheskaya Practika Weekly, Yurgazeta and others. Since the time the firm was founded and the years afterwards (2005 — 2016), leading Ukrainian legal periodicals listed Lexwell & Partners among the Top 5 Ukrainian law firms ranked by revenue per lawyer. In 2008 the firm took first place in the Ukraine’s largest M&A deal rating (USD 3 billion); in 2009, 2012 and 2016 — in the largest litigation case rating (over USD 1 billion). 20% of the top 10 cross-border M&A trans-
and other public authorities and private investors, especially foreign investors. In particular, a relevant office was established to attract and support investment by Resolution of the Cabinet of Ministers of Ukraine No.740 of 19 September 2016. The Ukraine Investment Promotion Office (the Office) is a temporary advisory body of the Cabinet of Ministers of Ukraine. The Office was established to facilitate interaction with public authorities and municipal bodies in the development and implementation of investment projects where foreign direct investments are involved. The main tasks of the Office is to create a mechanism for preparation and implementation of investment projects on the principle of “a single window”; to promote coordination of Ukrainian public authorities to address issues arising in the implementation of investments in Ukraine; to prepare proposals for the formation and realization of investment potential of Ukraine, support of priority investment projects, improving the investment climate in Ukraine, protection of investors’ rights; to identify ways, mechanisms and methods of solving problems that arise during the implementation of investment projects, etc. When this article was being prepared, the Office had not actually begun to function. So
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Tel.: +380 44 228 6080 E-mail: lexwell@lexwell.com.ua Web-site: www.lexwell.com.ua
actions in Ukraine published by Forbes in 2013 were handled by the lawyers of Lexwell & Partners. In 2014 the firm earned first place among Ukrainian law firms by revenue per lawyer. In 2017 the Tax Office of Ukraine included Lexwell & Partners in the Top 10 list of the largest taxpayers among Ukrainian law firms. Lexwell & Partners key clients are multinational and leading national companies, including ABN Amro, AET, Amstar, ArcelorMittal, Bridgestone, Bunge, Cargill, Chicago Mercantile Exchange, CRH, DuPont, East Metals, Eurobank, Evraz, Honda Trading, ING, Interpipe, Intesa Sanpaolo, Pfizer, PHV (Calvin Klein and Tommy Hilfiger), PwC, Red Bull, Marubeni, Millhouse, Morningstar, Naftogaz Ukrainy (State-owned Oil & Gas Company), Schenker, Sojtz, Subaru, Sumitomo, Suzuki, Toyota, VS Energy. The firm also advised the Government, the Office of the President and the Ministry of Justice of Ukraine.
it is too early to gauge its effectiveness. However, given that the Office is empowered to review applications of foreign investors for their support in investment in Ukraine and provide such support, it could potentially make a positive contribution and assist foreign investors in investing in Ukraine. The Cabinet of Ministers of Ukraine approved the Regulations on the Government Agent for Investments by its Resolution No. 647 of 8 August 2016. The Government Agent for Investments (the Government Agent) is an official who is authorized by the Cabinet of Ministers of Ukraine entrusted to coordinate the Office’s functioning, perform tasks to promote the development and implementation of the investment potential of Ukraine, increase foreign investment, support priority investment projects, improve the investment climate in the country, protect investors’ rights, and ensure interaction between investors, relevant bodies of foreign states, international organizations on attracting investment with public authorities and municipal bodies in Ukraine. The Government Agent is directly subordinated to the Cabinet of Ministers of Ukraine. The main duties of the Government Agent Office are to coordinate the Office’s
functioning, prepare proposals on the development and implementation of the investment potential of Ukraine, support priority investment projects, improve the investment climate in Ukraine and to protect investors’ rights. Therefore, the Government Agent is meant by the Government to be an important link between investors and the Cabinet of Ministers of Ukraine. The Reform Office was created by Resolution of the Cabinet of Ministers of Ukraine No.768 of 11 October 2016. The Reform Office is a permanent advisory body of the Cabinet of Ministers of Ukraine formed to ensure coordination and implementation of reforms at the proper level, including planning of necessary measures, monitoring and analysing their performance. The main tasks of the Reform Office are to ensure the proper level of organization and coordination of reforms; to prepare proposals for an action plan of reforms for the year in question and mechanisms for implementing such reforms; to monitor the status of performance of tasks listed in the action plan by central authorities; to analyze the results of performance of tasks listed in the action plan. The Central Reform Office will interact with regional offices which will open in all 24 regions of Ukraine.
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IT Law
All Goes Tech. The End of the IT Law Era I formed some examples of the most interesting trends in new segments of technologies that give rise to some peculiar issues.
FINTECH
Artem AFIAN Managing Partner, Juscutum Attorneys Association. Artem is actively involved in developing innovative law practice areas (legal security for business and IT-law). Attorney-at-law, member of the World IT Lawyers Association (Zurich, Switzerland)
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T Law no longer exists. The world is changing very fast. Only a couple years ago lots of articles appeared saying that the new legal practice has come. I personally compared the IT Law with a sleeping dragon in 2012. Now I see that the field of practice so much talked about is flying away. There are no technologies just for the sake of technologies. Technologies have now penetrated into various fields of life to such an extent that they gave birth to new forms of social relationships, competences and jobs. The law fell apart right after the technologies. IT lawyers are still leading in technologies adoption support. However, this process has its flip side. Everyone tries to become an IT lawyer. It’s hard to work in any field and not to face the issue of technologies at least once. It is very careless for a lawyer not to know the legal status of a code. A lawyer may face these issues in the field of an agricultural holding company, in a drug store auxiliary or even in the middle of a divorce case. Lawyers cannot hide from technologies. If you are a lawyer and you have a smartphone, it means that you already know a few things about tech. And as IT Law penetrates into every field, the need for IT lawyers per se disappears. The “Confident computer user” characteristic is gradually vanishing from modern CVs and, in the same way, IT law becomes an obvious competence of a modern-day lawyer.
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FINTECH is the oldest field. It is probably the ground zero of technologies. It is the veteran of tech-trends. There are conferences on it, plenty of start-up companies appear and serious financial institutions allocate considerable budgets for exploration of the fintech field. It all started with quite harmless cryptocurrencies and evolved into technologies for making payments. But fintech lives not only on transactions. The idea of financial credit documents and derivative financial instruments based on cryptotechnologies is gradually finding its way into it. Now affordable is starting to push aside classical ICO and elite IPO. There is no sense in reviewing fintech as a whole, so here I will name just a couple of initiatives in this field that I find rather interesting. Neat — mobile banking that provides various technological solutions as its feature: — Biometric identity verification — facial recognition system (it’s enough to make a selfie with your smartphone to enter a personal account); — The company has plans for applying artificial intelligence to processing the personal information of users. The application will evaluate various patterns of client behaviour and their geographical location and make personalized offers based on this information. — Monetizing — cooperation with various brands is planned by providing them with information about the target audience. Currency Cloud offers cross-border money transfers that are faster and cheaper than those that the banks offer, plus it offers a special software-application interface that can be built into the client’s websites, TCC Connect API (after the interface is built into a website, the company can receive payments or (if it is a bank) provide money transfer itself). Last year Sapphire Ventures and Rakuten, a Japanese e-commerce giant, invested USD 18 billion in Currency Cloud. Banking and finance lawyers were the first lawyers to feel fintech’s influence. It was sufficient to master the basics of national regulations before, but now it has become necessary to get familiar with different juris-
dictions, their rules and also with the peculiar workings of process solutions. The technologies don’t care about state borders, they disdain conventional expertise of lawyers and make them retrain as specialists in international law with a basic technical education.
Medtech
Health is the most valuable asset. It is the first thing to wish a person, and the rest will follow, as we say in Ukraine. The technologies have now followed and the result is medtech. In fact, the pharmaceutical industry has always been technologically advanced. But now it is a question not of drug production but of medical services. The following companies can be singled out here: — Patients know best — the platform that keeps all medical charts in the cloud and is controlled only by patients. By using it a patient can show a doctor his/her complete medical records and, as the result, it promotes individual attention to healthcare. — Zipline — drones that deliver donor blood and drugs to remote geographical areas. It works as any drone delivery. — UMoove — software that allows any front camera device to watch its owner face and eyes. There are some neurological disorders that can be diagnosed via eye movement, so uMoove can turn many mobile devices, laptops and even video game consoles, into diagnostic devices. — Tech Tats uses electroconductive ink to connect sensing devices that are pressed to the skin and monitor the vitals of an organism, which may include temperature, heart rate, etc. It’s a fitness tracker and a tattoo all in one. Over time any information can be added, such as credit card number, social insurance number, etc. Actually, if you used any fitness tracker or filled in a form in some health application on your smartphone, you have already used medtech. Its most ambitious tasks lie in the field of patients’ personal data, medical malpractices and responsibility for the functioning of software. All in all, medtech gives lawyers a lot of headaches.
Sextech
The sex industry has a turnover running into billions of dollars. It’s understandable that the technologies went after the money and lawyers followed. The industry is always teetering on the edge of criminal activity: what
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Juscutum
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Address: 27A Taras Shevchenko Boulevard, Kyiv, 01032, Ukraine,
uscutum is the first Ukrainian law firm to consider law as an instrument in building special relationships of clients in society. From the position of legal advisors, the company’s team has transformed itself into legal engineers to provide the market with new grade solutions. The company operates in such areas as corporate, tax, IT and media law, international business administration, white collar crime and conflict management.
should and should not be allowed, the dissemination of pornography, nests of vice, rules for AppStore in case of mobile applications. Only just recently the Svakom Siime Eye IoT vibrator was hacked (deliberately, for the sake of research). It has a camera on its tip enabling transfer of images to a computer, smartphone or tablet in real time via Wi-Fi. An interesting case happened in Geneva: the Fellatio café opened offering oral sex services performed by a robot alongside coffee. Sex work by a robot is legal but Swiss laws forbid combining it with food services. OhMiBod Remote service for remote masturbation manipulations enjoyed success on Indiegogo in 2014, and it now offers a set of sex toys that can be controlled via a smartphone application (for example, a vibrator for a female partner). Pure is a dating service, an application for iOS and Android for searching sexual partners “here and now” anonymously (according to the developers, it should be similar to calling a taxi online). The most interesting cases in this industry are related to legislation on the safeguarding of morality. They are especially interesting in the face of the cross-border possibilities of technologies. Access to these services, [using] robots as the subjects of sex services and “assisting in debauchery” — all this stands on a fine line with criminal acts that lawyers try to save sex innovators from.
Fashiontech
Technologies are in fashion now. Therefore, it’s quite consistent for the fashion in-
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Tel.: +380 44 223 3847 E-mail: office@juscutum.com Web-site: www.juscutum.com
In 2016, Juscutum occupied the leading position in the field of Ukrainian Technology. Media. Telecommunications following several ratings. Furthermore, Juscutum is the first company in Ukraine to develop a robot lawyer engaged in the business registration procedure instead of a person and released the first mobile application in the field of legal services in Ukraine, which is called Juscutum Legal Alarm.
dustry to turn its attention to them. There are various fashiontech start-ups (mostly online shops with user-friendly features). I’d like to place greater focus of the following two. 1) Fits.me uses information about a client’s body and creates a 3D model of it to try clothes on online. The reviews of the project state that the clients were asked to send their photos during testing for better understanding of every client’s specific body type. A real world dummy has also been created that can be changed according to set parameters, which is a convenient solution for design companies. It is a robot that can make chest or shoulders broader or narrower, or make legs longer, etc. 2) EDITED is basically big data for the fashion industry. They create scanners of brands’ websites all over the world using machine learning and image recognition technologies, and create a huge databank. For example, you can drag the mouse over a dress and learn what shops and regions have it, in what size or colour etc., as the system already contains more than 330 million items of 90,000 trading brands all over the world. It is mostly used by the brands (such as GAP, ASOS and Target) themselves in order to keep track of their own products promotion and that of their competitors. The main legal problem here is whether such a grand scale collection of information about goods of all these trade marks is legitimate. And, of course, there are still standard issues of legal backing for fashion projects.
There are several basic legal points that are to some extent present in all the startups mentioned: — personal data gathering, its storage/ distribution/other use — the technologies make gathering a huge amount of information about users/companies possible, plus it’s often necessary for the realization of the idea itself; the problem of security and privacy of such data is of great concern for a lawyer; — AI responsibility — lots of projects use robots/other forms of AI performing certain actions in one way or another; this is both a legal challenge and opportunity at the same time; — intellectual property issues as now they are basically a sort of weapon in the competitive fight for the market between companies; There are lots of interesting technological solutions that simply can’t fit in the size of this article. Basically, you can take any word, add “tech” to it and with great probability you will have a real field. However, even this situation is temporary. Fusion with technologies is to become so obvious and mundane soon that there will be no need to specify the technology. A smartphone is now called just a phone because simple phones have almost disappeared, and you would probably be more specific talking about a push-button telephone to be understood by the person you are talking to. This trend is neither good nor bad for lawyers. It is a fact and it reminds us that lawyers should also change by following the world around. It is very unwise to remain constant in the modern-day world.
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Labor & Employment
Dismissing Top Managers in Ukraine: Risks and Options New Category of Labor Disputes
Serhiy SILCHENKO ILF Partner, Head of UBA Committee on Labor Law
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n 25 years of independence Ukraine has been unable to change labor legislation in any significant way. The current Labor Code was adopted on 10 December 1971, with the adoption of a new one getting postponed time and again. So in the meantime labor law must advance one change at a time. It is an important issue for any company to be able to shuffle top management. It matters both to business owners that determine a company’s business strategy, as well as to executive managers that seek self-fulfillment. And while a manager, as an employee, can simply choose to resign voluntarily, a mere desire was not enough for employers to dismiss a manager at any time. To do this, they required a valid reason, expressly provided by the law. On 13 May 2014 Parliament adopted the Law of Ukraine On Amendments to Several Legislative Acts of Ukraine Regarding the Protection of Rights of Investors, adding section 5 to Article 41 of the Labor Code which provided new grounds for terminating labor contracts — termination of office for officers. Such dismissal is allowed at any time with no justification required and with severance pay of at least six monthly salaries for the dismissed person. This option makes it easier to dismiss hired administrators and key managers, since before this process was as tricky as with any other employee. Employers used to be able to fire an officer only on the grounds established by law or a contract.
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The Act brought about a new kind of labor dispute concerning reinstatement of officers dismissed on the grounds of section 5, Article 41 of the Labor Code. No consistent legal practice has been formed regarding those during the last two years due to the following reasons. Firstly, the Labor Code doesn’t clearly define which employees are considered “officers”. Secondly, the companies and organizations whose officers can be dismissed on the grounds of termination of office also remain unspecified. Aside from business entities and private companies, there are still a considerable number of public and municipal enterprises in Ukraine whose directors are no different from the administrators of business entities. After analyzing legal precedents and interpretations of certain public authorities, we can draw a couple of conclusions on the practical applications of section 5, Article 41 of the Labor Code. First of all, let us define the circle of officers that can be dismissed on the pretext of termination of office. In accordance with Part 1, Article 89 of the Commercial Code of Ukraine, a business entity is governed by its bodies and officers, whose membership and election or appointment procedures are determined based on the type of business entity that it is. According to part 2, Article 23 of the Law of Ukraine On Business Entities, officers of a business entity are individuals — the head and members of the executive body and audit committee, the internal auditor, as well as the head and members of other bodies in charge of the business entity, as long as such bodies are permitted by the entity’s constituent documents. A similar norm is provided for by section 15, part 1, Article 2 of the Law of Ukraine On Joint-Stock Companies. In missive No. 1332-0-26-13/11 of 22 February 2013 the Ministry of Justice of Ukraine points out that in order to define the concept of officers, we must take into account the legal practice, which cites organization and management duties as the main criteria of an officer. The State Labor Inspection of Ukraine in its clarification The Category of Officers in La-
bor Law of 24 July 2014 states that labor legislation has no concept of officers. Therefore, this category can include not only managers of business entities, but also state and municipal officials, administrators of state, municipal and private companies, institutions and organizations, their deputies, department heads and their deputies, as well as persons managing individual areas of work. An officer wields a certain degree of administrative authority and can make legal decisions, for instance, to hire and dismiss employees, take disciplinary actions, issue compulsory orders, etc. Since the law does not clearly define which companies have the right to use termination of office as grounds for dismissal, a number of legal precedents have arisen in the last two years. Thus, the High Specialized Court of Ukraine for Civil and Criminal Cases, v serving as a cassation court, on several occasions supported the use of termination of office as grounds for the dismissal of officers working at business entities. Referring to both the spirit and the letter of the Law On Amendments to Several Legislative Acts of Ukraine Regarding the Protection of Rights of Investors, the courts note the impossibility of using Section 5, Article 41 of the Labor Code for officers of public and municipal institutions and enterprises that are not business entities.
Dismissal Process for Top Management: Rules and Mistakes
The next condition of the legality of such dismissal is observance of the proper procedure. The management body of a business entity must decide on the termination of office and subsequent dismissal (as a personnel decision), while the employee without fail receives severance pay. It is important to note that such dismissal is prohibited when the employee is on sick leave or vacation. In addition, labor contracts with pregnant women, mothers of children younger than 3 years old, single mothers with children younger than 14 or handicapped children cannot be terminated either. In practice, employers often choose to ignore their managers’ voluntary resigna-
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ILF (Inyurpolis Law Firm)
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Address: 22 Shovkovychna Street, Kyiv, 01024, Ukraine
LF (Inyurpolis Law Firm) is an independent Ukrainian law firm with a core focus on litigation and business support (business setup, transactional support, regular advisory support). The firm operates on the market for 23 years through its two offices located in major cities of Ukraine — Kyiv and Kharkiv. Among ILF’s strong points is the ability to follow up on court decisions and get tangible results. This is due to years of experience dealing with debt recovery for banks and insurance companies (USD 500 million recovered in 2007-2015) as well as deposit recovery from liquidated banks for companies and individuals. We carry out business support through our commercial, corporate, M&A, tax and other teams, that follow an industryminded approach. The diverse expertise of the team ranges from business structuring and high-profile contracts to corporate acquisitions and asset deals. We’re known for our successful business structuring record in the IT sector, support of sophisticated technology contracts, and public private partnership (PPP) work in the field of healthcare and pharmacy. We help our foreign clients get clear understanding of Ukrainian business environment, based on our knowledge and experience in medicine and pharmacy, agribusiness and alternative energy, IT, banking and finance. Among our regular clients are Avon Products, Volvo, BASF Ukraine, Malteurop Group, Ecostar/DISH, SPS Commerce, EGGER and Amcor Tobacco Packaging.
tion applications. According to Article 38 of Labor Code, employees can resign if they notify their employer in writing two weeks in advance. However, sometimes business owners might not or would not hold a meeting to decide on the matter. As a result, the manager is unable to get another job and, what is more important, remains responsible to the state authorities for the company. This is essentially forced labor, which is forbidden by Article 43 of the Constitution of Ukraine.
Managers Forever: When Employers Ignore your Resignation
The problem can be solved with a lawsuit demanding termination of the labor contract.
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Tel.: +380 44 390 7777 Fax: +380 44 253 4549 E-mail: office@ilf-ua.com Web-site: www.ilf-ua.com
Our industry-oriented approach allows us to find legal solutions for business as well as manage projects dealing with institutional changes. In 2016 ILF lawyers working together with the expert team of the Ministry of Healthcare and backed by the World Bank and UNICEF designed legislation on primary healthcare reform. In addition, ILF is supervising a reform-pilot project in Kharkiv Region city of Chuguyev. The ILF team includes 50 highly qualified lawyers, attorneys, tax, investment and business consultants. Reputation For six consecutive years ILF is in TOP-15 law firms in the national rating 50 Leading Law Firms of Ukraine in 2016 by Yuridicheskaya Practika Weekly. “Ukrainian Law Firms. A Handbook for Foreign Clients 2016” named ILF as one of the leaders of the Ukrainian legal market and places the firm’s partners among key experts in their respective fields of expertise: litigation, medicine and pharmacy, IT and labor law. In 2016 ILF was named number one in healthcare and pharmacy (Legal Awards 2016 by Yuridicheskaya Practika Publishing). Areas of practice Corporate law and M&A, land and real estate, public-private partnerships and privatization, labor & employment, intellectual property, tax law, criminal defense, debt recovery, bankruptcy, family disputes.
In accordance with Article 38 of the Labor Code, the employee must first submit a written notice on voluntary resignation to the employer and await a reply for 14 calendar days. If the employer doesn’t come to a decision during that time, the matter can be taken to court. If the court rules in favor of the employee, the ruling will affirm the cessation of labor relations. The court will also terminate the labor contract, which will allow the employee to legally look for a new job. Another thing to note — the court decision on terminating the labor contract with the employer is insufficient ground for the State Registrar to register the change in the company’s management in the Unified State
Register of Legal Entities, Individual Entrepreneurs and Public Associations. According to Article 25 of the Law of Ukraine On State Registration of Legal Entities, Individual Entrepreneurs and Public Associations, the former manager must present the suit to the State Registrar with a request to enter the change of management in the Unified State Register. Since managers often encounter similar problems when quitting, it would be easy to rectify the situation with a change to the Law of Ukraine On State Registration of Legal Entities, Individual Entrepreneurs and Public Associations that would make the court decision on terminating the labor contract sufficient for removing the entry regarding the former manager from the Unified State Register.
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Land
Legal Developments in Land Law for 2016
Bate C. TOMS
Adriana KRYVESHKO
Managing Partner, B.C.Toms & Co. Legal education: Yale Law School (J.D., 1975); Magdalene College, Cambridge University (Law Tripos I; 1972-1973). Mr. Toms is admitted to legal practice in the District of Columbia and Virginia, USA, and in France. Chairman, British Ukrainian Chamber of Commerce
Junior Associate, B. C. Toms & Co. Legal education: National University of “Kyiv-Mohyla Academy”, Bachelor of Law (2016)
Registration of Land
On 6 October 2016, the Law On Amendments to Some Legislative Acts of Ukraine Concerning Improvement of the State Registration of Rights to Immovable Property and Property Rights, No.1666-VIII, was adopted. Under this statute, the state registration of property rights by a notary should now be conducted only within the region (being regions as well as the cities of Kyiv and Sevastopol and the Autonomous Republic of Crimea) where the applicant is located. The limited territorial jurisdiction of the authorities responsible for state registrations is not applicable when the documents are submitted in electronic form, in which case the state registration can be performed regardless of the location of the applicant individual or the legal entity within Ukraine.
The Royalty for Subsoil Use
The Law On Amendments to the Tax Code of Ukraine for Balanced Budget Revenue in 2017, No.5132, was adopted on 20 December 2016. This Law, which came into force on 1 January 2017, changed the royalty rates for certain categories of subsoil use. Specifically, the rate of the royalty fee for oil extracted from fields that fully or partially lie at a depth beyond 5,000 meters is 29 % (previously 45%). Presently the Tax Code of Ukraine Provides for the following royalty rates for production of hydrocarbons:
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(i) for extraction of natural gas (of any origin): — 29% of the tax assessment base applicable for the extraction from deposits fully or partially lying at a depth beyond 5,000 meters; — 14% of the tax assessment base applicable for the extraction from deposits fully or partially lying at a depth below 5,000 meters; (ii) for extraction of oil: — 29% of the tax assessment base applicable for the extraction from deposits fully or partially lying at a depth beyond 5,000 meters; — 14% of the tax assessment base applicable for the extraction from deposits fully or partially lying at a depth below 5,000 meters.
Land Auctions
Another notable development is the introduction of the requirement that particular transactions with state-owned and community-owned land can be done only on a competitive basis using auctions. On 18 February 2016, the Law On Amendments to the Land Code of Ukraine on the Operation of Land Auctions, No. 1012-VIII, was adopted, which imposes a prohibition on the transfer of the right to use particular types of stateowned and community-owned land without conducting an auction. Among the particular transactions that cannot be performed without an auction, the following may be relevant for business:
— granting state-owned and community-owned land to Ukrainian residents for the purpose of conducting farming, private agrarian household, gardening, construction and maintenance of a residential building, commercial buildings and other constructions (including garden plots attached to a residential building), private gardening construction and construction of private sheds; and — use of land for conducting concession activities. In addition, this statute amends the procedure for land auctions, requiring them to be conducted under contracts between the organizers of auctions (owner of a land plot) and the auctioneers (a legal entity who undertakes to organize and run an auction as a contractor), with all costs borne by the organizer of the auction, or the auctioneer, as provided by their contract, with further compensation being payable by the winner of the auction.
Land Lease Agreements
The Model Land Lease’s terms were modified on 23 November 2016 in order to reflect the Law of Ukraine No. 191-VIII, of 12 February 2015, On Introducing Changes to Certain Legislative Acts of Ukraine Regarding the Simplification of the Conditions for Conducting Business (Deregulation) (the Deregulation Law), that entered into force on 5 April 2015, and restated parts of Law of Ukraine No. 161-XIV, of 6 October 1998, On the Land Lease, by reducing the number of mandatory terms for land lease agreements. In particular, the Model Land Lease terms were amended so that: — the subject of the agreement should include the cadastral number of the land plot (previously only the designated use and location of a land plot were required); — the nominal monetary value of the land should be specified as of the date of the land lease agreement; — point 8 of the Model Land Lease Agreement provides for the following minimum durations for land leases: (1) 7 years — for an agricultural land lease; (2) 30 years — for a state or municipal land lease for the purposes of the creation of an industrial park; and (3) 10 years — for an agricultural land lease for land plots that have been reclaimed and/or where reclamation is in progress; — the lease payment is subject to periodical review to reflect changes in the nomi-
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B.C. Toms & Co
B.
Address: 18/1 Prorizna Street, Suite 1, Kyiv, 01001, Ukraine
C. Toms & Co is a multinational law firm of Ukrainian and Western lawyers specializing in Ukrainian law. It was the first Western law firm to open a Kyiv office, having focused its practice on Ukraine at its independence in 1991. The firm has handled, for example, land leasing for many of Ukraine’s largest agricultural and oil and gas projects, as well as acquisitions of land for commercial property developments. We also handled the legal work for the first, and the most, IPOs to raise funding for Ukrainian companies, as well as the first true project financing in Ukraine. Based on our over 25 years of experience in Ukraine, we can provide, with our legal advice, practical commercial advice on how to establish and develop a business in Ukraine. The firm has recruited and trained its Ukrainian lawyers from students at Ukraine’s leading law schools, most of whom have also studied at UK and US law schools as Chevening, Pinchuk, Fulbright and Muskie fellowships. Based on the firm’s practical experience, it has written numerous articles on Ukrainian law, including the legal section of the book Doing Business in Ukraine.
The principal practice areas of B. C. Toms & Co include real estate and land development, energy, natural resources, agriculture, banking and finance, M&A, environmental, labor, bankruptcy and administrative law. The firm also has a successful litigation and arbitration practice, having successfully handled many of Ukraine’s most important cases, including in all Ukrainian courts and before the Permanent Court of Arbitration in The Hague. The firm regularly advises on Ukrainian tax law, including from a multinational tax planning perspective. B. C. Toms & Co has prepared a wide variety of documentation for clients, including Ukrainian law share purchase agreements, asset purchase agreements, joint venture agreements, construction contracts, project financing documentation, production sharing and oil and gas license agreements, airport investment and management agreements, hotel management agreements, private placement agreements, real estate acquisition agreements, loan agreements, leases and agency, distribution, franchise and licensing contracts.
nal monetary value of state and municipal land; — the reservation that the agreement comes into effect upon its state registration has been removed from the Model Land Lease terms. Instead, a land lease agreement should stipulate that it comes into force upon its execution by the parties or, alternatively, upon its notarization, should the contracting parties chose to have the agreement notarized; and — the land lease agreement must be executed in only two copies (previously a third copy was required for the state registration office).
national Monetary Fund (the Memoranda) of 27 February 2015, 21 July 2015 and 1 September 2016. Under the Memoranda, Ukraine undertakes to pass a suitable law before the end of May 2017 and to cancel the moratorium on the sale of private and state-owned agricultural land starting from the end of 2017. A working group has been organized in cooperation with the World Bank to develop the relevant draft law. However, this agreed schedule has already been missed, as the cited 31 May 2017 deadline was not met. What will actually happen remains somewhat unpredictable, as ending the moratorium is politically controversial.
The Moratorium on the Sale and Disposal of Agricultural Land has been Extended
Solution to the “Dead Soul” Land Problem
The Resolution of the long-standing issue on the sale of agricultural land has been postponed again. On 6 October 2016, the Law of Ukraine On Amendments to Chapter X “Transitional Provisions” of the Land Code of Ukraine Concerning the Extension of the Prohibition to Dispose of Agricultural Land, No. 1669-VIII, was adopted, which extended the moratorium on the sale or other disposal of agricultural land until 1 January 2018. It is presently anticipated that the extension of this moratorium will end this year after the Parliament of Ukraine provides for the better legal regulation of the transfer of agricultural land. Parliament is expected to adopt a new law on the transfer of agricultural land, as required by the Memoranda between Ukraine and the Inter-
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Tel.: +380 44 490 6000, 278 1000 E-mail: kyiv@bctoms.net Web-site: www.bctoms.net
Previously an estimated 1.5 to 2 million hectares of agricultural land in Ukraine belonged to the category of so-called “dead souls” land, where the owners had died and no recognized heirs were found. The relevant territorial community had an obligation to establish its ownership over such land plots, but this involved very time-consuming court proceedings, as the procedure for such proceedings was rather complicated, so the territorial communities were often unable to establish their ownership in practice. In response to this situation, the Law On Introducing Changes to Certain Legislative Acts of Ukraine Regarding the Legal Fate of Land Plots, the Owners of which Have Died”, No. 1533-VIII (the Law On “Dead Soul” Land Plots), was adopted on 20 September 2016. Below are some principal amendments:
(i) The Land Code of Ukraine is supplemented with a provision that the territorial community acquires a land plot in communal ownership in case of its being recognized as being “dead soul” land by a court. The territorial community can then lease such land; (ii) An application to a court for recognition of the land plot as being “dead soul” land can be made not only by the local council of the territorial community, but also by any creditor of the deceased owner(s), and for agricultural land, by the owners or users of any of the neighboring land plots; (iii) The territorial community of the place where the land plot is located shall be considered to be the landlord of the land plot in case of the absence of heir(s) by will and by law, the cancellation of their inheritance right, the rejection of their inheritance or the refusal of its acceptance after the expiration of six months from the date of the opening of the time period for an inheritance claim to be made; (iv) After the death of an agricultural land plot’s owner, the local council of the territorial community of the place where the land plot is located can lease it during an interim period, until either (i) the heir(s) shows up and completes the state registration of his, her or their ownership rights to this land plot, or (ii) a court decision recognizes this land as being a “dead soul” land plot, what should be clearly stipulated in such lease agreement. The Law On “Dead Soul” Land Plots only applies to land lease agreements concluded after the date of its adoption.
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Litigation
Overview of the Judicial System of Ukraine: Global Changes
Andrey KUZNETSOV
Alexandra FEDORENKO
Partner, ANTIKA Law Firm
Senior Associate, ANTIKA Law Firm
he principles of seeing that justice is done are declared in the Constitution of Ukraine. The main principles include: implementation of justice exclusively by courts of law (the courts are unable to transfer their functions as well as other authorities or officials are unable to appropriate them); the court jurisdiction is spread to all legal relations that appear in the state; court decisions are binding throughout the territory of Ukraine. Today, Ukraine is experiencing global judicial reform, the main aim of which is to fight corruption in the judicial system and to establish truly independent judicial power. The new Law of Ukraine On the Judicial System and Status of Judges in a different way determines the system of courts. Thus, justice in Ukraine is performed exclusively by the courts. The courts specialize in considering civil, criminal, economic, administrative cases as well as cases on administrative offenses. The system of courts includes district courts, district economic courts, district administrative courts as well as other courts stipulated by procedural law. The highest court in the court system of Ukraine is the Supreme Court. The consideration of a certain case by this or that court depends on the subject matter and the nature of the dispute and is, first and foremost, regulated by the respective procedural codes (the Civil Procedure Code of Ukraine (2004), the Economic Procedure Code of Ukraine (1991), the Code of Administrative Court Procedure of Ukraine (2005), the Code
on Administrative Offences of Ukraine (1984), the Criminal Procedure Code of Ukraine (2012) and by some Laws of Ukraine (On Constitutional Court of Ukraine (1996), On Restoring Debtor Solvency or Declaring a Debtor Bankrupt (1992), the Tax Code of Ukraine (2010) etc.). If a dispute arises between business entities and concerns their business activity, the case should be considered by economic courts. Thus, economic courts shall consider disputes that arise while concluding, amending, terminating and executing economic agreements, cases related to bankruptcy, registration of rights on securities, cases that appear from corporate relations (even if the participant of the dispute is an individual), disputes that appear from land relations, cases on economic competition protection and other cases if their consideration does not refer directly to the competency of other courts or their consideration has not been excluded from the jurisdiction of economic courts by procedural law. Not long ago a new category of cases in economic proceedings, namely, cases on disputes between business entity and its official (including an official whose powers have been terminated) on compensation of damages caused by such official to the business entity and his/her actions or lack of actions, appeared. The person shall apply to protect his/her violated rights to the district administrative courts, if the rights of the individual or legal entity were violated by a public body during the performance of management functions. The district administrative courts shall also
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consider cases when a public body applies with a claim to an individual or business entity and the dispute is of a public nature. Administrative cases include disputes with fiscal bodies while challenging tax noticesdecisions by taxpayers, disputes related to designation, charging and paying social benefits, disputes related to challenging decisions, disputes on actions or lack of actions by local councils on the allocating of land plots to individuals or legal entities, disputes on legal relations related to the election or referendum, cases on decisions on actions or lack of actions of a private executive related to execution of decisions of the authorities (officials), except for court decisions. Procedural law stipulates certain restrictions on resolving disputes by administrative courts and their settlement refers to the competence of other courts. Thus, the jurisdiction of administrative courts does not include public cases that refer to the jurisdiction of the Constitutional Court of Ukraine, public cases that are supposed to be settled through the criminal proceedings procedure, public cases on imposing administrative fees, public cases on relations of the citizens group that according to the law, statute (provisions) refer to their activity or exclusive competence. District courts consider all other cases if one of the parties of the dispute is an individual as well as cases, the consideration of which, is not referred by the law to the competence of other courts. The courts of general jurisdiction shall consider cases that appear from civil, housing, land, family, labor relations, cases related to identification of legal facts, cases on recognition and enforcing decisions of international courts, etc. The system of courts of general jurisdiction is the most ramified (these courts are established in regions, cities, districts of cities). Taking this fact into account, some cases of administrative jurisdiction are considered by courts of general jurisdiction as administrative courts of first instance. Such an approach is considered to be sound because the competence of district administrative courts covers regions and, as a rule, they are located in regional centres. The court of constitutional jurisdiction is the Constitutional Court of Ukraine, an in-
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ANTIKA
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Address: 12 Khreschatyk Street, 2nd Floor, Kyiv, 01001, Ukraine
NTIKA was established in 2010. Since its formation, the firm has built a strong reputation as an independent law firm and continues to grow on the Ukrainian legal services market. According to the results of research of the legal services market undertaken by reputable international and Ukrainian guides to legal profession like The Legal 500 EMEA, Chambers Europe, IFLR1000 Energy and Infrastructure, Best Lawyers, Ukrainian Law Firms, A Handbook for Foreign Clients, Top 50 Law Firms of Ukraine, Client Choice. The Top-100 Best Lawyers in Ukraine, the firm has been recommended in antitrust, dispute resolution, corporate / M&A, banking, finance and capital markets, real estate, land, energy, subsoil use, energy efficiency and energy saving. The firm received the Legal Award 2012 in the nomination Law Firm — Breakthrough of the Year. The firm is a finalist of the Legal Awards 2013 in the field of Antitrust, Litigation and Real Estate, in 2014-2016 — in the field of Energy. ANTIKA’s team includes 15 lawyers, who have significant experience of various legal practices and provide a full range of legal services to national and international companies that do business in Ukraine, as well as abroad in the following fields: telecommunications, heavy machinery, chemical and food industries, automotive, complex develop-
dependent institution that differs completely from the other court system. First of all, the Constitutional Court of Ukraine is aimed at providing compliance with laws, other regulations of legislative and executive power, protection of constitutional rights and freedoms of the individual. Due to judicial reform that has been implemented the powers of the Constitutional Court of Ukraine do not include interpretation of laws. Although in the past a lot of disputed issues appeared while the application of law used to be considered through the Constitutional Court of Ukraine providing their official interpretation. The new Law of Ukraine On the Judicial System and Status of Judges liquidation of stipulates the higher specialized courts and the new structure of the Supreme Court as a unified court of cassation instance. A new Supreme Court of Ukraine, the selection of judges of which shall be performed through competition, should be formed by 30 March 2017. The competition between the judges to the Supreme Court of Ukraine shall be held by 30 November. Thus, a three-tier court system functions in Ukraine. It includes local courts, courts of appeal and the Supreme Court of Ukraine, that shall perform the cassation function. Local courts of first instance are the most widespread. Courts of first instance consider
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ment, construction and real estate, subsoil use, wholesale and retail, media and sports, banks and financial services market, energy efficiency and energy conservation. The firm’s key practices include antitrust, litigation and arbitration, corporate, construction and real estate, subsoil use, energy and energy efficiency, legal expertise. The firm’s main principles are the provision of high quality and timely legal services, strict confidentiality and a bespoke approach to every client’s project. The following are representative clients: AWT Bavaria, ArcelorMittal Kriviy Rih, Cadogan Petroleum, Cargill, Chernomorneftegaz, Deposit Guarantee Fund, Enesa a.s., Esan Eczacıbaşı Industrial Raw Materials, Energobank, FC Dnipro, Ghelamco, Heitman, Henkel Ukraine, Henkel Bautechnik Ukraine, Ibis Group of Companies, Imperial Tobacco, International Resources Group, Lantmannen Axa, MF Telecom, Nadra Ukrayiny, Nasosenergomash, ViDi Group, Ukrnafta. The firm also advises the World Bank, EBRD, USAID, TACIS, UNDP, KfW, NEFCO on energy efficiency, utility and the implementation of other projects in Ukraine. ANTIKA is a member of the Ukrainian Chamber of Commerce and Industry, the American Chamber of Commerce in Ukraine, the Canada-Ukraine Chamber of Commerce, the European Business Association, and the International Turkish-Ukrainian Businessmen Association.
cases on their merits. Due to this fact, they enjoy the right to determine actual facts of a case through evaluation of evidence collected on its inner conviction. The decisions of local courts, as a rule, enter into force after the term for their appeal is terminated or after this case is reconsidered by the court of appeal, if it is not cancelled or changed as a result of such reconsideration. Courts of second instance are courts of appeal. The powers of courts of appeal depend on their specialization and the category of the case. According to the general rule, courts of appeal consider a case in a new way and are empowered to examine evidence as well as to accept new ones if they has not been provided by the party to the court of first instance due to valid reasons. The decision of a court of appeal enters into force from the moment of its announcement. The last and the highest instance in the court system is the Supreme Court of Ukraine. It enjoys the right to consider court decisions through the cassation procedure. The following courts act within the Supreme Court of Ukraine: the Grand Chamber of the Supreme Court of Ukraine, the Administrative Cassation Court, the Commercial Cassation Court, the Criminal Cassation Court, the Civil Cassation Court. Each cassation court is allowed to establish the court chambers to consider cases
of certain categories taking into account the specialization of judges. The number and the specialization of court chambers shall be determined by the decision of the meeting of judges of a cassation court taking into account the procedure stipulated by law. However, the establishing of separate court chambers is compulsory: 1) in the Administrative Cassation Court to consider cases related to tax, fees and other mandatory payments; social benefits protection; elections and referendum as well as protection of the political rights of citizens; 2) in the Commercial Cassation Court to consider cases related to bankruptcy; protection of intellectual property rights as well as rights related to antitrust and competition law; corporate disputes, corporate rights and securities. The Grand Chamber of the Supreme Court of Ukraine is empowered as follows: in cases stipulated by the law it acts with the aim of providing similar legal provisions application by cassation courts; acts as a court of appeal in cases considered by the Supreme Court of Ukraine as a court of first instance; analyzes the legal statistics and studies court practice, performs generalization of court practice. The Law also provides establishment of the Higher Anti-Corruption Court, the Higher Court on Intellectual Property. These courts are courts of the first instance.
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Marine Insurance
Personal Injury Claims and Loss of Life Compensation within P&I Insurance
Artyom VOLKOV Head of Maritime Law Practice, ANK Law Office, Attorney-at-law
O
nce every five years BIMCO, together with the International Chamber of Shipping, conducts the most comprehensive assessment of global supply of and demand for seafarers. Last year BIMCO and ICS published the Manpower Report illustrating the current worldwide situation and trends on the market for 2010-2015. According to the Manpower Report, Ukraine occupied 6th place among states of seamen suppliers and delivered to the world labor market 39,000 officers and 30,000 ratings, which is 4.18% of the total. These statistics cannot help but be reflected on the quantity of insurance events occurred with Ukrainian seamen working under foreign flags.
P&I Insurance and MLC Convention 2006
All risks connected with personal injury, permanent or temporary disability or loss of life by the seaman on board are traditionally covered by the protection and indemnity insurance more commonly known as “P&I”. According to Directive No. 2009/20/EC on the Insurance of Shipowners for Maritime Claims, any vessel calling EU port or entering the waters of EU shall have valid P&I coverage. Foreign vessels, which do not comply with the Directive, may be refused on entering into any EU port. Besides, the MLC Convention requires from shipowners the arranging of due insurance of seafarers in case of injury, illness or death during their employment. Although Ukraine has not ratified the MLC Convention yet, these provisions have high importance
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both for Ukrainian seamen and Ukrainian shipowners operating the vessels through offshore companies registered in the states, which have ratified the MLC Convention. As ANK experience shows, typically the conflicts between seafarers and the shipowners arise in the process of payment of compensation caused by permanent or temporary disability received due to injury or accident on board the vessel. A separate group is formed by the claims related to payment of compensations for the death of a seafarer during the employment period or due to being missing at sea. What should shipowners and P&I clubs be aware of during the resolution of these conflicts?
Foreign Law and Ukrainian Courts
Many employment contracts have reference to foreign law. Some shipowners and crewing managers include into the contract of employment an arbitration clause, upon which any disputes that arise out of the employment contract shall be referred to a foreign court or arbitration. The shipowners and crewing managers mistakenly believe that reference to foreign law and foreign court (arbitration) will secure from possible court proceedings in a Ukrainian court, which still do not have enough confidence and authority before foreign employers and insurers. Along with that, according to Article 8 of the Labor Code of Ukraine, labour relations of Ukrainian citizens employed outside Ukraine shall be regulated by Law of Ukraine No. 2709-IV On International Private Law adopted on 23 June 2005 (the Law). According to the Article 52 of the Law, labor relations shall be governed by the law of the state where the work is conducted unless otherwise is prescribed by the law or by an international treaty to which Ukraine is a party. In international maritime law the legislation of the flag of state shall have exclusive jurisdiction on board of the vessel flying this flag. Therefore, by default the relations between the seafarer and the shipowner shall be regulated by the flag of the state or by the legislation of the state indicated in the contract of employment. Along with that, Article 76 of the Law provides for the categories of cases, which could be ex-
amined by Ukrainian courts. This category includes cases on payment of damages when the claimant is registered in Ukraine on a permanent basis. In addition to aforesaid, part 3 of Article 110 of the Civil Procedural Code clearly prescribes the possibility of submission of a court claim to the local court under the place of claimant’s residence for the cases related to compensation of damages caused by the injury, disability or death of an individual. The aforesaid legislative regulations enable Ukrainian seamen and their successors to easily submit court claims against shipowners, P&I clubs, which are registered outside Ukraine and the courts accept such claims for examination on a grand scale. As the practice of recent years shows, during examination of these cases Ukrainian court often ignore the references to foreign law and the International Private Law Act, using the laws of Ukraine for labour relationships of a Ukrainian citizen with a foreign employer.
When Conflicts Arise
Nobody in Ukraine officially records statistics on the death of Ukrainian seamen working on vessels flying foreign flags. Nevertheless, as our practice shows, about 60%-70% of disputes related to the payment of loss of life compensation to the successors of the seamen are resolved in out-of-court procedure. We can indicate the following reasons of conflict situations in these cases: (i) non-appointment of “next of kin” by the seafarer; (ii) the conflict between the lawful successors of the seaman; (iii) if the death was caused by suicide, use of alcohol, drugs of through other wrongful acts of the deceased seaman.
Who is “next of kin”?
Ukrainian legislation does not have the definition of “next of kin”, which is widely used in contracts of employment with seafarers. In maritime insurance “next of kin” traditionally means the person appointed by the seafarer for receiving the compensation in the event of death in the course of employment. Although the word for word translation of “next of kin” could be interpreted as the nearest relative, in reality the appointed person could not be the relative of the seafarer at all. We have seen employ-
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ANK law office
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Address: 9 Lanzheronovskaya Street, Odessa, 65026, Ukraine
NK law office was established in 1996 and through the years of extensive legal practice has become one of the leading law firms in Ukraine. We have been successfully advising our clients on different matters of Ukrainian law over the last 20 years. As a result of our dynamic development we have combined unique experience and created a highly-qualified professional team of lawyers and auditors. We provide regular legal support to our clients on the most difficult projects and deals. Today, the ANK team consists of more than 25 qualified lawyers and attorneys-at-law and each of them is an experienced specialist in his/her field of legal practice. ANK lawyers are regularly involved as experts by leading Ukrainian business media for commenting latest legislative amendments and government initiatives. ANK law office provides complex legal support to grain, oil and container terminals in Ukrainian ports. We advise clients on the process of attracting international financing from IFC, EBRD and other financial institutions. We act as Ukrainian legal counsel to the container shipping lines, shipowners and
ment contracts where the line “next of kin” contained a few persons (beneficiaries) with an indication of the percentage of compensation to be paid to each beneficiary in case of the seaman’s death. If, however, the line “next of kin” has not been properly filled in by the seaman or there is no such line, the compensation for the loss of life shall be paid to the successors empowered by law. In such situations the order of succession should be determined by the Civil Code of Ukraine. Some shipowners and P&I clubs usually ask relatives to come into inheritance and receive the certificate of inheritance rights and only after that pay the insurance compensation.
Missing at Sea: Evidence Problems
Some employment contracts and collective agreements directly prescribe the insurance of the seaman in the event of a seafarer going missing at sea. The main question, where the discussion between the seafarer’s lawyers and the owner’s lawyers starts, is what legal document shall prove the fact of being missing at sea for the purpose of recognizing maritime perils as an insurance event? As our experience shows, the majority of insurers insist on recognizing the seaman as deceased through the relevant court procedure and receiving a court judgment with further issuing the death certificate by the authorities. This procedure shall take not less than 6 months because Ukrainian legislation allows the starting of this court procedure not earlier than the passing of 6
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Tel./Fax: +380 482 348 716 E-mail: office@ank.odessa.ua Web: www.ank.odessa.ua
shipmanagers as well as P&I clubs. Our corporate and M&A practice advises clients on establishing business in Ukraine, licensing procedure and business restructuring. We have a strong team of court lawyers and attorneys-at-law who are ready to protect the interests of clients in court. Due to the large network of correspondent offices abroad, ANK law office can arrange effective legal assistance almost anywhere in the world. We cooperate with maritime administrations and classification societies and provide clients with professional legal assistance during the sale and purchase of vessels and yachts. ANK lawyers are fluent speakers in English, Ukrainian and Russian. Practice Areas: — Agriculture and Land Law — Arbitration and Litigation — Corporate and M&A — Infrastructure and Real Estate — Shipping and Maritime Law — Tax and Legal Due Diligence.
months after the seaman went missing at sea. Special interest and attention of maritime lawyers should be given to cases where there are reasonable grounds to believe that a seaman has committed suicide by jumping into the sea. The shipowner usually refers to statements from crew members, which describes possible suicide. From another side, the successors of the missing seafarer, willing to receive compensation at any cost, do not recognize the suicide and threaten the shipowner and its P&I club with possible criminal proceedings against the crew members and court litigation. It is worth noting that if a suicide note or other valuable written evidence proving suicide have not been found and the body of the deceased seaman not discovered, it is quite difficult to prove the fact of suicide.
Receipt & Release Statement: Legal Nature
Maritime lawyers are well aware of the practice of leading P&I clubs on payment of compensation to seafarers and their successors. The clubs recommend the execution of receipt & release statements proving not only the mere fact of receipt of compensation and amount thereof, but also fixing the seaman’s waiver from all future claims to shipowner, crewmembers, P&I club and other persons, which could have a property interest regarding the vessel. Large P&I clubs have approved “recommended forms” of receipt & release statements. Ukrainian legislation does not regulate the content or the form of these statements. Our experi-
ence shows that 10-15 years ago the majority of these statements were executed in written form and were certified by the signatures of two witnesses. Nowadays, more than 90% of receipt & release statements are subject of notarization. This is connected with continuous attempts by seafarers to appeal against statements executed in written form and request payment of compensation again. In these court claims the seafarers usually state that they have signed the R&R Statement under pressure from shipowners or crewing agency staff and that they did it because of desperation (otherwise the shipowners would not pay them). At the same time, on many occasions we have faced refusals of notarization of R&R Statements by Ukrainian notaries because they do believe that the content of the document contradicts the law. These notaries argue that such a receipt and release statement is a clear waiver (refusal) of the seaman from constitutional right of recourse to the court, which should be null and void. Another group of notaries consider the R&R Statement as a written statement (application) by a citizen, which is addressed to the unlimited scope of persons. In addition to the aforesaid functions, the R&R Statement has another important role. It clearly prescribes the undertaking of the successor of the seafarer to indemnify the shipowner and the insurer from claims, which could arise from third parties due to an insurance event. That is why we strongly recommend that special attention is paid to the drafting of the receipt and release statements and to its notarization in due course.
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Maritime Law
Maritime Law in Ukraine
Arthur NITSEVYCH
Nikolay MELNYKOV
Partner, Attorney, Interlegal Law firm LMAA and SCMAA member, FNI
Partner, Interlegal Law firm MNI, LMAA & GMAA member, Chairman of the Nautical Institute of Ukraine, MNI
Natalya MYROSHNYCHENKO
Artem SKOROBOGATOV
Partner, Interlegal Law firm President of WISTA Ukrainian
Partner, Interlegal Law firm Representative in FOSFA
kraine is a maritime state on the Black Sea and Azov Sea coasts, which has its own fleet, shipbuilding and ship repair facilities, a number of sea ports and river ports on two rivers, the Dnipro and the Danube, open for navigation. There are established short sea links with Turkey, Russia, Georgia, Bulgaria, Romania and Greece along with direct rail links to Central Europe, the Baltic States, the Russian Far East and Central Asia, thus making Ukraine a trans-shipment hub too. The list of sea ports opened now for foreign vessels calls is provided by the Order of the Cabinet of Ministers of Ukraine of 26 June 2013 No. 466-p and includes 13 sea ports (Reni, Izmail, Ust-Dunaysk, Belgorod-Dnestrovskiy, Chornomorsk, Odesa, Yuzhny, Mykolayiv, Olvia, Kherson, Skadovsk, Berdyansk, Mariupol). Ukraine is one of the world’s leading grain and sunflower oil exporters and is an important gateway for the import and export of commodities and goods. Ukraine exported
21.22 million tons of grain in 2016 (by 22 December 2016). According to information of the Agrarian Policy Ministry of Ukraine announced on 30 December 2016, the grain export forecast for the July 2016 — June 2017 season runs to a total of 41.6 million tons. The major ship owners include Ukrrichflot and the Ukrainian Danube Shipping company. Ukraine is also ranked as the 5th supplier of seafarers to the world’s fleet market, providing some 75,000 officers and ratings.
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Main Features of Maritime Law
Shipping has been at the forefront of international trade for over 5,000 years — no other industry has ever played such a fundamental part in economic voyages. Over the past fifty years, shipping has become progressively safer, more efficient and environmentally friendly. Sea transport is the ideal way to move large volumes of cargo. In comparison with air or road transportation, vessels are capable of carrying huge amounts of goods or
commodities and are suitable for transporting gas and liquids as well as various types of hazardous freight. Generally, Maritime Law describes all the legislation related to ships and shipping, including the building, navigation, crewing, operation and other activities and incidents related to ships. One feature is its international nature, which pleads for international uniformity in maritime law. This necessity has been satisfied internationally by implementing a number of international conventions or agreed rules like the Hague-Visby Rules unifying certain rules of law related to Bills of Lading, or the York-Antwerp Rules fixing the grounds for general average assessment. In some jurisdictions and in Ukraine in particular, the provisions of such conventions are implemented in local laws through the Merchant Shipping Code or similar. The widespread use of standard form documents as the basis of most contracts of carriage (like GENCON, SIINACOMEX, NYPE or BPTIME3) also has the effect of unification. The second obvious feature of maritime law is that contracts for carriage of goods by sea fail to be performed in specific and often hazardous conditions, in which it is practically impossible for one party to supervise the work of the other party on a daily basis. This factor is the key instrument in development of the sea carrier’s general duties and legal grounds for them, including the duty to provide a seaworthy ship and not to deviate from the route stipulated by the charter party as well as other carrier’s duties connected with the sea voyage. It also influences those parts of maritime law dealing with the shipper’s duty to disclose the dangerous nature of goods shipped and the master’s powers of jettison and other extraordinary powers conferred on the master of the vessel in the event of an emergency. The third notable feature affecting the nature and the practice of maritime law is that shipping regulated by such maritime law is directly dependent on other commercial activities. Contracts for the carriage of goods by sea are not made in commercial isolation. They are typically entered onto in order to sell goods or to give effect to a previous sale. This means that contracts for sea carriage often reflect direct interest of both, sellers or buyers, under a sales contract. Third parties may become involved in the carriage of goods in other ways. This leads to complex questions about who can sue and who can be sued. In the absence of a contract provision dealing with the particular problem, the main role in
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Interlegal
20 years of practice
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Address: 24B Genuezska Street, Odessa, 65009, Ukraine
nterlegal is a recognized law firm with its head office in Odesa, the biggest sea-gate of Ukraine. Founded in 1995, Interlegal gained the reputation of an international maritime law expert operating and servicing clients in the Black Sea Region. Interlegal expertise has been focused on the following major practices crystallized from our experience for over 20 years: shipping, transport & logistics, ports & terminals, international trade, corporate, investment & transactions, litigation & arbitration. Within wide practice in commercial shipping, Interlegal also renders the full range of yachting services: concluding sales contracts of yachts and ships, their registration and insurance. All participants of the transportation process are among the firm’s clients: cargo owners, carriers, forwarders, agents, ports, terminals, charterers, shipowners, insurers, banks, etc.
such cases is played by the governing law of a carriage contract, which is English law for the majority of sea carriage contract forms, or local law as the law of the place of the incident. The use of standard forms is a great point of maritime law practice. The vast majority of standard contracts developed by international associations, in particular, BIMCO (Baltic and International Maritime Council), FOSFA (Federation of Oils, Seeds and Fats Associations) and GAFTA (Grain and Feed Trade Association), contain standard or default provisions on application of English law. So, under the circumstances, Ukrainian maritime law practitioners deal mainly with casualties and incidents, not with contracts. The Merchant Shipping Code of Ukraine of 23 May 1995 regulates all main questions in this respect such as collision, pollution or grounding. Ukraine signed, and is a party to, many international conventions. For example, the International Convention for the Prevention of Pollution From Ships, 1973 as modified by the Protocol of 1978 (MARPOL 73/78), the International Convention on Maritime Search and Rescue (SAR 1979), the International Regulations for Preventing Collisions at Sea (COLREGs 1972), the International Convention on Maritime Liens and Mortgages (Geneva, of 6 May 1993), the International Convention Relating to the Arrest of Sea-Going Ships (Brussels, of 10 May 1952), etc.
Role of Arbitration in Shipping
Maritime cases are both very specific and very complex. To draw the right conclusion, one needs to have specific knowledge and expertise. That is why many in shipping favor arbitration over litigation. Arbitrators are more knowledgeable in maritime matters than
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Tel.: +380 482 33 7528 Fax: +380 482 33 7529 E-mail: odessa@interlegal.com.ua Web-site: www.interlegal.com.ua
Interlegal employs 37 top level law experts, advising clients 24/7. Careful selection has brought together talented, enthusiastic, goal-oriented professionals united by high standards and a team spirit able to solve hard tasks effectively and to observe quickly the firm’s purpose: Our mission is to be useful for Shipping, Transport & International Trade people in their fair business! While continuously developing our legal practice in Shipping and International trade in the Black Sea Region, we opened offices in Batumi (Georgia), Istanbul (Turkey), and Varna (Bulgaria). The annual research of the legal service market, Ukrainian Law Firms 2012-2016. A Handbook for Foreign Clients, has determined Interlegal as one of the leading firms handling maritime, transport and infrastructure matters.
judges, who have limited exposure to shipping. They can decide cases based upon the law, their practical knowledge and commercial reasoning. Furthermore, judges may be forced under the doctrine to decide modern-day disputes based on antiquated case law. Arbitrators, however, are not bound by this doctrine and have broad latitude to use their commercial sense of fairness. Neither are they bound by strict court rules of evidence and procedure. London remains the most popular choice for maritime arbitration. The majority of standard form charterparties, international sale contracts, salvage contracts, reinsurance and P&I Club Rules provide for London arbitration and, in particular, arbitration at the LMAA (London Maritime Arbitrators’ Association). Many bills of lading incorporate an arbitration clause in the charterparty under which the bill is issued. In Ukraine we have the Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry, an independent permanent arbitration institution operating under the Law of Ukraine On International Commercial Arbitration of 24 February 1994, the Statute on the Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry (Annex No.2 to this Law) and the Rules, approved by the Decision of the Presidium of the Ukrainian Chamber of Commerce and Industry No.18(1) of 17 April 2007, as amended by the Decision of the Presidium of the Ukrainian Chamber of Commerce and Industry No.24(6) of 25 October 2012.
Ukraine is a Maritime State
Ukraine’s position as a maritime power requires both the following global trends in
sea trade and trends in the regions of the Black Sea and Azov Sea. The domestic sea economic complex development is dictated by the high profitability of the transport service market due to the world-recognized competitive advantages of water transportation (ecological compatibility, low price, investment attractiveness, etc). However, the legal framework which regulates the marine industry remains imperfect. In particular, most of the items on its functioning in Ukraine are still regulated by subordinate acts. Several authorized central executive bodies have neither top level marine activity management, nor the required level of coordination between them and local executive bodies located in maritime regions. The procedure for establishing of the Maritime Administration is at the stage of creation of a regulatory basis for its activity. In particular, on 29 September 2016 the Ministry of Infrastructure of Ukraine submitted for consideration to the Cabinet of Ministers of Ukraine the Draft Order On Establishment of State Sea/River Transport Service of Ukraine — the Maritime Administration. The Ukrainian legal community has recently unified its efforts with the aim of improving the legal framework regulating some of the main issues of maritime law, in particular ship arrest in respect of maritime claims, ballast waters regulations, and others. Such work will definitely result in necessary amendments to legislation, giving Ukraine the possibility to obtain a strong system of maritime law and to become more attractive as a maritime jurisdiction.
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Mediation
Mediation in Ukraine debt recognition clauses give the creditor the right to apply for a notary’s execution clause in case the debtor does not pay in time. Thus, lengthy court disputes after the conclusion of mediation settlements can be avoided.
Neutrality of the Mediator Ivanna DORICHENKO
Dr. Julian RIES
FCIArb, LLM. Called to the bar of England & Wales (2014). Partner, Head of Trade & Commodities practice, Integrites London
Attorney-at-Law (Germany), Commercial Mediator. International Managing Partner, Head of Integrites office in Munich
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ediation is getting off the ground. Particularly in Ukraine, with the court system still problematic and businesses becoming ever more sensitive for legal fees, there are good reasons to avoid court disputes wherever possible. The large majority of conflicts in daily business life never come to court, since most conflicts are settled by negotiation between the parties. Only where the parties fail to reach an agreement by negotiation is court settlement an option. Mediation, at its core, is also negotiation, but with two particularities: a third, neutral person moderates the negotiation and the negotiation follows a certain proven course of negotiation. By moderating, the mediator makes the parties discuss their real interests in the matter, rather than their claims, rights and other legal positions. So mediation is basically a tool to bring the parties back on track for negotiation. Experience shows that once the parties are back at the negotiating table the chances of reaching an amicable agreement are very high, in 8 to 9 out of 10 conflicts parties do find agreement. Needless to say, that an amicable agreement serves the parties’ interests better than any court decision, is quicker to reach and is more costefficient. So far mediation in Ukraine has developed well without a special law on mediation. Nevertheless, currently there is a Draft Law On Mediation in its second reading in the Ukrainian Parliament. As mediation is basically negotiation there is little need to have the procedure formalized by a law. There is only a certain set of questions where it is helpful to have clear provisions.
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Immunity of Witness
In the absence of any specific provisions on immunity, the parties and the mediator are bound solely by confidentiality clauses in the agreement on mediation, possibly accompanied by penalty provisions. Just like any customary confidentiality clauses, these clauses would also have escape provisions to permit disclosure if that is prescribed by law and / or a court order. The Draft Law now suggests that the mediator cannot be summoned as a witness regarding circumstances which he learned about during the mediation process, unless the witness is necessary to protect the interests of a child, to avoid physical or psychological damage to a person or if disclosure of the content of a mediation settlement is necessary to enforce that settlement.
Whether and How Parties Can Get an Enforceable Title
In the best case the mediation ends with an amicable agreement. As this agreement is usually entered into by the parties, because they deem it more favourable than a court decision, the chances are high that the parties fulfil their obligations without enforcement. However, if the circumstances or the financial situation of a party change again there may well be the need to appeal to enforcement services. Also, particularly in debt restructuring matters, it may be necessary for the creditor to get more commitment than just a written agreement. The Draft Law is silent as to a certain enforcement procedure, but refer to the general provisions to protect its right in the courts. This is not too much, but the parties are free to negotiate notarised debt recognition clauses. Such
It is one of the basic principles of the mediation procedure that the negotiation is moderated by a third, neutral person. Particularly where lawyers act as mediators there is reason to prevent the mediator’s and the lawyer’s activity for one party getting mixed. The Draft Law establishes that the mediator must not be involved in the legal advisory of the same matter for one party before mediation and must not take up such advice or representation after unsuccessful mediation either. Other laws, for example the German law on Mediation, apply a wider scope: according to the German rules even persons practicing in the same firm or joint office must not advise or represent a party of mediation. As the success of any mediation largely depends on an open dialogue between the parties and even more between the party and the mediator, it seems to be appropriate to apply strict conflict rules. Should the Ukrainian Draft Law not be amended in this aspect, it is advisable to include respective restrictions in the agreement between the mediator and the parties. Other subjects may be of less importance for regulation by the legislator, in particular licensing requirements. Who can act as mediator? Is a license mandatory, or shall the market decide which mediator and which qualification succeeds? The Ukrainian Draft Law establishes certain minimum standards for the training of a mediator. The mediator shall have received training of a minimum of 90 academic hours, of which 45 academic hours shall be dedicated to practical exercises. Furthermore, the mediator shall be at least 25 years old and shall hold a higher education (masters), or a professional technical education. Other requirements, such as the minimum number of mediation cases, supervision etc., are not established. Also, foreign certificates shall be recognised if the foreign training corresponds to minimum Ukrainian standards. And there is a third set of questions, on whether to make mediation mandatory for certain conflicts. In the current Draft Law no mandatory mediation sessions are established, neither for family law matters, estate
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INTEGRITES
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Address: 1 Dobrovolchykh Batalioniv Street, Kyiv, 01015, Ukraine
NTEGRITES has a solid network of operating offices in the CIS (Kyiv, Moscow, Almaty, Astana, Karaganda, Aktau, Atyrau) supported by an international office network in London, Munich, Amsterdam and Guangzhou. The firm offers its clients complex legal advice in the CIS region. In 2016 The Lawyer recognized our work in the CIS with the award Law Firm of the Year: Russia, Ukraine and the CIS. We provide legal services for our world-known clients: Rabobank International, EBRD, VTB Bank, ProCredit Bank, Mitsubishi Group, Concern Toyota, Agrogeneration S.A., Credit Agricole, Nestle, COFCO Agri, LTk Capital, Dragon Capital, ADM, Louis Dreyfus Company, Soufflet Group, Сredit Agricole, Burisma, Aspen Pharmacare Holdings Ltd., Shell, DuPont, Bank of China, DHL, China Development Bank etc. Main industries: Agribusiness, Capital Markets, Construction and Land, Energy and Natural Resources, Information Technologies, Medicine and Healthcare, Telecommunications. Main Practices: Antitrust and Competition, Banking and Finance, Bankruptcy, Corporate, M&A, Criminal Law and White-Collar Crime, Intellectual Property, International Arbitration, International Trade and Trade Remedies, Labor and Employment, Litigation, Real Estate, Retail, Tax.
matters, lease matters or labour law matters, although experience shows that mediation can be of great help in conflicts where the parties one way or another will stay in contact. This is an unfortunate omission as the state courts are overloaded and mediation could be an efficient way to reduce the work load. Even worse, the Draft Law suggests that a mediation clause shall not prevent the parties applying to a court. This provision is rather strange and should be amended during the further readings, as this is outright ignorance of the parties’ intention. If the parties agree to first try mediation there is no reason to make this agreement non-binding
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Tel.: +380 44 391 3853 Fax: +380 44 391 3854 E-mail: info@integrites.com Web-site: www.integrites.com
Our firm is also represented by international offices: United Kingdom 1 King Street, EC2V 8AU, London, UK Tel.: +44 203 713 1750
Germany Maximilianstrasse 13, 80539, Munich, Germany Tel.: +49 892 030 061 50
Russia Naberezhnaya Tower Block C, Moskva-City 10, Presnenskaya Naberezhnaya Moscow, 123317, Russia Tel.: +7 495 660 50 70
China R&F Ying Sheng Plaza, MaChang Road 16, Tianhe district, Guangzhou city, Guangdong, China. Tel.: +86 185 0204 0880
Kazakhstan SUCCESS Business Center, 1/1, Zhandossov St., Almaty, 050008, Republic of Kazakhstan Tel.: +7 727 352 80 83/84
Netherlands Herengracht 282 1016 BX Amsterdam The Netherlands Tel.: +31 20-5219367
by law. This would put mediation procedures in an even worse situation than today and would also unfavourably compare Ukrainian practice with that of many international jurisdictions which either have systems providing for an automatic referral of disputes to mediation before the case can proceed to trial, or give wide discretion to courts to adjourn proceedings and order mandatory mediation where necessary. Even further, in certain countries known for the strength of their legal systems, such as England, mediation for certain type of cases (predominantly familial) is akin to mandatory as courts will refuse applications which do not indicate
that the mediation requirement has been complied with. In addition, while courts in England are against the idea of “forcing” parties to mediation, mediation is nonetheless “strongly encouraged”, and there are likely to be cost consequences if parties refuse to try mediation (read — save court time and cost) for no good reason before trial. It is, therefore, suggested that it would be quite beneficial for the Ukrainian legal system and, specifically, for the development of mediation in the country, if Ukrainian legislators were to look at prominent international mediation practice and reflect it in the Draft Law prior to its adoption.
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Medicine & Healthcare
When Can We Expect Functional Voluntary Health Insurance in Ukraine?
Tetyana GAVRYSH Managing Partner, ILF Coordinator of the Kharkiv expert group on implementation of medical reform
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or the past two years Ukrainian healthcare has been becoming increasingly attractive for investment thanks to healthcare reform. However, since the reform is yet legislatively unfulfilled, investors from Turkey, Israel, Georgia, United States and other countries are still sat on the fence, preferring to observe the market for the time being. In November 2016 the Government finally got to work, adopting the Concept of Healthcare Funding Reform. The Concept seeks to create a single buyer of medical services — the National Healthcare Service — with the principle in mind that reads “patients bring money”.
Who will Pay for Medical Services?
No matter where our patient goes, be it a public or private clinic, the treatment will be paid for by the state. Annual budget funding approaches USD 2.3 billion. These funds used to go to public and municipal hospital exclusively, but now private entities will also have the right to claim them. With payment dependent solely on the patient’s choices, the system will follow the principles of the Beveridge report already used in the UK, Italy, Spain and other countries.
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Olena KHYTROVA Associate Partner, ILF Head of medical and pharmacy law department at ILF, Head of UkrainianGerman Medical Association (UGMA) Committee on reform of the health system
Ukraine’s budget, however, will not be able to satisfy all the needs of the population. According to the 2014 statistics report on healthcare, the budget covers 51.7% of expenses on medical services, a small part of which belongs to voluntary health insurance, and some 46% is paid for by patients themselves. The total market estimate is just shy of USD 4.5 billion. In the old system, over USD 2 billion from patients’ pockets ended up feeding the black market. The reason for this was uncertainty as to what kinds of services the state provides, and how much each one actually costs. Unable to tell which service had already been paid for, patients often had no other choice but to open their wallets. Under the new healthcare system, the government will set a list of budgeted medical services. Those not on the list will have to be acquired by patients themselves, but at clearly defined rates. In conjunction with new anti-corruption legislation, it should eliminate incentives for abuse in healthcare and pharmacy and discourage the black market. The system is due for launch in 2018 and should be fully operational by 2020. Implementation of the new funding mechanism and official payment (co-payment) for treatment by patients require legislative changes other than in the field of pub-
lic procurement. There’s the pressing issue of amending Article 49 of the Constitution of Ukraine, which guarantees free medical treatment. According to the Constitutional Court, public and municipal medical institutions must provide treatment irrespective of its extent, without prior, concurrent or subsequent payment. The Constitutional Court also concluded that this does not rule out additional funding sources, such as sick funds and VHI. With current constitutional guarantees in place, public and municipal clinics cannot directly receive payment from patients, and until the Constitution is amended they will have to stick to VHI for additional funds. The new healthcare funding system adopted by the Cabinet of Ministers is not just beneficial to private clinics, but also to insurance companies that deal in VHI.
Health Insurance in Ukraine
Ukraine’s VHI market is currently in its infancy. Out of 323 insurance providers only about 45 offer this service, with the majority of sales divided among the leading 10 companies. According to the Ukrainian Legal and Economic Research Institute, over the course of 9 months in 2016 insurance companies sold USD 65 million worth of policies with a 52.86% premium. Next to the sums patients spend (over USD 2 billion, remember) the promise of the VHI market is evident, and there is a strong possibility that demand will increase in time. The fear of costly treatment in case of sickness and realization that free services are no longer a given could also affect the demand for VHI. Patients want assurances that they can count on their premiums when the need arises. Unfortunately, bankruptcy is not uncommon among Ukrainian insurance companies, as are cases when they refuse to pay up. As a consequence, lawsuits on premium collection are numerous. Evidence in cases like these is hard to come by and court hearings move at a snail’s pace: it takes roughly 2 years to conclude such a dispute. Moreover, carrying out the verdict and collecting the money also takes up to 6 months. Aware of the difficulties, people tend to avoid VHI altogether.
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ILF (Inyurpolis Law Firm)
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Address: 22 Shovkovychna Street, Kyiv, 01024, Ukraine
LF (Inyurpolis Law Firm) is an independent Ukrainian law firm with a core focus on litigation and business support (business setup, transactional support, regular advisory support). The firm operates on the market for 23 years through its two offices located in major cities of Ukraine — Kyiv and Kharkiv. Among ILF’s strong points is the ability to follow up on court decisions and get tangible results. This is due to years of experience dealing with debt recovery for banks and insurance companies (USD 500 million recovered in 2007-2015) as well as deposit recovery from liquidated banks for companies and individuals. We carry out business support through our commercial, corporate, M&A, tax and other teams, that follow an industryminded approach. The diverse expertise of the team ranges from business structuring and high-profile contracts to corporate acquisitions and asset deals. We’re known for our successful business structuring record in the IT sector, support of sophisticated technology contracts, and public private partnership (PPP) work in the field of healthcare and pharmacy. We help our foreign clients get clear understanding of Ukrainian business environment, based on our knowledge and experience in medicine and pharmacy, agribusiness and alternative energy, IT, banking and finance. Among our regular clients are Avon Products, Volvo, BASF Ukraine, Malteurop Group, Ecostar/DISH, SPS Commerce, EGGER and Amcor Tobacco Packaging.
Of course, patients can misbehave as well, such as by lying to their doctor about insured loss. It’s possible to anticipate this though in contracts with specific clinics of all forms of ownership (public, municipal or private). The insurance policy could contain a list of hospitals that should provide treatment. A contract between an insurance company and a clinic could oblige the latter to supply reliable information regarding the number of services provided and determine appropriate penalties.
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Tel.: +380 44 390 7777 Fax: +380 44 253 4549 E-mail: office@ilf-ua.com Web-site: www.ilf-ua.com
Our industry-oriented approach allows us to find legal solutions for business as well as manage projects dealing with institutional changes. In 2016 ILF lawyers working together with the expert team of the Ministry of Healthcare and backed by the World Bank and UNICEF designed legislation on primary healthcare reform. In addition, ILF is supervising a reform-pilot project in the Kharkiv Region city of Chuguyev. The ILF team includes 50 highly qualified lawyers, attorneys, tax, investment and business consultants. Reputation For six consecutive years ILF is in TOP-15 law firms in the national rating “50 Leading Law Firms of Ukraine in 2016” by Yuridicheskaya Practika Weekly. “Ukrainian Law Firms. A Handbook for Foreign Clients 2016” named ILF as one of the leaders of the Ukrainian legal market and places the firm’s partners among key experts in their respective fields of expertise: litigation, medicine and pharmacy, IT and labor law. Areas of practice Corporate law and M&A, land and real estate, public-private partnerships and privatization, labor & employment, intellectual property, tax law, criminal defense, debt recovery, bankruptcy, family disputes.
Furthermore, insurance companies can focus on selling VHI to employers. The Cornell University of New York showed that companies lose nearly three times more money when employees show up for work sick than when they stay at home. In light of this, businesses could certainly benefit from VHI. All the more so since current tax laws allow ascribing VHI expenses to total cost. In the old days they had to be covered by income. With no tax pressure and a number of lucrative offers from insurance companies,
employers are further encouraged to acquire VHI policies for their employees. All in all, everything points to a rapid growth of the VHI market in the near future. The niche is open for insurance companies that manage to provide necessary guarantees and demonstrate the benefits to patients and employers. As for patients, made wiser by their brush with bankrupt insurance providers, they could turn to foreign players for reliable medical treatment.
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Mergers & Acquisitions
Ukrainian M&A Market Review: A Look Ahead
Mykola STETSENKO Managing Partner, AVELLUM
Current Market Environment
The year 2016 was marked by relatively low M&A activity in Ukraine. Although transactions were carried out in almost every industry, their total number turned out to be quite moderate. In our view it is necessary to distinguish transactions relating to the Ukrainian market only and those transactions that were effected on a global scale, but which contained a significant Ukrainian element. If we speak of Ukrainian transactions only, a number of transactions in the financial sector are worth mentioning, particularly the acquisition of Ukrsotsbank by Alfa Group and the sale of Universal Bank. The latter was acquired by the TAS Group owned by Sergiy Tigipko, who also acquired Aegon life insurance company from its foreign shareholders. In line with its exit strategy, UniCredit sold its leasing subsidiary in Ukraine to Alfa Group in early 2017. We also witnessed a certain number of transactions in the agricultural sector (the sale of Creative Group, for instance), the IT segment (Soros investment in Ciklum), and the investment by Horizon Capital, a private equity fund, in Rozetka. Market rumors hint that several private equity firms are in the process of fundraising for new funds. This is obviously a good sign for 2017. A huge event in December was the sudden nationalization of PrivatBank, the largest bank in Ukraine, by the Ukrainian Government. The consequences of this nationalization for the country as a whole are yet to be seen. In the meantime, a new management and supervisory board have been
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installed, while the bank itself received significant monetary support from the Ministry of Finance of Ukraine. Unfortunately, no deals were concluded in the engineering and heavy industry sectors, and the FMCG segment also reported no intense activity. The pharmaceutical market was a noteworthy exception, with several transactions taking place in the course of 2016. Farmak’s investment in Poland was the most prominent one. This investment of a Ukrainian company into Eastern Europe became a pleasant exception at a time of low business activity and general exits by Ukrainian companies from the Russian and Crimean markets. A vivid example of this exiting phenomenon is MHP’s withdrawal from the Russian business by means of exchange of its assets in Russia for the Ukrainian assets of Agrocultura Group. Some further consolidation in the pharmaceutical industry also continued with the acquisition by Darnitsa of a 30% stake in the Borschahivsky pharma plant based in Kyiv. This investment, however, created some tension between old management and the new shareholder. In early 2017 Kernel, the largest vegetable oil producer in Ukraine, issued its debut Eurobonds for USD 500 million. While this event is not M&A activity by nature, it will likely spur some new acquisitions in the agricultural sector in 2017. The infrastructure segment, particularly sea ports, is gradually drawing more interest from investors, both local and international. The establishment of a joint venture between MV Group and Cargill, the global agro-industrial giant, may serve as a great example here. As far as we know, Ukrainian and foreign investors are also discussing a number of transactions related to port infrastructure and transhipment terminals. The dramatic increase of activity in the non-performing loans (NPLs) market (i.e., the market for secured or unsecured default loans) became a new trend this year. Although the targets of such transactions are rights of claim under loan agreements, such transactions may in fact easily turn into hostile M&A transactions typical of an unfriendly or opportunistic nature. Unlike the Ukrainian M&A market, the global M&A market once again looks likely to reach stratospheric level in terms of total transaction value. The USA remains the
leader in the value and the number of transactions. These transactions sometimes involve Ukraine, if only from the merger control clearance perspective (if new financial thresholds are exceeded). Some transactions (e.g., IT transactions) are even more related to Ukraine, since many of the specialists employed by IT companies are concentrated here. An excellent example of such a transaction was the acquisition of Lohika, a premier software development firm, by Altran, a global leader in innovation and high-tech engineering consulting company. Headquartered in Silicon Valley, Lohika is a leading software developer most active in North America with experienced delivery teams in Ukraine and Romania coming to more than 700 employees, most of them software engineers. Another great example is the acquisition of a 48% stake in GlobalLogic Inc. by Canada Pension Plan Investment Board. GlobalLogic Inc. is one of the top-5 global outsourced product developers headquartered in the USA, having 11,000 employees with significant operations in Ukraine, India, Slovakia, Argentina, Poland, and the US.
What Has Not Happened so Far?
First, everyone expected massive privatization to be launched in Ukraine. Unfortunately, this has not happened yet, although there were two attempts in 2016 to sell the Odesa Port Plant, one of the largest fertilizer producers in the world. Privatization of state-owned electricity generation and electricity distribution companies has also been postponed until 2017. At the moment, privatization of Ukrspyrt, the largest state holding of spirit production plants, is actively discussed, though it has not yet been initiated. Although there are undoubtedly a number of reasons for these delays, the market continues to hope for one or more successful privatizations in 2017. Second, the Ukrainian Deposit Guarantee Fund has not begun to sell its assets actively, even though it has so far accumulated an enormous amount of assets previously owned by liquidated banks. The Fund has already carried out an inventory of available assets, and its representatives report that they are working on the creation of transparent sales mechanisms involving the use of auction marketplaces, including the ProZorro public procurement system.
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AVELLUM
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Address: 38 Volodymyrska Street, Kyiv, 01030, Ukraine
VELLUM is a leading Ukrainian full service law firm with a special focus on finance, M&A, and dispute resolution. The firm covers capital markets, competition, corporate/M&A, dispute resolution, employment, banking and finance, energy and infrastructure, real estate, restructuring and insolvency, and tax. AVELLUM’s goal is to be the firm of choice for its clients with respect to their most significant business transactions. Its team is responsible, commercially minded, solution orientated and cost effective. The firm brings the most advanced Western legal techniques and practice, which, coupled with first-hand knowledge, broad industry experience, and an unparalleled level of service, will help the clients achieve the best results in their business endeavours. AVELLUM’s lawyers work seamlessly in integrated teams with premier US, UK, and European law firms in the course of multijurisdictional transactions. The firm offers its clients a highly individual focus on their matters, and is relentless when it comes to observing deadlines.
Headwinds
Both economic and psychological factors are working to restrain M&A in Ukraine. Economic factors include the low purchasing power of the majority of Ukrainian investors and the absence of high-quality assets for sale. At some level, this is a repetition of the situation in 2009 when very many companies became insolvent, yet their owners refused to sell them at the actual market value. However, compared to that previous crisis, Ukrainian banks this time are more aggressively disposed and ready to enforce pledged assets. In our view, it is definitely good news that Ukrainian bankruptcy and financial restructuring laws have been actively improving. The restraining effect of foreign exchange restrictions in Ukraine serves as an unconditional limiting factor. However, gradual liberalization of these restrictions — namely the permission to pay out dividends in part — is definitely bringing a positive impact. The National Bank announced in January 2017 that further liberalization should be expected in the course of this year. The procedure for purchasing rights of claim under loan agreements has a number
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Tel./Fax: +380 44 591 3355 E-mail: info@avellum.com Web-site: www.avellum.com
AVELLUM’s clients include international and domestic companies, government authorities, financial institutions, investment funds and investment banks seeking specialised legal advice and transaction skills from legal experts in the above practice areas. AVELLUM’s clients include AGCO, Allergan Inc, Altran, Baring Private Equity Asia, Onex Corporation, Boehringer Ingelheim GmbH, Canada Pension Plan Investment Board, CNBM International Corporation, Deutsche Bank, Deutsche Beteiligungs AG, EBRD, Farmak, Ferrexpo, ING Bank, Kernel, MHP, the Ministry of Finance of Ukraine, Novartis, Raiffeisen Bank International AG, UDP, Unicredit Group, and others. The firm’s employees received their education from top Ukrainian and Western universities. The team consists of 31 highly-qualified attorneys, including three partners, Mykola Stetsenko, Glib Bondar, and Dmytro Marchukov, who are actively involved in every transaction. AVELLUM is recognized as one of the leading law firms in Ukraine by various international legal directories and Ukrainian legal publications such as Chambers & Partners, IFLR1000, Legal500, International Tax Review, Ukrainian Law Firms, and others.
of drawbacks, which certainly restrict the free sale of default loans and serve as a restraining factor for foreign investors. Psychological factors should also be considered, since the fear of corrupt Ukrainian courts still prevails. However, these fears may be gradually dispelled upon the successful implementation of judicial reform in Ukraine, which commenced in September 2016. Unfortunately, the conflict in Eastern Ukraine, the annexation of Crimea, and potential Russian aggression still puts considerable pressure on the Ukrainian investment environment. Yet, as we can see, Ukrainian investors have already come to terms with these factors, while foreign investors are getting used to them.
Legislative Background
During the past year, the legislative environment experienced a number of changes that, in particular, had a positive impact on the M&A market, including: — significant reduction in regulatory requirements in Ukraine — an increase and enhancement of financial thresholds for merger control purposes
— an adoption of critical changes to the Law on Joint Stock Companies that came into force on May 1, 2016 — cancellation of the requirement to register foreign investments in Ukraine — adoption of legislative amendments aimed against raiding, in particular the introduction of mandatory notarization of documents changing directors or making other changes in membership. It is also crucial to highlight a number of draft laws submitted to Parliament for consideration, including the Draft Law On Limited Liability Companies, Draft Law On Shareholder Agreements, and Draft Law On Squeeze-out/Sell-out. The adoption of all these draft laws should improve the quality of corporate legislation in Ukraine and may create a climate for joint ventures to function properly in Ukraine and investors to rely on the substantial flexibility of new legislation. In late December 2016 and January 2017 these laws were passed in the first reading by the Ukrainian Parliament and the legal community has big hopes for them that they will be adopted in their final readings by the spring of 2017.
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Migration Law
For those Foreigners Aiming to Acquire Legal Status in Ukraine So How Can Expats Stay in Ukraine Legally?
Vasyl CHEREDNICHENKO Partner, EXPATPRO law firm
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espite the deep economic crisis of 2014-2016 and the de facto war with Russia, a lot of foreigners from over the world, including the USA and the European Union citizens, tend to move to Ukraine temporarily or permanently. Ukraine attracts expats with its huge economic potential, developed infrastructure, heartwarming people and, of course, due to the relatively low cost of living. Foreigners are interested in Ukraine as a place for starting a business which can give faster and bigger income than in other countries. Mild taxation for small and medium business, lots of Government programs stimulating business activity are attractive as well. It is worth noting that we now see the results of the implementation of e-government programs, transparent administrative services that are constantly improving. However, there is still much left to develop. Ukraine is open for almost any type of business activity you can think of. The IT sector, manufacturing, agriculture, advertisement, services, etc. You will never feel a shortage of qualified employees as higher education is available to all citizens and school education is compulsory here. At the same time, Ukraine is a desirable destination for expats who work remotely and can do their job wherever they want: IT developers, translators, consultants, copywriters, consultants, etc. These people can earn a high salary and spend it on an inexpensive life in Ukraine.
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Citizens of a long list of the countries can enter Ukraine without a visa: citizens of EU, USA, Great Britain, Canada, Georgia, South Korea, Japan and some other countries can stay in Ukraine for 90 days in a six-month period. In the case of violation of this rule the foreigner who overstayed in Ukraine gets illegal status and become unable to use Government, notarial and other official services. For example, foreigners who overstay can’t get a Ukrainian tax ID, can`t get married, are not able to give a power of attorney to a lawyer. A foreigner who breaks the 90-day stay rule can also be punished with a fine accordingly (Article 203 of the Code of Ukraine on Administrative Infringements) or even could be banned from entering Ukraine for 3 months to 3 years. Of course, such inconveniences can incommode the business activity of a foreigner or his personal life issues. To avoid such inconveniences which can incommode business activity, and stay in Ukraine legally for the continuous period a potential expat has several ways of doing this. The most common and transparent one is official employment in Ukraine. Any foreigner has a right to be employed in Ukraine (work in Ukraine) if he/she gets a work permit in accordance with the legislation of Ukraine. After getting a work permit the potential expat is eligible to get a temporary residency permit in Ukraine for 1 year with the unlimited right to extend it (and the work permit) each year. Obtaining a work permit is quite a complicated procedure facing a person. It requires evidence of educational level, qualification, the absence of infectious diseases, drug addictions, the absence of criminal procedures against the foreigner, and (generally) absence of a Ukrainian candidate for the place you apply for. Special procedures are granted for IT businesses and specialists (they may be employed without the employer complying with the priority employment rights of Ukrainians), scientists and representatives of religious organizations who comes for preaching activity. The students of Ukrainian schools, colleges, universities may be also granted a temporary residence permit.
Using this way of legalization in Ukraine the expat depends on the employer because he can lose his residency right after he/she is fired from the position. But this way of ensuring legalization in Ukraine (employment) is much easier and safe for expats who register their own business in Ukraine and become the director or a deputy director of their own company. Potential investors and foreigners who want to run a business in Ukraine (no matter if it is big or small) won’t have any problems getting temporary residence in Ukraine for as long as they need. It worth noting that expats who want to be employed in Ukraine will face some burdensome and bureaucratic procedures such as the necessity to provide at least some university or high school degree, legalized or apostiled in the country of origin and obligation to pass a range of medical examinations. But at the same time, all these procedures are constantly improving and become easier for foreigners from year to year. Another possibility is a family reunion. This is grounds for issue of a temporary residence permit. Such reunion relates to both reunions with parents, a spouse who is Ukrainian and those who have already obtained permission to stay legally in Ukraine. For instance, if a foreigner has started a business in Ukraine, received a work permit and temporary residence permit, all his family main join him and also acquire legal status in Ukraine without their employment or looking for other grounds to get permission to stay in our country. They will just need to apply for type D visa and after that — for residency. That is how a family reunion works. It is much easier to acquire residency if you have some family connection in Ukraine: for example, marriage with a Ukrainian, having a child who is a citizen or Ukraine or having relatives who are (were) Ukrainians (ethnical connection) or who were born on the territory of Ukraine. However, if you are married to a Ukrainian citizen it does not automatically grant you permanent residency: you need to prove that the marriage lasted for more than 2 years, otherwise you can apply for a temporary residence permit. Being “Worldwide Ukrainian” is another efficient mechanism that gives foreigners
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EXPATPRO
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Address: 18 Vasylia Lypkivskoho Street, 3rd Floor, Kyiv, 03035, Ukraine
e are a Ukrainian trusted legal partner for corporate and private clients with a focus on migration law. EXPATPRO is a leading boutique law firm that focuses on migration to Ukraine and offers personalized,top-quality legal services for foreign expats. Our clients are foreign individuals and the international companies that oversee their business, employment or personal opportunities in Ukraine. Through comprehensive knowledge of legal, political and business areas, our migration experts walk our clients through the jungle of Ukrainian law. Our team provides professional legal solutions on how to move to, and reside in, Ukraine and start-up there in the simplest way in accordance with applicable Ukrainian legislation. We strive to keep in touch with our clients and continue to support them in their daily business activities and their evolving living needs in Ukraine. Whether you are considering relocating to Ukraine, starting a business there or simply seeking consultation on work permit, visa, and
who identify themselves as Ukrainians, has a blood relationship with Ukrainians or someone who was born on the territory of modern Ukraine. This special status gives a foreigner right to get a long-term 5-year visa free of charge, right to get an immigration permit and thus, apply for permanent residence permit, right to work in Ukraine without obtaining a work permit and thus, apply for a temporary residence permit (Law of Ukraine No. 4381-VI On Worldwide Ukrainians, Law of Ukraine No. 5067-VI On Employment of Population).
Permanent Residence Permit
Ukrainian legislation sets out the grounds for issuing a permanent (unlimited) residence permit. They include the following: — being in a marriage with a citizen of Ukraine for more than 2 years, — being a parent of a citizen of Ukraine — being a child of a citizen of Ukraine. — being born on the territory of Ukraine. The aforementioned grounds are unconditional. But Ukrainian legislation also recog-
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Tel.: +380 44 339 9881 Fax: +380 44 339 9881 E-mail: office@expatpro.co Web-site: www.expatpro.co
residency issues, or have other expat-related legal needs, you can count on EXPATPRO. Expats who want to open a business in Ukraine may face some time-consuming, bureaucratic difficulties. Our team will guide you through the peculiarities of Ukrainian business and corporate law. Our Corporate, Commercial and Business Team will advise you at any stage of your company’s operations in Ukraine. The team of EXPATPRO offers sounds advice and a wealth of experience in all areas of employment relationships between business entities and expats. Our real estate agents together with our lawyers will guide you through every step of real estate transactions in Ukraine, from legal review/vetting of properties and negotiations to signing Lease or Sale-Purchase Agreements. Our team is experienced in cancellation/ removal of work and residence permit disputes initiated by the Government of Ukraine. We also have successfully argued appeals on a wide variety of disputes on behalf of our clients.
nizes certain grounds for issuing an immigration permit (and, therefore, a permanent residence permit) within annual Governmentestablished quotas. These quotas are used in the following cases: — for investors (those who invest at least 100, 000 USD into the Ukrainian economy are permitted to apply for an immigration permit and thus receive a permanent residence permit); — for scientists and cultural activists, in whose immigration Ukraine is interested; — for brothers, sisters, grandparents or grandchildren of Ukrainian citizens; — parents, spouse, and minors of immigrant; — highly-qualified specialists of those professions which Ukraine needs. Additionally, Ukraine currently supports repatriation processes and provides possibilities for acquiring special status for those foreigners who were citizens of Ukraine in the past. To acquire residency in Ukraine (temporary or permanent one) foreigners need to get a type D visa at a Ukrainian consulate abroad.
It is one of the problems that may occur during obtaining a residency. The cost of such a visa differs from country to country and is based on the principle of reciprocity (depends on the value of visas for Ukrainian citizens in the respective countries). The exceptions are citizens of Belarus, Georgia, Moldova, Azerbaijan, Uzbekistan, Armenia and Russia who does not need a type D visa. The good news is that obtaining temporary residence or a permanent residence permit provides you with almost the same scope of rights and duties as a Ukrainian citizen has. Those expats may stay within the territory of Ukraine, leave it and re-enter within the term of validity of their document, they can purchase property, work, study, get any type of Government and private services, etc. But those foreigners who aim to acquire legal status in Ukraine need to remember: any breach of laws of Ukraine related to the legal status of the foreigner (including overstaying, providing forged documents or false information) may result in forced expulsion from Ukraine and a ban on them re-entering.
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Patents
The Year 2016 in Review: Patents
Mariya ORTYNSKA Managing Partner, IPStyle
The Game of Numbers: Quantity is Not Always Quality
Looking back on the previous year with regard to patenting, 2016 may be characterized as the year of Ukraine’s so-called fabulous progress namely within the sphere of patent filing. According to the State Intellectual Property Service of Ukraine, 51,559 patent applications were filed in 2016 (compared with 47,819 applications filed in 2015)1. However, the increased figures can hardly indicate an improvement in quality. In Ukraine, just as in certain other countries, including Germany, France, China, Belarus, Kazakhstan, patents may be granted for inventions and for utility models as well. Patents for utility models are declarative. That is, the Patent Office grants them at the applicant’s own risk, without examining whether this or that utility model meets the criteria of novelty and industrial applicability. Moreover, the rights to utility models are the number two most popular intellectual property rights abused by patent trolls. It was the number of patent applications for utility models that increased last year (8,620 applications in 2015, compared with 9,557 applications in 2016), while the number of patent applications for inventions decreased (4,495 applications in 2015, compared with 4,095 applications in 2016). These trends highlight the following: 1) In Ukraine, patent trolls increasingly focus their attention on patenting and, in most cases, they manage to escape legal responsibility; http://www.uipv.org/i_upload/file/promvlasnist-2016.pdf 1
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2) Inventors and companies create less inventions or, being disappointed in the system’s efficiency, stop filing applications, or file their applications abroad, in breach of the mandatory requirement to file the first application in Ukraine. The data on non-resident applicants interested in filing patent applications in Ukraine are hardly optimistic either. Only 191 applications from non-residents were filed under the national procedure in 2016 (against 235 applications in 2015) and 1673 applications under PCT (against 1989 applications in 2015). Foreign applicants are apparently disappointed in the efficiency of patent protection, or do not rely on Ukraine being a country that is attractive for investing, business and product import. Sure enough, by comparing 2015 and 2016 only, it is impossible to take into account all the ins and outs of the current trends. Yet, these trends are obviously not encouraging.
Why Grant Patents for Utility Models that are Not New?
As said before, in Ukraine, patents for utility models are granted at the applicant’s risk, they are declarative and are often used by patent abusers. Unlike utility models, inventions are examined by the Patent Office for novelty, inventive step and industrial applicability. Interestingly, in 2016, only 5 lawsuits were filed for nullification of patents for inventions, while there were 15 lawsuits for nullification of patents for utility models. Only 2 patents for inventions and 8 patents for utility models were nullified by courts. The question is, how come there are so few lawsuits requiring nullification of patents for utility models? The analysis of regulations, judicial practice and market trends points to numerous reasons, including the following: 1) Patents can only be nullified by courts. According to Paragraph 1, Article 33 of the Law of Ukraine On the Protection of Rights to Inventions and Utility Models, patents may be nullified in full or in part in a court of law. 2) Forensic examination of patents. According to Paragraph 3, Article 33 of the Law of Ukraine On the Protection of Rights to Inventions and Utility Models, to nullify a declarative patent, any person may require a competent institution to carry out the expert examination of a patented invention (utility
model) against the requirements of patentability. However, even if the expert report of the Patent Office indicates that the patented utility model has failed to meet the criteria of patentability, it does not mean that such patent will be immediately nullified, and does not set aside the necessity for forensic examination. The described approach is used in judicial practice. In particular, the Ruling of the Supreme Economic Court of Ukraine No.21/54620/214 of 10 February 2009, states that “… this statutory provision does not change the general procedure for nullification of disputed patents (which may only be nullified in a court of law), and it exists since no other qualification examination of declarative patents is provided; this examination has the status of scientific and technical examination; the databases of the competent Institution containing the records of inventions’ registrations (in particular, international) and special expertise of its employees may be used. The reports of this expert examination may be applied as follows: for out-of-court resolution of disputes between the parties; when deciding whether applying to court/reasons for applying to court for the declarative patent nullification are viable; as evidence in a legal dispute, etc. However, no current regulations set out that expert reports of the Ukrainian Institute of Industrial Property indicating that technical solutions in declarative patents fail to meet the requirements by patentability, may be interpreted as decisions of a competent authority to nullify such patents”. 3) The fight against patent trolling and patents for inventions that are not new is a reminders of Don Quixote’s tilting at windmills. While a patent nullification case is being heard, the patent owner, his/her representatives or any other person, may file another patent application for a utility model, and the Patent Office has no grounds to refuse the granting of a patent for a utility model.
Judicial Practice as a Key Efficiency Indicator
In spite of statistics, judicial practice is developing not only in regard to patent nullification, but also with regard to protection of patent rights. This indicates that businesses are paying more attention to patents and are aware that it is important not just to obtain patents, but to be able to protect their patent
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IPStyle Patent Law Company
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Address: 1A Khoryva Street, Kyiv, 04071, Ukraine
PStyle Patent Law Company is a Ukrainian-based IP boutique founded in 2007. The company’s team consists of technical specialists, IP experts and lawyers. IPStyle uses a complex approach to all client cases. Furthermore, the Company provides the full range of IP services: from searches and registration to rights protection. IPStyle has already received more than 3,000 certificates for trademarks, more than 500 patents for inventions, utility models, and industrial designs. The company’s team consists of IP experts, lawyers and technical specialists. Every single member has his/her special field of work and responsibilities to provide 360 degree IP protection. IPStyle Managing Partner Mariya Ortynska is the guide and leading force of the company, who contributes to developing and expanding the scope of our activities. IPStyle experts are members of the following National and International Organizations: — INTA (International Trademark Association); — AIPPI (International Association for the Protection of Intellectual Property); — CEAPA (Council of the Eurasian Patent Attorneys); — AIPLA (American Intellectual Property Law Association); — FOBIS (Federation of Business Appraisers and Intellectual Property); — EBA (European Business Association);
rights in courts. 2016 was a year of unusual legal battles. Here is the overview of the most significant cases: — Seedera Seed Company vs. the State Intellectual Property Service of Ukraine, Syngenta Participations AG. The claimant filed a lawsuit requiring to terminate Patent of Ukraine No. 41255 as of 14 July 2013 and hold invalid the decision of the State Intellectual Property Department (currently — the State Intellectual Property Service) to extend the patent term. Syngenta Participations AG obtained proprietary rights in the aforementioned patent, which had been earlier granted to another company called Novartis AG. Yet another company by the name of Syngenta Crop Protection AG obtained the registration certificate from the Ministry of Environment for a product that contained thiamethoxam, which had been protected by the aforementioned patent. According to paragraph 4, Article 6 of the Law of Ukraine On the Protection of Rights to Inventions and Utility Models, the term of a patent for an invention, i.e. the medicinal product, animal protection product, plant protection product, etc., the use of which requires a permit from a competent authority, may be extended at the request of its owner for
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— Ukrainian Association of Intellectual Property (Patent Attorneys); — UBA (Ukrainian Bar Association); — UAA (Ukrainian Advocates’ Association). IPStyle Patent Law Company has been working on the Ukrainian legal market for more than 10 years, during which it has managed to acquire a reputation of excellence on the Ukrainian and international markets of IP consulting services due to great responsibility and professionalism. The client list of IPStyle Patent Law Company is a trusty measure of various Ukrainian and foreign companies. IPStyle’s main aim is to protect the solutions, creations and inventions of clients. The company’s projects are oriented both at trademark and patent legal solutions. Projects also include trademark registration, transferring trademarks rights, license agreements, copyright registration, patenting of innovations, utility models, design patenting. Moreover, IPStyle provides consulting (contracts, legal opinion, developing strategy) and litigation services, including representation in courts of any instance, in arbitration and mediation, other state authorities including the Anti-Counterfeiting Committee. Striving to be a trusted consultant for our clients, the lawyers and consultants of IPStyle actively hold seminars on up-to-date IP issues, sharing IP experience as well as their vision on IP trends with colleagues and current clients.
a term equal to a period between the date of filing the application and the date of receipt of this permit, but for no more than 5 years. Thus, based on this legal provision, the claimant filed the request for the patent extension and the State Department extended the term of this patent. In fact, the court had to decide whether the aforementioned legal provision was applicable, provided that the permit had been obtained by the person other than the patent owner. The Economic Court of Ukraine dismissed the claim. Thus, the above-mentioned legal provision was applied regardless of who had obtained the permit (the patent owner or any other person). It should be noted that the Kyiv Economic Court of Appeal and the Supreme Economic Court of Ukraine upheld the decision of the primary court. — Individual vs. Kharkiv Machine Building Plant SVITLO SHAKHTARIA, the PJSC. The claimant had been the respondent’s employee for 10 years. The respondent filed the patent application, but in breach of the law, failed to make an agreement with the inventor specifying the amount and conditions of the latter’s remuneration. The inventor filed the lawsuit with rather unusual claims, including the following: to nullify the patent
application as one that was filed in breach of the inventor’s rights, to admit that the claimant is the patent owner, etc. According to the claimant, patent applications for employee inventions had certain features of written agreements. Consequently, the employer’s obligation to conclude a written remuneration agreement within the time specified by the law shall be interpreted as a fundamental term of an agreement. However, the court dismissed the claim. Still, the above legal case demonstrates that many employers ignore the requirements to execute remuneration agreements with inventors, while inventors become aware of their rights and are ready to protect them. In addition to the aforementioned cases, there are numerous other current and recent legal cases, including cases involving the protection of rights, the acknowledgment of the previous user’s right, application or nonapplication of the doctrine of equivalents. All these cases hold out hope and show that despite the dominance of utility models and the spread of patent trolling in Ukraine, the market of patenting, licensing and inventions is gradually developing, while patent attorneys and IP lawyers deal with rather unusual cases in courts.
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Pharmaceuticals
Pharma Marketing: Quo Vadis?
Mykola ORLOV Managing Partner, Law Offices of OMP
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here is hardly anything more characteristic of Government regulation in present day Ukraine than the treatment of marketing agreements concluded between pharmaceutical producers and pharmacy chains. Over the past three years the situation has gone from outrageous to ridiculous. The natural outcome is an impasse of sorts. The industry is waiting for the next move by the regulators. The latter are undecided and unpredictable. The problem is unresolved. What is worse, the state authorities do not seem to have anything resembling a strategy. The discussion below is an attempt to trace the problem from its origins right up to recent developments. Special focus is placed on the varying interests of all the parties involved.
Marketing Dilemma
It seems that there has always been something schizophrenic about marketing agreements in Ukraine. Both pharmacy chains and pharma producers were always keen to use them. The terms were straightforward and simple. The producers paid the sellers for the increase in sales. No frills, as simple as that. The remuneration depended on the volume of sales. Of course, there were a few exceptions. These, however, mainly occurred in addition to, and not instead of, the main arrangement. (At times, producers wanted to be nice to all the retailers and were ready to pay a little something to all of them irrespective of the achievement of the targeted volumes.) It became more complicated when the parties wanted to document their arrangements. The wording more often than not (which is to say, almost always) differed from the substance. Indeed, the most widely-used approach has been (and still is) not to men-
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tion any percentage of sales as the basis for remuneration at all. Instead, producers paid retailers for zillions of different services. Often, pharmacies provided information reports worth thousands and even hundreds of thousands of hryvnias. Even more widespread were payments for the visits of the field force. Thousands of visits to each chain. Then, of course, there were priceless publications of promotional materials. There have always been several reasons for the above mismatch of form and substance. Producers were wary of the possible persecution of the marketing agreements by the Ukrainian authorities. Indeed, their fears have been justified by the ever recurring attention of the antimonopoly agency to any payments made by them to either distributors or retailers. Over the past ten years, the agency could never formulate their overall policy with respect to marketing agreements. As a result, their official statements, initiatives or enquiries were lacking in consistency and resembled a witch-hunt more than anything else. Retailers shared the above fears. Still, the main driving force for their lack of enthusiasm about documenting actual marketing arrangements appeared to be somewhat different. Unlike producers, pharmacy chains were subject to fewer, if any, compliance requirements. They could afford riskier tax planning strategies. One of these was to have marketing fees paid to tax-exempt intermediaries, mainly individual entrepreneurs. Payments for multiple services appeared to suit such tax plans better than simple performance-linked fees.
Risks of Marketing Duality
Whatever the reasons, any agreements deviating from reality have inbuilt legal and tax risks. Marketing agreements in the pharma field are no exception. While it is highly unlikely is that a party to them will abuse the mismatch of form and substance in court, as antimonopoly and tax investigations might prove devastating. In terms of tax, marketing agreements are a nightmare. There are three major problems with their tax accounting. First, consider the often obviously inflated prices of various services deemed to be provided under such agreements (information research and analysis, marketing studies, sales statistics, etc.). More often than not the price of the same services provided to the same producer by different pharmacy chains would differ dramatically (if no internal restraints and common
sense is exercised the difference may well be 200% or 300%). The other common malaise of these agreements is the frequency with which certain services are provided. The common examples would be visits by a field force to pharmacy chains or presentations made to pharmacists. With the ever growing amount of fees payable under these agreements, the number of such visits or meetings has the tendency of shooting up to thousands per each chain. It remains unclear whether one can reasonably justify such frequency, not to mention other mind traps. For example, whether the same information was used for all the visits or whether the pharmacists, if questioned, would ever remember what all those meetings were about. The hottest tax issue with marketing agreements is payments made to private entrepreneurs. As discussed above, one of the main reasons why pharmacies insist on the present form of marketing agreements is their desire to insert intermediaries. These intermediaries are either individual entrepreneurs paying the 5% flat tax or legal entities paying the same flat tax. More often than not individual entrepreneurs have little connection to the pharmacies using them. In many instances, there are doubts that such intermediaries ever pay anything to the relevant pharmacies. In view of the restrictions set by Ukrainian tax law on the maximum amount of income earned by payers of the flat tax, many individual entrepreneurs are used for one marketing service agreement with just one producer. All of the above creates the impression of an artificial scheme the sole purpose of which is tax avoidance. Previously, the Ukrainian tax authorities have been quite reserved in their treatment of pharma marketing agreements. That approach is changing now. With the general crackdown on individual entrepreneurs and abuse of their tax privileges by big businesses, the companies paying individual entrepreneurs under marketing agreements start receiving requests from the fiscal agency to re-consider their tax accounting of such expenses. Often such requests are satisfied and the respective payments are struck from taxdeductible expenses. The fear is that this is just the beginning. The main tax risk is that the fiscal authorities would start scrutinizing the services deemed to have been provided under marketing agreements. If that happens, it might prove difficult to justify payments for many services. The irony of the situation is that all
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OMP
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Address: 79 Tarasivska Street, 4th Floor, Kyiv, 01033, Ukraine
ver ten years, OMP has been supporting pharma both in Ukraine and in all the other NIS countries. We focus on providing the full range of tax and legal services to the pharmaceutical market players. The majority of our services are specifically
payments are valid but for the contractual wording. Unfortunately, the Ukrainian tax authorities might have a strong incentive to disregard the substance and just find faults with the form. In their present form, pharma marketing agreements can easily be challenged by the Ukrainian antimonopoly authorities. Any subsequent witch-hunt might trigger scrutiny of the mismatch. Why would anyone indeed pay for thousands of unnecessary visits to pharmacies or for hundreds of the same presentations shown to the same pharmacists? Well, unless, of course, this is payment for something else. This agency has always been good at interpreting what else might have been paid for. As is the case with the tax authorities, unfortunately, the risk is that the interpretation would have an anti-industry bias. It is not inconceivable that the paying producers might be suspected or even accused of misusing such payments to manipulate the market or abuse their dominant market position.
Is AMCU To Blame?
The AMCU is not the only reason why the marketing agreements are so artificial. Nonetheless, it is one of the main culprits. This agency has created the perfect excuse for the pharmacies and the perfect bugaboo for the industry to continue with the questionable practice of dual nature marketing agreements. The antimonopoly authorities never seemed to have any strategy regarding marketing agreements. Instead, they have been trying to apply scare tactics in order to achieve short-term political goals. The main objective appears to have unvaryingly been reducing the price of medicines for the population. There is no solid evidence that marketing agreements have ever had any tangible influence on the cost of pharmaceuticals. There is overwhelming evidence that the prices skyrocketed following the sharp devaluation of the national currency. However, this has never bothered the antimonopoly agency. Instead, its officials first tried to claim that marketing services should be provided at cost. Following the uneasy dispute with the industry the claim was taken back. Instead, the agency warned that such agreements should be concluded on equal terms and reserved its right
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tailored to the needs of the pharma industry. OMP has a recognized experience in tax mediation and litigation, GR and legislative work. One of our recent projects is supporting promotional and marketing efforts in the pharma industry.
to go after agreements with dominant market players. These vague criteria have never been further developed by officials. Finally, at the end of 2016 the antimonopoly authorities conceded in their market research that Ukrainian law did not regulate marketing agreements. This admission effectively means that these agreements, by and of themselves, may not violate Ukrainian law. Furthermore, contracting parties are free to agree on any terms. Ukrainian law does not restrict contractual terms. Importantly, the antimonopoly authorities should investigate marketing agreements only on an individual basis to the extent they violate or appear to violate Ukrainian antimonopoly regulations. The latest development in the AMCU’s stand on marketing agreements is undoubtedly a move in the right direction. However, it is the history of the stand-off that is more important to the industry. As is too often the case with the Ukrainian authorities, there was arguably little legal basis for the antimonopoly agency to go after marketing agreements. Unfortunately, this did not stop the officials from trying to meddle in them. Their attempts to achieve political goals outside the scope of their powers would have a lasting effect on the industry. They feed the air of uncertainty and lawlessness when anybody and anything can be prosecuted or outlawed at the whim of the regulator. Following the past three years of the stand-off with the AMCU, it is quite difficult for producers to argue with retailers who do not want to conclude marketing agreements with remuneration linked to the percentage of sales for the fear of reprisals from the antimonopoly authorities. It was the officials themselves who wanted “cost-based� pricing, although they could not justify that claim later and duly withdrew it.
Available Strategies
None of the driving forces of the mismatch of form and substance of the marketing agreements in pharma is gone. If anything, the latest decisions by the AMCU prove that the agency is still searching for its policy line on pharma. We might be in for many more unexpected twists and turns. One of the current focuses appears to be market abuse by pro-
ducers of leading medicines. It is quite likely that marketing budgets would draw the attention of the regulator. At the same time, the risks brought by the mismatch are now higher than even a year ago. The Ukrainian tax authorities have always focused on marketing services as potential money laundering and a tool for tax abuse. Combining marketing services and individual entrepreneurs often invites tax audits. Even without individual entrepreneurs, producers and retailers might be hard pressed to justify many of the services. It is high time the industry reconsidered its attitude towards marketing agreements. The ideal world scenario would be to describe the real arrangements of the parties, i.e. remuneration linked to sales. While the above might not be achievable with all the pharmacies, it is definitely worth trying to pursue. One of the strategies of minimizing the risks of antimonopoly is to try and obtain clearance from the antimonopoly agency for a particular marketing agreement used by the producer. It should be noted, however, that such clearance would apply only to the wording submitted to the AMCU and only to the extent that real life arrangements do not deviate from it substantially. For those pharmacies refusing to change the old ways and the producers willing to put up with the associated risks, it is important to mitigate at least the most serious tax risks. Thus, the risk of criminal charges may be effectively mitigated by producers if they insist on the provision by pharmacies of comfort letters or copies of agency agreements with individual entrepreneurs. Furthermore, it is advisable to discontinue the practice of disparate payments for the same services provided by different pharmacy chains. At the very least, the difference should be obvious and based on sound business rationale. (It is not unusual that bigger pharmacies would charge more than smaller ones. However, the difference should not defy common sense.) Whatever the marketing arrangement, we would recommend exercising care in those cases where the producer is promoting a market dominant product or explicitly attempting to increase its market share to the clear detriment of its competitors.
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Ports and Marine Terminals
Investments in Port Infrastructure: What Should Investors Be Aware of?
Alexander KIFAK Managing Partner, Attorney-at-Law, ANK Law Office
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n January 2017 the Ukrainian Sea Port Authority (USPA) published the results of cargo transshipment in Ukrainian seaports for 2016. According to USPA, in the reporting year Ukrainian ports transshipped a total of 131.7 million tonnes, which is 9% less compared to the same period in 2015. At the same time, in 2016 several companies at once declared the start of implementation of large investment projects in ports. For example, USPA, Cargill and MB Cargo have signed a Memorandum on construction of a grain terminal at Yuzhny port while the EBRD and IFC have confirmed their readiness to provide partial financing for the project. In December 2016 the Ministry of Infrastructure and Hutchison Ports signed a Memorandum, upon which a famous port operator from Hong Kong could become the operator of Chernomorsk Port and, first and foremost, its container terminal. In this regard, potential investors often ask us about the legal instruments available under Ukrainian law which could be used for investment projects in Ukrainian ports.
Concession
The first active talk about the necessity to transfer the ports into concession arose in May 2012 after the Verkhovna Rada had adopted Law of Ukraine No.4709-VI On Sea Ports of Ukraine (hereinafter — the Ports Law). The Law introduced the possibility to transfer into concession berths, motor roads and railway tracks, engineering networks as a unified property complex. One arti-
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cle of the Law included the list of types of agreements, which could be used for private investments in ports; along with the wellknown lease and joint activity agreements, the article also listed concession agreements. However, in order for the concession to truly work, the Ports Law alone was not sufficient. It was necessary to adopt several regulatory acts, while some experts insisted on introduction of a special law on concession in ports, drawing an analogy with the law on concessions for construction of automobile roads. In October 2012 the Government included property complexes of all sea ports to the list of objects of state property, which could be transferred into concession. The Ministry of Infrastructure has even drafted a model structure and content of technical feasibility study of the concession project. Market insiders said that Yuzhny Port was selected to become the pilot project in this field. However, not a single concession competition has been executed, nor was any concession agreement signed in sea ports in the period of 2013-2015. Last year the Ministry of Infrastructure decided to return to the idea of transferring the ports into concession. However, now they intend to start with small ports, where the private stevedoring business is hardly represented or is completely absent. The issue here is Olviya Port and Kherson Port. As world experience shows, concession is used successfully in many seaports. Therefore, we can only appreciate the efforts of the Ministry of Infrastructure in this direction.
Privatization
Starting from 1992 a legislative ban on the privatization of seaports in Ukraine has been in place. The Ports Law itself implemented the general guidelines, upon which strategic port infrastructure facilities (quay walls, water areas, approaching channels, railway tracks and automobile roads of general use) could not be privatized. However, unified property complexes of the ports — state enterprises — and its business units could be privatized. Besides, since at the moment when the Ports Law was adopted a lot of warehouses, storage areas, buildings and other port facilities were already leased
to private stevedoring companies, a special note was added to the Ports Law. The note provides that these objects could be bought back by the lessee who added fixtures to the leased property, the value of which exceeds its depreciation value as of the moment of privatization by 25%. However, the main step required to start privatization of seaports has not been taken yet because all Ukrainian seaports are still included in the list of stateowned objects, which are not subject to privatization. It is obvious that privatization of seaports could not be widespread. It should be used in cases where concession or other form of private public partnership does not work. Besides, transfer of a particular port to a private investor should not lead to monopolization of a port (stevedoring) services market in that particular region and, therefore, it requires the special attention of the Antimonopoly Committee and the Ministry of Infrastructure of Ukraine as market regulators.
Lease
Whether we like it or not, nowadays lease seems to be the only legal mechanism, which really works in Ukrainian ports. It is worth noting that the majority of lease agreements on immovable property have replaced joint activity agreements, which had been widespread in ports in the 1990s. By terminating joint activity agreements, which provided for unification of property shares of participants and for payment of a part of the income for the benefit of the port, the Ministry was expecting lease fees to be significantly higher and that the state would get more benefits. In practice, however, these expectations did not hold water. Lease payments were subject to state regulation and the leased property was extremely worn-out. That is why its market appraisal value, which is the basis for calculation of the lease fee, was not high. That is why the so-called “port services agreements” were created in several ports. These “services agreements” were meant to compensate port financial losses during transfer from joint activity into lease agreements. Nevertheless, many lease agreements were signed for a period of 10 years or longer. Later on these lease agreements were extended for even longer terms,
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ANK law office
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Address: 9 Lanzheronovskaya Street, Odessa, 65026, Ukraine
NK law office was established in 1996 and through the years of extensive legal practice has become one of the leading law firms in Ukraine. We have been successfully advising our clients on different matters of Ukrainian law over the last 20 years. As a result of our dynamic development we have combined unique experience and created a highly-qualified professional team of lawyers and auditors. We provide regular legal support to our clients on the most difficult projects and deals. Today, the ANK team consists of more than 25 qualified lawyers and attorneys-at-law and each of them is an experienced specialist in his/her field of legal practice. ANK lawyers are regularly involved as experts by leading Ukrainian business media for commenting latest legislative amendments and government initiatives. ANK law office provides complex legal support to grain, oil and container terminals in Ukrainian ports. We advise clients on the process of attracting international financing from IFC, EBRD and other financial institutions. We act as Ukrainian legal counsel to the container shipping lines, shipowners and
which was appreciated by the port operators for it is well known that consistent business rules are any investor’s top priorities.
Permanent Improvements Problem under Lease Agreements
According to our results, the main problem of port operators working under lease agreements is the impossibility to carry out reconstruction, modernization of their leased objects, to say nothing about comprehensive construction of port infrastructure objects. In fact, the Lease of State Property Law provides for the lessee’s right to execute permanent improvements of a leased object only upon the lessor’s consent, unless otherwise stated in the lease agreement. In reality regional departments of the State Property Fund, which act as the lessors under lease agreements with port operators, do not only double the regulations requesting the lessee to obtain approval for conducting permanent improvements, but also directly indicate that the lessee’s costs and expenses for such improvements shall not be compensated regardless of whether such consent was granted or not. The procedure for obtaining the consent for making permanent improvements to the leased property is approved by Order of the State Property Fund of Ukraine No.1523 (the Order). According to the Order, the Fund formally approves a decision on granting consent based on the documents presented by the lessee. In practice the Fund is not a decision-maker here because the real deci-
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shipmanagers as well as P&I clubs. Our corporate and M&A practice advises clients on establishing business in Ukraine, licensing procedure and business restructuring. We have a strong team of court lawyers and attorneys-at-law who are ready to protect the interests of clients in court. Due to the large network of correspondent offices abroad, ANK law office can arrange effective legal assistance almost anywhere in the world. We cooperate with maritime administrations and classification societies and provide clients with professional legal assistance during the sale and purchase of vessels and yachts. ANK lawyers are fluent speakers in English, Ukrainian and Russian. Practice Areas: — Agriculture and Land Law — Arbitration and Litigation — Corporate and M&A — Infrastructure and Real Estate — Shipping and Maritime Law — Tax and Legal Due Diligence.
sion is made by the Ministry of Infrastructure at a meeting of the special commission. As our experience of last year shows, the meetings of the commission became public and the Ministry invites not only the port and the Fund but also the lessee, who is to describe in detail what permanent improvements they intend to carry out and what positive effect it would have on the whole enterprise. Nonetheless, the practice of granting such permits shows that the Ministry discusses the possibility of conducting such permanent improvements on condition that its value shall not be compensated. Such an approach seems to be at least strange, taking into account the fact that the lessee spends a lot of time, money and effort collecting the requested set of documentation, which includes design and cost estimating documents and an expert reports on the results of the expertise. Should the state, represented by the Ministry and the Fund, like to study the planning of the permanent improvements deeper and would like to check the cost sheets of the future works and to be reassured that they correspond with existing standards and regulations, the lessee shall be entitled to compensation of such permanent improvements in case of termination of the lease agreement. Should the state not intend to compensate the costs spent for the permanent improvements to the lessee (which today is prescribed in all approvals issued by the Ministry) from the very beginning, the lessee should then be released from submission of the estimated cost sheet and expert report and the procedure should be simplified.
Special attention should be given to the question of the terms when the lessee may receive the consent of the Fund to conduct permanent improvements. The current edition of the Order does not provide for any terms for the regional department of the Fund to examine the lessee’s application. In addition, there are no terms for examination of the set of documents in the Ministry of Infrastructure. In reality this means that it may take the lessee 3-6 months to receive approval for permanent improvements, and sometimes even longer. From our point of view, the Ministry of Infrastructure should think about changing such practice and speed up the examination procedure of these questions and start issuing approval for compensation of permanent improvements, especially when we are talking about long-term lease contracts.
Summary
Attracting investments into ports, which use lease instruments, seems to have low prospects. World experience shows that concession for construction or for operation are the right instrument for the job. It is clear that the Concession Law and the Ports Law do not regulate these issues in due course. That is why we highly appreciate the initiative of the EBRD, which declared that it is ready to grant the funds for drafting the law on concession in the ports. Also we believe that the announced concession projects in the Olviya and Kherson ports shall be successfully realized and will get positive feedback from foreign investors.
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Private Clients / Wealth Management
Private Client Review
Tetyana IVANOVYCH
Nickolas LIKHACHOV
Counsel, Head of Private Clients, Spenser & Kauffmann
Counsel, Head of M&A, Banking and Finance, Spenser & Kauffmann
krainian law does not provide for a form of a legal entity that could be regarded as a private wealth management vehicle. The concept of a “trust” or a “foundation” is not recognized in Ukraine. But as of the time of writing of this note, Ukrainian citizens and residents were not statutorily prohibited from transferring assets to foreign trusts as settlors, beneficiaries or protectors of such structures. The ownership of any assets transferred to such a structure is lost and the assets will then be considered to be owned not by the settlor of the structure but by third parties (e.g., trustees). In such a case, Ukrainian succession law does not apply. If Ukrainian citizens or residents plan to transfer their property to foreign trusts, it is recommended that certain precautions be observed. Because the concepts of “trust” and “foundation” do not exist in Ukraine, Ukrainian citizens or residents can assign their assets in Ukraine directly to a trust (or foundation) only through a foreign company. Though Ukrainian matrimonial law does not directly specify that to have any assets, being under the joint tenancy of spouses, transferred to any trust or foundation, the consent of the other spouse is required; we strongly recommend receiving such consent to avoid such transfer being challenged in court as a violation of Ukrainian family law. In addition, trustees of best practices may ask settlers to include forced heirs, if any, to the list of beneficiaries of the trust. Significant legislative developments aimed at providing economic and financial transparency have taken place since 2014. The regulation of tax, corporate and banking law underwent drastic changes in order
to bring it in line with EU laws after Ukraine ratified the Association Agreement with the EU on 16 September 2014. The Government, driven by the desire to meet strict criteria of EU visa-free regime, has introduced an electronic declaration system and launched the National Agency for Prevention of Corruption. Receipt of the next tranche from the IMF is subject to further reforms such as establishing a special anti-corruption court, new financial police force and the launch of the agricultural land market. The implementation of recognised international standards and principles of business is aimed at providing clear rules for both Ukrainian businessmen and foreign investors.
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Wealth Regulation
Over the last decades, Ukrainian ultrahigh net worth individuals (UHNWI) have got used to taking advantage of cross-border structuring of business. Service providers from Cyprus, the Netherlands, BVI, Panama ensured privacy of their principles. However, Ukraine is now making progress in providing the transparency of businesses and their owners in accordance with recent global trends. These efforts are aimed at eliminating nominee shareholders’ services, fighting corruption and preventing money laundering. The first step in this regard was made in 2014 when Ukraine introduced the requirement to disclose information about ultimate beneficial owners (UBO) of companies in the State Registry of Legal Entities and Private Entrepreneurs. Ukrainian legislation identifies UBOs as individuals who are able to exercise, directly or indirectly, decisive influence on the management or business activities of the company regardless of formal ownership. Publicly available on the website, the
State Registry now contains personal information of UBOs. Notwithstanding that nondisclosure of the company’s UBO is subject to only administrative sanctions, it may lead to consequences, which are more significant. No reputable partner will engage with a company without knowing who stands behind it. Moreover, foreign banks are unwilling to open accounts or accept transfers from unidentified entities, as they are obliged by their governments to conduct financial monitoring. Сompliance procedures observed by Ukrainian banks, however, are known to be less comprehensive compared to banks in the EU. Furthemore, in April 2016 Ukrainian President Poroshenko established a Special Task Group with the aim of drafting a deoffshorisation bill that will counteract the reduction of the tax base and profit shifting abroad. Such steps are taken with the view of Ukraine’s obligations to join BEPS (Base Erosion and Profit Shifting) Action Plan and Common Reporting Standard (CRS). While some draft laws on implementation of four steps of BEPS already have been presented to the Ukrainian Parliament, preparation to join the CRS Convention is unlikely to take less than a couple of years. It is worth mentioning that automatic exchange under the CRS concerns the data on not only bank accounts of UHNWI, but also the information about trusts and foundations. This enables full transparency of their UBOs. Notwithstanding that Ukraine will need some time to adjust its legislation before joining the CRS, the countries that started exchange of tax information in 2017, are accumulating information on UBOs from other countries that have not joined the CRS. As soon as Ukraine joins the Convention, its tax authorities will receive information accumulated through previous years. According to the OECD’s website, 101 countries have already assumed obligations to participate in an automatic exchange, including those, which are popular for cross-border structuring among Ukrainian UHNWI. Therefore, the impact of CRS on UHNWI could not be underestimated, because as soon as Ukraine joins the CRS, Cyprus, the Netherlands, BVI, Belize and others will send the collected information to the Ukrainian tax authorities. The new electronic declaration system for politically exposed persons as introduced in 2016 promotes fighting corruption as one of the key goals to be achieved before visafree travel to the EU is permitted. State officials have already filed their declaration for 2015, and declarations for 2016 will be submitted before 1 April 2017. The National
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Spenser & Kauffmann
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Address: 7 Klovsky Uzviz, 14th Floor, Kyiv, 01021, Ukraine
penser & Kauffmann is one of the leading full-service law firms in Ukraine. Since its foundation in 2006, Spenser & Kauffmann aims to provide its сlients with the highest standards of legal advice and exemplary service. We represent our сlients in all areas of business law, including mergers and acquisitions, corporate, antitrust, intellectual property, IT, labor & employment, insurance law, banking and finance, capital
Agency for Prevention of Corruption, which is authorized to control the accuracy and completeness of the submitted data, as well as compliance with deadlines, approved the procedure of such control on 10 February 2017. According to it, the Agency will use all available information from the Internet, state registers, state and local authorities, law-enforcement bodies, individuals and legal entities to review the assets of persons, conflicts of interest and signs of illegal enrichment. Individuals and companies in Ukraine are still facing difficulties connected to strict currency regulation. Active legislative rules prohibits individuals and legal entities from investing funds from Ukraine in foreign countries without an NBU license. Violation of this rule may result in a fine in the amount of invested currency. However, due to the financial situation in Ukraine, the NBU has banned individuals from transferring money from Ukraine to foreign accounts or investing abroad and limited legal entities in investing abroad to the sum of USD 50,000 per month. While earlier the NBU used to extend the currency restrictions every 6 months, the latest order of NBU envisages an undefined term of restrictions, as they act until a separate order of the NBU. On 23 February 2017, the NBU abolished the necessity for individuals to obtain licenses for investing abroad and depositing
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Tel.:+380 44 288 8383; 288 6707 Fax: +380 44 351 2155 E-mail: office@sklaw.com.ua Web-site: www.sklaw.com.ua
markets, construction, energy & natural resources, enforcement proceedings, private clients, tax consulting and litigation. Throughout the last ten years, our firm has been recognized among the leaders by various prestigious international and domestic rankings in different legal spheres. Our lawyers speak English, French, German and Czech, which allows us to understand and communicate with domestic and international сlients without psychological or language barriers.
money on accounts in cases, when funds did not originate not from Ukraine. Henceforth, UHNWI that have funds abroad can proceed with opening bank accounts and purchasing assets directly in their name without delay and bureaucracy connected to old-fashioned licensing. This relief gives hope for future liberalization of currency regulation in Ukraine. The aim of the NBU’s banking sector reform was aimed, among other things, at the transparency of banks’ business and the ownership structure of banks and has led to the liquidation of more than 90 commercial banks in Ukraine since 2014. As the biggest Ukrainian bank PrivatBank was nationalized at the end of 2016, the state now controls the majority of the banking sector. According to current legislation, acquisition of a significant interest in a Ukrainian bank requires obtaining approval from the NBU. Before issuing such approval, the NBU analyses the transparency of the planned ownership structure, reputation of applying UBOs and management, clear source of income of the buyers. Failure to provide the NBU with information on key shareholders may result in the forced liquidation of a bank.
Taxes and Succession
Tax residents of Ukraine pay tax on their income with no regard to the country of source. A rate of 18% for income tax ap-
plies to any income, including dividends (except for dividends from corporations that are taxed at 5%), interest and royalties. In addition, a military duty was introduced in Ukraine since the time that the armed conflict in the Donbass region began. A rate of 1.5% is applicable to the worldwide income of Ukrainian tax residents. The income of tax residents from the disposal of real estate is taxed at 0% when the following three conditions are met: (i) the transaction is the first of the seller during a tax year; (ii) real estate that has been in ownership for not less than three years prior to disposal; (iii) real estate is of a specific type. In other cases, such income is taxed at 5%. A rate of 18% is applied to income from the disposal of real estate of non-residents. There are two types of succession: intestacy and testamentary succession. Intestacy takes place if a devisor has not left a valid will and testament or if the devisor left a will but it was quashed by a court or if the heirs waived their rights to inheritance. Testamentary succession means that a devisor has left a will, which defines the persons that can take part in the succession process. The provision regarding forced heirs stipulates that minors or disabled children, spouses or parents shall, in any case, inherit at least a half of the property they would receive in the absence of the last will.
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Private Equity
Private Equity Financing: the Ukrainian Model
Svyatoslav SHEREMETA Partner, Head of Corporate and M&A Practice, Integrites ILF
Global Trends in Private Equity Financing
Private equity (hereinafter — PE) investment is a type of financing when portfolio (non-strategic) investors, usually specialized private equity funds and so-called “family offices”, invest in the share capital of company shares which are not traded on stock exchanges. Therefore, a PE investor takes a higher risk in terms of proper information disclosure by the investee company and participation in its corporate governance but, at the same time, expects a higher yield on its investment, as compared with investments in the shares of publicly-traded companies. In some cases, PE financing may combine investments in share capital and providing debt financing. According to a number of research reports, global PE financing in 2016 sees some decline, but it remained near record high levels both in Europe and the US. Even though each of those two large PE markets has its own specifics (e.g., in the US, micro financing or financing at very early stages of companies’ development, so-called “angel investments” or “seed investments”, are more popular), the outlook for both the amount of total capital invested and number of deals is positive for the next few years to come.
Ukrainian Market
While the first PE investors emerged in Ukraine more than two decades ago, they were limited to a few professional investments companies and international financial institutions managing funds raised from Western-based private or institutional investors. The most popular industries for
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such PE funds were agriculture and food processing, financial services, retail, commercial real estate, production of household products. The second wave of PE financing on the Ukrainian market was inspired by the rapid growth of information and computer technologies in Ukraine, and the range of PE investors expanded by a number of investment funds which grew out as a separate line of business of large Ukraine-based business and financial groups. Currently, the main focus of PE funds has shifted to IT, e-commerce, cyber security, pharmaceuticals, export oriented agri-production and food processing.
Distinctive Features of PE Financing
A typical PE fund would have its internal investment policy guidelines. Investment policy guidelines determine, inter alia, maximum percentage of the fund which may be invested in one investee, minimum and maximum ticket size (limits on value of separate investments), preferred industries and regions for investment, target rates for return on investment, fund’s expected lifespan (which generally ranges between 7 to 10 years), and potential mechanisms for divestment (as most investors in PE fund do not see a return from their investment until they exit). There are a number of most common exit strategies for PE funds such as an IPO, sale to portfolio investors, merger with or acquisition by a strategic investor (a larger company active in a similar or complementary type of business), or liquidation. Quite often the preferred exit strategy would determine, to some extent, the desirable characteristics for investee companies. PE funds may differ as to what stake they would be willing to acquire in one investee. Thus, some of the largest institutional PE funds present in Ukraine consider acquisition of minority stakes only, while others do not invest in companies where they cannot acquire a majority stake or obtain full operational control. Also, taking into consideration the great influence of regulatory procedures and requirements on some businesses (e.g., construction of residential or commercial real estate) or specifics of Ukrainian corporate governance, co-investments by a smaller local PE investor and its large international peer are becoming more and more popular in Ukraine.
Since PE funds rely on distribution of proceeds resulting from the exit from their investment rather than on regular dividend payment or interest payments (which is the case for debt financing), PE Funds make investments in companies with high growth potential with the aim of increasing the value of the company (and of their investment, accordingly). One of the ways to increase a company’s value can be to improve its business model, expand the product lines and clients base and enter new markets. Strengthening management capabilities, either through increasing qualification of existing operational management with the use of PE fund manager’s own know-how and human resources, involvement of external experts or combination of both, is another way to make an investee company more attractive in the eyes of potential future buyers. Also, ensuring that internal accounts and annual audited reports are prepared in full compliance with international standards is a must for large institutional investors or for companies being prepared for an IPO.
Conventional Structuring of PE Financing
In Western jurisdictions, PE funds are often structured as limited partnerships where the general partner (the PE fund manager) takes the responsibility for selecting investee companies for the fund and then taking part in the management of such investee companies, and limited partners (the passive investors) provide most of the financing for the PE fund. Largely due to possible unfavorable tax implications, limited partners in PE funds usually do not take an active role in the corporate governance or operation of business of investee companies. In most cases, all the entities and contractual arrangements may be set up in, and regulated by the law of the jurisdiction where an entity that will be managing the PE fund is established.
Ukrainian Model for PE Deals
Unfortunately, Ukraine has not yet developed a legal framework allowing the structuring of PE deals within the contour of the Ukrainian jurisdiction only in a way which would be comfortable for a PE investor willing to invest in Ukraine-based businesses. Therefore, most PE transactions are structured with
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INTEGRITES
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Address: 1 Dobrovolchykh Batalioniv Street, Kyiv, 01015, Ukraine
NTEGRITES has a solid network of operating offices in the CIS (Kyiv, Moscow, Almaty, Astana, Karaganda, Aktau, Atyrau) supported by an international office network in London, Munich, Amsterdam and Guangzhou. The firm offers its clients complex legal advice in the CIS region. In 2016 The Lawyer recognized our work in the CIS with the award Law Firm of the Year: Russia, Ukraine and the CIS. We provide legal services for our world-known clients: Rabobank International, EBRD, VTB Bank, ProCredit Bank, Mitsubishi Group, Concern Toyota, Agrogeneration S.A., Credit Agricole, Nestle, COFCO Agri, LTk Capital, Dragon Capital, ADM, Louis Dreyfus Company, Soufflet Group, Сredit Agricole, Burisma, Aspen Pharmacare Holdings Ltd., Shell, DuPont, Bank of China, DHL, China Development Bank etc. Main industries: Agribusiness, Capital Markets, Construction and Land, Energy and Natural Resources, Information Technologies, Medicine and Healthcare, Telecommunications. Main Practices: Antitrust and Competition, Banking and Finance, Bankruptcy, Corporate, M&A, Criminal Law and White-Collar Crime, Intellectual Property, International Arbitration, International Trade and Trade Remedies, Labor and Employment, Litigation, Real Estate, Retail, Tax.
the intensive use of foreign legal elements. A typical structure for an institutional PE fund investing in Ukraine-based business would look as follows: a Ukrainian operating company (established in the form of a limited liability company) is fully owned by, in most cases, a Cypriot special purpose vehicle (selection of the Cypriot jurisdictions is explained by the favorable terms of the tax treaty entered into between Ukraine and Cyprus), which, in turn, is owned by a limited partnership registered in one of the so-called “tax haven” jurisdictions — British Virgin Islands, Isle of Man, or Jersey. The use of a limited partnership (a tax transparent entity) in such structures means that profit distribution to the investors will not be affected by taxes levied at the level of the limited partnership. An agreement setting forth the investment policies of the PE fund, investors’ commitments to provide funding, terms for admission of additional limited partners, allocation of costs and distribution of profits, corporate governance rules, etc. is concluded between the general partner and initial limited partners at the level of limited partnership. Structuring a PE fund in the conventional way requires a substantial amount of effort, time, human and financial resources from all parties involved, and may look too cumbersome for those Ukrainian investors and investee companies that just started their journey on the PE financing path. Local in-
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Tel.: +380 44 391 3853 Fax: +380 44 391 3854 E-mail: info@integrites.com Web-site: www.integrites.com
Our firm is also represented by international offices: United Kingdom 1 King Street, EC2V 8AU, London, UK Tel.: +44 203 713 1750
Germany Maximilianstrasse 13, 80539, Munich, Germany Tel.: +49 892 030 061 50
Russia Naberezhnaya Tower Block C, Moskva-City 10, Presnenskaya Naberezhnaya Moscow, 123317, Russia Tel.: +7 495 660 50 70
China R&F Ying Sheng Plaza, MaChang Road 16, Tianhe district, Guangzhou city, Guangdong, China. Tel.: +86 185 0204 0880
Kazakhstan SUCCESS Business Center, 1/1, Zhandossov St., Almaty, 050008, Republic of Kazakhstan Tel.: +7 727 352 80 83/84
Netherlands Herengracht 282 1016 BX Amsterdam The Netherlands Tel.: +31 20-5219367
vestments of smaller (“family-office type”) Ukraine-based PE funds are often structured through the use of nominal individual owners of Ukrainian operating companies, intensive use of low-taxed individual entrepreneurs as subcontractors in a company’s operational activities, dividing ownership over the main assets and IP rights among a group of formally unrelated legal entities or individuals, which makes such structures more vulnerable in terms of long-term sustainable operation and deter many Western institutional PE funds from investing in businesses structured in such a way. At the same time, converting the business operations of such a business into a more conventional model would with a high probability negatively affect the profitability of the business and may eat up all the company’s operating profitability, a critical factor to be taken into account by any PE fund when making an investment.
Regulatory and other Barriers on the Investors’ Pathway to Ukraine
In addition to corporate structuring issues, PE funds willing to invest in Ukrainian business may face a number of other regulatory and legal barriers which they rarely see in most other jurisdictions competing with Ukraine for financial resources. Extreme
overregulation of currency exchange operations, harsh restrictions on repatriation of dividends to a non-resident parent company, the vulnerable legal status of shareholders’ and option agreements, absence of the contractual concepts of warranties and indemnities, the weak judicial system and low enforceability of court decisions and arbitral awards — all those factors present in Ukraine are accounted for by investors when planning their investment strategies and selecting countries for providing PE financing.
Actions Required from Ukrainian Legislators
Both local and foreign investors await a clear and unambiguous signal from the Ukrainian authorities that investors will be treated fairly, that corruption will be fought and eventually eliminated in most areas related to business activities,. Futhermore, that the judicial system will be reorganized in a manner that would allow to rely on it without the fear of being treated unfairly. It is an immediate task for the Ukrainian Parliament to eliminate those gaps and problems in the Ukrainian legal system, as well as it is within the main goal, and in the best interests of the entire legal and business community, to help legislators to bring the Ukrainian legal framework into conformity with the best international standards and practices.
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Privatization
Privatization in Ukraine
Serhiy PIONTKOVSKY
Nataliya TYSCHENKO
Managing Partner, Kyiv office of Baker McKenzie
Associate, Kyiv office of Baker McKenzie
hortly after the Revolution of Dignity in 2014, the Ukrainian Government embarked on a path of large-scale privatization. In August 2016, the Cabinet of Ministers of Ukraine amended the Regulation On Transparent and Competitive Privatization in 2015-2017 (the Privatization Regulation) defining the list of properties subject to privatization for 2016-2017. This list includes about 300 enterprises, among them a significant number of strategic enterprises in the energy, mining, infrastructure, chemical and agricultural industries. The “top” enterprises subject to privatization for 2017, as named by the State Property Fund of Ukraine (the SPF), are PJSC Centerenergo, PJSC Khmelnitskoblenergo, PJSC Ternopiloblenergo, PJSC Kharkivoblenergo, PJSC Mykolaivoblenergo, PJSC Zaporizhyoblenergo, PJSC Cherkasyoblenergo, President-Hotel Kyivsky, and the Bank for Reconstruction & Development. With a view to facilitating the privatization process, in 2016 the Ukrainian Parliament adopted amendments to the Law of Ukraine No. 2163-XII On the Privatization of State Property (Privatization Law). The amendments, inter alia, (i) abolished the mandatory sale of 5-10% of the shares in a public joint stock company (JSC) belonging to Groups B and G (Ukrainian state strategic enterprises) on a stock exchange, (ii) established a mechanism for engaging advisors during the privatization of a JSC belonging to Group G and (iii) allowed resolution of disputes under a privatization agreement in an international arbitration court if this is set out in the relevant privatization agreement.
— Assets, production facilities, and structural units of enterprises that constitute integrated property complexes, which may include underlying state-owned land plots; — Separate individually-defined property, which may include underlying stateowned land plots; — Unfinished construction sites, which may include underlying state-owned land plots; — State-owned shares in enterprises; and — Socio-cultural objects, which may include underlying state-owned land plots. The Privatization Law divides all stateowned assets into six groups, which are subject to different privatization methods. Group A includes state enterprises and their structural units that during a fiscal year have up to 100 employees and gross revenue of less than UAH 70 million and/or their fixed assets value is not sufficient for establishing a JSC. Group B includes state enterprises and their structural units that during a fiscal year employ more than 100 employees and have a gross revenue of more than UAH 70 million and/or their fixed assets value is sufficient to establish a JSC. Group G covers integrated state property complexes that have dominant market positions, companies of strategic importance, and those determined on a case-by-case basis by the relevant authorities to merit the application of an individual procedure by being unique in the sphere of production or intellectual property. Group D covers unfinished construction sites and mothballed construction sites, including the underlying land plots. Group E includes state-owned shares in private enterprises of any legal organizational form.
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Objects of Privatization
Under the Privatization Law, the following state-owned assets are subject to privatization:
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Group J covers social and cultural objects, including the underlying land plots. The privatization of objects belonging to Group G, as well as properties in the fuel and energy industry, is carried out upon the decision of the Cabinet of Ministers of Ukraine. There are certain objects that are exempt from privatization by law (certain cultural heritage sites; hydraulic facilities; seaport areas; agricultural land which can be privatized only after the adoption of the Law On Transfer of Agricultural Land, but in any case not earlier than 1 January 2018).
Participants in Privatization
Under the Privatization Law foreign individuals and legal entities may participate in the privatization process, along with Ukrainian citizens and legal entities. Foreign investors should pay for the privatization objects they intend to purchase in local currency or in freely convertible currency. Under the Privatization Law the following entities may not purchase state-owned property: — entities in which the state owns more than 25% of assets; — entities, where any number of shares are owned / controlled by an entity-resident of the state, recognized by the Ukrainian Parliament as an aggressor (Aggressor State) (currently, the Russian Federation) or by the Aggressor State; — state bodies, employees of state privatization bodies; state business entities or their subsidiaries of any legal organizational form; — persons incorporated in off-shore zones (the list of such zones is compiled by the Cabinet of Ministers of Ukraine) or in jurisdictions listed in the Financial Action Task Force’s Non-Cooperative Countries or Territories; — entities and/or individuals and/or their affiliates incorporated in the Aggressor State or entities and/or individuals subject to sanctions (Ukrainian or international); — all persons that are directly or indirectly controlled by the persons mentioned above. In addition, the Privatization Law contains a number of restrictions on potential purchasers of shares of JSCs that enjoy a monopoly (dominant) position in the national market for relevant products, or that are of strategic significance to the national economy and/or security. In such cases only a majority stake in such a JSC can be offered for privatization and privatization of such
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Baker McKenzie
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Address: Renaissance Business Center 24 Bulvarno-Kudriavska Street, Kyiv, 01601, Ukraine
aker McKenzie’s Kyiv office has maintained a leading market position in Ukraine for 25 years. We offer a full range of legal services and business solutions. The quality of our work is reflected in the number of domestic companies, multinationals and financial institutions that seek our advice on high-profile transactions and legal representation in Ukraine. In close cooperation with Baker McKenzie offices worldwide, we provide the guidance and support clients need to achieve their commercial objectives in practice areas like Antitrust & Competition, Banking & Finance, Corporate,
objects is performed on a case-by-case basis, and such privatization is strictly regulated. The Privatization Law stipulates that foreign investors must submit a declaration of the origin of the funds which they intend to use as consideration for the property being privatized, regardless of the value of the purchase.
Methods of Privatization
Under the Privatization Law state-owned property may be privatized through the sale of state property at auctions, through a tender with open price offers or under alternative methods specifically established by law. As a general rule, state land plots underlying the objects subject to privatization are privatized together with such objects through auctions pursuant to the Procedure for the Sale of Objects Subject to Privatization together with Land Plots Owned by the State adopted by the Cabinet of Ministers of Ukraine. The SPF may organize a tender for the sale of shares in a JSC in the form of an open auction. In such a case, the winner is determined on the basis of the auction held in accordance with the procedure established by privatization regulations. There are additional requirements for the sale of shares in “strategic enterprises”. If an enterprise which is to be sold through an auction or a tender or at a stock exchange is identified as “strategic”, the bidders must provide information to the privatization authorities about connected undertakings and other additional documentation that may be requested by the SPF. If the stake to be acquired in a strategic enterprise exceeds 25% or 50% or is otherwise deemed to grant controlling powers in the highest management body of the enterprise, then the approval of
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Tel.: +380 44 590 0101 E-mail: kyiv@bakermckenzie.com Web-site: www.bakermckenzie.com/ukraine
Mergers & Acquisitions and Securities, Compliance, Dispute Resolution, Employment, Energy, Mining and Infrastructure, Healthcare, Intellectual Property, IT and Communications, Private Equity and Venture Capital, Privatization, Real Estate and Construction, Trade & Commerce, Tax and Customs, Wealth Management. Every year the Kyiv office confirms its top positions in the leading international and national legal directories, namely Chambers Global, Chambers Europe, Legal500, IFLR1000, World Trademark Review 1000, International Tax Review, Ukrainian Law Firms, Ukrainian Legal Awards, etc.
the Antimonopoly Committee of Ukraine must be obtained prior to the purchase. The lists of enterprises to be sold through auctions, tenders and buyouts must be approved by the SPF for state-owned property and by local councils of deputies for municipal property. The title to privatized property is evidenced by the sale and purchase agreement entered into by the purchaser and the corresponding privatization authority. The sale and purchase agreement must be executed in written form and certified by a notary.
Investment Obligations
The Privatization Law provides for investment obligations which must be included in the sale-purchase agreement. These investment obligations include the following: — Preservation of the main types of activity; — Modernization of production; — Compliance with mobilization targets; — Ensuring social guarantees for employees; — Environmental protection obligations; — Repayment of debts. The parties to the privatization process may also agree on other investment obligations. The period for the fulfillment of such investment obligations, except the obligation regarding compliance with mobilization targets, may not exceed five years. Any transfer of shares (property) which are subject to investment obligations must be approved by state privatization authorities and is generally prohibited until the investment obligations are performed in full. If the state privatization authority approves such a transfer of shares (property), then the investment obligations must be assumed by the new owner of the shares (property) in question.
Expected Changes into Privatization Procedure
With the purpose of simplifying privatization procedures and implementing global international business best practices for privatization in Ukraine the SPF initiated the development of a new Privatization Law. Such a Draft of the Privatization Law has already been developed with the assistance of Baker McKenzie as the EBRD consultant and is currently at the stage of discussion by the main stakeholders (the IMF, IFC, EBRD) and Ukrainian authorities. The Draft Privatization Law, amongst other things, proposes: — the division of all privatizable assets into two groups, namely large privatization assets and small privatization assets which is intended to be determined based on the value of assets criteria; — mandatory involvement of an investment advisor for sale of any large privatization asset; — the setting of the starting price for large privatization assets using the recommendation of an investment advisor and the starting price for small privatization assets should be determined based on the proposals of qualified bidders; — introducing an electronic auction system for the sale of small privatization assets; — possibility to govern a sale and purchase agreement on the basis of foreign law; and — inclusion of representations and warranties into sale and purchase agreements. After the agreement of the Draft Privatization Law by all stakeholders it should be passed to the Cabinet of Ministers of Ukraine and the Ukrainian Parliament, which is expected to happen by the end of 2017.
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Property Rights
Protection of Property
Andrii KUBKO Partner, Salkom
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he right of ownership is one of the core concepts of modern civil law in Ukraine. This right is enshrined in the Constitution of Ukraine and is guaranteed by international law governing human rights and protection of investments, such as the European Convention for the Protection of Human Rights and Fundamental Freedoms and Protocol No.1 to the Convention. Disputes between the state of Ukraine and private persons regarding violations of the rights to property guaranteed by Protocol No. 1 are adjudicated on a regular basis by the European Court of Human Rights. Ukraine recognises the jurisdiction of this court. The right of ownership is also protected by international investment treaties. Ukraine has acceded to a number of international agreements related to the protection of foreign investments, which are known as bilateral investment treaties. In addition to the purely legal aspect, there is an economic (financial) element of the right of ownership. Nowadays, it is impossible to imagine that market relations could develop in the absence of reliable guarantees of the ownership right and its efficient exercise. It is a well-known fact that insufficient implementation of the guarantees of the right of ownership on the level of the judiciary and the executive in recent decades was one of the major impediments that have prevented the development of economic relationships in the country, including the extension of domestic and foreign investments. Considering the above, it seems impossible to underestimate the importance of the right of ownership in modern conditions. On the other hand, it is the duty of the state to regulate matters pertaining to ownership. Such regulation is necessary to
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protect public interests, implement tasks imposed on the state, and to balance the interests of owners. Such regulation implies certain restrictions of the right of ownership. By the way, the right of the state to use measures to control property and also to interfere in the right of ownership is expressly recognised by Protocol No. 1 to the Convention and in the jurisprudence of the European Court. This is particularly relevant in the situation where the state has to protect the integrity of its territory and state sovereignty, and to eliminate external military and political threats. Therefore, the regulation of the right of ownership is always entwined with a search for an optimum balance between the interests of a private owner and the need of the state to restrict the ownership right in certain cases so as to attain the overall objectives of the state. This issue has huge importance in the conditions that modern Ukraine finds itself. Protection of the right of ownership plays the most important role in the concept of ownership. The efficiency of the mechanisms intended for the protection of the right of ownership is an indicator as to whether the real exercise of this right is secured and whether real guarantees to this right exist. Legislators use efforts to implement mechanisms aimed at strengthening the protection of the right of ownership. This in the main applies to the state registration of rights to real properties. On 6 October 2016, the Law of Ukraine On Amendments to Certain Acts of Ukraine to Modernise State Registration of Rights to Real Properties and Protect Rights to Property was adopted. This Law introduced amendments, among other things, to the Law of Ukraine On the State Registration of Property Rights to Real Properties and Encumbrances thereof. Such amendments cover the following areas. Firstly, the Law more precisely regulates information that should be recorded in the State Register of Rights. Secondly, the rules about software support of the State Register and functions of a technical administrator were made more specific. Thirdly, the procedure for the creation of a data base of applications filed to register rights to real properties was updated. Not only court decisions prohibiting registration of rights but also applications filed by owners requesting to prohibit registration, court de-
cisions setting aside decisions issued by trial courts, and applications filed by owners to withdraw application to prohibit registration filed earlier, are all recorded in the database. Fourthly, the Law defined more precisely the time frames for registering rights to real properties in the State Register. The right of ownership and other property rights have to be registered within five business days following the date of the application filed with the State Register of Rights. Rights arising as a result of notarial acts have to be registered immediately following the completion of a notarial act. Amendments in the information recorded in the Register must be registered within one business day, and the same time frame is established for issuing excerpts from the Register. The suspension of the registration procedures, cancellation of the state registration of rights, and annulment of a decision made by the state registrar should be recorded within two hours following the registration of a relevant application or a court decision in the State Register. Fifthly, certain amendments were introduced to the procedure for suspending registration of real properties. From now on, registration procedures may be suspended not only by a court order but also on the basis of an application submitted by an owner of real property seeking to prohibit registration activities in connection with their property. Such an application is registered by the State Register of Rights. If the owner does not submit to the registrar within ten business days a final court decision prohibiting registration, the state registrar may resume registration operations in connection with the property owned by the relevant applicant. Sixthly, the Law of 6 October 2016 set out the mechanism for registration of real property based on court decisions. Rights are registered exclusively on the basis of court decisions obtained within the framework of interaction between the State Register of Rights and the Unified State Register of Court Decisions, and no additional filings on behalf of the applicant are required. The State Court Administration of Ukraine is responsible for ensuring that court decisions are delivered to the State Register of Rights on the same day when a relevant decision comes into force. Finally, the introduction of provisions imposing control over the state registration of rights is an important development. The Law of 6 October 2016 provides that the Ministry of Justice of Ukraine is in charge of controlling and monitoring the registration activities of the State Register of Rights.
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Salkom
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Address: 12 Khreschatyk Street, Kyiv, 01001, Ukraine
alkom law firm was founded in 1990 and quickly built a reputation for honest and efficient counsel. It is now recognized as one of the leading providers of legal services in Ukraine. Year on year the firm is being rated by Ukrainian and foreign rating experts as one of the leaders on the legal services market in Ukraine. Famous international publications and guidebooks, such as The Legal 500 (Europe, Middle East & Africa), PLC Which Lawyer?, Chambers Global recommend the Salkom law firm as one of Ukraine’s top law firms that practices successfully in the fields of antitrust law, contract law, corporate and commercial, securities, bankruptcy and insolvency, international trade, privatization, and litigation, including foreign courts and international commercial arbitration procedures. Salkom law firm has extensive intellectual and professional potential as it employs 39 highly-experienced lawyers. The firm’s employees speak English and other languages, which enable them to work efficiently with foreign clients.
The objective of such measures is to uncover violations of registration procedures by state registrars and parties who have the authority to register rights. Based on such monitoring, the Ministry of Justice audits the operations of state registrars and parties who have the authority to register rights. If violations are discovered during audits, the Ministry may impose sanctions, such as temporary or permanent restriction of access to the State Register of Rights, administrative penalties, or annulment of accreditation. The other area of legislative development in the sphere of the right of ownership is the upgrading of management of certain properties. On 2 June 2016, the Law of Ukraine On Amendments to some Acts of Ukraine Concerning the Management of State-owned and Municipal Property was adopted. Although the Law of 2 June 2016 governs the use of state-owned and municipal property, its provisions are applicable to private business. The reason for this is that privately-owned companies develop their business relations with state-owned and municipal companies, in particular, due to recent developments in the area of public-private partnership. The Law of 2 June 2016 introduces new rules concerning the governance of state-
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Tel.: +380 44 591 3100, 591 3101 Fax: +380 44 591 3115, 591 3107 E-mail: salkom@salkom.kiev.ua Web-site: www.salkom.ua
The firm’s clientele are foreign and domestic companies, both private and state-owned, engaged in various industries such as automotive industry, banks, financial institutions and insurance companies, hotel business and leisure, publishing, investments, information technologies, shipbuilding, international trade, metallurgical industry, real estate, oil and gas, the food industry, natural and mineral resources, retail, agriculture, telecommunications and media, transport, chemical industry, power industry. Salkom enjoys longstanding cooperative relationships with international law and consulting firms in the United Kingdom, USA, Russia, Austria, France, Cyprus, Italy, Australia, etc. The firm is a member of European Business Association (EBA), British-Ukrainian Chamber of Commerce (BUCC), and American Chamber of Commerce (ACC) in Ukraine. The firm’s Partners are members of the International Bar Association. In 2013, Salkom law firm and Squire Patton Boggs, an international law firm with 44 offices in 21 countries of the world, established the Squire Patton Boggs — Salkom International Association.
owned unitary businesses, reporting procedures, and disclosure of information about operations. The new legislation strengthens the role of the supervisory board of such companies. The supervisory board has received the power to elect the chief executive officer. The Law also establishes a procedure for the execution of transactions with interested parties. The Law of 2 June 2016 set out criteria for transactions with interested parties and established a procedure for approval of such transactions. The approval is granted by the supervisory board or by the government agency that governs the unitary enterprise. Furthermore, a special procedure was introduced for state-owned unitary enterprises assuming “substantial commercial commitments”, i.e. when the market value of property or services covered by a given commitment equals 10% or more of the value of assets of the enterprise. Talking about trends in legislation that governs certain types of property, special attention should be paid to the desire of legislators to improve the regulation of the use of certain properties that have specific importance for the development of the national economy, and to bring such regulation into line with modern realities. This relates to, for
instance, regulation of the use of motorways and treatment of foreign investments. In the first case, the legislator has introduced a mechanism of long-term agreements on the maintenance of motorways. The Law of Ukraine of 17 November 2016 (coming into force on 1 January 2018) provides for long-term (up to seven years) agreements on the maintenance of motorways, and sets out the requirements that apply to the terms and conditions of such agreements. Moreover, the Law of 17 November 2017 expressly provides for the application of international standards, such as FIDIC contract templates, in these agreements. In connection with the second case, it should be noted that the requirement for mandatory registration of foreign investments has been waived in Ukraine. This amendment was introduced by the Law of Ukraine of 31 May 2016 and its objective was, in fact, to simplify the exercise of the right of ownership by foreign investors. In summary, one can observe an increase in the legislator’s attention to the issues of property rights protection recently. Despite the complex and contradictory nature of matters related to property, the steps taken in this direction are bound to make an ultimate contribution towards strengthening legal guarantees in this area.
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Public-Private Partnerships
Public-Private Partnerships: Quo Vadis, Ukraine?
Yevheniy DEYNEKO
Andriy OLENYUK
Managing Partner, EVERLEGAL Education: INSEAD, (Broadening Business Perspectives Programme, 2015); Kyiv National Economics University (Masters in Finance, 2009); University of Connecticut School of Law, (LL.M., 2001); Lviv National University Law School (Specialist’s Degree in Law, 2000). Mr Deyneko is qualified to practice in Ukraine and admitted to practice in New York State, USA.
Partner, EVERLEGAL Education: Georgetown University Law Center (LL.M., 2010); Lviv National University Law School, (Master’s Degree, 2008). Mr Olenyuk is admitted to practice in Ukraine.
What are PPPs?
Public-private partnerships, or PPPs, stand for contractual arrangements between entities of the public and private sectors with a view to implementing certain projects of public significance. The typical features of PPPs include the following: (i) a long-term contract between a public entity and a private investor relating to the performance of works or services by a private investor with the support of a public entity; (ii) the transfer of enterprise risks (e.g. risks relating to designing, building, operating and financing a project) from the public entity to the private investor; and (iii) the public entity usually maintains/ acquires title to assets in relation to which the services are rendered by a private investor or work products in relation to which the works were performed by a private investor. The most popular PPPs among private investors involve the rehabilitation of existing facilities with established demand, whereas PPPs with excessive budgets and risks of unknown demand are less attractive for private investors. This is especially true in the Ukrainian context of early stages of economic recovery following several years of political and economic instability.
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Why does Ukraine need successful PPPs?
The political and economic turmoil of 2014-2015 in Ukraine puts off the country’s ambitious plans to implement certain largescale infrastructure projects initiated by the government (e.g. the LNG terminal project in Odesa, the Kyiv-Boryspil Airport railway project and the new Kyiv metro line project). Such projects were, to a considerable extent, planned to be implemented through PPP arrangements which would allow the public authorities to leverage private investments in exchange for predictable returns. But the prevailing perception of increased political risks associated with the military conflict with Russia and lack of financing with maturity matching the duration of the PPP contracts did their job. Unfortunately, as of today, none of them has matured into financial closure. There is a considerable backlog of demand for large-scale PPP projects in Ukraine because of the need to repair certain worn-out infrastructure currently maintained by public entities, such as highways, railways, airports and sea ports, or create new infrastructure facilities, such as LNG terminals, high speed railways, metro systems and even the prison infrastructure. However, the Ukrainian public sector cannot afford to implement such infrastructure projects through conventional
procurement procedures due to excessive associated costs. Ukrainian banks cannot afford to finance such projects due to liquidity and regulatory issues while foreign lenders often lack confidence in Ukrainian borrowers. PPP arrangements with the participation of foreign private investors and IFIs can be considered a viable alternative here. Ukraine desperately needs a number of success stories in PPP projects for the following reasons: — with a private investor’s participation offering additional “value for money” to the public sector through increased quality of services or project outcomes, the general public would benefit from better services or goods for a lower public spending; — the positive effects of modernising the infrastructure is the key to the increase of internal and cross-border trade in goods and services originating from Ukraine; — the risk-sharing element of PPP arrangements between the public entity and the private investor enables hedging against financial risks relating to potential operational failures of a project’s outcome; — this would allow Ukraine to tackle its impeding economic challenges, such as high unemployment and the continuing infrastructure shortfall, and reinforce its economic recovery; and — a strengthening of the general investor confidence in the PPP market and increasing the chances of further PPP projects in Ukraine.
What is the Current Regulatory Framework for PPPs in Ukraine?
The key laws and regulations governing PPPs in Ukraine are: (i) the Law of Ukraine of 1 July 2010 No. 2404-VI On State and Private Partnership; (ii) the Law of Ukraine of 16 July 1999 No. 997-XIV On Concessions; (iii) the Law of Ukraine of 8 July 2011 No. 3687-VI On Specific Issues relating to Concessions of the Fuel and Energy Industry Facilities that are Owned by the State; (iv) the Law of Ukraine of 21 October 2010 No. 2624-VI On Specific Issues relating to Transfers into Lease or Concessions of Facilities in the Field of Heat Supply, Water Supply and Water Disposal that are Owned by Municipalities; and (v) the Law of Ukraine of 14 December 1999 No. 1286-XIV On Concessions for the
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EVERLEGAL
E
Address: 4 Rylskyi Lane, Sofyiska Square, 6th Floor, Kyiv, 01001, Ukraine
VERLEGAL’s team is a synergetic combination of professionals from international law firms and local legal experts. We advise our clients on transactional matters with focus on corporate finance, various facets of dispute resolution and legal aspects of business operational matters. We feel equally comfortable when advising on complex cross-border deals or representing your interests in domestic courts against tough counterparties. The services we offer cover Corporate and M&A, Dispute Resolution, Antitrust/Competition, Banking & Finance and Commercial Matters.
Construction and Operation of Automobile Roads. There is also a considerable volume of secondary legislation enabling the primary PPP rules and detailing the PPP related procedures.
Which PPP Projects are Currently Implemented?
According to the website of the Ministry of Economic Development and Trade of Ukraine and based on the data received from the central and local authorities, as of 1 August 2016 185 projects were implemented under PPP arrangements. Among those projects, 153 have been implemented under concession-type arrangements, 31 projects — under joint activity agreements and 1 project — under the public-private partnership (sic!) contract. The most popular sector for PPP projects in Ukraine seems to be waste treatment with 112 projects. Other sectors include collection, purification and distribution of water (37 projects); construction and exploitation of roads, railways, bridges and other transport infrastructure facilities (16 projects); production, transportation and supply of heat (6 projects); production, distribution and supply of electricity (5 projects); exploration for and production of minerals (1 project); tourism, recreation, culture and sport (1 project) and others (5 projects). The number of PPP projects signifies the viability of the current PPP regulatory framework. At the same time, the above numbers demonstrate that certain sectors (e.g., transport infrastructure, energy, healthcare or defence) that could benefit from PPP, are of little interest to private investors. This will need to be changed, including by implementing improvements outlined below.
What is in the Pipeline?
PPP is showing signs of early recovery in Ukraine. The Government and international donors are making efforts to revitalise PPPs, including through creation of task forces at
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Tel.: +380 44 337 0016 Fax.: +380 44 337 0018 E-mail: info@everlegal.ua Web-site: www.everlegal.ua
EVERLEGAL’s clients are industry leaders with global brands, mid-size and growing businesses as well as start-ups. Our lawyers have experience and expertise in a range of sectors such as oil & gas (upstream, mid and downstream), conventional energy and renewables, agriculture, IT and telecoms, healthcare and pharmaceuticals, infrastructure, banks and financial institutions, consumer goods. EVERLEGAL’s motto is “Ever More Success”. We measure that success by how successful our clients are in achieving their business goals.
the authorities and supporting development of PPP policy and the legal framework. For example, the task force (PPP Management Office) was created at the Ministry of Infrastructure of Ukraine with the support of international donors. The role of the task force is to revitalise PPPs in Ukraine’s infrastructure sector and its various subsectors. The task is basically twofold: to improve the legal framework and to launch and implement PPP pilot projects. The focus is on the improvement of the policy framework for PPPs/concessions and the Law of Ukraine On Concessions. Reportedly, this initiative is being funded by the EBRD. Following modernisation of the policy and regulatory framework, there are three concession-based pilot projects on the agenda. They are concessions of: State Enterprise Stevedoring Company Olvia, State Enterprise Kherson Sea Trade Port and railways/ ferry complex of State Enterprise Sea Trade Port Chornomorsk. The success of these pilot projects would be a signal for private investors.
Improvements Needed
The PPP legal landscape has been notably improved in Ukraine in May 2016, when the new legislation was passed providing, for example, for possibility of foreign arbitration under PPP contracts, use of SPVs by private investors, step-in rights by creditors, streamlining the process for assessment of PPP opportunities and selection of a private investor, etc. Nonetheless, certain issues remain unresolved. Among a number of actions to tackle those issues are the following: — to design and implement a clearer PPP institutional and regulatory framework, strategies and projects, including to clearly set priority sectors for the implementation of PPP in Ukraine; — to reinforce and sustain the institutional capacity of public entities for the implementation of PPP projects;
— to codify and/or clearly define the hierarchy of statutes regulating PPP and its various forms in different sectors; — to provide additional public entity support to private investors through the implementation of various Government co-lending structures, sharing the cost of investments and issuing long-term guarantees, including by amending the current wording of the Budget Code to enable long-term commitments in connection with the PPP by the public entity; — to improve and simplify the rules on access to land for private investors; — to simplify permitting system for implementing PPP projects, including for subcontractors of private investors; — to introduce clear step-in rules to improve bankability of PPP projects and allow financiers to secure cash flows by changing a private investor in case of the original private investor’s default and without the need for a new tender; — to grant currency controls and tax benefits for private investors to draw attention to Ukraine and add a cutting edge in the competition for capital; — to streamline interaction between rules on supply of goods/services by a private investor to the public entity as a type of PPP state support measure with public procurement rules and newly-introduced rules on state aid; — to extend the scope of the stabilisation clause to cover, in particular, adverse tax and capital controls legislative amendments; and — to consider allowing foreign governing law for PPP contracts.
Conclusions
PPPs have proved their viability in Ukraine regardless of the difficult environment. To boost the development of PPP projects in Ukraine further improvements are needed, including, among others, through designing and implementing a clearer PPP institutional and regulatory framework, strategies and projects.
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Public Procurement
Public Procurement: Special Aspects of the New Procedure
Alexey KOT
Alexander TRETIAKOV
Managing Partner, ANTIKA Law Firm. Member of the Judicial Reform Council, PhD (Law)
Senior Associate, ANTIKA Law Firm
ublic procurement is traditionally one of the most topical issues in Ukraine. For many years now the Government has been declaring that it will combat corruption in this field and make the procurement procedure transparent. The law has experienced numerous amendments but, unfortunately, it has not changed the situation significantly. At the end of 2015 a new version of the Law of Ukraine On Public Procurement to regulate relations in this field was adopted. The main peculiarity of this Law was to implement an absolutely new approach to perform procurement procedures, namely, a unified electronic platform called ProZorro, the usage of which should provide transparency and effectiveness in the use of state funds. From 1 April 2016 the system started to function for central bodies of public authorities and enterprises that conducted their activities in the fields listed in the law. From 1 August 2016 the system appeared to be binding for all state and local authorities as well as for state enterprises. What are the main features of the new procurement system and the principles of its work? The Law of Ukraine On Public Procurement stipulates two types of procurement, depending on the value of the tender: — procurement with a price under EUR 133,000 for goods and services and EUR 5 million for works;
— procurement with a price bigger than is stipulated in the Law. The Law stipulates three types of procurement procedures: — open bidding; — competitive dialogue; — negotiation procedure. According to the open bidding procedure, the estimation of tender bids is conducted automatically based on criteria and estimation techniques specified by the buyer in the tender documentation as well as through the application of an electronic auction. The estimation criteria are: — in case of procurement of goods, works and services produced, performed or provided not through specially developed specification (project plan), for which a constantly functioning market exists, — the price; — in case of procurement that is of a complicated or specialized nature (including consulting services, scientific researches etc.), — the price plus such estimation criteria as payment conditions, term for performance, etc. Before the electronic auction is conducted the electronic system for procurement automatically opens information on the price and the list of all tender bids placed in the order from the lowest up to the highest price without the names and information about the offerors. If other criteria except price were determined, the electronic system automatically shows them as well as the price. In those cases the value equivalent or ratio of the
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other criteria shall be determined. The ratio of the price criterion shall not be less than 70%, except for cases of implementation of the competitive dialogue procedure. After the tender bid estimation, the buyer reviews them for their compliance with the terms of tender documentation, starting from the offeror whose tender bid was defined as the most economically beneficial. If such tender bid was rejected, the buyer reviews the next most economically beneficial one out of the list of offerors. Based on the results of such review the report on tender bids consideration is drafted. The buyer publishes it on the web portal. After such report has been published, the electronic system automatically sends out notifications to all offerors. The list of offerors whose tender bids were accepted is published on the web-portal as well. The day and time of the electronic auction are scheduled automatically by the electronic system, but at the earliest 5 days from the day of publication of the report on tender bids consideration. If only less than two tender bids were accepted, the procurement procedure is canceled. The buyer determines the winner and takes a decision to conclude the contract. The crucial innovation in the procedure of open bidding is application of the e-auction system. An auction is conducted through three stages. During each stage the offeror enjoys the right to reduce the price of the tender bid for the one or more auction stages. The offeror whose bid appears to be the smallest at the end of the last stage of the auction is supposed to be the winner. Competitive dialogue is the second type of procurement procedure. It is applied in case: — the buyer is unable to define the required technical, qualitative characteristics (specifications) of works or service type and in order to make the best decision on procurement it is necessary to conduct negotiations with the offerors; — the subject of the procurement is consulting or legal services, information systems development, program products, scientific researches or experiments or developments performance, design and experimental or construction works performance, the defini-
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ANTIKA
A
Address: 12 Khreschatyk Street, 2nd Floor, Kyiv, 01001, Ukraine
NTIKA was established in 2010. Since its formation, the firm has built a strong reputation as an independent law firm and continues to grow on the Ukrainian legal services market. According to the results of research of the legal services market undertaken by reputable international and Ukrainian guides to legal profession like The Legal 500 EMEA, Chambers Europe, IFLR1000 Energy and Infrastructure, Best Lawyers, Ukrainian Law Firms, A Handbook for Foreign Clients, Top 50 Law Firms of Ukraine, Client Choice. The Top-100 Best Lawyers in Ukraine, the firm has been recommended in antitrust, dispute resolution, corporate / M&A, banking, finance and capital markets, real estate, land, energy, subsoil use, energy efficiency and energy saving. The firm received the Legal Award 2012 in the nomination Law Firm — Breakthrough of the Year. The firm is a finalist of the Legal Awards 2013 in the field of Antitrust, Litigation and Real Estate, in 2014-2016 — in the field of Energy. ANTIKA’s team includes 15 lawyers, who have significant experience of various legal practices and provide a full range of legal services to national and international companies that do business in Ukraine, as well as abroad in the following fields: telecommunications, heavy machinery, chemical and food industries, automotive, complex develop-
tion of requirements as to their performance needs to be negotiated. The procedure is conducted through two stages. On the first stage all participants are offered to provide tender bids that should include information on compliance with the qualification criteria and requirements stipulated by the buyer in tender documentation as well as the description of the decision on procurement without stating the price. After tender offers are considered, the buyer invites to negotiations not less than three offerors whose tender offers were not rejected at the result of consideration. After negotiations the buyer amends tender documents on technical requirements and requirements to the quality of the subject of the procurement, or defines its new characteristics and invites all the offerors who took part in negotiation to participate in the second stage. At the second stage the offerors should file the final tender bids stipulating the price. The consideration and estimation of tender bids at the second stage is performed through a general procedure stipulated for the open bidding procedure. The third procedure stipulated by the Law of Ukraine On Public Procurement is the negotiation procedure. This procedure is applicable as an exception in the following cases:
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Tel.: +380 44 390 0920 Fax: +380 44 390 0921 E-mail: office@antikalaw.com.ua Web-site: www.antikalaw.com.ua
ment, construction and real estate, subsoil use, wholesale and retail, media and sports, banks and financial services market, energy efficiency and energy conservation. The firm’s key practices include antitrust, litigation and arbitration, corporate, construction and real estate, subsoil use, energy and energy efficiency, legal expertise. The firm’s main principles are the provision of high quality and timely legal services, strict confidentiality and a bespoke approach to every client’s project. The following are representative clients: AWT Bavaria, ArcelorMittal Kriviy Rih, Cadogan Petroleum, Cargill, Chernomorneftegaz, Deposit Guarantee Fund, Enesa a.s., Esan Eczacıbaşı Industrial Raw Materials, Energobank, FC Dnipro, Ghelamco, Heitman, Henkel Ukraine, Henkel Bautechnik Ukraine, Ibis Group of Companies, Imperial Tobacco, International Resources Group, Lantmannen Axa, MF Telecom, Nadra Ukrayiny, Nasosenergomash, ViDi Group, Ukrnafta. The firm also advises the World Bank, EBRD, USAID, TACIS, UNDP, KfW, NEFCO on energy efficiency, utility and the implementation of other projects in Ukraine. ANTIKA is a member of the Ukrainian Chamber of Commerce and Industry, the American Chamber of Commerce in Ukraine, the Canada-Ukraine Chamber of Commerce, the European Business Association, and the International Turkish Ukrainian Businessmen Association.
— procurement of pieces of art or procurement related to protection of intellectual property rights, or concluding an agreement on procurement with the winner of an architectural or art competition; — absence of competition; — emergency need to make a procurement due to appearance of certain economic or social circumstances; — procurement of legal services related to protection of rights and interests of Ukraine, including with the purpose of protection of national security and defence, dispute resolution, consideration of cases in foreign jurisdictions with the participation of a party from a foreign country and Ukraine, on the basis of the Decree of the Cabinet of Ministers of Ukraine or Decrees of the National Security and Defence Council of Ukraine. The procedure includes conducting negotiations with the offerors with the aim of agreeing procurement terms. At the result of negotiations the buyer takes a decision on the intent to conclude the agreement. Such a decision is binding for publication within 1 day from the day of its adoption. Another interesting innovation related to the new procurement procedure is introduction of a system of appeal. According to the new Law, the person files a claim on violation directly through the electronic system. The system automati-
cally terminates the procurement procedure and directs a claim to the Antimonopoly Committee of Ukraine. Today, it is not clear whether such procedure will be effective and widely used. In any case the terms to consider the claims will be shorter than they are today due to the application of electronic document management. Evaluating the initial results of the work of the ProZorro procurement system since the time of its introduction, it should be mentioned that problems related to abuses from the side of official bodies, like defining qualification requirements “for their own people”, groundless rejection of offers and others, still remain. Moreover, reasonably, such problems can’t be solved merely with help from the implementation of a new procurement procedure. First of all, there is a need for oversight and to strive towards punishing those people who perform abuse in reality. Despite all the difficulties, we hope that the procedure will enjoy further development and improvement, because its idea of maximum transparency and publication of information with free access allow not only appeal against the results of a procurement procedure, but to guarantee public control in this field, particularly while performing procurement that runs into significant amounts of money.
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Real Estate
Ukrainian Real Estate Developments in 2016/2017
Bate C. TOMS
Maria BARHILEVYCH
Managing Partner, B.C.Toms & Co. Legal education: Yale Law School (J.D., 1975); Magdalene College, Cambridge University (Law Tripos I; 1972-1973). Mr. Toms is admitted to legal practice in the District of Columbia and Virginia, USA, and in France.Chairman, British Ukrainian Chamber of Commerce
Junior Associate, B. C. Toms & Co. Legal education: Taras Shevchenko National University of Kyiv, Bachelor of Law (2016)
The Simplification of Licensing for the Construction of Buildings
The Cabinet of Ministers of Ukraine has reduced the bureaucracy involved in the residential construction sector by limiting the number of activities subject to licensing or certification for the construction of buildings of the fourth and fifth categories, being those for the permanent habitation of 300 or more persons. This relaxation of the licensing regime was introduced by the Resolution of the Cabinet of Ministers On Certain Questions on Licensing the Building of Objects of the IVth and Vth Categories of Complexity, No. 256, of 30 March 2016. The number of such licenses and certificates was reduced by half, excluding from the list the following: — construction design works (since contractors providing design services are presently subjected to professional certification); and — engineering works; In addition, all works for buildings of the first, second and third categories of complexity, being those for housing for fewer than 300 persons were excluded from the list requiring licensing. Another novelty is that license applicants are required to demonstrate a track record of involvement in construction of buildings of lower categories, as follows:
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(i) for the fourth category of complexity — previous involvement in construction of at least three buildings of the third category; and (ii) for the fifth category of complexity — previous involvement in construction of at least three buildings of the fourth category or at least five buildings of the third category. The Cabinet of Ministers has also recently adopted the Resolution On Amending the Procedure for the Licensing of Economic Activities Related to the Creation of Architectural Objects, No. 238, of 10 March 2017, whereby licenses for construction of buildings of the fourth and fifth categories shall be issued for an indefinite term, instead of the previously applicable three to five year term.
The Anti-Raider Law
The Law On Amending Certain Legislative Acts of Ukraine on Improvement of the State Registration of Real Estate Rights and the Protection of Property Rights, No. 1666-VIII, of 10 June 2016 (known as the “Anti-Raider Law”) came into force on 2 November 2016. This law aims to strengthen the protection of property rights in Ukraine, and therefore help attract foreign investment. The main feature for Ukrainian business is the introduction of better protection of real estate rights from improper takeover. To begin with, the Anti-Raider Law aims to eliminate the phenomenon of the so-called “black notaries” by providing for desk audits,
i.e. verifications, conducted by the Ministry of Justice, based on information in the State Register of Rights, so that the work of notaries and state registrars can be tracked. All registration action, meaning the state registration of rights, amendments to the records in the State Register of Rights, cancellations of the state registration of rights and other acts recorded in the State Register of Rights (except those to merely provide information from the State Registry of Rights) can thereby be monitored. This should reduce the number of abuses and result in quicker responses to stop attempted violations. Second, the registration services provided to legal entities can only be carried out within the region where the company is registered or, for enterprises in Kyiv or Sevastopol, in the respective city. As a result, notaries can only provide real estate registration services within their respective region or city. This restriction is intended to impede a common type of abuse where, for example, a registrar or notary in Kyiv or Odesa conducts illegal actions to change a property’s registration in another region, like Lviv or Kharkiv, outside of local supervision. Third, the Anti-Raider Law is intended to protect against the forgery of court decisions. Specifically, court decisions that may change the legal status of property must be reflected in the Unified State Register of Court Decisions (“USRCD”) to constitute a valid legal ground for any registration action. Should the court decision referred to by the applicant be absent from the USRCD, the state registrar must request a copy of the court decision directly from the court. In such an event, the registration of real estate rights and their encumbrances, based on such court decision, shall be suspended pending the furnishing of a copy of the decision by the court. Fourth, the Anti-Raider Law expands the powers of the Ministry of Justice to supervise the state registration of rights and monitor registration activities. State registrars are also required to (i) use data from the State Land Cadastre, the Unified Register of Permits for Construction Activity and the USRCD and (ii) to access data through protected holders of personal keys for digital signatures, in order to better protect data from unauthorized access. In addition, instead of an “information notice”, state registrars can now provide an extract from the State Register of Real Estate that is certified by the signature and seal of the registrar based on an application.
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B.C. Toms & Co
B.
Address: 18/1 Prorizna Street, Suite 1, Kyiv, 01001, Ukraine
C. Toms & Co is a multinational law firm of Ukrainian and Western lawyers specializing in Ukrainian law. It was the first Western law firm to open a Kyiv office, having focused its practice on Ukraine at its independence in 1991. The firm has handled, for example, land leasing for many of Ukraine’s largest agricultural and oil and gas projects, as well as acquisitions of land for commercial property developments. We also handled the legal work for the first, and the most, IPOs to raise funding for Ukrainian companies, as well as the first true project financing in Ukraine. Based on our over 25 years of experience in Ukraine, we can provide, with our legal advice, practical commercial advice on how to establish and develop a business in Ukraine. The firm has recruited and trained its Ukrainian lawyers from students at Ukraine’s leading law schools, most of whom have also studied at UK and US law schools as Chevening, Pinchuk, Fulbright and Muskie fellowships. Based on the firm’s practical experience, it has written numerous articles on Ukrainian law, including the legal section of the book Doing Business in Ukraine.
Fifth, the Anti-Raider Law limits the grounds for denying the state registration of real-estate rights in those cases where there is an existing registration of rights or encumbrances to such real estate. Thus, the following grounds may not be invoked to refuse registration: (i) the state registration of other encumbrances over the real estate; (ii) the state registration of real estate rights based on of the consent of (i) the mortgagee or (ii) the supervisory body to the transfer the property, where the encumbrance is (a) a prohibition on the disposal of real estate (under a contract) or (b) a tax pledge; (iii) the state registration of real estate rights based on certificate of inheritance. The Anti-Raider Law also extends the time period for making complaints to the Ministry of Justice from 30 to 60 days (calculated from the date of the decision or the date when the person learned or should have learned about the violation of his, her or its rights. Furthermore, the owner of real estate now has the right to submit an application to the state registrar to prohibit any registration actions on his, her or its real estate, whereby the state registrars are obliged to stop any state registration of rights for the period specified . The penalties for violations have also been increased. Notaries who violate the procedures for property right registration are subject to license revocation by the Disciplinary Bar Commission of the Ministry of Justice. Submitting
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Tel.: +380 44 490 6000, 278 1000 E-mail: kyiv@bctoms.net Web-site: www.bctoms.net
The principal practice areas of B. C. Toms & Co include real estate and land development, energy, natural resources, agriculture, banking and finance, M&A, environmental, labor, bankruptcy and administrative law. The firm also has a successful litigation and arbitration practice, having successfully handled many of Ukraine’s most important cases, including in all Ukrainian courts and before the Permanent Court of Arbitration in The Hague. The firm regularly advises on Ukrainian tax law, including from a multinational tax planning perspective. B. C. Toms & Co has prepared a wide variety of documentation for clients, including Ukrainian law share purchase agreements, asset purchase agreements, joint venture agreements, construction contracts, project financing documentation, production sharing and oil and gas license agreements, airport investment and management agreements, hotel management agreements, private placement agreements, real estate acquisition agreements, loan agreements, leases and agency, distribution, franchise and licensing contracts.
forged documents for the state registration of rights to immovable property now also constitutes a criminal offence, with potential liability of up to UAH 800,000 (approximately USD 30,000), or up to 6 month arrest or imprisonment for up to 2 years. The adoption of the Anti-Raider Law should greatly reduce the abuse of rights to real estate, especially as this law strengthens the criminal and administrative liability of officials in the registration offices and provides stricter formal requirements for the state registration of real estate rights.
Improvements for Town Planning
The Parliament of Ukraine has also adopted the Law of Ukraine On Amendments to the Certain Legal Acts of Ukraine on the Improvement of Town Planning Activity, No. 1817-VIII, of 17 January 2017. This law revises the concept of “categories of complexity” for complex construction in order to eliminate abuses where, by dividing projects into different categories, developers were able to deliberately understate the overall scope of their projects in order to avoid inspections and permissions. Instead, a building hereafter will be classified based on the potential level of danger for the health and life of the people, who stay in the building regularly or periodically. Such change is only now about to take place, so the currently applicable legislation still employs the “old” terms on “categories of complexity”.
In addition, instead of the “declaration on construction”, the “notification of the start of construction work” will be the main document for construction activity in the future, and it is prohibited to carry out building activity without this notification being in place. The new Law will also increase the penalties for violations by developers, with fines being increased by 300%. In addition, the state officials who are competent to issue construction-related permits will become accountable for the issued documents, so they shall need to check the whole documentation related to the project. Previously it was not possible to hold such officials liable for authorizing an essentially unlawful construction of a building.
Online Declaration of a Building’s Readiness for Operation
The State Architectural and Construction Inspectorate and the State Agency for E-Government, with the support of the Organisation for Security and Co-operation in Europe (OSCE) have launched an online service for the registration of the declaration that a building is ready for operation. This service should greatly simplify and expedite the procedure for declaring buildings ready for operation (i.e. use). The whole process can now be completed online based on an application filed by the investor, developer or contractor. Such e-service should process applications within 10 days and is free of charge.
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Regulatory
Regulatory: New Regulatory Framework of Ukrainian Seed Industry
Oleksandr MAMUNYA
Oleksandr TERESHCHENKO
Partner, AEQUO
Attorney-at-Law, AEQUO
ccording to recent World Bank data1, among major factors, which slow down development of the seed sector are official red tape, redundant requirements for registration of plant varieties and certification of seeds. This, in turn, results in the raised costs of seed producers coupled with serious delays in the introduction of new plant varieties. Namely, costs for registration of plant varieties in Ukraine are the highest by comparison with all the countries analysed by World Bank experts2. The Ukrainian seed industry could be one of the most attractive agricultural sectors for foreign investments and can meet both domestic demand for high quality seeds and unleash the export potential of our country considering the vast use of seed products in food, feed, chemical and energy industries. The creation of high quality plant varieties is a rather complex task requiring a scientific approach and an in-depth focus on the seed production. However, due to the obsolete legal framework it has been impossible to fully unleash such potential. Effective from 1 July 2016, the Law of Ukraine No.864-VIII On Amending Some Ukrainian Laws on Harmonisation of Seeding and Planting Legislation of Ukraine with the European and International Rules and Standards (the Law) is aimed at addressing the above
issues and radically reforming the Ukrainian seed industry. The authors of this article were directly involved in drafting the Law as legal experts during meetings of dedicated parliamentary committees, etc. Since the Law establishes comprehensive reform of domestic seed industry, it is impossible to cover all the novelties of the Law in one article. Therefore, we provide a summary of the most important achievements.
A
World Bank Report “ENABLING THE BUSINESS OF AGRICULTURE 2015� 2 For instance, in Spain similar costs are 6 times lower than in Ukraine 1
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Acquiring the Status of a Seed Producer
For a business entity to engage in the seed industry, it must acquire the status of a seed producer. Prior to the adoption of the Law, a rather complex accreditation procedure had to be undergone that required the filing of many documents. Grounds for refusal of accreditation seemed to be controversial and far from transparent, which as a matter of practice resulted in the abuse of powers by the State Agricultural Inspection of Ukraine (Agricultural Inspection). The Law abolishes accreditation of seed producers and introduces a simpler system of registration of seed producers with the State Register of Seed Producers and Planting Material (Register of Producers) based on the declarative principle. The Register of Producers represents a list of seed producers authorised to produce seeds and/or planting material to be sold on the market, or those providing seeding and planting services. The Register is public and administered by the State Service
of Ukraine on Food Safety and Consumer Protection (Food Safety Service), the successor to the liquidated Agricultural Inspection. The Food Safety Service is to consider an application for inclusion into the Register within 10 days. The Law also allows submission of a digitally signed application by email. Besides, the Law sets out an exhaustive list of grounds for refusal to include an applicant in the Register of Producers and for striking it off the Register. If the Food Safety Service sends no reasonable refusal to the applicant, there is a presumption that an entity is included by default on the Register and it may start seed production. We believe that such a procedure for administering the Register of Producers (including electronic form via the Internet) would eliminate current barriers to market access. Meanwhile, if a seed producer is struck off the Register (for example, due to regular breach of seed legislation), it will lose the right to produce, sell or use seeds.
Seed Certification
Seeds may be introduced and sold on the market only after their certification, just like prior to the reform. However, unlike earlier practice when certification was carried out only by the agencies within the Agricultural Inspection, the Law introduces the European system of seed certification, which is totally new to Ukraine. In the EU, a certifying authority can be both a state agency and a private company having relevant technical expertise, being accredited and unbiased. Third countries (including Ukraine) seeking to export seeds and planting material to the EU are obliged to meet the same criteria for seed quality, marking and package as applied in the EU. The Law creates a competitive environment for seed certification services to be provided by either state agencies or private certifying authorities and certification auditors. Under the Law, every single lot of seeds to be sold on the market should be accompanied with certificates evidencing the varietal and sowing qualities of seeds. The varietal qualities of seeds are determined by a certification auditor (inspecting agronomist) and the sowing qualities by a certifying authority. It is
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AEQUO
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prohibited by the Law to use seeds without the relevant certificates. Certification auditors/certifying authorities can be either state or private. The Law establishes public registers of certifying authorities and certification auditors (inspecting agronomists). Certifying authorities should be accredited by the National Accreditation Agency of Ukraine (Accreditation Agency) subject to their compliance with strict eligibility criteria. A certificate of a certification auditor shall be cancelled, inter alia, where an auditor is regularly in gross breach of seed legislation. If this is the case, an auditor will be prohibited from conducting seed certification for a 5-year period. Although certifying authorities and auditors are independent from the Food Safety Service, the latter shall monitor their activities and may (where necessary) send to the Accreditation Agency or the Ministry of Agriculture a grounded application seeking a correction action (cancellation of certificates, termination of accreditation, etc). However, having allowed private companies to carry out seed certification, the Government still monitors and controls the industry and, hence, it may, inter alia, conduct inspections, give directions binding on seed producers, review seeding documents, open any seed package (container) for sample control purposes, impose administrative sanctions against persons in breach, file a claim with a court seeking correction actions in the form of termination or a ban on sale of seeds whatsoever, and have free access to any place where seeds are grown, processed and stored. Customs clearance of seed is subject to the passing of phytosanitary controls and presentation of a seed quality certificate of the exporting country, or a certificate of the Organisation for Economic Co-operation and Development (ОЕСD) (under the OECD Seed Schemes implemented by Ukraine) and a
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certificate of the International Seed Testing Association (ISTA). Under the Law, where the ОЕСD and ISTA certificates are issued for seeds exported to Ukraine, no additional testing or certification would be required. Thus, the Law implements the long-awaited mechanism of avoiding double certification3 for seed import to Ukraine, which reduces business costs and expedites certification. Accordingly, seeds will become cheaper for agrarians as now there is one certification procedure instead of two.
Registration of Plant Varieties
Seeds may be imported into Ukraine provided only they are listed among the varieties included in the Register of Plant Varieties of Ukraine (Register of Varieties). Varieties not included in the Register may not be sold in Ukraine. The Law envisages that, if the applicant so wishes, some stages of examination of an application for registration of a plant variety (e.g. formal examination, examination of a variety as to its marketability) may be carried out by all expert institutions accredited by the Accreditation Agency. So, similar to seed certification, separate stages of examination of an application for a plant variety registration may be carried out by private entities that comply with strict criteria set out by the Law (e.g. availability of competent staff, resources and technical facilities, etc) and which are duly accredited. However, a decision on the state registration of a variety and granting a patent shall be taken by a competent state authority, which shall also perform supervisory functions (for instance, private expert institutions must report on their activities, undergo annual audit, etc). Before the said reform even when ОЕСD and ISTA certificates were issued, an additional “internal” certificate of the Agricultural Inspection was required 3
Tel: +380 44 490 9100 Fax: +380 44 490 9102 E-mail: office@aequo.ua Web-site: www.aequo.ua
The Law further provides that a plant breeder may transfer to its employer the right to file an application for a plant variety if such option is provided by a relevant employment contract or a contract for creation of a variety. Third parties, who believe that their rights to a variety might be infringed, are entitled to object registration of rights to such variety. The Law also simplifies the requirements for documents to be filed to register a variety (for instance, no employment contract with a plant breeder would now be required); sets out that a formal examination of an application is to be carried out during a maximum of 3 months instead of the earlier stipulated 6 months; reduces the term of issuance of title documents for a variety; clarifies in detail the procedure for examining a variety name and challenging a decision taken by the competent state authority in question.
Conclusions
To sum up the above, it can be concluded that the Law ensures the harmonisation of national legislation with relevant international and European requirements, fosters integration of Ukraine into the European seed marketing network, brings Ukrainian laws into line with EU seed rules, extends participation of Ukraine in the Seed Schemes of the OECD and facilitates mutual recognition of certification by competent international organisations. As a result, the above could guarantee a better varietal purity and quality of seeds produced in Ukraine and, ultimately, lead to an increase in crop yield. A predictable and transparent regulatory framework with a system of variety registration and seed certification recognised as equivalent to the EU will contribute to attracting long-term foreign investments into the Ukrainian seed industry and enable Ukrainian seed exporters to get simpler access to European as well as global markets.
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Renewable Energy
Renewable Energy in Ukraine tion phase of the electricity station, which produces electricity from alternative energy sources. The feed-in tariff for different types of renewable sources of energy is shown in the table below (in EUR).
Premium to Feed-in Tariff Igor DYKUNSKYY
Dmitriy SYKALUK
LL.M., Partner, DLF attorneys-at-law Following his successful graduation from the University of Augsburg (Germany), Igor has been advising international commercial enterprises in Ukraine for over twelve years. He has managed a significant number of M&A transactions, guided numerous clients through the due diligence process, merger applications and the subsequent structuring of transactions, advised clients on labor, agriculture and renewable energy law matters as well as in relation to assertion and enforcement of creditors’ claims.
Associate, DLF attorneys-at-law Dmitriy advises international corporations on a wide range of labor, corporate, contract law issues. He can boast substantial experience in legal and tax consulting in complex cross-border transactions. Dmitriy‘s legal practice also covers representing clients before domestic commercial and administrative courts of all instances (including the Supreme Court of Ukraine), as well as in arbitration proceedings on all issues related to the commercial activity of clients in Ukraine.
he alternative energy sector in Ukraine is considered by many as one of the most fast-growing and attractive industries for investment. This is explained, to a large extent, by the advantageous geographical conditions in Ukraine as well as increases in the prices of communal services, such as electricity and heating in the last two years and favourable legal framework. The positive trend in this area will continue in 2017.
sion Zone announced by the Government of Ukraine also present a great opportunity for foreign investors.
T
Current state of play in the field
Following a couple of years of relative silence on the alternative energy market in Ukraine, a substantial increase in the number of commissioned renewable energy projects was observed in 2016 and the beginning of 2017. Thus, a couple of dozen projects, mainly in relation to wind, solar and biomass energy, have already been completed in 2016 or are at their final stages of completion. Many of these projects are carried out by foreign investors, who turned to the Ukrainian market following introduction of legal reforms in relation to feed-in tariff regulation in mid2015. The plans to construct high capacity solar power stations in the Chernobyl Exclu-
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Feed-in Tariff: Main Attraction for Investors
For many years, Ukraine has been making efforts to stimulate financially the generation of electricity from alternative sources of energy. Such stimulation results in legislative provision for the feed-in tariff, i.e., the guaranteed obligation of the state to purchase generated ‘green’ energy from producers of alternative energy. The feed-in tariff is fixed in euro until 2030 and is paid in the national currency. All generated electricity, except for volumes for personal needs, shall be paid under the feed-in tariff (except for blast furnace and coke gas, and for hydro plants with capacity of up to 10 MW). It is the obligation of the wholesale electricity market of Ukraine to purchase “green” energy produced under the feed-in tariff and make full payment for the cost of electricity, regardless of the installed capacity or volume of supply. The amount of the feed-in tariff depends on the commission date of the object of electricity generation, including the construc-
The use of equipment of Ukrainian origin by investors is stimulated by the relevant premium to the feed-in tariff (throughout all term of its validity), if the electricity objects are commissioned by 31 December 2024. Therefore, if equipment of Ukrainian origin is used at least at the level of 30%, the premium to the feed-in tariff shall be 5%. If equipment of Ukrainian origin is used at least to the level of 50%, the premium to the feed-in tariff shall be 10%. The level of use of equipment of Ukrainian origin at power plants that generate electricity from alternative energy sources is defined as the sum of respective percentages of specific items of equipment. The Law of Ukraine On Electricity provides an exhaustive list of equipment for each type of alternative energy source that qualifies for the feed-in tariff premium. However, it is worth noting that such premium to the feed-in tariff is not applicable to the electricity objects of private households.
Private Households: a Popular New Trend
According to the State Agency for Energy Efficiency and Energy Saving of Ukraine, the rise in the number of solar panels installed by households is the latest trend in the alternative energy sector of Ukraine. This is attributed to the positive legislative changes made in 2015, which allowed private households to not only sustain their electricity needs by means of using renewable energy sources, but to also sell any such excessive energy generated under the feed-in tariff. The trend has been growing continuously for the last two years. Thus, pursuant to the Law of Ukraine On Electricity, private households are entitled to set up electricity generating facilities with a capacity of up to 30 kW and sell electricity produced from solar or wind energy under the feedin tariff to the electricity distribution company in the amount that exceeds monthly consumption of electricity by such private households.
Tax Benefits
For a number of years, the producers of “green” energy in Ukraine have enjoyed quite substantial tax benefits. However, amend-
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DLF ATTORNEYSAT-LAW
Address: Torus Business Centre, 17d Hlybochytska Street, Kyiv, 04050, Ukraine
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LF attorneys-at-law is a Ukrainian law firm that provides consultancy services to mainly English and German speaking clients on various matters on doing business in Ukraine. We have vast expertise in corporate, M&A, insolvency, antitrust, labor, competition, IP, renewable energy law, advertising law, privatization, agriculture, real estate and tax law as well as in litigation and dispute resolution. Our core customers are SMEs from various fields. We offer them tailor-made and economically viable solutions. The firm is also a reliable business partner for a number of listed corporations and their subsidiaries in Ukraine. We represent our clients in a wide range of industries: IT, engineering, management consulting, agriculture, life sciences and healthcare,
ments made to the Tax Code of Ukraine in late 2014 cancelled many tax privileges for producers of electricity from alternative energy sources, specifically in relation to income and land taxation. Currently only those entrepreneurs constructing renewable energy objects in the Chernobyl Exclusion Zone enjoy tax privileges; the rent for land use in the exclusion zone is paid at 15% (i.e., with an 85% discount). Nevertheless, some tax benefits are still available for renewable energy producers. Thus, pursuant to the Tax Code of Ukraine, no VAT is applicable to transactions on import to the territory of Ukraine of: — equipment which is functioning on the basis of alternative energy sources, energy
Type
Tel.: +380 44 384 2454 Fax: +380 44 384 2455 E -mail: info@DLF.ua Website: www.DLF.ua
renewable energy, foodstuffs, pharmaceuticals and chemicals as well as home appliances. Our team is multilingual and led by two partners, Igor Dykunskyy, LL.M. and Andriy Navrotskiy, LL.M. Most of our lawyers graduated from Ukrainian law universities and successfully continued their studies abroad, particularly in England and Germany. Our specialists are held in high esteem in professional circles thanks to their expertise on the special features of doing business in Ukraine. Our attorneys understand not only the needs of our clients, but also their business philosophy and the specific needs of their respective business models. Legal and tax advice is a business relationship built on trust and this is a significant advantage for our clients. We have a close working relationship with various business associations in Ukraine and regularly publish our articles in local and international legal and business journals. In addition, we come recommended by a number of foreign embassies in Ukraine.
saving equipment and materials, means of measuring, control and management of energy resources, equipment and materials for production of alternative types of fuels or electricity from renewable energy sources; — materials, equipment, components for manufacturing equipment, which is functioning on the basis of renewable energy sources; raw materials, equipment and components for production of alternative types of fuels or electricity from renewable energy sources; energy saving equipment and materials, products whose operation provides saving and rational use of energy resources; means of measuring, controlling and managing energy resources. In addition, pursuant to the Customs Code of Ukraine, the above-mentioned
Capacity (kW)
goods are exempt from import and export duties, provided that the taxpayer uses them for its own production and that no identical goods with the same qualities are produced in Ukraine. Nevertheless, this tax benefit, while being settled on paper, cannot be actually implemented in practice due to the failure of the Cabinet of Ministers of Ukraine to approve the list of such goods with specification of codes under the Ukrainian Classification of Foreign Economic Activity Products. Furthermore, the Tax Code of Ukraine provides that any transactions regarding the sale of electricity generated by qualified cogeneration units and/or from renewable energy sources are not subject to excise tax.
Date of commissioning 01.07.-31.12.2015
2016
2017 — 2019
2020 — 2024
2025 — 2029
Ground-mounted solar power plant
0.1696
0.1599
0.1502
0.1352
0.1201
Rooftop solar power plant
0.1804
0.1723
0.1637
0.1475
0.1309
Wind turbine
<600
0.0582
0.0517
0.0452
600-2000
0.0679
0.0603
0.0528
>2000
0.1018
0.0905
0.0792
Biomass
0.1239
0.1115
0.0991
Biogas
0.1239
0.1115
0.0991
<200
0.1745
0.1572
0.1395
200-1000
0.1395
0.1255
0.1115
1000-10000
0.1045
0.0942
0.0835
0.1502
0.1352
0.1201
0.1626
0.1449
0.1045
0.0932
Hydro plant
Geothermal energy Solar power for private households
<30
Wind turbine for private households
<30
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0.2003
0.1901 0.1163
0.1809
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Sanctions
Sanctions under Ukrainian Laws
Andriy SELYUTIN Partner, Head of South Ukrainian Branch, Arzinger
Political Sanctions
The regime of national sanctions is quite a new legal institution in Ukraine. On 14 August 2014 the Verkhovna Rada of Ukraine enacted the Law On Sanctions, which provides a legal framework for imposition of sanctions in response to external threats. According to Article 3 of the Law On Sanctions Ukraine may apply sanctions against individuals and legal entities in response to actions by a foreign state, foreign legal entity or individual, or other parties creating imminent and/or potential threats to national interests, national security, sovereignty and territorial integrity of Ukraine, supporting terrorist activities and/or violating human and civil rights and freedoms. Other grounds for the imposition of sanctions are resolutions of the United Nations General Assembly and Security Council, decisions and regulations of the Council of the European Union and the existence of a violation of the Universal Declaration of Human Rights, the Charter of the United Nations. The main peculiarity of a sanction under the Sanctions Law is that it is not a kind of punishment for the certain direct violation but mainly a general response by the country to the aggressive or unfriendly actions from the counterpart in question. And, as a result, its cancellation doesn’t often depend greatly on the sanctioned person’s or entity’s behaviour. Lists of sanctioned persons and restrictive measures in respect thereof may be proposed by the Cabinet of Ministers (the Government), Verkhovna Rada of Ukraine (the Parliament), the President of Ukraine and the
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Security Service of Ukraine. Those propositions must be passed by the National Security and Defence Council of Ukraine, enacted by a Presidential decree and approved by a Resolution of the Ukrainian Parliament within 48 hours of the issue of the Presidential Decree. On 22 September 2015 personal sanctions were imposed by Ukraine on a number of individuals and legal entities (mostly of Russian origin) associated with supporting the continuing violation of the national sovereignty and territorial integrity of Ukraine. Restrictive measures were introduced under the Presidential Decree of 16 September 2015 No.549/2015 On Decision of the National Security and Defence Council of Ukraine of 2 September 2015 On Application of Personal Special Economic and other Restrictive Measures (Sanctions) for a period of one year. In October 2016 the list of sanctioned persons and legal entities was reapproved and also enlarged by Presidential Decree No. 467/2016 of 17 October 2016. Summarising the data from the lists of persons under sanctions it may be concluded that the following restrictive measures are the most common types of imposed sanctions: freezing of assets (temporary restriction of right of the entity to dispose of its property); preventing removal of funds from Ukraine; blocking of business and financial transactions; ban on participation in public procurement; ban on financing companies that are subject to the sanctions. Further to the Law On Sanctions and the Presidential Decree a few bylaws have been approved by various authorities in order to enable practical implementation of the imposed sanctions. The National Bank of Ukraine adopted Resolution of 1 October 2015 No.654 On Providing Implementation and Monitoring of the Efficiency of Personal Special Economic and Other Restrictive Measures (Sanctions). The abovementioned Resolution obliges financial bodies to provide the National Bank of Ukraine with actual information on the status of a sanctioned person’s bank accounts, to abandon approaching such persons, void execution of financial obligations, operations in their favor and freeze appropriate monetary assets. The Resolution and amendments made hereto are intended to: 1. authorize a bank to verify the identity of the holder of electronic means of payment and reject transactions involving the use of
electronic means of payment held by persons under sanctions; 2. allow subsidiary banks incorporated in accordance with applicable laws of Ukraine to be recapitalized by banks against which the sanctions were imposed in order to prevent Ukrainian banks from being withdrawn from the market, which could result in additional financial pressure on the Deposit Guarantee Fund and the State Budget of Ukraine; 3. prevent Ukrainian banks from transferring funds to the accounts of persons under sanctions and/or to the accounts of Ukrainian banks opened with entities under sanctions except if these funds are intended for the recapitalization of subsidiary banks incorporated in accordance with applicable laws of Ukraine. Thereafter, the legislator made amendments of 27 January 2016 to the Order of Notary Actions Execution by Notaries of Ukraine. When an individual or a legal entity applies to a notary to carry out an action, the notary has to check if any personal economic sanctions are applied to such a person. If it is so, the notary will deny carrying out any notarial action. In such a way, this provision is an extra guaranty of implementing of such a personal economic sanction as freezing of assets. Amendments were also made to the Order of State Registration of Legal Entities and Individuals-Entrepreneurs. This Order provides for the state registrar’s obligation to check personal economic sanctions application only when a person applies for increasing the statute capital of the legal entity which has a non-resident person as its shareholder possessing major influence on the legal entity’s activity. The above-mentioned Order does not stipulate any other provisions that oblige state registrars to check application of personal economic sanctions regarding a person applied to the state registrar.
Sanctions for the Violation of Foreign Trade Regulations
In addition to the Law On Sanctions, sanctions may also be imposed by the Ukrainian Ministry of Economic Development and Trade for the violation of foreign trade regulations. Those sanctions are individual licensing of foreign trade transactions and temporary prohibition of foreign economic activity. Individual licensing means that any export-
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Arzinger
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Address: Senator Business Center, 32/2 Moskovska Street, 10th Floor, Kyiv, 01010, Ukraine
rzinger is an independent law firm headquartered in Kyiv which has regional offices in Western and Southern Ukraine, in Lviv and Odesa, respectively. Arzinger has for over 14 years been among the legal business leaders providing high-quality legal support to clients throughout Ukraine. Among the firmâ&#x20AC;&#x2122;s many clients are top representatives of international and local business. Arzinger follows high standards of legal services and is a reliable partner in view of its great experience in a wide range of industries and legal practices: M&A, corporate law, real estate and construction, antitrust and competition, litigation and arbitration, tax, banking & finance. We serve clients operating in the financial services, energy, mining and natural resources, pharmaceuticals, food & beverages, investment banking and corporate finance, telecommunications, retail & leisure, hospitality, aviation and automotive, agriculture, insurance, and infrastructure & transport industries.
import operation, including any payments, is subject to prior permission from the Ministry. Prohibition means complete cessation of foreign economic operations. These sanctions may be imposed against both Ukrainian and foreign entities. Unlike previously described, those sanctions are always imposed for the specific violation of law and can respectively be removed if the violation is corrected. Until quite recently the most frequent reason for such sanctions was the violation of terms of payment under the sale and purchase contracts between Ukrainian and foreign entities. Ukrainian law requires that payments under an import-export contract be carried out no later than 120 days after custom clearance of goods1. In practice it means that an exporter has to receive payment no later than 120 days upon sending the goods abroad and an importer has to receive purchased goods no later than 120 days upon making an advance payment. In case of violation, (regardless of the reason for it) the Ukrainian entity will be fined (0.3 % per day of the amount of the debt). If the violation is caused by the foreign counterpart the Ukrainian entity has to file a lawsuit in the court of arbitrage before the expiry of the above mentioned 120 days. Furthermore, the Ministry of Economic Development may impose a sanction against the foreign entity. But now sanctions have also been imposed for violations of the trade ban with
Tel.: +380 44 390 5533 Fax. +380 44 390 5540 E-mail: mail@arzinger.ua Web-site: www.arzinger.ua
Arzinger employs highly-qualified professionals with vast hands-on experience in a wide range of legal matters, deep knowledge and understanding of the local market, international education and background. The firm has a team of over 70 seasoned legal professionals led by 8 partners. All of them are acknowledged among leading experts on the Ukrainian legal market and are recognized by reputable international and local rankings. As a result, Arzinger can offer extensive legal assistance to effectively support a variety of complex and challenging transactions, including cross-border matters. The firm renders tailor-made legal services of unsurpassed quality to meet the clientâ&#x20AC;&#x2122;s expectations. Arzinger cooperates closely with legal advisors from numerous jurisdictions and is a member of international professional organizations, enabling it to engage colleagues from various jurisdictions in cross-border transactions and so provide clients with top-level professional legal advice.
Crimea. The annexing of Crimea caused an unprecedented event in the history of modern Ukraine: Russia extended its jurisdiction to the territory of Ukraine. After the annexation of Crimea, Ukraine adopted the Law On Temporary Occupied Territories (TOT), which regulates the status of Crimea as well as the procedure of entry therein. In accordance with part 1 of Article 4 of the Law On Temporary Occupied Territories the temporarily occupied area shall be subject to a special legal regime of crossing of boundaries of the temporarily occupied area, the performance of transactions, the holding of elections and referenda, the exercise of other human and civil rights and freedoms. To provide the opportunity to conduct commercial activities between Ukraine and Crimea for the period of temporary occupation, the Ukrainian Parliament adopted the Law On Free Economic Zone (FEZ), which defines specific features of the exercise of economic activities within the temporarily occupied territory of Ukraine and establishes the Crimea Free Economic Zone (Crimea FEZ). The Law On Free Economic Zone came into force on 27 September 2014. According to para 1.1 of Article 1 of the Law On Free Economic Zone the Crimea FEZ shall be implemented within the boundaries of two administrative territorial units of Ukraine: the Autonomous Republic of Crimea and the city of Sevastopol. Pursuant to para 1.2 of Article
1 of the Law On Free Economic Zone the administrative boundary between the territory of Crimea FEZ and the rest of the territory of Ukraine shall coincide with the land administrative boundary between the Autonomous Republic of Crimea and Kherson Region. The Crimea FEZ was introduced for ten full calendar years starting from the effective date of the Law On Free Economic Zone (that is, until 27 September 2024). In accordance with sub-para 4 of para 12.6 of Article 12 of the Law On Free Economic Zone the temporary border control shall be implemented at the Crimea FEZ administrative boundary. To sum up the provisions of both the Law On Temporary Occupied Territories and the Law On Free Economic Zone entry to Crimea is only possible via check-points at the border of Kherson Region and Crimea, and any delivery of goods to Crimea is only possible subject to custom clearance at the custom checkpoints there. As a result, the delivery of goods to Crimea from the territory of Russia became contraband in terms of Ukrainian legislation as it is performed beyond Ukrainian Custom Service checkpoints. Every company delivering goods to Crimea from the territory of Russia violates Ukrainian law and may be sanctioned. The Security Service of Ukraine monitors deliveries to Crimea and appeals regularly to the Ministry of Economic Development and Trade to impose sanctions against the violating companies.
The term is not negotiable but it can be changed by the National Bank of Ukraine depending on the current account balance. 1
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155
Sports Law
Contract with a Sportsman: What Should you Know?!
Andriy SHULGA Partner, ARBITRADE
T
oday, many participants of sporting relations (sportsmen, coaches, doctors, sports clubs etc.) share the opinion that the field of sports is not sufficiently regulated at the legislative level, leading to numerous violations of the rights of sportsmen and other parties in the field. In this article I will attempt to somewhat dispel this myth and demonstrate the other side to the absence of “overregulation” in sports, in particular, using the example of a sports contract. It is the contract that serves as an instrument of regulating the relations between two equal parties. The contract sets out the rules of the game to be followed in the absence of detailed legislative regulation. It also provides advantages and deprives rights in case of future disputes.
The Legal Nature of a Sports Contract
A sports contract may be defined as a contract between two equal parties in the sphere of sports which regulates their relations connected with the preparation and participation in competitions with the aim of achieving sports results, sets mutual rules and obligations of the parties and is concluded for a fixed term. The closest definition to the above in our legislation is the definition contained in the Labor Code of Ukraine. Part 3 of article 21 of this Code provides that “A special form of an employment agreement is a contract in which its period of validity, rights, obligations and liabilities of the parties (including pecuniary liability), conditions of supply and organization of the employee’s labour, conditions of termination of the agreement, including prema-
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ture termination, may be established by the agreement of the parties. The sphere of application of a labour contract is determined by the laws of Ukraine”. In the opinion of the author of this article, this is the definition one should be guided by when assessing the legal nature of a sports contract. It shouldn’t be thought that the issue of contract is unregulated and unclear. On the contrary, Ukrainian legislators have granted the contacting parties in the sphere of sports the widest possible discretion in setting out the terms of cooperation between the sportsman and the employer with the aim of achieving high results and profits. And who knows whether it would be better if the state interfered more heavily with these relations. Therefore, the parties should use the freedom provided to them in determining their own rights and obligations towards each other.
Basics of Legal Regulation of the Sports Contract
The Decree of the Cabinet of Ministers of Ukraine of 19 March 1994 No.170 On the Ordering of the Use of Contractual Form of an Employment Agreement stipulates that the contractual form of an employment agreement should apply to employees at the time of recruitment for a position only in cases directly foreseen by legislation (clause 1). The conclusion of a sports contract is foreseen by the specialized Law On Physical Culture and Sports. It should be noted that the specialized Law of Ukraine On Physical Culture and Sports does not contain a definition of an employment contract or an indication of terms that the latter may regulate. Yet, the Act directly connects the acquisition of the status of a professional sportsman with the conclusion of a sports contract, rendering such a contract extremely important. Namely, according to part 3 of Article 38 of the Act, a sportsman acquires the status of a professional sportsman from the moment of conclusion of a contract with the corresponding parties in the area of physical culture and sports on the participation in competitions between professional sportsmen. In light of this, it is important to remember that contracts should contain a clear reference to the participation of a sportsman in professional competitions. Separate contracts are to be
concluded with members of the national teams of Ukraine, which is also foreseen by the Law (parts 7 and 9 of Article 37). A Standard Form of an employment contract has been approved by the Order of the Ministry of Labor of Ukraine of 15 April 1994 No.23. It should be borne in mind that this form is not compulsory, but serves an information and auxiliary function, and the parties are free to use it in full or in part. Generally, the standard form of contract regulates the following issues: the scope of the work offered and the requirements of the quality and time limits of its performance, the duration of the contract, the rights, obligations and mutual liabilities of the parties, the conditions of payment for and the organization of labor, the conditions of termination of the agreement, social, physical and other conditions necessary for the performance of the parties’ obligations, taking into account the specificity of the tasks, professional peculiarities and financial possibilities of the enterprise, institution, organization or employer. As mentioned above, this Standard Form of contract does not affect the principle of party autonomy, which parties should be guided by when negotiating the terms of the contract. The provisions on party autonomy are expressly foreseen in the Civil Code of Ukraine in Article 627, according to which the parties are free in the conclusion of an agreement, the choice of counterparty and in determining the terms of the agreement, taking into account the requirements of the Code, other acts of civil legislation, trade usage, requirements of reasonableness and justice. According to Article 6 of the Civil Code of Ukraine, the parties are free to conclude an agreement which is not foreseen by the acts of civil legislation but corresponds to the general foundations of civil legislation. The parties are free in an agreement foreseen by the acts of civil legislation to regulate their relations which are not regulated by such acts. The parties may deviate from the provisions of acts of civil legislation and regulate their relations at their own discretion. The parties may not deviate from provisions of acts of civil legislation if these acts expressly provide for this, as well as in the case where the compulsory nature of provisions of civil legislation for the parties follows from their content or from the nature of the relationship between the parties.
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ARBITRADE
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Address: 4 I.Lepse Ave, Building 1, 5th Floor, Office 518, Kyiv, 03680, Ukraine
RBITRADE is a boutique law firm specializing in international trade, international arbitration, litigation and complex negotiations/restructuring. We have a reputation of being a client-focused law firm that provides high quality services. ARBITRADE’s team is made up of highly-qualified and experienced dispute resolution lawyers. The leading positions of ARBITRADE in international arbitration are confirmed by professional awards and international rankings, such as the Legal 500, Ukrainian Law Firms 2015, Best Lawyers International, ILO Client’s Choice, Who is Who International Arbitration. ARBITRADE has extensive experience in representing clients before leading international arbitral institutions in international commercial, investment, sports, maritime and commodities arbitration. As a GAFTA and FOSFA member, we are particularly well-equipped to advise on the structuring and drafting of sale and purchase agreements for soft commodities incorporating GAFTA and FOSFA standard contract forms. The ARBITRADE team also has extensive expertise in representing clients before national courts in Ukraine in commercial and administrative disputes within many industries and
Party Autonomy The latter principle of “what is not forbidden is allowed” applies to the terms of the employment agreement between the sportsman and the employer. Therefore, the parties should not be afraid to regulate in as much detail as possible all the issues that may be relevant to their cooperation. This ensures avoiding future claims and disputes. For instance, if the situation of financial difficulties of the employer was clearly regulated in employment contracts, there would be significantly fewer disputes between sportsmen and clubs. Therefore, currently both civil law and employment law give the parties in the field of sports the broadest possible discretion to regulate the terms of their employment con-
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fields of business. White collar crime defense, legal security for business, support in internal corporate investigations, and compliance are among the featured practices of the firm. ARBITRADE is a long-term legal partner of the Ukrainian Chess Federation (UCF). We have represented the UCF at meetings of the General Assembly and the Executive Committee of FIDE (World Chess Federation), the General Assembly of the European Chess Union, including with regard to issues of sports jurisdiction over Crimea and disputed player transfers. ARBITRADE has also provided legal support to UCF in connection with the Women’s World Chess Championship Match 2016 which was held in Lviv, Ukraine. As a law firm specializing in international trade and promoting bilateral trade between Ukraine and other European countries, ARBITRADE has developed strong connections with other law firms in many jurisdictions; we have also maintained a representative office in Bulgaria for a number of years. ARBITRADE is a member of the Norwegian — Ukrainian Chamber of Commerce (NUCC), the Bulgarian Chamber of Commerce and Industry and the Ukrainian Chamber of Commerce and Industry.
tracts. It should be noted that the Draft Labor Code of Ukraine currently being considered by the Verkhovna Rada of Ukraine does not change the position on party autonomy in employment contracts. On the other hand, a sports contract cannot be considered an employment agreement in the classical sense attributed to it by the Labor Code of Ukraine. An employment agreement, in fact, does not regulate the relations between an employer and a hired employee, but fixes the hired employee with the employer. The requisite relations under an employment agreement are actually regulated by the Labor Code of Ukraine, which is designed to regulate employment at large state enterprises with a significant bias in favor of the employer, and does not answer the
modern challenges raised by a relationship between two equal parties such as a professional sportsman and his/her employer.
Conclusions and Recommendations
To conclude, the author would like to urge all parties to relations in the sphere of sports to try and regulate their relations independently. As of today, all necessary conditions are in place to achieve this. What is needed is simply to work out in detail each provision of the contract and bear in mind all situations which may arise in the future within the context of your relations. Only then will the stability and confidence which are often lacking in relations between sportsmen and their employers appear.
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State Aid
State Aid: Terra Incognita for Ukraine
Sergey DENISENKO
Oleksandr TERESHCHENKO
Counsel, AEQUO
Attorney-at-Law, AEQUO
ubsidy and state aid issues are usually quite complex, requiring a high level of expertise and in-depth knowledge from advisors. Coherent and complex state aid legislation in the EU has been developed over the last 60 years and the respective rules of the World Trade Organization (WTO) on provision of subsidies over the course of decades. Unlike the EU and WTO, the current state of affairs in Ukraine related to granting state aid may be characterized by the word “chaos”. To change this situation and to ensure transparent public money spending, in 2017 the Ukrainian state aid system shall be launched and is expected to function on the same footing as the European one.
of its decision to appeal against certain issues of law and legal interpretations developed by the compliance panel. On 28 November 2016 the WTO DSB confirmed in its report that the US tax exemptions granted until 2040 to Boeing for production of the Boeing 777X are incompatible with WTO law. In addition, by making these tax benefits dependent on the use of domestically produced wings, the USA also discriminated against foreign producers. The total amount of illegal subsidies could reach USD 5.7 billion. Recently state aid issues became increasingly important for beneficiaries and providers of state aid also at EU level. We all heard about such high-profile and complex cases as Starbucks, Fiat, construction of a new nuclear plant at Hinkley Point in the UK, creation of movie studio Ciudad de la Luz in Spain, etc. However, the recent state aid probes by the European Commission (EC) completed in 2016 were landmark ones and, to some extent, revolutionary. At the beginning of 2016 the EC concluded that a Belgian “Excess Profit” tax scheme was illegal and demanded recovery of about EUR 700 million from around 35 well-known international groups of companies. The scheme allowed its beneficiaries on the basis of tax rulings to reduce corporate profit tax in the range from 50%-90%. Given that the scheme benefited only certain companies and violated the arm`s length principle, the EC declared it illegal. The EU state aid rules require that incompatible state aid is recovered in order to remove the distortion of competition created by the aid. There are no penalties under the EU state aid
S
What are the Recent Developments in WTO and the EU?
In the sphere of illegal public subsidies there were 2 landmark rulings in 2016 by the Dispute Settlement Body (DSB) of the WTO, which deserve attention. Given that Ukraine is a global player on the aviation market, such cases are especially interesting. On 22 September 2016, the WTO DSB issued a compliance panel report according to which the EU failed to stop unfair government subsidies to French aircraft producer Airbus despite previous rulings by the DSB to withdraw illegal support from the Government. The DSB also found that Airbus had received new illegal subsidies for the A350 aircraft, which are reported to be nearly USD 5 billion. In total, Airbus has received nearly USD 22 billion in subsidized financing. On 13 October 2016, the EU notified the WTO DSB
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rules (except accrual of interest). Therefore, the EC simply restores a level playing field for other companies, whose legitimate interests have been affected. It is also important to note that in the Atzeni and Others Case, the European Court of Justice (ECJ) ruled that illegal state aid needs to be recovered even if it leads to subsequent bankruptcy of the beneficiary. In the Deggendorf case, the ECJ held that a beneficiary, which refuses to return the illegally granted state aid, may not receive new aid until it returns it in full, including interest. In summer 2016 the EC decided that public support measures granted by Spain to 7 professional football clubs (Real Madrid CF, FC Barcelona, Athletic Club Bilbao, Club Atlético Osasuna, Valencia CF, Hercules CF, Elche CF) gave those clubs an unfair advantage over other clubs in breach of EU State aid rules. The EC demanded that Spanish professional football clubs pay back all incompatible aid with interest. In a landmark Apple case, following an in-depth state aid investigation, the EC concluded that over the course of 10 years Ireland granted illegal tax benefits of up to EUR 13 billion to Apple. It is illegal under EU state aid rules because it allowed Apple to pay substantially less tax than other businesses. According to the EC, Ireland gave Apple preferential tax treatment that is illegal under the EU State aid rules (Article 107 of the Treaty on Functioning of the EU). In particular, Apple paid CPT in the amount lower than 1% while the average rate for other companies was about 12.5%. Thus, the EC now requires Ireland to recover the illegally granted state aid in the record-high amount of EUR 13 billion as well as interest. As we can see from the above examples, in 2016 the WTO and the EU were active in terms of subsidies and state aid revocation. Therefore, the legality of state aid measures granted by WTO/EU member states to private or public undertakings have become an increasingly important issue today.
What are Ukraine’s Undertakings under the Association Agreement?
The Association Agreement requires Ukraine to implement an efficient and transparent system of state aid control and monitoring. In particular, Ukraine undertook:
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AEQUO
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Address: Vector Business Centre, 52 Bohdana Khmelnytskogo Street, Kyiv, 01030, Ukraine
EQUO is an advanced industry-focused Ukrainian law firm. Our team is made up of highly-qualified and recommended lawyers who work proactively to help clients reach their business goals. Backed by solid industry expertise and a thorough understanding of business we develop innovative strategies and provide efficient solutions to the most complex and challenging matters. Our advice is clear and practical. Today, we are a legal advisor of choice for many of the largest Ukrainian and multinational companies and financial institutions, including Fortune 500 entities, and leaders in their respective sectors. We operate at the top end of the market. Our representative clients include Agroprosperis, Alfa Bank,
By 1 January 2019 — to adopt and implement state aid rules similar to those which apply in the EU; — to develop respective secondary regulatory framework, which sets out details of aid intensity, eligibility criteria, notification and investigation procedures, etc; — to establish an independent, competent supervisory body; By 1 January 2021 — to create a register of state aid measures, which needs to contain information about all state aid measures; By 1 January 2023 — bring all existing state aid schemes into compliance with EU standards. Finally, the Agreement establishes that when assessing the eligibility of state aid measures and its compliance with state aid rules, Ukraine is granted the status of a country with difficult social and economic conditions, which provides some benefits in assessing the legitimacy of the measures in question.
How will the Ukrainian State Aid Control System Function?
As from 2 August 2017 the Law of Ukraine On State Aid to Undertakings (State Aid Law) will come into effect and, consequently, Ukraine will launch its brand new state aid control system. The State Aid Law introduces significant restrictions on the extent to which public funding can be used. In particular, Article 2 of the Law provides that the state aid granted in any form through state or local resources, which distorts or threatens to distort competition by favouring certain undertakings is incompatible with the Law and prohibited per se. As we can see, the definition of state aid is very broad and includes inter alia direct government subsidies, tax exemptions,
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Tel: +380 44 490 9100 Fax: +380 44 490 9102 E-mail: office@aequo.ua Web-site: www.aequo.ua
Allianz, Apax Partners, Apollo Global Management, AXA, ATB Market, British American Tobacco Pryluky, Bunge, BXR Partners, Citadele Banka, Discovery Networks, Dr. Reddy’s Laboratories, Dragon Capital, DuPont, Epicenter K, European Bank for Reconstruction and Development, European Commission, FESCO, Forbes, GlaxoSmithKline, Google, Groupe Danone, Inditex Group, Mosquito Mobile, MTS Ukraine, NCH Capital, Nova Poshta International, Novus Ukraine, Philips, Pioneer HiBred International, Porsche Bank AG, Portigon AG, Premium Sound Solutions, Samsung Electronics, Sandvik, Sonae, Soros Fund Management, Syniverse, Synthon, Tetra Laval, Thomson Reuters, TIS, Ukrainian Redevelopment Fund, UniCredit Group, VimpelCom and Zara Ukraine.
state guarantees, debt/penalty write-offs and other assistance measures. In 2015 the Antimonopoly Committee of Ukraine (AMCU) was designated as a competent supervisory body in the field of state aid with powers to authorize state aid schemes and individual aid. Within the framework of the AMCU, 5 working groups on development of required legislative framework were created with participation of leading global and domestic experts (including, the authors of this Article). The state aid system will control only undertakings (business entities or individual entrepreneurs) and does not cover physical persons. The system implies that within one year from the date that the Law comes into force (i.e. by 2 August 2018), all existing state aid shall be notified to the competent authority. The AMCU will review the submissions and will issue recommendations, if needed. In accordance with the State Aid Law, all unlawful aid can be subject to recovery from the recipients. If the current state aid measures do not comply with the legislative requirements, they either need to be brought into compliance (deadline — 2 August 2022) or recovered from the beneficiaries. From 2 August 2017 all new state aid measures must be preliminarily approved by the AMCU before they are actually implemented. The AMCU has 2 months to scrutinize a notification on new state aid and is authorized to take one of the following decisions: 1) the measure is not state aid; 2) the measure is compatible with state aid regulations; 3) if there are suspicions that it may be incompatible with the state aid regulations, start in-depth investigation proceedings. The AMCU is also authorised to send information requests to state aid providers, beneficiaries and other parties, which may have the necessary data.
When applying to state aid providers for the aid, companies must make sure that they comply with the Law and funding levels are tailored to regulatory requirements. Otherwise, the businesses may face recovery claims as Article 14 of the State Aid Law requires that incompatible state aid is recovered in order to remove the distortion of competition created by the illegal aid. Similarly to the EU rules, the State Aid Law requires that the whole amount of illegal aid needs to be recovered, including interest. If the affected undertaking does not return the illegal aid, the AMCU may file a statement of claim to the Circuit Administrative Court of Kyiv city on recovery thereof. The Law also establishes that the limitation period in recovery proceedings is 10 years, which is one of the longest in Ukrainian legislation. Therefore, the beneficiaries of state aid need to act proactively by granting all possible assistance to state aid providers in drafting notifications on existing as well as new aid. Otherwise, the recovery claims by the AMCU may ultimately affect the state aid beneficiaries as they could be forced to return the illegal aid with interest. The new Ukrainian state aid rules may significantly affect energy, aircraft and shipbuilding companies, as these sectors are heavily subsidized and are among the biggest beneficiaries of fiscal benefits. Therefore, such industries need to prepare preliminary defence strategies against potential allegations from the AMCU of unlawful state aid in recovery procedures. In order to effectively counter possible recovery claims, both beneficiaries and providers of state aid need to cooperate closely. Given that state aid matters are complex and require comprehensive expertise, 2017 will most probably provide Ukrainian lawyers with new tasks.
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Tax
International Tax Structuring: Recent Developments and the Coming Future
Dmitriy MIKHAILENKO
Roustam VAKHITOV
Stanislav LOBKO
Partner, OMP Tax & Legal
Counsel, International Taxation, OMP Tax & Legal
Counsel, OMP Tax & Legal
willingness to participate) we might proclaim banking secrecy dealing with large companies as dead, as all financial data relating to passive companies with an annual turnover of at least USD 250K would be referred to the jurisdiction of their beneficiaries in order to be properly taxed there.
ening of criteria for controlled transactions and rumors of introduction of CFC and joining the AEOI. In practice they continue coming down on shame agreements and shell companies. On top of this the National Bank of Ukraine is now the most successful authority fighting against the outflow of capital and tax evasion itself through application of Resolution No.369 of 15 August 2016. Society itself is idle. We may, inter alia, refer to the Panama papers, Luxembourg papers, Wikileaks, etc. which made us aware of significant tax evasion involving PEP and resulted in major resignations. All the above seem to show that tax planning exists no more than back in the day. From the Ukrainian perspective it has already triggered numerous alterations, namely: — closure of many classic offshores (at the moment — predominantly involved in major disclosures like Panama) which are likely to join the AEOI (including BVI, Anguilla, Bermuda, Seychelles, etc.); — closure of Cypriot back-to-back loans which historically have been used to finance at least 90% of Ukrainian-based industrial or trading groups due to more and more efficient application of the beneficial ownership test; — forthcoming closure of Cypriot IPcompanies which have been either used for holding Ukrainian-based marketing and IT assets due to recent modification of Cypriot
O
ver the past five years we have seen evidence of a global shift in comprehension of approaches to international taxation. As both business and tax professionals have got used to that it shall inevitably end up with the shrinking of taxes as we now painfully face the simple truth when it is being transformed into rather correct arrangement of real business. We still believe that this trend will inevitably pay dividends for the whole of society as both business would profit from failed competition (namely, honest taxpayers would not be undermined by their unscrupulous rivals) and Governments would profit from an extension of the income basis.
Automatic Exchange of Information
The first sticking point arose right after the FATCA obliged overseas Governments to provide the US with information connected with their tax residents. The world regarded it as a drastic crackdown on banking secrecy. However, soon this initiative was soaked up by the OECD, now backing a global initiative called automatic exchange of information (AEIO) of the same nature. Literally, as from FY2017, when the AEOI will consist of 100 countries (including the entire EU, Russia and almost all the classic offshores, but currently excluding Ukraine, which has expressed its
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BEPS
The others promptly followed suit: it is particularly worth mentioning BEPS, another initiative aimed at amending DTTs and local legislation in order to avoid aggressive tax models involving classic offshores, shifting profits to low-tax jurisdictions, minimizing the tax effect of personal relocation to countries offering attractive personal taxation regimes (like Cyprus, Gulf countries, Monaco, Andorra, etc.). For example, in the EU it ended up with adoption of the Anti Tax Avoidance Directive (introducing, inter alia, the thin capitalization rule, exit taxation, CFC-regime etc.). When it comes to practice we might as well recall notable tax cases involving Amazon, Starbucks, Fiat and eventually Apple, claiming the payment of huge amounts of back taxes, though initiated against states rather than companies themselves in allegations of distortion of competition.
Ukraine
Getting back to Ukraine, we can trace our recent transfer pricing developments broad-
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OMP Tax & Legal
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Address: 37 Spaska Street, Kyiv, 04070, Ukraine
MP Tax & Legal is a dynamically developing Ukrainian law firm with a tax specialization. As of today, the firm’s team includes more than 30 highly specialist professionals in the areas of law, accounting and audit. Our firm provides full legal support to Ukrainian companies in the area of taxation. An important focus of work in this area is international tax structuring, which has accumulated solid experience and marked a significant growth due to the professionalism and support of partner Roustam Vakhitov. For the purpose of quality implementation and proper protection of the company’s solutions, our service portfolio includes: advanced expertise in the areas of currency regulation, contractual, corporate, labor law, intellectual property, transfer pricing, tax audit and due diligence. The integrated and comprehensive solution of the customer issue is the main priority in our work. In this regard, in 2016, OMP Tax & Legal began cooperation with the Law Company Pravozakhyst Ukraine (Managing Partner German Taslitskiy), engaged in expertise in the area of customs and international economic activity.
IP-box regime effective from FY2016, carving out marketing IP assets (like trademarks) and setting new rules for the development of other IP assets; — stepping aside from UK–based companies due to their public register of beneficiaries available at https://beta.companieshouse. gov.uk/; — development of substance when it comes to overseas companies which result in moving of at least senior staff and the sales team to the jurisdiction where the main trading company is located. Certain Ukrainian businesses are reluctant to modify their structures under the influence of recent changes and still go with the flow, while others are developing fresh concepts which may soon become classic ones for tax planning. The only consequence of this reluctance, though, is the substantial risk of significant tax adjustments in the future. We see the Ukrainian tax authorities becoming more and more efficient and knowledgeable in challenging Ukrainian international tax planning strategies. We attribute significant risks to these structures since they may be vulnerable both for unfriendly acquisitions and attacks from the Government itself, and thus less attractive for strategic investors. Though recent changes are going ahead we now lack bulletproof solutions which would definitely withstand any kind of chal-
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In 2016, OMP Tax & Legal co-founded Crowe Horwath AC Ukraine, an audit, accounting and tax consulting company. Crowe Horwath AC Ukraine is a member of Crowe Horwath International, a network of accounting and advisory services firms ranked among the TOP-10 audit firms in the world. The network is represented by 200 offices in 130 countries. The key partners of the firm are: Dmitriy Mikhailenko, Leonid Karpov, Olga Bogdanova, Roustam Vakhitov, German Taslitskiy. In different years the firm`s partners ranked among the TOP-100 best lawyers in Ukraine. They are recognized experts in the area of taxation, participate actively in the work of public councils of the State Fiscal Service, the Verkhovna Rada Committee on Tax and Customs Policy, the State Registration Service, tax committee at the Ukrainian Chamber of Commerce and Industry, Union of Poland Entrepreneurs in Ukraine, are advisors to the IT Committee of the European Business Association. Our partners are members of the editorial board of professional journals and arrange and participate in conferences on professional issues.
lenge from any side. These constant developments somehow prevent both business and tax advisors from accepting drastic measures like putting the past behind them and starting everything from scratch. From this point of view we badly need specific legislation releasing those businesses which disclose their past violations and adhering to new standards, as well as reliable and binding procedures for defining safe harbors for taxpayers willing to cooperate and prepared to conclude agreements/rulings on specific tax positions with the tax authorities. What we may now share with you as more or less acceptable solutions are the following: — re-evaluate existing tax positions. The majority of existing international tax structures were implemented in the past and need to be audited from the perspective of new challenges and threats; — founding of reputable holdings directly held by Ukrainian shareholders. Starting from July 2015 the classic donation of shares was switched to purchase in UAH on the territory of Ukraine as was allowed by NBU Resolution No.478. Though we anticipate that recent Resolution No. 14 of 23 February 2017 enabling direct investments from accounts abroad would inevitably shift to direct investments with overseas money; — moving capital from offshore companies to reputable jurisdictions. These actions may involve either direct capital contribu-
tions or indirect transfer of capital by redemption of shares, real estate as well as paying dividends or granting group loans. — Either moving financing and IP-activities from Cyprus to the UAE, enabling effective tax burden up to 3% for interest and 0% for royalties or employment of newly-adopted Cypriot notion interest deduction allowing tax deductions for injecting capital which may end up with an effective tax rate of up to 2-3% for interest and up to 5% for royalties (including Ukrainian withholding tax); — moving trading companies to reputable though not high-tax jurisdictions like Estonia, Switzerland (while domicile and mixed companies regime are effective), Malta, UAE, Singapore, etc. — step-by-step reduction in use of nominal directors/service which will no longer make much sense due to AEOI and CFC rules. Summing up the above we are sure that at the moment we pass certain milestones in international tax planning which should show whether it will survive as reformed reality or inevitably die. This requires shifting our perceptions from tax minimization being sometimes close to tax evasion towards assisting in paying our fair share of taxes. Therefore, the sooner we realize and conform to the new reality ourselves the more chance we have to avoid the painful and risky process of being forced to do so by the tax authorities through fines and penalties.
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Tax Controversy
Why do Ukrainian Courts Choose to Supervise VAT Reimbursement Rather than Enforce It?
Iryna KALNYTSKA Head of Tax Practice, GOLAW. Iryna Kalnytska has extensive experience of tax law, international tax planning and structuring, and currency regulation with a specific focus in the areas of both import and export customs regulations and operations. While handling cases, her top priority is making sure the client’s interests have the utmost legal protection through optimization of the tax consequences for their business.
What is VAT Reimbursement?
Under Ukrainian tax legislation, any VAT taxpayer has the right to receive a refund of VAT when, in the course of his/her commercial activity, it pays more VAT than the taxpayer actually owes the Government, thus accumulating “tax credit”. According to the Tax Code when the amount of the VAT tax obligation is less than the amount of accumulated tax credit, the taxpayer may demand from fiscal authorities to refund the overpaid amount of VAT or request a transfer of that amount to the next taxable period.
Faulty Procedure
The process of VAT reimbursement was fairly simple in the last few years. The taxpayer who intends to receive a VAT refund from the state budget should file an application along with the tax return to the fiscal body at the place of the taxpayer’s registration. If the taxpayer meets all the criterion for reimbursement, the fiscal body files an application to
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the State Treasury on the basis of which, the Treasury must transfer the appropriate sum to the taxpayer’s bank account. At the same time, the fiscal authorities are often reluctant to satisfy claims for refund of VAT, even when the claimant met the entire criterion and filed all the documents required by the legislation. The problem is that the process of VAT compensation is often obstructed with bureaucratic impediments, violation of internal procedures, or even simple negligence of staff when processing documents received from taxpayers. Hence, many taxpayers resort to the courts in hopes to receive a much desired VAT refund from the Government.
Uniform Approach toward VAT Related Disputes
Luckily for VAT taxpayers, it seems that Ukrainian courts have finally come up with a more or less consistent approach toward resolution of claims for refund of overpaid VAT from the state budget. The main reason why courts could not agree on how to enforce such claims is because of the various and often conflicting interpretations of the scope of powers and functions of fiscal authorities, as well as vague limits of judicial authority itself. Prior to 2015, the Supreme Court of Ukraine expressed the view that the proper remedy in such cases is to issue a judicial order to recover an overpaid amount of VAT in favor of a taxpayer directly from the state budget.1 However, in 2015 and throughout 2016 the decisions of the Supreme Court marked a radical change of approach toward this matter. Thus, the court expressed the view that VAT compensation from the state budget is within the exclusive authority of the State Fiscal Service of Ukraine and the State Treasury. For that reason, the courts have no power to substitute those agencies and decide on recovery of any sums from the state budget. The Supreme Administrative Court of Ukraine discussed this issue in its Decision Decree of Supreme Court of Ukraine, case no. 21-2141. http://www.reyestr.court.gov.ua/Review/3741893 1
No. К/800/44985/15, of 4 February 2016.2 The Court in this case openly disagreed with the position of Supreme Court of Ukraine, noting that the courts should not be limited in the choice of remedies. Thus, the courts have the power to apply the most effective tool to protect and remedy the rights of taxpayers violated by the actions (inactions) of fiscal authorities. In such case, contrary to the position of the Supreme Court of Ukraine, the courts do not substitute or trespass on the authority of fiscal bodies in any manner, but rather carry out their own lawful authority to restore the violated rights of claimants. Moreover, the Administrative Court in support of its position invoked the provision in Decree of Cabinet of Ministers, which states that the courts may issue orders to refund overpaid VAT, which can be filed directly to the Treasury by the claimant. An appeal was brought in this case to the Supreme Court of Ukraine, which had its final say on the refund of VAT by means of a direct court order.3 The Supreme Court disagreed with the conclusion of the Supreme Administrative Court, reaffirming its position that courts do not have the authority to “substitute” executive agencies and issue orders which run counter to the procedures specifically established by law. In this case, the Supreme Court noted that issuing a direct court order does not accord with the scheme of VAT refund set out in the Tax Code and applicable Government regulations. The court said that the refunding of VAT can be carried out solely by the State Treasury, based on the application of the taxpayer and written conclusion of the fiscal body. As a result, the Supreme Court again confirmed that issuing a court order to refund VAT is not a proper remedy in such cases. Instead, the correct remedy would be to issue an order to compel the fiscal body to issue a conclusion for the State Treasury to reimburse the VAT. Decree of Supreme Administrative Court of Ukraine, case no. К/800/44985/15, dated 04.02.2016. 3 Decree of Supreme Court of Ukraine, case no. 806/2256/15, dated 07.06.2016. 2
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GOLAW
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Address: 19B Instytutska Street, Suite 29, Kyiv, 01021, Ukraine
OLAW is one of the leading Ukrainian full service law firms. The firm was founded in 2003 and currently has offices in Kyiv, Lviv, Odesa (all in Ukraine) and Berlin, Germany. The firm’s lawyers are widely recognized for their skills and extensive expertise. The GOLAW team focuses on efficiently resolving issues facing clients, communicating effectively on their behalf, assisting them in navigating the nuances of Ukrainian law, and avoiding costly legal traps. The firm’s client portfolio includes large and medium-sized, national and foreign companies, banks and financial institutions, as well as private investors doing business in Ukraine or entering local markets. GOLAW provides sophisticated legal advice and reliable legal assistance in all major sectors, including agribusiness, retail and FMCG, healthcare and pharmaceuticals, financial services, energy and natural resources, transportation and infrastructure, Internet technology and real estate. GOLAW has developed a top tier tax practice which includes issues regarding tax functioning in Ukraine, strategic advice on tax planning, tax and fiscal controls, as well as professional contacts with the tax authorities at all levels. The firm represents its clients in dispute resolution and litigation in general, economic, and administrative courts of all levels, along with support for international commercial disputes. Our deep expertise in white collar defense and investigations enables GOLAW attorneys to successfully represent clients in criminal legal proceedings, advising them on the wider
In turn, the Kyiv Administrative Court supported the position of the Supreme Court in virtually the same case, which also concerned the refund of VAT4. The judges fully recognized the claims of the plaintiff and ruled that it was entitled to receive VAT refund from the state budget. At the same time, the court refused to enforce this right by means of judicial order for the same reasons as the Supreme Court did so in prior cases. The judges argued that current legislation determines a clear “algorithm” of actions by a VAT taxpayer, local fiscal and treasury bodies when it comes to VAT refund. This algorithm does not make it possible to compensate VAT by means of a judicial order. However, administrative courts have the power to compel an appropriate fiscal body to issue a conclusion based on the evaluation of taxpayer’s tax returns and file it to the State Treasury for further refund of the due sum. The court made it clear that judicial control is important in the resolution of administrative disputes and that the court takes an active position not only during resolution of the dispute, but also in the course of its enforcement. Decree of Kyiv Administrative Court, case no. 810/786/16, dated 17.05.2016. 4
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Tel.: +380 44 581 1220 Fax: +380 44 581 1222 E-mail: info@golaw.ua Web-site: www.golaw.ua
commercial, regulatory and image implications when there are allegations of fraud or corruption. GOLAW professionals advise clients across a broad spectrum of corporate work including M&A, joint ventures and corporate restructuring, as well as general commercial, antitrust, and corporate governance issues. The effective combination of transaction skills combined with our unique expertise including antitrust, employment, environmental, intellectual property, and taxation, enables the firm to handle issues that can arise from any single corporate transaction. In banking and finance, the firm successfully represents clients regardless of whether it is a trade, export, finance deal, M&A, or any other financial project; we also provide advice on civil, banking and currency laws. Our firm is a leader in representing financial services institutions in contentious insolvency and regulatory matters. The firm’s team of lawyers utilizes unrivaled local knowledge of the demands of operating in increasingly international and volatile markets, with a deep understanding of the issues impacting the energy and natural resources sectors. The firm’s clients are involved in commodities, power, oil & gas, nuclear, mining, metals & minerals, renewable and clean-technology energy industries. GOLAW covers the full range of labor and employment matters, including: whistleblower litigation, labor-management relations, benefits, collective agreements, and employment of foreign citizens.
Fines for Untimely Refund of VAT
After the fiscal body determines the sum to be refunded to the VAT taxpayer, the Treasury is obliged to transfer that sum to the bank account of the taxpayer within five business days, as provided in Article 200.13 of the Tax Code. Accordingly, if the Treasury fails to transfer the sum within that period, a fine in the amount of 120% of the bank rate of National Bank of Ukraine will accumulate from the day of default and until the day when the due sum of compensation is actually paid to the taxpayer. Thus, in many cases, taxpayers filed lawsuits for refund of VAT, along with claims to impose fines for untimely reimbursement. The review of cases demonstrates that the courts are ready to impose fines on a fiscal body which unreasonably delays refund of VAT to the taxpayer. Thus, the Kyiv Administrative Court ruled in favor of the plaintiff, noting that inactions of the defendant (State Fiscal Inspection) caused a delay in refund of VAT for almost three years. The court said that taking into account the negligent behavior of the State Fiscal Service in the past, it is prudent to establish judicial control over enforcement of the court’s decision. Thus, the court obliged the defendants to file in court a written report
of enforcement of the court’s decision within ten days of such decision becoming valid.5
Takeaway
An overview of court decisions regarding VAT refund clearly shows that filing a lawsuit may serve as an effective instrument to fight negligence and inaction on the part of the fiscal authorities in Ukraine. Despite certain inconsistency in the position of the Supreme Court in previous years, recent decisions and the reasoning of the Supreme Court and administrative courts indicate that there is a real possibility to remedy the rights of VAT taxpayers violated due to unlawful actions or inaction on the part of the State Fiscal Service. At the same time, it is important to keep in mind that resorting to a court is not always the best course of action. As noted in abovementioned decisions the courts, despite their considerable authority, have no power to act in place of the fiscal authorities and carry out their legal duty to refund VAT for them. The courts, however, do have the power to make an executive authority do its job properly and, in accordance with the law, to also impose substantial fines if the state body violates the law, such as in the case of a delay in refunding VAT. 5
Ibid (no. 5).
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Telecommunications
Telecom and Media 4G in Ukraine: Main Obstacles
Anna BABYCH Partner, AEQUO
A
s compared to 2015 the TMT year of 2016 witnessed a far more modest outcome: fewer M&A transactions, of which none can be called “major”, uncertainty regarding the launch of 4G, and the never ending story of implementing Mobile Number Portability. Nevertheless, development of electronic services regulation, transparency of media companies ownership and the overall high performance of IT sector are definitely a good sign.
M&A: a Step Backwards?
It appears that 2015 was an exceptionally active M&A year in the IT sector, with the number of deals exceeding 60 totaling over USD 300 million in value. Many considered it a new trend and awaited more major acquisitions, like that of Looksery, a facial tracking and transformation technology company, acquired by Snapchat for USD 150 million in 2015. Despite the fact that IT sector became Ukraine’s 3rd largest export contributor in 2016, M&A activity in 2016 evidenced that success in 2015 was merely a spike in activity, rather than an upcoming trend. In particular, the total number of venture investment deals last year barely reached 30 for the total value of around USD 40-50 million. The largest deals included the USD 50 million acquisition of Data Centre Parkoviy, USD 20 million Series B investment for GitLab, open-source hosting solution, USD 20 million Series B investment for Busfor, a bus ticketing service, and USD 2.6 million seed investment in PetCube, a pet care products manufacturer, and USD 2.35 million seed investment in Allset, a restaurant booking service.
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In 2015 we celebrated the long-awaited launch of 3G in Ukraine. However, Ukraine is not yet on the list of 100+ countries who have introduced LTE. In November 2015 the Cabinet of Ministers of Ukraine adopted the Action Plan on Introduction of the Fourth Generation Mobile Communication in Ukraine. The said plan appears to be quite optimistic, with the tender for 4G license scheduled for December 2017. However, prior to the possibility of any such tender becoming feasible, two major issues must be solved. Firstly, the frequencies shall be re-distributed among the players on new conditions. That is, so called “re-farming of frequencies” will take place. Secondly, the law introducing the principle of tech neutrality in Ukraine needs to be adopted, which will enable the current players to use previously allocated frequencies for the purposes they want (for instance, GSM or LTE). In any event, the above actions, namely introduction of changes to the national frequency allocation table / usage plan and refarming of existing frequencies for LTE under a new technology-neutral licensing regime are scheduled for February — June 2017.
Mobile Number Portability Saga
Last year we reported about mobile number portability, the service which allows users to change their operator without changing their mobile number. Though widely available worldwide, it still remains a technologyto-be in Ukraine. The original regulations allowing the implementation of the said service were adopted in April 2013, and 1 July 2014 was meant to be the launch date. Due to certain drawbacks in the procedure of an MNP administrator’s appointment, litigations initiated by Kyivstar against the launch of MNP service on terms and conditions provided in the original regulations, the launch did not take place. As a result, in July 2015 new rules were adopted, and in January 2016 the tender for purchase of software and hardware for this service took place. The Dialink company was initially declared the winner, with its software solution on the Latvian platform Mediafon costing UAH 71 million. However, another participant, SI Centre, whose proposal cost UAH 39 million and appeared to gain
more points from the Ukrainian State Centre for Radio Frequencies preliminary estimate, filed a claim to the Antimonopoly Committee of Ukraine, which was subsequently satisfied. As a result, SI Centre was declared the winner. Nevertheless, due to numerous lawsuits filed by Dialink, the Ukrainian Centre for Radio Frequencies and SI Centre failed to sign the agreement within the prescribed 30-day period. Hence, the parties had to go to court in order to recognize the agreement as concluded within the required period. The courts ruled in favor of SI Centre’s position, and Dialink’s appeal was rejected in January 2017, thereby giving the green light to SI Centre to finally implement MNP in Ukraine. According to the current calendar plan, the new deadline is 6 April 2017.
Internet of Things and M2M Services
According to the statistics for 2016, the number of mobile sim card users exceeds the population of Ukraine by 20 million. The reason for this in not only the use of several sim cards by Ukrainian mobile subscribers, but also their active use in M2M services (ATMs, logistics services, agriculture, etc, on-line shops, etc). This is what is now called Internet of Things. The launch of 3G gave the green light for the rapid expansion of M2M services in 2016. It is expected that the use of sim cards in M2M services will increase sharply in future as mobile operators offer a wide range of M2M services to commercial entities enabling the simplification and optimization of business processes, reduction in operational costs, raising the quality of services and introduction of innovative technologies. Needless to say that IoT improves and simplifies the way business is done and provides services to individuals. Thus, in the near future IoT will be actively used in industries such as healthcare, retail services, smart energy, transportation, logistics, automotive.
Transparency of Ownership of Media Companies
As one may remember, in order to introduce transparency of ownership of media companies, in 2015 amendments regarding mandatory disclosure of the ultimate benefi-
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AEQUO
A
Address: Vector Business Centre, 52 Bohdana Khmelnytskogo Street, Kyiv, 01030, Ukraine
EQUO is an advanced industry-focused Ukrainian law firm. Our team is made up of highly-qualified and recommended lawyers who work proactively to help clients reach their business goals. Backed by solid industry expertise and a thorough understanding of business we develop innovative strategies and provide efficient solutions to the most complex and challenging matters. Our advice is clear and practical. Today, we are a legal advisor of choice for many of the largest Ukrainian and multinational companies and financial institutions, including Fortune 500 entities, and leaders in their respective sectors. We operate at the top end of the market. Our representative clients include Agroprosperis, Alfa Bank,
ciary owners of media companies were made to the Law of Ukraine No.3759-XII On Television and Radio Broadcasting”. In particular, each media company has to disclose its ultimate beneficiary holding directly or indirectly of 10% or more in its share capital to the Television and Radio Broadcasting Council, the media industry
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Tel: +380 44 490 9100 Fax: +380 44 490 9102 E-mail: office@aequo.ua Web-site: www.aequo.ua
Allianz, Apax Partners, Apollo Global Management, AXA, ATB Market, British American Tobacco Pryluky, Bunge, BXR Partners, Citadele Banka, Discovery Networks, Dr. Reddy’s Laboratories, Dragon Capital, DuPont, Epicenter K, European Bank for Reconstruction and Development, European Commission, FESCO, Forbes, GlaxoSmithKline, Google, Groupe Danone, Inditex Group, Mosquito Mobile, MTS Ukraine, NCH Capital, Nova Poshta International, Novus Ukraine, Philips, Pioneer Hi-Bred International, Porsche Bank AG, Portigon AG, Premium Sound Solutions, Samsung Electronics, Sandvik, Sonae, Soros Fund Management, Syniverse, Synthon, Tetra Laval, Thomson Reuters, TIS, Ukrainian Redevelopment Fund, UniCredit Group, VimpelCom and Zara Ukraine.
regulator, and make public this information on their Internet sites. The Television and Radio Broadcasting Council supervises diligent disclosure and is empowered to refuse to prolong the validity term of a broadcasting license in case of failure to disclose the beneficiary. The disclosure of information about the beneficiary owner is also a condi-
tion precedent to obtaining a broadcasting license from the Television and Radio Broadcasting Council. Throughout 2016, major TV broadcasting companies, including Inter, 1+1, STB, ICTV, TRK Ukraine, Channel 24, etc., duly disclosed their ultimate beneficiary owners to the Television and Radio Broadcasting Council.
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Trade Remedies
On the Cusp of a New Era of Trade Defence Instruments in Ukraine and export; in December applied anti-dumping measures to imports of certain nitrogen fertilizers originating in Russia. At the same time, in 2016 the Commission initiated only two new proceedings: in May — anti-dumping investigation related to imports of chocolate and other finished products from cacao originating in Russia and in December — review of safeguard measures applied to imports of porcelain tableware.
Anzhela MAKHINOVA
Andrew ZABLOTSKY
Counsel, Sayenko Kharenko. Mrs Makhinova comes highly experienced in trade defence proceedings (antidumping, countervailing and safeguards) both in Ukraine and abroad as well as in WTO issues. She is a country expert on franchising for the International Distribution Institute, was recognized by Who’s Who: Trade and Customs, Who’s Who: Franchising, Clients Choice in International Trade.
Counsel, Sayenko Kharenko. Mr Zablotskyi is a highly qualified trade lawyer with outstanding expertise in advising companies, industries and authorities on trade remedies (antidumping, countervailing and safeguards proceedings), application of WTO regulations in Ukraine, export-import regulations and the economic and commercial impacts of international trade on business and industry growth. Mr Zablotskyi was recognized as a trade and customs practitioner for Ukraine by Who’s Who Legal: Trade and Customs 2015 and 2016 editions.
I
t goes without saying that 2016 was crucial for trade defence instruments both in Ukraine and around the world. Suffice to mention (a) expiry of Section 15(a)(ii) of China’s Accession Protocol to the WTO in December 2016 allowing WTO Members to treat China as a non-market economy for the purposes of calculating a dumping margin and thus, to apply higher anti-dumping duties to products which originate in China; (b) the Appellate Body report in Argentina — Biodiesel case implying the end of cost adjustment methodologies; (c) the fierce opposition by such WTO Members as the USA and the EU against granting market economy status to China, which has already resulted in the introduction of considerable amendments to the EU Basic Anti-Dumping Regulation1 stipulating the possibility for the European Commission to construct normal value on the basis of costs of production and sale reflecting undistorted prices or benchmarks; (d) gradual constant
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growth of trade defence measures used to protect domestic producers... Recent trends of trade defence proceedings in Ukraine clearly demonstrate that similarly to other WTO Members, Ukraine should reinforce its approaches and regulations to address the above challenges in the most efficient way. This aim of this article is to summarize benchmark trends of trade defence proceedings in Ukraine in 2016.
Statistics
In February 2016 the Interdepartmental Commission on International Trade (i.e. the state agency responsible for adoption of key decisions in trade defence proceedings) (the “Commission”) extended anti-dumping duties applied to imports of wood fiberboards originating in Russia; in May applied antidumping duties to imports of caustic soda originating in Russia and safeguard duties to imports of blocks and sheets from polyurethane notwithstanding the country of origin
Recent trends
Ukraine vs. Russia Based on recent statistics, it is safe to assume that the “trade war” between Ukraine and Russia has evidently influenced trade defence proceedings. Notably, in 2016 all investigations in Ukraine were conducted against imports of products originating in Russia1, while 9 out of 16 anti-dumping measures are applied against products from Russia. The first countervailing duties for Ukraine are applied against Russia as well. Like night follows day, 2 out of 3 investigations currently being conducted in the Eurasian Economic Union (Belarus, Russia, Kazakhstan, Armenia, Kyrgyzstan) are against products originating from Ukraine, while 7 of 19 anti-dumping duties are applied against Ukraine. Safeguard Investigations — New-Old Approaches In the past domestic producers preferred safeguard investigations rather than anti-dumping or anti-subsidy probes, despite the fact that under the WTO rules safeguard measures should be applied only in extraordinary circumstances. The way in which Ukrainian producers acted could be easily explained, since the matter of proof in safeguard investigations is much simpler than in anti-dumping and anti-subsidy ones: it is enough to simply provide customs statistics indicating an increase in imports and to compare it with the alleged injury caused to domestic producers. Moreover, contrary to anti-dumping or counUnder WTO rules and Ukrainian legislation, safeguard investigations are conducted and measures and applied notwithstanding the country of origin and export. Therefore, in this article we concentrate only on country-specific measures. 1
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SAYENKO KHARENKO
Address: 10 Muzeyny Provulok, Kyiv, 01001, Ukraine
S
ayenko Kharenko is a leading Ukrainian law firm with an internationally oriented full-service practice. We are currently one of the largest law firms in Kyiv. Most recently, Sayenko Kharenko collected three of the most prestigious professional excellence country awards, more specifically, Law Firm of the Year by each of IFLR European Awards 2017, Who’s Who Legal Awards 2017 and Legal Awards 2017. In early 2017, the firm was also shortlisted in Law Firm of the Year category by The Lawyer European Awards 2017 and Chambers Europe Awards 2017. About its International Trade Practice Sayenko Kharenko’s international trade practice group offers a wealth of experience across the full spectrum of crossborder trade regulation and policy to help its clients manage the risks and maximize the opportunities associated with the increasing regulation of international trade in goods and services around the world.
Tel.: +380 44 499 6000, 389 5000 E-mail: info@sk.ua Web-site: www.sk.ua
Sayenko Kharenko’s stellar team of lawyers is the most expert in Ukraine in the field of international trade and routinely handles cross-border trade and regulatory issues, which require thorough legal knowledge, solid commercial background, and deep trade policy insight. The firm’s team blends all of the above and acts for a diverse roster of foreign and domestic industries. Sayenko Kharenko’s lawyers practice before all the relevant bodies in Ukraine and globally, covering all major international trade law matters, including: international transactions and contractual structuring; agency, distribution and franchising; free trade agreements; trade remedies (anti-dumping, countervailing and safeguards); regulation of foreign trade activity; WTO counselling, WTO dispute settlement, and other matters. Sayenko Kharenko trade lawyers have a great reputation among colleagues and professional community, and come recommended by leading legal directories for trade, customs and franchising in Ukraine. They also serve as Ukraine’s national experts on agency/distribution and franchising at the International Distribution Institute.
tervailing measures, safeguard measures allow to “kill all birds with one stone”, simultaneously blocking all channels of imports. However, the age of safeguard measures passed when the Panel in the Japan — Passenger Cars case ruled that Ukraine violated almost all WTO requirements, while imposing safeguard duties on imports of passenger cars. As a result, Ukraine terminated safeguard duties even without submission of an appeal. After that the Commission and the Ministry refrained from initiating safeguard investigations in Ukraine until 2015, when a safeguard investigation related to imports of blocks and sheets from polyurethane was initiated and even safeguard duties were applied in 2016. In our opinion, the case materials make it safe to assume that the Ministry and the Commission kept making the same mistakes as in the safeguard investigation related to passenger cars and thus, quite expectedly, the relevant decision has been challenged before the court.
safeguard measure continues to be necessary to prevent or remedy serious injury and that there is evidence that the industry is adjusting. However, it is silent with respect to what procedure to follow. In this connection, only Article 7 of the WTO Safeguard Agreement explicitly states that such a review should be in line with the procedures set out in Articles 2, 3, 4 and 5 of this Agreement, which means the Ministry should conduct a fully-fledged safeguard investigation. Since in such a review the Ministry will need to confirm only that the safeguard measure continues to be necessary to prevent or remedy serious injury, and that there is evidence that the industry is adjusting, the Ministry can, based on its powers, shorten the period of review and determine specific information to be provided by interested parties. However, major procedural stages of the investigation should be carried out. Additionally, a safeguard measure that is extended shall not be more restrictive than it was at the end of the last period, and should continue to be liberalized.
Extension of Safeguard Measures — New Benchmark? On a separate note, on the last day of December 2016, the Commission initiated a review of the safeguard measures against imports of kitchen tableware produced from porcelain. Since Ukrainian safeguard legislation lacks clarity on the procedure of the review and related aspects, the results of this review will become a benchmark on how the Ministry and the Commission deals in practice with such cases. In particular, Ukrainian safeguard legislation provides that safeguard measures may be extended provided it is determined that the
Interests of Customers vs. Interests of Domestic Producers The importance of an anti-dumping investigation related to imports into Ukraine of nitrogen fertilizers originating in Russia is more than merely symbolic: it has created lots of landmark precedents, to name but a few: — it is the first proceedings when the end customers of the products subject to investigation (i.e. agricultural producers) strongly and actively opposed application of antidumping measures and thus, the Commission and the Ministry were forced to strike a balance between their interests and the domestic
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producers initiating the investigation. To overcome the opposition of the agricultural producers, the Commission applied anti-dumping duties in December 2016 on condition of their suspension, which was already carried out in February 2017, even prior to the coming into force of anti-dumping duties. — even prior to official publication of the decision, the Commission and the Ministry posted on the web-site2 information about the adopted decision, on the intention to further suspend the anti-dumping duties and to even initiate a specific law to abolish import duties on the importation of fertilizers. The said announcement deviates from the previous experience of the Commission. — the Commission and the Ministry took into account arguments from agricultural producers, even though they had not been duly registered as the interested parties of the anti-dumping investigation. The compatibility of such approach with the Law of Ukraine On Protection of Domestic Producers from Dumped Imports is highly questionable. The moral of the above tale is that domestic producers should be aware of the stated new approach of the Commission and the Ministry, and should be ready to counteract such position held by customers from the very beginning. End customers should consider it as a very clear message that their active participation in an investigation can have a strong influence on the final decision adopted by the Commission. http://www.me.gov.ua/News/Detail?lang=ukUA&id=e25cd6de-d945-4cfc-83d6-f919b4852c8 3&title=ZaiavaMizhvidomchoiKomisiiZMizhnaro dnoiTorgivli 2
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Trademarks
Is Your Trademark Well-Known?
Julia SEMENIY
Mariana POLISHCHUK
Partner, Asters
Associate, Asters
he more famous your trademark is, the more benefits you may have but, expectedly, the more your rights may be infringed. And, more importantly, infringements may appear to be not straightforward but rather inventive. Use of your trademark and goodwill for business that is not the same as yours, but still implies associations, is often the case.
As contemplated above, a trademark may be recognized as well-known for a specific list of products and/or services, although the actual protection may go beyond such a list. Also, it is important to define and prove who may be the beneficiary of the procedure, i.e. a well-known trademark owner. The choice may be a challenge where, for example, a group of companies is concerned.
T
Benefits for the Trademark Owner
To have a more efficient tool for preventing or fighting such situations one may seek well-known status for the trademark. The major benefits such status provides are as follows: (1) Extended protection in terms of the goods and services covered. Namely, the protection shall cover goods and services that are not related to those for which the trademark is recognized as well-known, provided that the use of such trademark by the other person regarding such goods and services shows the relationship between them and the owner of the well-known trademark, and such use may damage the interests of the owner of the wellknown trademark. (2) The status may be granted retrospectively, i.e. as of the date in the past, provided that the applicant proves the fame of the trademark as of that date. Otherwise, according to the Law of Ukraine On Protection of Rights in Marks for Goods and Services (the Trademark Law) from the date as of which the trademark is recognized as well-known in Ukraine, it will enjoy the same protection as those trademarks registered in Ukraine. Thus, a trademark may be recognized as well-known regardless of its registration in Ukraine, although, in most cases, the status is sought for trademarks that are already registered.
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Available Procedures
Protection shall be granted to a wellknown trademark with reference to Article 6bis of the Paris Convention for the Protection of Industrial Property, on the basis of a decision recognizing such trademarks as wellknown. In Ukraine, two options are available to obtain such a decision: applying to the Appeal Chamber with the Ukrainian Patent Office (the Appeal Chamber) or filing the respective legal action to a court. If one seeks the well-known trademark status as a preventive measure, to combat the potential conflicts in the future, applying to the Appeal Chamber may be preferable. At the same time, if the conflict already exists, considering the legal action route may be practicable as it allows the addressing of both trademark infringement and recognition of trademarks as well-known in the same proceeding. As far as the Appeal Chamber is concerned, the procedural rules are set out in the Procedure for Recognizing the Trademark as Well-known by the Appeal Chamber (the Procedure). Court proceedings shall be governed by the relevant procedural code (e.g. the Commercial Procedure Code or the Civil Procedure Code), depending on who the parties to the proceedings are. The information regarding the trademarks that have been recognized as well-known is published on the Ukrain-
ian Intellectual Property Institute’s website (www.uipv.org/ua/bases2.html). The respective register includes trademarks recognized as well-known by either the Appeal Chamber or courts. As of today the trademarks recognized as well-known in Ukraine include Forbes, ASOS, ESCADA, YOUTUBE, INTEL and many others. Notably, the Forbes trademark was recognized as a well-known trademark of Forbes Inc. in respect of electronic publications, Internet publications and magazines (periodicals) as of 30 May 2005, while the respective court decision came into effect on 6 May 2010.
Important Factors
Regardless of the route chosen, the following factors, as provided by Article 25 of the Trademark Law, shall be considered to opine whether the trademark is eligible for well-known status: — the degree of the reputation and recognition of the trademark in the relevant public sector; — the duration, volume and geographical area of any use of the trademark; — the duration, volume and geographical area of any promotion of the trademark, including advertising or offering to the public and display of the trademark on exhibitions of goods and/or services for which the trademark is used; — the duration and geographical area of any trademark registrations and/or applications for registration of the trademark, provided that the trademark is used or recognized; — evidence of successful protection of rights in the trademark, in particular, the territory where the trademark is recognized as well-known by competent authorities; — the value associated with the trademark. Various documents may be submitted to prove the aforesaid circumstances in relation to the trademark for which the wellknown status is sought. These may include supply and distribution contracts, invoices and waybills, promotional materials, proof of advertising campaigns, relevant licenses and permits. Fame and recognition of the trademark in other countries shall also be helpful, as is proof of successful enforcement of rights in the trademark.
Surveys
Opinion polls appear to be one of the most important instruments to demon-
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Asters
A
Address: Leonardo Business Center, 14th Floor, 19-21 Bohdana Khmelnytskoho Street, Kyiv, 01030, Ukraine
sters is a full-service independent national law firm that has maintained a strong presence in Ukraine since 1995. The firm provides efficient transactional legal advice and represents clients on a broad spectrum of matters arising in the course of doing business in Ukraine. For six consecutive years Asters has been ranked No. 1 Law Firm in Ukraine according to the Top 50 Annual National Rankings 2011–2016 conducted by Yuridicheskaya Practika Weekly. Asters was acknowledged as the Law Firm of the Decade by Ukraine’s Legal Awards 2016. Asters is a winner of the 2015 and 2014 Law Firm of the Year: Ukraine and the CIS award by The Lawyer, Ukraine Law Firm of the Year 2014 award by Who’s Who Legal, and two time holder of the International Law Office Client Choice Awards for Ukraine. Asters offers a full range of legal services and maintains a high reputation for its expertise in a wide array of practices, such as banking and finance, capital markets, corporate and M&A, competition and antitrust, dispute resolution, energy and resources, environment, family law, intellectual property, international trade, labor and employment, real estate, restructuring and insolvency, taxation, telecommunications, and white collar crime. Shell, Coca-Cola, Philip Morris, L’Oreal Ukraine, GlaxoSmithKline, The Boeing Company, Siemens AG, S.C. Johnson & Son, Nokia Corporation, Sopharma, General Electric Energy,
strate the fame of the trademark among a certain consumer segment in Ukraine. Such surveys shall be carried out by a research organization that focuses on conducting sociological or marketing research. The survey shall cover at least six cities located in different geographical regions of Ukraine with a population of at least 500,000 people. First of all, the survey shall cover three of the biggest regional centers e.g. Kyiv, Kharkiv, Lviv, Odesa, Dnipro. Other cities shall be chosen depending on the peculiarities of the respective business activities of the applicant. The number of respondents shall correspond to the survey target, more specifically, it shall not be less than 500 respondents in any of the two cities chosen, and shall be
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Tel.: +380 44 230 6000 Fax: +380 44 230 6001 E-mail: info@asterslaw.com Web-site: www.asterslaw.com
Glencore International AG, Deer & Co, Kodak Health Group, ED & F Man, Marathon Oil, News Corp., Nissan Motor, Novartis AG, Telenor, Thyssen Krupp Elevator, as well as many other multinational corporations and major local companies are clients for which Asters’ attorneys regularly handle a variety of complex matters and the largest transactions. Asters is an exclusive Ukrainian member of professional networks such as World Services Group, L2B Aviation, Biolegis, Legalink and Energy Law Group, and is a long-standing member, both at corporate and individual level, of numerous professional associations, chambers of commerce, business associations, and international and local bar associations. Asters’ 120-strong staff offers clients a mix of deep local awareness and substantial international experience. Asters’ lawyers received law degrees from the best European, Ukrainian and US law schools, including Yale, Harvard, Chicago, and California University. In 2016 Asters was recognized among the 20 best employers in Ukraine according to research by the weekly magazine Focus. Asters’ corporate social responsibility strategy is aimed at providing valuable input to the development of Ukraine. In 2016 EBA-Asters Legal School, one of Asters’ CSR initiatives, was recognized one of the best CSR projects on the Ukrainian legal market according to the results of the National CSR Business Cases Contest.
at least 125 respondents in every location. However, it is important that the survey covers the “target audience”. For example, the survey among sales personnel shall not fairly represent the situation against end customers. Therefore, surveys regarding consumer goods shall be carried out among so-called average consumers in terms of age, gender, education, social and financial status, as well as among experts in the relevant sectors of industry or trade. At the same time, if the products concerned are designed for industrial use, the survey shall be carried out among experts who are, in fact, the consumers of such goods and belong to the production, trade or other business circles.
The survey report shall provide the respondent’s answers to at least the following questions: — do they know the trademark; — for which goods and/or services the trademark is used; — what person, in their opinion, is the trademark owner or the manufacturer of goods under the trademark, or supplier of services under the trademark; — how long have they known the trademark; — what is the source of information regarding the trademark for them. Still, as far as court proceedings are concerned, obtaining the expert opinion of a certified court expert may be required or helpful so as to prove the fame of the trademark.
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Transfer Pricing
Transfer Pricing in 2017 — Improvement Under the Slogan of Liberalization On Extension of Controlled Transactions List
Yaroslav ROMANCHUK
Larysa VRUBLEVSKA
Managing Partner, Attorney-at-law, International Legal Center EUCON, President of the Ukrainian Business Association in Poland. Yaroslav Romanchuk focuses on the most complicated issues of corporate and tax law, transfer pricing, commercialization of IP rights objects and tax planning with the use of non-material assets, corporate restructuring and assets protection. He represents the interests of international and national corporations in the most complicated and high-profile corporate and tax disputes.
Partner, Auditor, International Legal Center EUCON. Larysa Vrublevska advises well-known national and multinational companies on transfer pricing documentation with justification of contractual prices and introduction of transfer pricing control, as well as on tax planning and tax strategies. Larysa Vrublevska is head of the Transfer Pricing School and holds lecture courses of on the most sensible issues of transfer pricing. Specialization: tax consulting, tax planning, transfer pricing, business restructuring, accounting and tax accounting.
F
rom 1 January 2017 Ukrainian tax legislation regulating transfer pricing has undergone changes, which generally can be evaluated as liberal and which were introduced in the interests of taxpayers. Here is the short list of changes.
Increase of Cost Criterion to Recognize Transactions as Controlled
This is definitely the most expected business standard. Preparation of reports on controlled transactions and documentations for many small businesses, whose sum of activities fell within the criterion to recognize transactions as controlled, was quite burdensome. From now on transfer pricing is a prerogative right of taxpayers with more substantial amounts of income. The annual income criterion was increased to UAH 150 million (earlier it was UAH 50 million).
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The volume of transactions with one counterparty was increased to UAH 10 million (earlier it was UAH 5 million). Comment: yet the non-availability of controlled transactions does not mean a lack of attention on the part of controllers to a range of non-controlled transactions. Thus, for example, income tax payers with an annual income of at least UAH 20 million are obliged to increase their financial result before tax by adjusting by 30% the cost of goods, works (services) acquired from nonresidents registered in countries included in the list approved by the Cabinet of Ministers of Ukraine. The increase in the taxable financial result is carried out also in case of costs accrual in the form of royalties for the benefit of non-residents. And it seems that it is possible to avoid adjustments only if a company prepares substantiation of price level under transfer pricing rules. In other words, you should either increase the tax base or substantiate the level of costs in documentation.
From now on foreign economic transactions can be recognized as controlled not only on sales, but also on the acquisition of goods and/or services carried out via a non-resident commission agent. Economic transactions carried out with non-residents who do not pay income tax (corporate tax), including tax on income received outside the country of registration of such non-residents, and who may not be tax residents of a country where they are registered as legal entities can also be recognized as controlled. The list of business legal structures of such non-residents by countries (territories) shall primarily include British LLP companies. The current list of countries (territories) of low-tax jurisdictions and countries, with which Ukraine has not concluded any agreements including provisions on information exchange should be supplemented with a list of countries, with which such agreements were concluded, but competent authorities do not provide timely and full tax information exchange upon requests from tax officials. While this year any country (territory) is included in the said list of the Cabinet of Ministers of Ukraine, transactions with counterparties registered in such a country (territory) shall be recognized as controlled from 1 January of the following calendar year.
On Controlled Transactions that are Carried out on the Basis of a Forward or Futures Contract
In case of carrying out controlled transactions under a forward or futures contract, price comparisons shall be performed on the basis of information on forward or futures prices as of the date closest to the date of the respective forward or futures contract’s conclusion. If a controlled transaction is related to export and/or import of exchange goods, carried out on the basis of forward or futures contracts, then to substantiate compliance of such transactions conditions with the “arm’s length” principle, the price range shall be calculated on the basis of exchange quotations of corre-
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International Legal Center EUCON
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Address: 33 Taras Shevchenko Blvd, Office 12, Kyiv, 01032, Ukraine Tel./Fax: +380 44 238 0944; 238 0413 E-mail: ilc@eucon.ua
ur philosophy on protecting a client’s rights is simple — to prevent legal risks and litigation. International Legal Center EUCON provides services representing the interests and outsourcing of non-residents and residents doing business in Ukraine and abroad. An important feature of services provided by the firm is a comprehensive study of clients’ problems, particularly the involvement of auditors, financial advisers, tax advisers, deep doctrinal research tasks. This approach enables us to provide comprehensive and intelligent solutions for our clients. The firm operates from two offices. Yaroslav Romanchuk heads the Ukrainian office in Kyiv and Ihor Yatsenko is the head of the Polish office in Warsaw. The team of International Legal Center EUCON advises clients on the most complicated issues of tax, transfer pricing, corporate, business restructuring, assets protection, commercialization of IP rights objects, tax planning with application of non-material assets. The firm’s clients include international and Ukrainian industry leaders that come from oil and gas, energy, agriculture and food industry, telecommunications, trade, transport, metallurgy, chemical industry, construction, hospitality, finance, etc. The performance of International Legal Center EUCON and its partners is highlighted by numerous recognitions and awards.
sponding goods for the decade preceding the date of the respective contract’s conclusion. At the same time, such an opportunity is provided to taxpayers subject to sending notification on such contract’s conclusion to the SFS of Ukraine within 10 days of its conclusion.
On Comparable Legal Entities and Price Ranges (profitability)
In case of non-availability or inadequacy of information on individual comparable transactions to determine profitability indices, the financial information of legal entities can be used that carry out activities comparable to a controlled transaction, provided that there is information that the mentioned entities do not carry out comparable transactions with related parties. At the same time, the number of conditions and restrictions as to the comparable entity is set: — It carries out comparable activities within a controlled transaction and also comparable functions related to such activities (taking into account the Classifier of economic activities and international classifications); — There are no losses (according to accounting (financial) statements) in more than one reporting period from the periods information from which it is used for comparative analysis;
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18 Jana Dantyszka St, Poland, 02-054, Warsaw Tel./Fax: +48 22 658 1025 Tel./Fax: +48 57 000 8575 Web-site: www.eucon.ua
Since 2010 EUCON has been included in the list of top 50 Leading Law Firms in Ukraine according to the annual ratings conducted by the Yuridicheskaya Practika Weekly and Kommersant-Ukraine Publishing House. EUCON is recognized as being among the leading tax law firms according to the national legal directory Ukrainian Law Firms. A Handbook for Foreign Clients, Kyiv Post, Legal Awards, international directories Legal 500 EMEA, World Tax and World Transfer Pricing, International Tax Review. In 2015 EUCON won the Ukraine Transfer Pricing Firm of the Year award at the annual European Tax Awards 2015, International Tax Review. The tenth anniversary awards ceremony of the best Ukrainian lawyers Legal Awards 2016 named International Legal Center EUCON Transfer Pricing Firm of the Year in Ukraine. In view of the current trends in tax policies, International Legal Center EUCON has established a separate transfer pricing practice and enlisted lawyers in addition to auditors and assessors. International Legal Center EUCON and the International Audit Union established and operate the Transfer Pricing School attended by managers of accounting and financial divisions.
— It does not own directly and/or indirectly more than 20% of corporate rights in another legal entity or does not have a member (shareholding) legal entity owning a share of direct (indirect) participation totaling more than 20%. The right of taxpayers to calculate the profitability range on the basis of information on comparable legal entities not only for the reporting period, in which a controlled transaction was carried out, but for a few preceding years, is formalized. In this case, a weighted average rate of a profitability index is calculated for each comparable company, and the procedure for such calculation must be determined by the Cabinet of Ministers of Ukraine.
On Adjustment of Tax Liabilities Under Controlled Transactions
Taxpayers are allowed to carry out independent adjustment of prices in cases when controlled transactions do not conform to the “arm’s length” principle, on the basis of maximum or minimum value of price ranges (profitability). At the same time, such adjustment cannot be made during verification of relevant controlled transactions. Taxpayers received the right to carry out adjustment of their tax liabilities according to
the results of adjustment of tax liabilities by the other party of a controlled transaction, in the manner and under conditions stipulated by Ukraine’s international agreements on avoidance of double taxation.
On Deadline for Submission of Report on Controlled Transactions
The deadline for submission of the report on controlled transactions was moved from 1 May to 1 October of the year following the reporting one. It is possible to correct errors by sending a new or specifying report to a controlling body. Comment: unfortunately, some weak points were not avoided. Legislative bodies, when changing the date of report’s submission, made no changes to related standards. A request to provide documentation on transfer pricing may be submitted after May 1 of the year following the year, in which controlled transactions were carried out. That means, prior to the deadline for submission of the report. Moreover, it is possible to make an independent adjustment of tax liabilities and to specify an income tax declaration without a penalty of 3% only up to 1 May and not to 1 October, which would be logical.
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Transportation
Transportation Law: Legal Trends and Key Issues
Viktor MOROZ
Valerii PRYSIAZHNYI
Roman OKSANYCH
Managing Partner, Suprema Lex
Senior Partner, Suprema Lex
Counsel, Head of banking and finance law practice, Suprema Lex
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kraine has a unique geographic location to become an international hub for the transit of foreign passengers and cargoes and to make transportation the leading area for international investments and the country’s development. The transport infrastructure of Ukraine, together with its airports, seaports, railroads and roads is the key to the country’s competitiveness and its integration into the European and world transport networks as well as the global economy. The priorities of Ukraine today are European integration processes, including harmonization of Ukrainian legislation with European standards. The implementation of those priorities is defined by the Ukrainian Government in Ukraine’s 2020 Transportation Strategy, whose main areas include: — ensuring the availability and improving the quality of transportation services; — integrating national transportation systems into European and international transportation systems; — increasing the effectiveness of public administration in the field of transportation; — developing the transportation infrastructure; — renewing rolling stock; — improving the investment climate; — ensuring safety during transportation; — improving the environmental friendliness and energy efficiency of vehicles. In this article we will show the main legal trends and key issues of transportation law in Ukraine, possibilities and risks for international investors desiring to invest their funds into the Ukrainian transport sector.
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Legislative Regulation
As the transport system of Ukraine consists of several kinds of transport, each of which has certain characteristics, legislation on transport is quite significant in scope and diverse in content. Relations associated with transport activities are regulated by the Constitution of Ukraine, Civil and Commercial Codes, On Transport Act of Ukraine of 10 November 1994, Laws of Ukraine On Pipeline Transport Act of Ukraine of 15 May 1996, On Railway Transport Act of Ukraine of 4 July 1996, On the Transit of Goods Act of Ukraine of 20 October 1999, On the Automobile Transport Act of Ukraine of 5 April 2001, On the Functioning of the Single Transport System in the Special Period Act of Ukraine of 20 October 1998, On the Freight Forwarding Activities Act of Ukraine of 1 July 2004. A significant range of transport relations is governed by transport codes and charters of certain types of transport: Air Code of Ukraine of 19 May 2011, Maritime Code of Ukraine of 23 May 1995, Charter of Inland Water Transport of USSR of 15 October 1955, Charter of Road Transport of Ukrainian USSR of 27 June 1969, the Charter of Railways of Ukraine of 6 April 1998. Among other acts of Ukrainian transport legislation of importance are the rules for transportation of goods, acting for various kinds of transport and all kinds of goods, Aviation rules of Ukraine, regulating the order for acquiring the rights for exploitation of airlines, etc.
Legal Trends
In inviting potential investors to open dialog and effective cooperation for investing in the infrastructure of Ukraine, the Ministry of
Infrastructure of Ukraine really is creating the necessary legislation. But is this legislation really effective for protecting potential investors? Taking into account the considerable number of types of transportation in Ukraine, it would be reasonable to stop at the each of them separately. Aviation Increasing passenger turnover, developing the airports infrastructure, making air transportation in Ukraine cheap, comfortable, simple, available and safe are the main goals of reforms of aviation in Ukraine. The indicators of successful implementation of this reform are Ryanair’s anticipated launch, which really can create competition on the airline market and the introduction of the visa-free regime between Ukraine and EU countries. For realization of those initiatives the Ukrainian Government has developed legislative acts on issues of aviation rules that regulate aspects of receiving permits to use airlines; flight and aviation safety; development of airport infrastructure. All of those acts are really necessary for the effective development of aviation in Ukraine, but the wording of legislative acts presented by the Government is not effective enough to protect international investors and so requires further adaptation. The main feature of aviation law in Ukraine is that acts of law are mainly not directly applicable, but based at subordinate legislation. However, due to the basis of Ukrainian aviation legislation meeting international principles and acts it does, in the main, meet EU requirements.
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Suprema Lex
Address: 8 Cosmonavta Comarova Avenue, Kyiv, 03067, Ukraine
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uprema Lex is a multi-disciplinary, industry-focused Ukrainian law firm consisting of highlyâ&#x20AC;&#x201D; qualified lawyers who work proactively to help their clients reach their business goals and generate commercial advantages. The firm provides a full range of legal services to national and international companies trading in Ukraine and abroad as well as to private individuals. The main principles of the law firm are an individual approach to every client, knowledge of the finest peculiarities of Ukrainian and international legislation, confidentiality and personal responsibility for the services provided. Our team A guarantee of your success in deciding any legal question is the professional competence of specialists to whom you turn. Highly-qualified lawyers and attorneys work at Suprema Lex, who have high-quality legal educations and excellent experience in various branches of law. Full protection of clientsâ&#x20AC;&#x2122; interests Suprema Lex offers a full range of legal services and maintains a high reputation for its expertise in a wide array of
The Ukrainian Government has introduced the Concept of State target program of airport development, which is aimed at involving private investments under state guarantees to get reconstruction of aerodromes and terminal complexes of regional airports in Ukraine. Furthermore, the Ukrainian Government is working on the establishment of collaborative airspace with the EU, based on free access to the air carriage market, equal competitive conditions and collaborative rules, especially in the areas of aviation safety, air traffic management, environmental protection and industrial social norms, development of cooperation between air manufacturing complexes of the EU and Ukraine. Railway and Automobile Transport Analysis of the current state and trends in railway and automobile transport of Ukraine shows that there are several significant problems that need to be solved. This applies in particular to the indeterminate legal status of the state-owned Ukrainian Railways company as the regulatory body of railway transport; the distinction between commercial and Government control functions in rail transport. For the automobile transport, there is a great deal of tension around the issue of financing highways and attracting foreign investment. The technical standards of Ukrainian roads do not meet EU standards nor the quality and weight loads, so Ukraine needs to
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Tel.: +380 44 384 0557 E-mail: office@supremalex.law Web-site: www.supremalex.law
practices, such as transport law (including aviation law and maritime law), corporate law, taxation, competition & antitrust, M&A, insolvency, dispute resolution, banking & finance law, capital markets, land and real estate law, construction law, intellectual property, branding, licensing, domain disputes, media law, sport law, family law, labor & employment, medical & pharmaceutical law, criminal law, etc. The firm possesses extensive industry-specific experience and consults clients in various market sectors, including agriculture, automotive, aviation, banking and finance, energy, infrastructure and transport, insurance, media and advertising, oil and gas, pharmaceuticals and healthcare, private equity, real estate and construction, retail and consumer goods, telecommunications and IT. Our client portfolio includes international and domestic companies that requires deep expertise and specialized legal advice from legal experts in the above practice areas. We develop innovative strategies and provide efficient solutions to the most complex and challenging matters within the shortest period of time. With us nothing is impossible. Membership: Ukrainian Bar Association (UBA).
bring its legislation into line with EU standards. So, amendments have to be made to the On the Public-Private Partnership Act of Ukraine, On Concessions Act of Ukraine. At the end of 2015 amendments were passed to the On Concessions for the Building and Exploitation of Roads Act of Ukraine. Sea and Inland Water Transport Sea and inland water transport are also very popular in Ukraine and play a significant part in the transporting of goods and passengers. An important step in the approach of the transport industry to European standards is interventions to develop a regulations system allocating a part of export goods for the domestic cargo fleet. For this goal it is important to establish national freight exchanges and develop a system of financing national shipbuilding companies and taking into account the importance of improving the quality of agency services to implement minimum requirements for ship agents, based on the recommendations developed by UNCTAD. Ukraine is a participant of the European Agreement on Main Inland Waterways of International Importance (AGN), the European Agreement concerning the International Carriage of Dangerous Goods by Inland Waterways and has introduced the On the Seaports of Ukraine Act of Ukraine that enables Ukraine to be an equal participant of international projects in the area of sea and inland water transportation.
Key Issues The key issues of the transport field in Ukraine are creation of a good environment to provide investment attractiveness, developing public-private partnership, modernization and renewal of rolling stock with the help of finance lease and credit-export financing and engaging investors in improving the condition of the transport infrastructure in Ukraine.
Instead of a Conclusion
So, for the comfort of the transport business in Ukraine, the foreign investor has to acknowledge that Ukrainian transport legislation is now developing and that it does not correspond in full with EU standards. Considering the quality of the Ukrainian court system and imperfections of national legislation for protecting the interests of foreign investors, reform of investment legislation that regulates the activities of the Ukrainian transport market, public-private partnership and capital markets is also necessary. The very serious drawback of Ukrainian legislation in the transport sphere is the lack of a unified approach in questions related to transport activity. If Ukraine is positioning the transport industry as one of the main Ukrainian economic areas then it should follow global trends and develop harmonization with EU standards. The hope is that in the near future Ukraine will get the names of leading countries in the world for investment in transport and infrastructure projects.
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Unfair Competition
Unfair Competition: Common Violations and Responsibility
Alexey KOT
Sergii KORNIIENKO
Managing Partner, ANTIKA Law Firm. Member of the Judicial Reform Council, PhD (Law)
Partner of ANTIKA Law Firm. Member of the Public Council of the Antimonopoly Committee of Ukraine
he present day market economy is a complex mechanism consisting of a great number of different industrial, commercial, financial and informational structures that function jointly in time against the background of a ramified system of legal norms for business and that are united by a common concept, namely the market. Competition is the key concept that expresses the essence of a market economy. Above all, fair competition involves fair competitiveness among business entities for consumer demand on the market. However, in order to obtain advantages over other market participants certain business entities resort to competition methods that are detrimental to consumers, competitors and the public in general. Such methods are recognized as unfair competition, which is extremely undesirable for any economy in the world and especially for Ukraine, which is going through the formation of market relations which should comply with international standards. Issues related to protection against unfair competition in Ukraine are regulated by the Law of Ukraine On Protection Against Unfair Competition (hereinafter — the Law). Article 1 of the Law defines “unfair competition” as any actions in competition that contradict trade and other fair traditions in business activity. The Law conditionally defines three main types of activity that are recognized as unfair competition in Ukraine, namely:
1) illegal use of a business entity’s reputation (Articles 4-7 of the Law of Ukraine On Protection Against Unfair Competition); 2) building obstacles to business entities in the competition process and attaining illegal advantages in competition (Articles 8-151 of the Law of Ukraine On Protection Against Unfair Competition); 3) illegal collection, disclosure and use of business secrets (Articles 16-19 of the Law of Ukraine On Protection Against Unfair Competition). The most common unfair competition practice is traditionally considered to be the spreading of misleading information. Thus, according to the annual reports of the Antimonopoly Committee of Ukraine, in 2014 the number of such violations detected by the Committee was 90%, and in 2015 and 2016 — 89% of the total number of violations in form of unfair competition. Misleading information shall include, in particular, any information that: — contains incomplete, inaccurate or false data about the origin of product, manufacturer, seller, manufacture method, source and method of purchase, sale, quantity, consumer properties, quality, completeness, usability, standards, characteristics, particular features of selling products, works and services, information about the price and discounts on such products, as well as data about essential terms and conditions of the contract; — contains incomplete, inaccurate or false data about the financial position or economic activities of an conomic entity;
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— refers to powers and rights that do not exist or relationships that are not maintained; — includes references to volume of production, purchase, sale or supply of goods, works and services, which actually did not exist at the date such information was disseminated. The above-mentioned list of misleading information is not exhaustive and it is possible to amend it. However, the content of Article 151 of the Law of Ukraine On Protection Against Unfair Competition only considers facts of dissemination of misleading information that include incomplete, inaccurate and/ or false data as unfair competition. At the same time, the Law does not consider cases of spreading of true information that also may be misleading as unfair competition. Thus, for instance, in some countries it is forbidden to add chemical substances to certain types of food, hence the text on their packages such as “chemical substances free” could be considered as misleading, because the consumer may think that this good is exceptional. It should also be mentioned that the provisions of Article 151 of the Law of Ukraine On Protection Against Unfair Competition are quite subjective. In practice, especially while developing promotional materials, the question related to whether or not the advert video, announcement or any other advertisement complies with the norms of legislation on protection against unfair competition, often arises. In order to receive an answer to this question and to avoid possible sanctions for disseminating misleading information, the business entity should perform thorough legal expertise of any promotional material as well as the description of the product (good) that is usually placed on its packaging. In 2016 the biggest fines for violations stipulated by Article 151 of the Law of Ukraine On Protection Against Unfair Competition were imposed on the State Enterprise Starokonstantinovskiy milk plant (the case related to providing the public with false information on the packaging of the “farming sweet cream butter” product produced by the violator related to its name and characteristics that may affect the intentions of an infinite number of persons related to its purchase) and the Simferopol Wine and Cognac Distillery, LLC (the case related to violation of legislation
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ANTIKA
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Address: 12 Khreschatyk Street, 2nd Floor, Kyiv, 01001, Ukraine
NTIKA was established in 2010. Since its formation, the firm has built a strong reputation as an independent law firm and continues to grow on the Ukrainian legal services market. According to the results of research of the legal services market undertaken by reputable international and Ukrainian guides to legal profession like The Legal 500 EMEA, Chambers Europe, IFLR1000 Energy and Infrastructure, Best Lawyers, Ukrainian Law Firms, A Handbook for Foreign Clients, Top 50 Law Firms of Ukraine, Client Choice. The Top-100 Best Lawyers in Ukraine, the firm has been recommended in antitrust, dispute resolution, corporate / M&A, banking, finance and capital markets, real estate, land, energy, subsoil use, energy efficiency and energy saving. The firm received the Legal Award 2012 in the nomination Law Firm — Breakthrough of the Year. The firm is a finalist of the Legal Awards 2013 in the field of Antitrust, Litigation and Real Estate, in 2014-2016 — in the field of Energy. ANTIKA’s team includes 15 lawyers, who have significant experience of various legal practices and provide a full range of legal services to national and international companies that do business in Ukraine, as well as abroad in the following fields: telecommunications, heavy machinery, chemical and food industries, automotive, complex develop-
on protection against unfair competition through placing on the label “strong alcohol beverage “Malty” (“Malty”) Black Jack TM”, the text “WHISKEY Old”, “Scotch WHISKEY” and “WHISKEY” while this product is not whiskey, which is why the spreading of false information about consumer properties and characteristics of the stated product took place). The fine in the first case was more than UAH 790,000, while in the second case more than UAH 1.6 million. It is interesting to mention that in 2015 the Antimonopoly Committee of Ukraine prosecuted the Simferopol Wine and Cognac Distillery LLC for the same violation of legislation on protection against unfair competition. The sum of the fine exceeded UAH 14.6 million. Another topical violation of legislation on protection against unfair competition (according to the Antimonopoly Committee of Ukraine) is illegal use of designations. The number of such cases considered by the Antimonopoly Committee in 2015 was equal to 9% of the total number of violations in the form of unfair competition which, together with cases on violation in the form of spreading of misleading information, was equal to 98% of the total number of cases on unfair competition that were investigated by the Committee in 2015. In 2016 this index appeared lower. It made up for about 5% of the total number of violations in the field of unfair
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Tel.: +380 44 390 0920 Fax: +380 44 390 0921 E-mail: office@antikalaw.com.ua Web-site: www.antikalaw.com.ua
ment, construction and real estate, subsoil use, wholesale and retail, media and sports, banks and financial services market, energy efficiency and energy conservation. The firm’s key practices include antitrust, litigation and arbitration, corporate, construction and real estate, subsoil use, energy and energy efficiency, legal expertise. The firm’s main principles are the provision of high quality and timely legal services, strict confidentiality and a bespoke approach to every client’s project. The following are representative clients: AWT Bavaria, ArcelorMittal Kriviy Rih, Cadogan Petroleum, Cargill, Chernomorneftegaz, Deposit Guarantee Fund, Enesa a.s., Esan Eczacıbaşı Industrial Raw Materials, Energobank, FC Dnipro, Ghelamco, Heitman, Henkel Ukraine, Henkel Bautechnik Ukraine, Ibis Group of Companies, Imperial Tobacco, International Resources Group, Lantmannen Axa, MF Telecom, Nadra Ukrayiny, Nasosenergomash, ViDi Group, Ukrnafta. The firm also advises the World Bank, EBRD, USAID, TACIS, UNDP, KfW, NEFCO on energy efficiency, utility and the implementation of other projects in Ukraine. ANTIKA is a member of the Ukrainian Chamber of Commerce and Industry, the American Chamber of Commerce in Ukraine, the Canada-Ukraine Chamber of Commerce, the European Business Association, and the International Turkish-Ukrainian Businessmen Association.
competition that were detected by the Antimonopoly Committee of Ukraine last year. Pursuant to Article 4 of the Law of Ukraine On Protection Against Unfair Competition illegal use of designations is considered to be use of the name, commercial (firm) name, trade mark (mark for goods and services), advertising materials, design of product packaging and periodicals, other designations without permission (consent) of the business entity that started using these or similar designations in its business earlier, which has resulted, or may result, in confusing them with the activities of this particular business entity. We would like to note that the abovementioned violation has a very similar legal nature to that of violations in the field of protection of intellectual property rights. However, the field of regulation of protection against unfair competition has certain peculiarities that can make it possible for business entities to protect their rights in case when the legislation on protection of intellectual property rights does not provide this. In addition, the field of application of legislation on protection against unfair competition is wider, because in such a case the protection is provided not only for a certain identified and registered trademark for goods and services but to any designation that a business entity uses in its activity. When filing a complaint on the illegal use of designation
to the Antimonopoly Committee of Ukraine, it is necessary to understand that the main aim of its activity and function is to protect competition on the market but not to protect a certain person. Therefore, the business entity is unable to claim through the Antimonopoly Committee of Ukraine for compensation of damages or to receive any other compensation from the offender. By way of conclusion, it is worth adding that Ukrainian legislation provides fundamental responsibility for actions that are recognized as unfair competition. Thus, when the violation of competition law in the form of unfair competition takes place, the Antimonopoly Committee of Ukraine is empowered to impose a fine on the offender in the amount of up to 5% of income (revenue) from the sales of products (goods and services) for the last financial year preceding the year in which the fine was imposed. In addition to this, the Committee is also empowered to initiate (by applying to the court with a respective claim) the seizing of respective goods with illegal use of designation, copies of products of another business entity from both the manufacturer and the seller of such products. In this case, the sanction in the form of seizure of goods has the aim, above all, of terminating further spread of infringing products (goods) by the particular business entity that allowed such violation of competition legislation to occur.
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WHO IS WHO IN UKRAINIAN LAW BY PRACTICE AREAS/INDUSTRIES Agribusiness Antitrust / Competition Banking & Finance / Restructuring Bankruptcy Corporate and M&A Criminal Law / White-Collar Crime Energy & Natural Resources Intellectual Property International Arbitration International Trade: Trade Remedies / WTO, Commodities IT / Telecommunications & Media Labor & Employment Litigation Pharmaceuticals / Medicine & Healthcare Real Estate, Construction, Land Retail Tax and Transfer Pricing Transport: Aviation, Maritime, Shipping
WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Agribusiness
Agribusiness Igor MELNYK IMG Partners
As lawyers we are seeing in practice a growth in unfair competition cases in the agricultural business, which often translates into hostile takeovers of agribusinesses. While previously raiders’ methods were mainly through the use of force, current invaders develop complex intellectual schemes and implement them, reinforcing their positions by means of the corruption component. The state is making progress by adopting laws against hostile takeovers, but this, unfortunately, is not enough, because raiding in Ukraine is not a natural phenomenon but a process with the involvement of certain subjects. As farmers, on our business we feel that against the background prospect of the approach of the opening up of the agricultural land market, the competition between neighboring agribusinesses set on the ground has been intensified. As a result, we are seeing a rise in rents, particularly in regions with fertile soils and easy access to the logistics infrastructure. Agro scam cases involving the sale and purchase of seeds, crop protection products, fertilizers and other supplies for the agricultural sector have increased. Knowing the psychology of farmers, fraudsters use the boom during the sowing and harvesting and lure their victims through attractive prices. Official suppliers are not able to make such significant discounts — that fact should be a big clue to farmers, but in trying to save money they become victims of fraud, losing much larger amounts, which are almost impossible to get back, usually because this unscrupulous provider is a fictitious company.
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aw Offices of OMP has a highly-focused, sizeable practice dealing with an extensive range of projects in agribusiness, which is the firm’s primary industry focus. The team has a consistent workflow from investors considering investing in the sector across various regions of Ukraine. The past year included performance in corporate restructuring and M&A, tax consulting and litigation. In the public domain are complex legal support to Vinnytsia Agro-Industrial Group on the sale of the company’s assets to Epicenter K; representation of Cargill AT in a tax dispute regarding reimbursement of VAT to the tune of UAH 69 million. Other typical queries from clients included structuring and management of land banks. The impressive client roster includes Cargill, Agro-region Group, Cygnet Holding, Agrokultura, Kernel Group, HarvEast Holding, Selkhozproduct Group, Glencore. Given the focus on big agrarian clients, the firm has a fourpartner strong team of Kyryll Levterov, Igor Ogorodniychuk, Mykola Orlov, Yaroslav Sverdlichenko. Agribusiness is the eminent industrial focus of Alexandrov & Partners, a local counsel which has fully equipped its offering for legal work in this sector. The firm is regularly instructed for structuring investment, agribusiness assets restructuring, tax, land law (lease, emphyteusis, land bank development), financing, export-import transactions. Recent highlights take in business structuring and supporting a honey exporter to enter the EU market. Other clients for comprehensive legal support are Trigon Agri, Agroinvest group, The Bashtanskaya Poultry Farm, Ramburs. Dmytro Alexandrov is named a universal practitioner focused on agriculture. Another partner, Oksana Kryzhanivska, is growing her project portfolio and market reputation. Over the past year Sayenko Kharenko significantly enhanced its position in the agricultural sector, and stands out for representing domestic and international agricultural companies across the firm’s core practices. The team is present in high-value M&A, banking, finance and capital markets mandates, tax, regulatory and IP matters. The firm also catches the eye for solid international trade and arbitration projects. Selected highlights in 2016 include acting for the Ukrainian Grain Association on signing of the MoU on cooperation with SGS, global leading inspection and verification company; representing one of the leading global agricultural trading houses with regard to cancelling of special sanctions applied by the Ukrainian Ministry of Economic Development and Trade upon request of the State Fiscal Service. The finance team led by partner Nazar Chernyavsky acted as a legal counsel to the EBRD on providing a loan of up to USD 20 million to the subsidiaries of the Industrial Milk Company. The firm is a strong capital market counsel and advised joint lead managers of the debut USD 500 million Eurobond issue by Kernel Holdings S.A. The competition practice is loaded with related instructions, and the caseload of the inter-
national arbitration practice includes a string of disputes involving both local and global agricultural companies, led by Tatyana Slipachuk and Olexander Droug. Counsel Andrii Zablotskyi is extremely active in the agrarian sector, expanding his expertise on regulatory, trade remedies, export-import transactions, infrastructure matters and GR. Most recently he advised the Ukrainian Grain Association on various regulatory matters on sanitary and phytosanitary regulations, grain blending deregulation, export-import transactions. Asters is a full-service team with extensive industrial coverage and particular legacy in agribusiness. The sizeable multidisciplinary practice often acts on sector related financial transactions and restructuring matters, corporate restructuring, land lease, agri-items trade. With the top market antitrust practice, the firm is a primary choice for merger clearances within M&A. Asters provided full support to ED&F Man Holdings regarding its tolling transactions (processing of raw sugar cane at Ukrainian facilities). The firm regularly represents international financial institution on crediting the sector. For example, advised the EBRD in connection with USD 5 million financing provided to V.V. KISCHENZI Ltd, a privately-owned diversified agricultural producer. Alexey Khomyakov, Iryna Pokanay and Oleksiy Demyanenko are lead partners. Dentons has a premier focus on transactional work, performing complex regulatory and banking and finance matters, trade finance facilities, debt restructuring, acquisition of land, M&A. Among the clients are major international agricultural players, such as CHS and Noble Group that are advised on a series of issues related to their activity in Ukraine. The recent project is acting for CRI Group Limited in connection with the debt and corporate restructuring of Mriya Agro Holding. Ihor Mehedynyuk and Volodymyr Monastyrskyy are lead partners. The pro-active domestic law firm AEQUO was boosted with instructions from the agrarian sector, and was especially vivid in corporate and M&A, competition and finance mandates. The team, led by Anna Babych, acts for NCH Capital’s agro division Agroprosperis on three separate acquisitions of local agro players to enlarge its land bank; advised Epicenter K on acquisition of a controlling stake in Vinnitsa AgroIndustrial Group. The banking and finance team headed by Yulia Kyrpa advised Agroprosperis Bank, the Ukrainian subsidiary of NCH Group, in the course of obtaining a subordinated debt from its shareholder for the purposes of fulfilling the capital requirements of the National Bank of Ukraine and further financing of the agrarian sector. Her team also advises on trade and acquisition finance. Managing partner Denis Lysenko increases his involvement in taxation, and advised a Ukrainian group of agricultural companies on tax matters in pre-sale restructuring. The competition team guided by counsel
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Agribusiness Sergey Denisenko advised on Ukrainian merger control issues in connection with acquisition by Koninklijke Bunge BV of two European oilseed processing facilities from Cargill Group. AEQUO’s niche arbitration practice is led by Pavlo Byelousov, counsel. AGA Partners is a team that is fully dedicated to agricultural clients, widely referred for specific commodities trade and international arbitration. The firm commands an established niche in the sector given that 7 out of the 10 biggest Ukrainian agribusiness companies are among its clients, namely ViOil Industrial Group, MHP, COFCO Agri, ADM, NCH, State Food and Grain Corporation of Ukraine and Ukrlandfarming. In 2016 the team recorded about 25 arbitration processes within GAFTA, FOSFA and LMAA institutions. In a recent highlight the firm represented Bizon-Import LLC (Poletehnika) in a dispute with a Japanese manufacturer of agricultural machinery, under a contract on delivery of goods that was affected by the military conflict, and resulted in an amicable settlement. Another landmark matter is a FOSFA case where the firm represents Agroprosperis LLC (part of NCH Capital Inc.) in a dispute with a Russia-based agrarian holding that arise out of the ban imposed by Russia on the import of Ukrainian goods. Partners Aminat Suleymanova and Ivan Kasynyuk received strong market feedback. Irina Moroz is particularly active in GAFTA cases. ARBITRADE is a highly specialized commodities arbitration and litigation firm. In 2016 the firm received a number of positive decisions in soft commodities arbitrations (GAFTA and FOSFA); advised on structuring transactions (including complex transactions on purchase of large volumes of commodities from Malaysia and Brazil; financing; transshipment; restructuring). ARBITRADE has successfully represented a claimant, EFKO-Trade LLC (Russia) in a FOSFA arbitration; and received four decisions of GAFTA in con-
LEADING FIRMS 1. 2. 3. 4. 5.
Law Offices of OMP Alexandrov & Partners Sayenko Kharenko Asters Dentons
nected cases in favor of its long-standing client, the State Food and Grain Corporation of Ukraine. Andriy Shulga and Yuliya Chernykh are primarily involved in the practice. The diverse experience in the agricultural industry features the full-service offering of Arzinger. The firm is involved in comprehensive corporate projects, tax, competition, land use, regulatory and other ongoing matters of the agricultural business. The antitrust and competition team obtained merger clearances from the AMCU for one of the largest agricultural corporations of Ukraine in connection with a number of transactions completed by some of the group’s companies without subsequent clearance as part of the mergers amnesty announced in September 2015. The team of the South Ukrainian Branch, led by Odesa-based partner Andriy Seliutin, represented a shareholder of a world famous U.S. agricultural trading group in disputes with a group of affiliated companies in the city of Mykolaiv, associated with a shortfall of grain and grain products worth upwards of UAH 320 million. The international arbitration practice led by Lviv-based partner Markian Malskyy enjoyed a consistent sectoral following. In the past year the firm explicitly expanded its debt restructuring portfolio with distinctive representation of lenders, handled by Oleksander Plotnikov. Partners Anna Zorya advises on corporate and M&A, and Kateryna Gupalo focuses on tax litigation and white-collar crime. Eterna Law (new name which emerged as a result of the merger of AstapovLawyers international law
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OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
AEQUO AGA Partners ARBITRADE Arzinger Eterna Law ILF (Inyurpolis Law Firm) IMG Partners Integrites KM Partners
LEADING INDIVIDUALS 1. Mykola Orlov (Law Offices of OMP) 2. Dmytro Alexandrov (Alexandrov & Partners) 3. Andrii Zablotskyi (Sayenko Kharenko) 4. Oksana Kryzhanivska (Alexandrov & Partners) 5. Ihor Melnyk (IMG Partners) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Eugene Blinov (Eterna Law) Oleg Boichuk (Egorov Puginsky Afanasiev & Partners Ukraine) Ivanna Dorichenko (Integrites) Ivan Kasynyuk (AGA Partners) Kyryll Levterov (Law Offices of OMP) Denis Lysenko (AEQUO) Ihor Mehedynyuk (Dentons) Alexander Minin (KM Partners) Artem Naumov (ILF (Inyurpolis Law Firm) Aminat Suleymanova (AGA Partners)
COUNSELINK B. C. TOMS & CO
18/1 Prorizna Street, Suite 1, Kyiv, 01001, Ukraine Tel.: +380 44 490 6000, +380 44 278 1000 E-mail: kyiv@bctoms.net Web-site: www.bctoms.net
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GOLDENGATE LAW FIRM
Business Center Saksagansky, 70 Saksaganskogo Street, Kyiv, 01030, Ukraine Tel.: +380 67 776 6130 E-mail: info@goldengate-law.com Web-site: www.goldengate-law.com
INTERLEGAL
24B Genuezska Street, Odesa, 65009, Ukraine Tel.: +380 482 33 7528 Fax: +380 482 33 7529 E-mail: odessa@interlegal.com.ua Web-site: www.interlegal.com.ua
LAW OFFICES OF OMP 9 Tarasivska Street, 4th Floor, Kyiv, 01033, Ukraine Tel.: +380 44 391 3001 Fax: +380 44 391 3002 E-mail: office@omp.ua Web-site: www.omp.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Agribusiness
group and Baltic Business Group) advised a range of national leaders — producers and traders on international arbitrations, especially GAFTA and FOSFA, as well as LMAA. Clients have traditionally instructed its corporate and tax teams on trade, M&A and related disputes. The client list includes Artis-Agro Export, EFKO, Ukrenergy Trade. Partner Eugene Blinov has a substantial track record of specialized arbitrations in his professional profile.
acts in a range of commercial disputes, debt recovery litigation, bankruptcy proceedings, advises on specific land, tax and corporate matters. Managing partner Ihor Melnyk is a recognized name for sector specific advice. Mykola Struts is known for his bankruptcy focus. Selected clients are Mriya Agro Holding, Creative Group, Cygnet Agrocompany, PJSC Ilyichevsk Oil and Fat Industrial Complex, Odesa Fat and Oil Plant, Nash Kraj.
ILF (Inyurpolis Law Firm) is the Kharkiv regional market’s leading counsel that significantly sharpens the agrarian market of Southern Ukraine. The scope of multi-disciplinary team ranges from business structuring for further export activity, EU market entry and attracting finance; employment, unfair competition and IP, tax litigation, debt collection and other commercial and regulatory disputes. The innovative highlight of the firm is its pro bono support of the establishment of agro-food cluster in Kharkiv Region, where the firm represents 25 agrarian companies. ILF is the key counsel for sectoral M&A in the region, with a wealth of experience of supporting inbound and outbound investment. Among the consistent publishable clients are BASF, RIAL meat processing plant, AgTech Ukraine, Panorama Agro. Artem Naumov is a lead partner who thoroughly enhances the firm’s dedication to the agrarian sector.
First and foremost, KM Partners has a specific tax expertise in the agrarian sector. As a renowned tax practice, the firm became a point of choice for multinational agrarian players for representation in tax disputes, particularly the cancelation of tax notices and VAT refund. The vast tax practice also includes the extensive consultancy side. The firm has got involved lately in infrastructure projects. Partners Maxim Oleksiyuk and Alexander Shemiatkin participate in these projects. Alexander Minin, the most respected tax lawyer in the country, is highly regarded for tax advice in the agrarian industry.
Widely referred by market participants for its domestic agrarian clientele, IMG Partners
Integrites is a growing legal market force with a diverse offering for sectoral clients. In order to cover major business needs, over the last couple of years the firm has rapidly gathered vivid practitioners and completed its partnership with a slew of recognized names. The firm ensures support in corporate structuring, land acquisition and operations management, trade and project finance, tax and
regulatory advice, investments, port and infrastructure projects, trade and sales both inland and internationally, as well as resolution of relevant disputes. Notably, the firm demonstrated a dramatic increase in specific dispute work, and remarkable arbitration portfolio led in 2016 by highly active partner Olena Perepelynska. Renowned trade expert Ivanna Dorichenko joined the firm as a partner and head of its London office. She assisted the State Food and Grain Corporation of Ukraine in the resolution of a trade dispute with UK buyers and Indian/Pakistan receivers due to allegations of inferior quality of shipped cargo. The banking team often advises on trade and project finance. Vsevolod Volkov advised Agrogeneration S.A. on EUR 10 million preexport trade finance facility from the financial division of Quadra Group. Other partners Oleksiy Feliv (land, real estate and infrastructure) and Svyatoslav Sheremeta (corporate) round off practice diversity. Highly-dynamic Ukrainian law firm AVELLUM has a solid corporate finance offering, and had a presence in several benchmark deals in the agrarian sector. The strong banking and finance practice has been involved in a range of high value finance and significant cross-borders restructuring mandates, working mainly on the lenders side. The team, guided by Glib Bondar, acted as a Ukrainian law counsel to the EBRD in connection with renewal of the USD 40 million secured syndicated pre-export loan facility to
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Education: LLM in EU law (King’s College London).
Practice Areas:
M&A, Real Estate, Corporate and Competition, Agro.
Sergiy BENEDYSYUK Head of Corporate and M&A, N&D Law Firm
Languages: Ukrainian, Russian, English
Professional experience:
Regarded the brains of the team when it comes to complex matters with lots of nuances in various areas of law. Delivers results in the style of leading global law firms. Sergiy has gained a profound professional legal experience specializing in M&A, real estate, corporate and competition. He has provided comprehensive legal advice and assistance to foreign investors on issues pertaining to joint venture and business acquisition, brown-field and green-field investments, investments structuring and strategies in such areas as agro-sector real estate, industrial manufacturing. His services in the agro sector included legal support on acquisition of companies involved in crop cultivation, seed oil refining and others, setting up joint ventures for construction of grain terminals and other infrastructure objects, elaborating complex mechanisms for providing future crops into pledge as collateral for delayed payment for fertilizers. Prior to joining N&D Law Firm Sergiy occupied management positions with international and domestic legal firms and Ukrainian Government authorities. Sergiy holds LLM in EU law (King’s College London).
www.ndlaw.com.ua Tel.: +380 44 237 7250 s.benedysyuk@ndlaw.com.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Agribusiness the Industrial Group ViOil; advised a group of current creditors of Mriya Agro Holding on a complex structured finance deal of a bridge loan to cover the company’s working capital needs until the harvesting campaign. Apart from traditional dedication to corporate and M&A work led by Mykola Stetsenko, the firm has of late been increasingly active on the tax and litigation fronts. The dispute team, as led by Dmytro Marchukov, has acted for the trustee under two issues of Eurobonds of Mriya Agro Holding Plc in the litigation on enforcement of claims (almost USD 600 million) against 68 Ukrainian sureties under Eurobonds. Praised for its expertise in corporate finance and capital markets, the Kyiv office of Baker McKenzie renders advice on transactions involving securities, debt restructuring, antitrust and infrastructure projects. Notably, the office acts for both international investors and large Ukrainian agricultural holdings. In 2016 the firm acted on the first landmark transaction in the infrastructure over the last couple of years and a legal counsel to Cargill in respect of an agreement with MV Cargo on construction of a new port terminal in the sea port of Yuzhny. The busy antitrust practice represented Bunge, a global agribusiness and food company, and Wilmar, an Asian leading agribusiness group, in merger control filings related to the establishment of a JV, for the purpose of production and distribution of the soybean oil in Vietnam. The projects are led,
respectively, by focused partner: Viacheslav Yakymchuk (corporate, M&A, private equity and equity capital markets), Oksana Simonova (competition) and Lina Nemchenko (real estate and construction). The cross-practice team of Vasil Kisil & Partners includes practitioners in the area of land, corporate, contract, tax, intellectual property, labor law and litigators. The firm rendered legal advice to the Ukrainian Club for Agricultural Business on a variety of issues of corporate, tax, regulatory, land, commercial and other nature. Under the guidance of managing partner Andriy Stelmashchuk, the firm represented New Century Holding (NCH) in a series of court disputes regarding lease of land plots. The key figures according to their practice focuses are Volodymyr Igonin (corporate), Tetyana Berezhna (tax), Oleg Kachmar (dispute resolution). Egorov Puginsky Afanasiev & Partners Ukraine provides a wide scope offering for industry clients by creating project groups comprised of professionals in arbitration and litigation, capital markets, competition, corporate and M&A, finance, tax and real estate matters. Most recently the firm advised Altera Azteca Milling Ukraine on Ukrainian law issues related to complex corporate restructuring, as well as on implementation of a sophisticated corporate model; advises Enza Zaden, a plant breeding company, on a supply agreement; the world’s leading corn flour and tortilla produc-
WHO IS WHO
tion company on various business structuring matters. Oleg Boichuk leads the agriculture team. The Kyiv office of CMS Cameron McKenna advises major Ukrainian and international agricultural companies on M&A, commercial and financing issues. In the recent transactional workflow the office acted in the main on behalf of lenders, boosting expertise in high value financing, restructuring and litigation. The team also acted on a landmark infrastructural project, having advised MV Cargo on joint venture with Cargill for the construction of a new grain terminal in the Ukrainian Black Sea port of Yuzhny. Olga Belyakova is a lead partner, and is supported by the team of Kateryna Chechulina, Vyacheslav Ovechkin, Anna Demchenko. The Kyiv office of DLA Piper possesses transactional capacities and acts on cross-border M&A, debt restructuring and tax matters. The office is empowered with predominantly international clientele. The multidisciplinary team includes: Oleksandr Kurdydyk (finance), Margarita Karpenko (corporate and M&A), Illya Sverdlov (tax). Given extensive experience of advising agribusiness, EY Ukraine is hired for ongoing advisory, structuring and restructuring, and transaction support. The team is empowered by its international network and is preferred for comprehensive multijurisdictional pro-
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Education:
Taras Shevchenko National University of Kyiv.
Practice Areas:
Real Estate and Land
Languages: Maksim MAKSIMENKO Counsel, Attorney, Ph.D, Co-Head of Real Estate and Land Law, Spenser & Kauffmann
Ukrainian, Russian, English
Professional experience:
Maksim is an expert in the field of land and agricultural law, real estate, construction, renewable energy, and telecommunications. Mr. Maksimenko possesses 12 years’ experience of legislative work in the area of land relations. Maksim was a member of various task groups of the central bodies of executive power, involved in developing and approving draft regulations in the Ukrainian Parliament, Ministry of Economic Development and Trade of Ukraine, Ministry of Agrarian Policy and Food Ukraine, and the State Service of Ukraine related to geodesics, cartography, and the land cadastre. The scope of his scientific interests encompasses issues of land use structure optimization in Ukraine. In 2013 Maksim defended his Candidate of Sciences thesis in land use structure optimization regulation of Ukraine.
www.sklaw.com.ua Tel.: +380 44 288 8383, +380 44 288 6707 E-mail: m.maksimenko@sklaw.com.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Agribusiness
jects. EY advises a Central European business group on the sale of its Ukrainian agricultural business to multiple buyers via a bidding process. The main figures are partners Albert Sych and Igor Chufarov, and Bogdan Malnev, senior associate. In 2016 EVERLEGAL, a Ukrainian law firm whose core team has solid transaction experience, continues to grow its M&A track record. The firm acts on behalf of buyers, and recently acted for a specialist Czech investment firm on the acquisition of a number of agri-businesses in Ukraine. Another highlight is the team’s involvement in several auction sales, when it advised a Ukrainian agricultural holding in connection with the acquisition of a Ukrainian agricultural business from a Balkan investor. Managing partner Yevheniy Deyneko is the main contact. Ilyashev & Partners is mostly known as a highly-specialized litigation and arbitration force, heavily involved in cross-border matters and criminal defence. The firm has a sizeable bankruptcy practice, and supports the sound bankruptcy procedure of Creative Group. Moreover, Creative is represented in the High Court of England and Wales, in LCIA arbitration, arbitration on ICC rules in Munich, and in commercial courts of Ukraine and Cyprus in disputes with an international consortium of banks regarding recovery of loans worth USD 80 million. Noble Group, Danone, KWS Ukraine, OLAM Ukraine, Agrein Group are also
part of its client roster. Mikhail Ilyashev is the lead partner. As a prominent domestic litigation force LCF Law Group adds agrarian clientele to its caseload, which encompasses corporate, banking and tax disputes, bankruptcy proceedings. The firm represents Mriya Agro Holding in its ongoing USD 35 million litigations with Ukrainian and foreign lenders. AVK Group, a Ukrainian confectionary producer, is represented in large stake ongoing debt recovery litigations with Ukrainian banks. Other selected clients include Tovstenkovsky Starch Plant and the PJSC Kupyansk Milk Сanning Factory. Both partners Anna Ogrenchuk and Artem Stoyanov are actively involved in litigation practice. The full-service firm Gramatskiy & Partners is preferred for export programs support, technical regulation, land, corporate, finance, indebtedness restructuring and sector related regulatory issues. The firm is experienced in projects providing export financing for entering the European, Middle East and China markets and developing legal schemes of crossborder trade. Most recently the firm advised AgroAlliance Group on corporate reorganizations, land lease agreements, contracts with exporters and traders. Other clients include Finrostorg, Lavinia, AgroTechnologies, Shenzhen Ruiben Import and Export Service. Iegor Ignatichev oversees matters in the agricultural industry at the firm.
GOLAW, a domestic law firm headquartered in Kyiv, with an adjusted regional presence in Lviv and Odesa, regularly improves its capabilities to support investments in agribusiness. The firm is mostly active in litigations acting for investors in the sector, contractual issues and restructurings, agrarian receipts and regulatory matters. The firm acted for its consistent client Syngenta, a global Swiss producer of agrochemicals and seeds, on formalization of its relationships with contactors; advised Kron-Bartis on foreign trade transactions and currency regulation in Ukraine, and agricultural machinery leasing. Some other clients include Vitagro and Donegal FRS. Both partners Valentyn Gvozdiy and Sergiy Oberkovych oversee the projects. International Legal Center EUCON is known for its experienced tax team with specific industry wise knowledge. Given its strong tax litigation history, the firm acted for Mikogen Ukraine and Zhoravske Agricultural LLC in tax disputes. Additionally, the center grows advisory in tax structuring and international tax planning, Ukrainian-Polish inbound and outbound investments. The firm operates throughout two offices in Kyiv and Warsaw. Tetiana Samsina, senior partner, is the key point of contact. Sokolovskyi & Partners is involved in advising both public and private companies. The firm is well-versed in delivering contractual
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Education:
National University of Kyiv-Mohyla Academy.
Practice Areas:
Litigation, Land and Real Estate, Corporate Governance and Tax.
Ihor KRAVTSOV
Languages: Ukrainian, Russian, English
Professional experience:
Igor has in excess of 10 years of legal professional experience in litigation, land law and real estate, legal support of the company’s ongoing activity, corporate governance and tax issues and currently acts as litigation team leader and teamwork coordinator. Valued by clients and colleagues for his ready-to-do attitude towards matters and the ability to get a deal through in the most challenging circumstances. Very easy to work with. His broad legal experience as an in-house lawyer in oil & gas and agro companies is beneficial for providing legal services with a deep understanding of what is important for the client’s business. Igor obtained a master’s degree in law from National University of Kyiv-Mohyla Academy in 2009. Since 2016 he has also been as an adviser to the International Finance Corporation on crop receipts enforcement procedure.
Head of Litigation & Arbitration, N&D Law Firm
www.ndlaw.com.ua Tel.: +380 44 237 7250 i.kravtsov@ndlaw.com.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Agribusiness support, land, employment, targeted advisory on intellectual property, debt recovery, and its key strength — tax. The firm supports the National Academy of Agrarian Sciences and its structural departments on contractual base and tax advisory. Private agrarian clientele gives the firm orders on tax planning, tax audits support and representation in tax disputes, M&A and investments. Export and import contracts remain on the firm’s recent agenda. The industry is supervised by senior partner Tetiana Lysovets.
EQUITY (called FCLEX up till June 2017) is focused on advising domestic clients, big agrarian market players, providing litigation, debt restructuring and criminal defense service. The firm acted for the Soloduсhin agricultural company in a USD 7 million debt recovery dispute with Delta Bank, and represented the interests of officials from Creativ Group in a number of criminal proceedings. Diverse instructions of agrarian clients are managed by three partners, namely Andrey Nikitin, Vyacheslav Krahlevych and Taras Poshyvanyuk.
ANK Law Office, the Odesa-based legal counsel with especial focus on port infrastructure, recorded an increase in legal inquiries from grain traders, operators of grain terminals, silos and freight forwarders regarding issues with grain trade, transportation, freight forwarding and grain export. The major recent clients of the office are Bunge, Vector Oil Trade, Olimpex Coupe International, FERKO, Kernel, Louis Dreyfus Commodities, Risoil S.A. Alexander Kifak, Artyom Volkov, Dmitriy Kolodiazhniy are lead partners.
Spenser & Kauffmann, which is active on the market throughout 2016, mostly present in corporate matters, ownership rights protection, sectoral acquisitions and land bank development. Aleksandra Fedotova, partner, and Maksim Maksimenko, counsel, are the key contacts. Despite rapid diversification of its clientele, Moris Group still enjoys a legacy for vast workflow in the agrarian sector. The scope of work includes finance, tax and corporate
WHO IS WHO
practices. Among the best known clients is the vertically-integrated agricultural holding AvangardCo. Managing partner Andriy Romanchuk is the main contact. Based in Odesa, law firm DE-JURE renders regularly support to players of corn and fumigation market, arranging contracts supervising and tax planning needs. Its client list takes in Ukrmortransservice, Baltic Control Ukraine, Glenport Odesa and others. Gregory Tripulskii and Andrii Pavlyshyn are the main contacts. Law Firm Dynasty, the Dnipro-based law firm, has consistent clientele which entrusts the firm with dispute representations. The Juscutum Attorneys Association acts on structuring agribusiness and supports asset deals. Gryphon Legal advised on insurance of agricultural risks in Ukraine and subsequent issues of economic competition. In 2016 ENGARDE’s corporate team, headed by Andriy Vyshnevsky, was involved in representing sectoral clients in debt restructuring.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Antitrust/Competition
Antitrust/Competition Oleksandr VOZNYUK Asters
Last year we saw significant changes to antitrust rules as well as noticeable progress in the AMCU’s operating style. The authority is now more actively engaged in constructive dialogue with businesses and society in general, openly discussing practical problems in competition and the ways of solving them, including by initiating further amendments to the law and its own procedures. The AMCU’s readiness to hear the concerns of business has encouraged lawyers, public organizations and business to step up, which provided impetus to the reform spree resulting in modernization and simplification of merger control regime, opening access to AMCU decisions, and clarification of rules on the calculation of fines. The revision of merger thresholds caused a certain decrease in the number of notifiable transactions, and the legal services market has to some extent lost profits. However, in the long run, changes to the law are likely to open up wider prospects for development. Antitrust rules and the AMCU enforcement practice are starting to look less like parallel worlds. The AMCU is taking on more complex cases, which raise more sophisticated legal questions, with many of them requiring profound understanding of the underlying economic concepts and how industries work. Hence, the importance and increased demand for professional legal services. It is worth noting that this is not simply the result of recent legislative changes — they only touched the top of the iceberg — but rather a reflection of current trends. Antitrust practice is not a thing in itself. Being part of the system, its development depends on its own activity in creating conditions for such development. Introduction of the principles of due process, creating conditions for improving the quality of judicial control, developing transparent competition rules and standards of assessment are all challenges that antitrust lawyers face today, which request them to be active participants and lobbyists in this process. This is the cornerstone of further development in this area.
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sters is regarded a stellar leader on the Ukrainian competition market, which has acted in all high-profile antitrust probes and investigations over the last 10 years. The three-partner team is the biggest one on the market with internal specialization covering the full spectrum of competition matters. Throughout 2016 the team acted for Allergan plc in the USD 160 billion merger with Pfizer; represented The Dow Chemical Company in USD 130 billion merger with E.I. du Pont de Nemours and Company; assisted in obtaining merger clearance for the indirect acquisition by China National Chemical Corporation of shares and control over Syngenta AG. The team is present in key investigations of the Antimonopoly Committee of Ukraine (AMCU) and competition litigation. For example, Asters represents Bayer in the sector investigation on the market for distribution of pharmaceutical products; and represents ACNielsen Ukraine in commercial court in connection with appeal of the AMCU’s decision in the cartel investigation. Igor Svechkar is recognized as a leader in the competition area. Oleksandr Voznyuk is a highly reputed name who gets particular praise for his legislative work. Alexey Pustovit is noted for expertise in cartel and abuse of dominance matters. IP partner Julia Semeniy is present in projects on the intersection of competition and intellectual property. Sayenko Kharenko is among market leading teams with an established reputation and significant share of antitrust work volumes. The firm’s antitrust team is consistently mandated for merger control instructions in the course of global transactions, as well as domestic deals. Another strength is particular expertise in unfair competition and concerted practices. Among the highlights was obtaining merger clearance for the merger of DuPOnt and Dow; USD 67 billion acquisition of EMC Corporation by Dell; obtaining merger clearance for the acquisition by Berkshire Hathaway of Precision Castparts; acting for Anheuser-Busch InBev S.A./N.V. with regard to the merger with SABMiller. Reputed partner Vladimir Sayenko leads both competition and corporate and M&A practices. Maksym Nazarenko, counsel, is acknowledged by peers who observed his deep involvement in work with clients. The firm strengthened its practice with the hire of Oleksandr Nagorny (previously held executive positions in the AMCU, who joins the firm as a counsel). AEQUO commands a comprehensive competition practice that covers a full range offering. This includes merger control matters, cartel cases and
high value disputes, unfair competition, abuse of dominance. The firm has rapidly increased its clientele and bespoke support to its transactional practices. Selected highlights included acting for Danone S.A. on obtaining merger clearance for acquisition of sole control over Dairy JV Holdings Limited; merger clearance in connection with acquisition of Signet Group by NCH Capital; advising Lohika on competition aspects of a share sale transaction as well as the Ukrainian merger clearance process. The firm’s recent caseload takes in significant presentations in key AMCU investigations involving the petroleum, gas, tobacco, retail markets and antitrust compliance. The team represents Novus in a sound alleged cartel case which is under review by the appelate court. The core competition team members are Sergey Denisenko, counsel, fairly dedicated to competition practice, who has demonstrated an outstanding track record in the past year; Yevgen Blok, senior associate, bringing significant input. Managing partner Denis Lysenko, renowned multifaceted lawyer, is the practice head. Established in 2015, CLACIS is a boutique practice with a geographical reach including Ukraine, Russia and Kazakhstan. The well-versed practice covers an all-round offering, including investigations, audits, infringement, leniency, merger control approvals, antitrust due diligence, litigation, distribution and contract related antitrust issues, public procurement, and compliance. In 2016 the team provided support to Terex Corporation, a globally acting US cranes and mining equipment maker, on obtaining merger control issues in its merger with Finnish rival Konecranes. Notably, the boutique puts strong emphasis on competition law investigations and litigation. Thus, CLACIS represents major multinationals working in the region in various continuous competition law cases, such as MasterCard, ArcelorMittal, AB InBev and others. Antonina Yaholnyk, founder and managing partner, has been named for years as among the strongest competition lawyers on the market. Kateryna Tkachenko, an experienced team member, has been promoted to partner. She is noted for active involvement in market investigations and competition law cases. Empowered by its global presence, the competition practice of DLA Piper Ukraine encompasses multijurisdictional merger filings, anti-competitive concerted practices, commercial agreements and trade practices, competition compliance policies, AMCU investigations. In 2016 the team provided full legal support in obtaining a merger control clearance for Orkla’s acquisition of Hamé,
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Antitrust/Competition
AUTHORITIES Olexander Martinenko (CMS Cameron McKenna)
one of the leading branded consumer goods companies in the food sector; advised Georgian Industrial Group acquisition of a stake in JSC Indar from Polish biotechnological company Bioton S.A; advised ABH Holdings in connection with the sale of Ukrsotsbank (UniCredit Group) to Alfa Group. Practice lead partner Galyna Zagorodniuk is highly active in merger control and investigations, with particularly noted knowledge of the pharma sector. Arzinger’s antitrust and competition practice is among the core strengths of the firm. The practice features a fullservice offering, including clearances for mergers and concerted actions, cases concerning dominance, unilateral practices and discriminations, concerted actions, unfair competition, cartels and parallel market behavior, as well as intersection of IP and antitrust, sectorspecific regulation. Among the team’s core advantages is its industry expertise, particularly in the retail, energy, automotive and pharmaceutical sectors. The firm stands out for proficient work in competition disputes. Among its landmark projects is representing Zeonbud in appealing the decision of the AMCU in accusations in abuse of dominance and a fine of UAH 44.5 million. The team regularly advises on distribution and supply chain cooperation matters, and supported Teva Ukraine on developing a new model for its cooperation with distributors and pharmacies in the field of marketing. On the merger control side, Arzinger supported the obtaining of a merger clearance (under the amnesty announced by the AMCU) by PKC, an international group, a leader in the field of electricity and electronics for trucks, for the purchase of Groclin’s wiring and controls business. The practice has two lead partners: Timur Bondaryev and Lana Sinichkina, who are also praised for their sharp industrial specializations. Baker McKenzie is best known for advising big multinational public
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LEADING FIRMS 1. 2. 3. 4. 5.
Asters Sayenko Kharenko AEQUO CLACIS DLA Piper Ukraine
and private companies for merger control work in Ukraine, especially global transactions. Notably, the Kyiv office is experienced in advising clients (especially from pharma sector, as well as consumer goods companies) on implications of various vertical arrangements with Ukrainian customers, and investigations of the Ukrainian competition authority. Amongst the notable highlights are representing Baxter and Baxalta Incorporated in three merger control filings related to the second stage of transfer of Baxter International Inc.’s Bioscience Business and certain related assets and corporate rights located in a number of deferred jurisdictions into a spin-off — Baxalta Incorporated; assisting in establishing a JV between Bunge and Wilmar for the purpose of production and distribution of the soybean oil; advising Alfa Bank Group in a merger control filing and a concerted actions filing related to acquisition of PJSC Ukrsotsbank. Partner Oksana Simonova leads and constantly develops the competition practice of the office, representing prominent clients. CMS Cameron McKenna has strong experience of merger control issues, general antitrust compliance and unfair competition. The office advised DECAPTERUS S.A.R.L. on EUR 175 million sale of Hamé to food group Orkla; acted on obtaining merger control filling in connection with establishment of a JV between MV Cargo and Cargill for the construction of a new grain terminal in the Ukrainian Black Sea port of Yuzhny. Olga Belyakova, partner, has long-time practice and enjoys market recognition. Olexander Martinenko, senior partner, is one of the most reputed general practitioners. Dentons competition group is best known for advising on a wide range of competition/antitrust matters within cross-border M&A transactions and complex corporate restructurings where the global law firm is a legal counsel. Over the last couple of years the firm’s
WHO IS WHO
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
Arzinger AVELLUM Baker McKenzie CMS Cameron McKenna Dentons Ilyashev & Partners Integrites
LEADING INDIVIDUALS 1. Igor Svechkar (Asters) 2. Antonina Yaholnyk (CLACIS) 3. Vladimir Sayenko (Sayenko Kharenko) 4. Oleksandr Voznyuk (Asters) 5. Galyna Zagorodniuk (DLA Piper Ukraine) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Olga Belyakova (CMS Cameron McKenna) Timur Bondaryev (Arzinger) Sergey Denisenko (AEQUO) Oleksandr Fefelov (Ilyashev & Partners) Andrii Gorbatenko (Legal Alliance Company) Alexey Kot (ANTIKA) Denis Lysenko (AEQUO) Maksym Nazarenko (Sayenko Kharenko) Alexey Pustovit (Asters) Serhiy Shershun (Integrites) Oksana Simonova (Baker McKenzie) Lana Sinichkina (Arzinger) Kateryna Tkachenko (CLACIS)
COUNSELINK ESQUIRES
40-X Hlybochytska Street, Kyiv, 04050, Ukraine Tel.: +380 44 337 7007 Fax.: +380 44 337 7008 E-mail: info@esquires.legal Web-site: www.esquires.legal
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Antitrust/Competition
team has been particularly active in the agricultural, energy, luxury, consumer products, hotels and leisure and automotive sectors. Volodymyr Monastyrskyy is a lead partner. Ilyashev & Partners, guided by Mikhail Ilyashev, provides offering on various competition and antitrust matters, and is active in Ukraine and in Russia. The firm acted for Ukrrichflot in obtaining merger clearance for acquisition of a stake in LLC Ekozerno, and represents Ukrtatnafta with regard to investigations by the AMCU of violations on exchange auctions for the sale of oil and gas condensate. The firm also provided merger clearance work in the course of acquisition of shares in BTA Bank Kazakhstan and NJSIC Oranta by a private investor and Kazcommerzbank (Kazakhstan). Oleksandr Fefelov is the head of practice, and is referred as an experienced practitioner. With the consistent M&A and corporate workflow, AVELLUM is principally centered to merger control clearance and antitrust due diligence. The firm, as led by managing partner Mykola Stetsenko, has acted for Mr. Hamed Alikhani in connection with obtaining merger control clearance for acquisition of PJSC Commercial Bank Center (Ukraine); obtained merger clearance for the acquisition of Lohika by Altran Group. Yaroslav Medvediev is seen in project work. Integrites actively develops its antitrust practice, and boasts them simultaneously in Russia and Kazakhstan. With established work on merger filings, unfair competition, and competition in commercial arrangement, the firm possesses experience designing and implementing compliance programs and advising on public procurement matters. Notably, the firm acted for Farmak in merger clearance for its acquisition of KWW Kotkowski Wierzbicki Wegrzyn sp.j., the leading Polish distributor of biologically active substances; represented Nova Poshta Group in merger clearance for the purchase of PE Batist-Dnepr. The list of selected clients includes ADM International Sàrl, Aspen Pharmacare Holdings Ltd, LKQ Corporation, Schreder, Dragon Capital Investments Limited, Brain Computers, Suhail Bahwan Group. Serhiy Shershun and Pavlo Loginov, counsels, are the core practitioners. In 2016 the Kyiv office of Wolf Theiss was actively involved in advising clients on Ukrainian competition law peculiarities and obtaining merger and concerted actions clearances. Its network of offices in Europe enables bespoke advisory. Selected high-
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lights include advising Deere & Company and Monsanto Company in obtaining merger clearance with regard to the USD 190 million acquisition of a shareholding in Precision Planting LLC, a subsidiary of Monsanto, and Monsanto’s assets related to business in the development, manufacture, licensing and sale of precision planting equipment. On the domestic front the office represented AMIC Ukraine and the Ukrainian targets, LUK AVIA OIL LLC and LUKOIL AVIATION Ukraine LLC in obtaining merger clearance for acquisition of 100% shareholding in each target; represented Erste Group Immorent International Holding GmbH in obtaining merger clearance for the sale of a 100% shareholding in its subsidiary. Olga Ivlyeva is the practice head. Vasil Kisil & Partners increased its presence in investigations conducted by the Ukrainian competition authority, and is strong in advising on regulated markets, i.e. energy sector, pharmaceuticals, tobacco and alcohol, markets of banking and other financial services. Among notable highlights is representing Billa Ukraine in a cartel investigation into the retail market and further ongoing court proceeding regarding challenging of one of the AMCU’s decision. The team has notable expertise in abuse of dominance, commercial arrangements, antitrust risks. Anna Sisetska, counsel, is the key practitioner. Established in 2015 EVERLEGAL is centered to merger filings, advisory work related to restrictive practices and unfair competition, as well as controversies with the antimonopoly authorities. Major clients include foreign companies in pharma, IT, agribusiness and energy sectors. Some recent mandates included merger control notifications in connection with a global merger between international pharmaceutical companies; advising a specialised Czech investment firm on the merger control implications of its acquisitions of agri-businesses in Ukraine. The antitrust practice is co-headed by managing partner Yevheniy Deyneko and counsel Ulyana Khromyak (currently on secondment to the Investment Promotion Office of Ukraine). Sytnyk & Partners is seen mainly in merger control clearances related to multinational M&A. Robert Bosch GmbH, firm’s established client, regularly instructs the team of Denys Sytnyk for merger clearance work, most recently, in connection with indirect acquisition of joint control over Automotive Web Solutions AB together with Mekonomen Nya Affärer AB and Lasingoo Sverige AB; ac-
quisition by Chervon North America, Inc. of assets in the form of a business division used for manufacturing and selling portable electric power tools, measuring tools and accessories from Robert Bosch Tool Corporation. Highly active throughout 2016, Spenser & Kauffmann reinforced its practice with a new counsel Tatiana Kharebava, who joined in the past year. The practice is industry-oriented and mainly focused on agribusiness, land and real estate, pharmaceutical and healthcare, tobacco and alcohol, FMCG and retail. Among illustrative recent projects is advising domestic agrarian holding regarding its further corporate restructuring in view of competition law as well as conducting antimonopoly compliance of its current corporate structure; obtaining merger clearances for acquisition of assets in Ukraine. On the side of competition investigations, the firm advised national retail chain on enhancing legal position in a court case regarding the AMCU’s investigation on the retail market; and represented a national winery in an investigation amid accusations of unfair competition. ANTIKA Law Firm is known for the antitrust expertise of its team members. The firm represents a company operating in the oil and gas sector, in a case of alleged violation of legislation on protection of economic competition. Managing partner Alexey Kot is a highly regarded expert on the market. ECOVIS Bondar & Bondar advises on antimonopoly clearance in connection with M&A, as well as on various cases related to competitive market regulations. The firm is known for its strong presence in aviation and the aviation infrastructure field. Clients include Ukraine International Airlines, KLM Royal Dutch Airlines, Lufthansa Group, Swissair, Interavia, Aerohandling, Danske Commodities, Europcar Ukraine, Bionorica SE (Germany), OPower Inc (USA), Advent International. Oleksandra Nikitina and Oleg Bondar are lead partners. Ante Law Firm has a specific competition expertise in the aviation sector, the core strength of the team. In the past year the team represented the interests of airlines in all AMCU activities on the aviation market and advised Pavo group with regard to duty free market investigations and analysis. The firm also acted for the interests of a diesel supplier with regard to rail operator Ukrzaliznytsia public procurement procedure conflicts as to an estimated sum of more than UAH 250 million, and represented Zdravo
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IN UKRAINIAN LAW BY PRACTICE AREAS â &#x201E; INDUSTRIES Antitrust/Competition and Technomedex group at the AMCU during public procurement claims. Andriy Guck is the primary contact. EY Ukraine advised on the notifyability of a contemplated transaction with the AMCU and provided merger and concerted practices filing support on a turnkey basis. EY provided merger clearance filing support to Rozetka in connection with the acquisition of a warehouse complex in the city of Brovary; sell-side merger filing support to a Central European business group in connection with the sale of its Ukrainian agricultural business. Albert Sych, partner, is the main contact. Legal Alliance Company is mostly known for handling antitrust and compe-
WHO IS WHO
tition matters in its core industry of presence, pharmaceuticals. The firm is involved in several landmark cases in competition on the pharmaceutical market such as investigations of the AMCU regarding distributors contracts and marketing agreements with pharmacies. Among the major clients are Alcon, Astellas, Baxalta, Berlin Chemie, Boehringer Ingelheim, GlaxoSmithKline, Dial Service, Izotop, Orion Corporation, Reckitt Benskiser, Servier, Stada, Takeda. Associated partner, Andrii Gorbatenko, is in charge of the practice.
the antimonopoly aspects of distribution; defended the clientâ&#x20AC;&#x2122;s interest in connection with contesting the results of bids for the purchase of software. Maxim Oleksiyuk and Alexander Shemiatkin are the key figures.
Throughout the previous year KM Partners provided comprehensive legal advice on competition matters with regard to cooperation between the major players of the seeds supply sector and grain traders; assisted on
Egorov Puginsky Afanasiev & Partners Ukraine is an important visible practice preferred for merger clearance and cross-border projects. Oksana Ilchenko, partner, is the practice head.
EQUITY (called FCLEX up till June 2017) is seen in dispute resolution representing clients in the AMCU and courts. The firm acted for PJSC Zaporozhtransformator, challenging the AMCU decision on prohibition to participate in procurement for 3 years. The practice is guided by partner Andrey Nikitin.
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Banking & Finance/Restructuring
Banking & Finance / Restructuring
Natalia SELYAKOVA Dentons
The market remains unpredictable and turbulent, being impacted by deep crisis and, at the same time, by the reforms process. And yet debt restructuring and refinancing remain the key trend on the financial market. Rapid changes in legislation and continuing liberalization of currency control regulations by the National Bank of Ukraine keep both clients and legal counsels constantly following the pulse and information flow. Clients have become more demanding. Most of them require efficient, quick and handmade products. Projects involving new money are subject to stricter requirements from lenders and investors. And in general such transactions became more complex and require tailored solutions. Traditionally within the last few years international financial institutions are the active players among lenders. We also see an increase in demand for regulatory advisory, enforcement and insolvency proceedings, sanctions implications, e-commerce/FINTECH. Structuring and assisting with distressed debt trade is an interesting, prominent spot on the market. The recent liquidation of more than 100 Ukrainian banks has led, inter alia, to a tremendous increase in the size of the distressed debt market. And although this significant market opens up brilliant opportunities, there is a crucial need for an efficient legal framework to attract professional investors to come to distressed debt case, which is not still the case for the Ukrainian market.
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krainian law firm AVELLUM fixed the positions of its outstanding banking and finance, capital markets team. The firm continues to be a legal counsel to the Ukrainian Finance Ministry on sovereign bond issues and cross-border loans. In 2016 the team handled representation in connection with the USD 1 billion issue of notes guaranteed by the United States of America, acting through USAID, and of notes and GDP-linked securities as part of the restructuring of four sovereign-guaranteed loans. The team is preferred by international and domestic banking and financial institutions (e.g., EBRD, ING Bank, Deutsche Bank, PrivatBank) in the course of lending in different economic sectors. It is also mandated for scaled restructuring and liability management projects, acting a lot for creditors. AVELLUM acted as Ukrainian legal counsel in connection with the cross-border transfer of loan assets from UniCredit Bank Austria AG to UniCredit S.p.A., Italy, as part of the wider transfer of the CEE business, including the shareholdings of CEE subsidiaries. Glib Bondar, senior partner, who is fully dedicated to the practice, enjoys a strong reputation. The firm strengthened the team with the experienced Igor Lozenko, who joined the practice as a counsel. Sayenko Kharenko is at the top of the market among Ukrainian counsels for banking and finance and commands outstanding debt restructuring capability. The firm represented some of the world’s largest banks, international financial organizations and corporate clients across a range of financing transactions. Selected project highlights include advising Oschadbank on becoming an issuing bank under the EBRD’s Trade Facilitation Programme; acting as a Ukrainian legal counsel to Citibank, N.A., and Deutsche Bank AG, as mandated lead arrangers and original lenders under a EUR 478 million facility to Naftogaz of Ukraine. Notably, the firm also advised Nordic Environment Finance Corporation on nearly 20 project financings to Ukrainian enterprises and municipalities aimed at implementing energy-saving technologies. The team has strong capital markets expertise. On the restructuring front, the firm was traditionally active with a number of innovative and complex debt restructuring transactions in the market involving a wide range of Ukrainian borrowers, including municipalities, state-owned and private banks and corporates. Overall, the firm handled debt restructuring projects for the total amount of over USD 3 billion. The firm advised a special committee of Eurobonds’ owners on restructuring of a loan participation issued by Shortline plc for the purpose of financing loans provided for JSC Ukrzaliznytsia;
handled the final restructuring of sovereign-guaranteed debt of Ukravtodor; acted for DTEK Finance Plc in restructuring of USD 1.275 billion Eurobonds. Partners Michael Kharenko and Nazar Chernyavsky are considered the first port of call for many in high-end and complex transactions. Counsels Anton Korobeynikov and Olexander Olshansky were at the forefront of the majority of projects. Seniors Iryna Bakina, Yuriy Draganchuk, and Maria Tsabal are on the firm’s up and coming list. Baker McKenzie offers clients worldwide presence and close integration of its banking/finance teams that ensures capabilities for cross-border mandates. The Kyiv team is enlisted to handle large scale and highly important for the economy debt restructuring and liability management projects, and became increasingly active on the dispute side. At the same time, the office is equally present in representations of both borrowers and lenders. Of late the team advised a borrower and its parent DTEK Renewables B.V. in connection with the restructuring of the complex multijurisdictional security arrangement for two loans of Landesbank Berlin AG. Under the guidance of Ihor Olekhov the team advised Eurobank Ergasias S.A., one of the largest banks in Greece, on the sale of its Ukrainian subsidiary, Universal Bank, to TAS Group. Some publishable clients are the EBRD, IFC, Metinvest Group, DTEK Group, EurobankErgasias S.A., Obolon Brewery, Citibank Ukraine, ING Bank Ukraine, State Street Bank, Ukrgasbank, AerCap. Managing partner Serhiy Chorny heads the banking and finance and debt capital markets practices and is a member of the firm’s global restructuring and insolvency advisory committee. He is named among luminaries. With the growing reputation and capabilities of its banking and finance practice, AEQUO enjoys a steady flow of client requests. The firm demonstrates extensive activity in the domestic market. The team acted on one of the major financing of the past year, having advised Naftogaz of Ukraine on borrowing a USD 500 million revolving facility from Citibank and Deutsche Bank for gas purchase from gas suppliers. AEQUO grows its portfolio of cross-border restructuring mandates, advising the consortium of foreign and domestic lenders (including Portigon AG, Ukrgazbank and UniCredit Bank) in the course of restructuring of indebtedness of one of leading car manufacturers in Ukraine. The EBRD enlisted the firm for various high value loan restructurings. Additionally, the firm is present in M&A in banking, e-money and insurance industries. Yulia Kyrpa, partner, manages the 8-lawyer strong team.
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Banking & Finance/Restructuring
AUTHORITIES
Serhiy Chorny (Baker McKenzie)
BANKING & FINANCE/ RESTRUCTURING
Armen Khachaturyan (Asters)
Michael Kharenko (Sayenko Kharenko)
LEADING FIRMS 1. 2. 3. 4. 5.
AVELLUM Sayenko Kharenko Baker McKenzie AEQUO Asters
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
Redcliffe Partners has a sizeable practice team that has reached a 7-lawyer capacity. The firm is visible on advising large-scale lending and restructuring
projects, acting predominantly on the lenders’ side, with long standing banking clients on board (Credit Suisse, Deutsche Bank, EBRD, IFC, FMO, Natixis, UniCredit Bank Austria, and others). The firm is mandated for cross-border work alongside offices of Clifford Chance and lately led transactions across energy, infrastructure, agriculture, financial sectors. In the recent highlight the firm advised the EBRD and IFC on investment for the construction of a grain terminal in Odesa sea port by a US agricultural giant Cargill and M.V. Cargo. The practice impresses with a large portfolio of multi-million restructuring of corporate borrowers, being enlisted to represent syndicates of banks. Among completed in 2006 public projects is advising Sberbank of Russia and Deutsche Bank AG on the restructuring of a USD 600 million syndicated loan extended to Ukrlandfarming. Managing partner Olexiy Soshenko receives market recognition for deep involvement in practice. The recent global combinations of Dentons enhanced cross-border capabilities of its banking and finance practice. The office is regularly enlisted for crossborder lending, trade finance, sovereign financings, restructuring, distressed debt trade, as well as far reaching regulatory and sanctions advice. Dentons remains a port of choice for financial institutions — EBRD, EIB, Export Development Canada,
29 Lesi Ukrainki Blvd., Office 75, Kyiv, 01014, Ukraine Tel.: +380 67 325 9582, +380 44 228 0279 Fax: +380 44 285 5286 E-mail: office_law@amber-corp.com Web-site: www.amber-law.net
ESQUIRES
40-X Hlybochytska Street, Kyiv, 04050, Ukraine Tel.: +380 44 337 7007 Fax.: +380 44 337 7008 E-mail: info@esquires.legal Web-site: www.esquires.legal
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1. Glib Bondar (AVELLUM) 2. Nazar Chernyavsky (Sayenko Kharenko) 3. Olexiy Soshenko (Redcliffe Partners) 4. Natalia Selyakova (Dentons) 5. Yulia Kyrpa (AEQUO) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Gabriel Aslanian (Asters) Anton Korobeynikov (Sayenko Kharenko) Igor Krasovskiy (Jeantet) Oleksandr Kurdydyk (DLA Piper Ukraine) Helen Lynnyk (Gryphon Legal) Ihor Olekhov (Baker McKenzie) Dmytro Orendarets (Baker McKenzie) Vyacheslav Ovechkin (CMS Cameron McKenna)
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LEADING INDIVIDUALS
TRUSTED ADVISORS
40/85 Saksahanskoho Street, 5th Floor, Kyiv, 01033, Ukraine Tel./Fax: +38 044 359 0664 E-mail: info@trustedadviors.com.ua Web-site: www.trustedadvisors.ua
Oleksandr Plotnikov (Arzinger) Iryna Pokanay (Asters) Nadiya Shylienkova (Dentons) Roman Stepanenko (Egorov Puginsky Afanasiev & Partners Ukraine) Oleh Zahnitko (Integrites)
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Banking & Finance
Asters regularly acts for international financial institutions and development banks on their lending transactions with Ukrainian corporate borrowers. For example, the practice advised the IFC on its loans to agricultural producers Astarta and Integrated Agrosystems, and financing to a fuel supplier, Nadezhda Group. In addition to financing instruction, the firm acted as a legal counsel to the EBRD in connection with acquisition of 40% of the share capital in UkrSibbank, the capital increase of UkrSibbank by UAH 3.29 billion and debt to equity swap. The firm is known for expertise of capital market transactions and crossborder bonds restructuring. This past year it completed the landmark USD 500 million Eurobonds restructuring of JSC Ukrzaliznytsia, where it represented the borrower. The firm’s restructuring portfolio includes assignments of creditors and corporate borrowers, and covers energy, agriculture, retail, banking sectors. The practice is led by two partners, highly respected market authority Armen Khachaturyan, also known for his work in the oil and gas sector, and experienced Iryna Pokanay. Gabriel Aslanian, counsel, is another important team member.
Arzinger CMS Cameron McKenna Dentons DLA Piper Ukraine Egorov Puginsky Afanasiev & Partners Ukraine Integrites Jeantet Redcliffe Partners
WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Banking & Finance/Restructuring
Nazar CHERNYAVSKY Sayenko Kharenko
In 2016 the Ukrainian debt restructuring market, as well as all its practitioners, received new hope in the guise of the brand new Financial Restructuring Law, which came into effect this year. The concept of the Law was based on the best practices of out of court debt restructurings and workouts (globally known as the London Approach and less known, but more relevant for Ukraine Istanbul Approach) and was intended to boost the turnaround of economically viable Ukrainian companies in distress, as well as to revamp the Ukrainian banking system. One of the important features of the new law is that it specifically addressed the participation of state-owned banks and the Deposit Guarantee Fund in debt restructuring, given that they now control in aggregate most of the assets in the Ukrainian banking system. However, the authors of the new law have not managed to retain the mechanism whereby non-participating creditors could be crammed down by the majority of votes in the course of court— approved voluntary restructuring, which might be a disincentive for the other creditors to participate at all in the process. However, this mechanism may still appear in the restated version of Article 6 of the Insolvency Law, which is expected to be put to the vote in Parliament soon. In any event, we believe that the new law would create an entirely new market for all professionals generally involved in debt restructuring, including lawyers. Lawyers would act as arbitrators within the procedure stipulated by the law, as well as carry out “viability” legal due diligence and traditionally draft the agreements so as to give effect to restructuring. Other than potential work related to the new law, we see the revival of the Ukrainian Eurobond market, which means the possibility of the new restructurings involving these instruments. One of the most likely transactions in 2017 would be buybacks of Eurobonds and exchange offers to raise money at a better value. Generally, we believe that any debt restructuring should be more viable with new money and we expect to see more new financings than workouts of distressed debt next year.
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UniCredit, Sberbank, Black Sea Trade and Development Bank, and regularly acts on the lenders’ side. This past year the firm extended its restructuring track record and currently works across high value restructurings of the corporate and public borrowers, exchange offers and consent solicitations, acquisitions of distressed debts. The firm currently advises CRI Group Limited on USD 1.3 billion debt and corporate restructuring of Mriya Agro Holding. Natalia Selyakova, partner, has led the practice for many years. Nadiya Shylienkova received positive responses for her experience in sophisticated crossborder projects. The practice of DLA Piper Ukraine is busy with financing projects and sophisticated restructuring work, and advised on specific banking regulation, international payment system, debt to equity conversion and sanctions advice. The team is experienced in financing matters in transport, infrastructure, energy, agriculture. The firm advised GIZ, German agency for international development and cooperation supporting the German government, on establishment of Energy Efficiency Fund by international donors and the State of Ukraine to provide a sustainable long-term mechanism to finance energy efficiency projects. Most recently the office has been increasing its focus in banking M&A and nonperforming loans sale. For example, the firm advised AHBB in a transaction on disposal by UniCredit of 99.9% held in PJSC Ukrsotsbank in exchange for a minority stake (9.90%) in ABHH. Other clients encompass EBRD, IFC, Alfa Group, UniCredit Bank, Black Sea Trade and Development Bank. The lead partner is Oleksandr Kurdydyk. The senior team includes Illya Muchnyk, Mykhailo Byelostotskiy, Rodion Ignatenko. Arzinger advises on lending, representing mostly creditors, while this past year it demonstrated a strong record of restructuring work. The landmark ongoing project among agrarian corporate borrowers is advising the coordinating committee of banks in connection with restructuring of Mriya Group’s USD 1.3 billion debt. Sberbank of Russia has been advised in connection with restructuring of a USD 600 million syndicated loan facility provided to Ukrlandfarming, and DTEK debt restructuring. The practice enjoys an extensive client base, that includes the EBRD, IFC, Deutsche Bank, UniCredit Bank, ING, Erste Bank, Societe Generale, VTB, Credit Europe Bank, Amsterdam Trade Bank, Intesa Sanpaolo, Landesbank Berlin AG, Raiffeisen Bank, Big Dutchman AG, Oikocredit, BHF-Bank. Highly active throughout the past year, partner Oleksandr Plotnikov heads the practice. With an established CEE network CMS Cameron McKenna is known for advising on finance transactions in the energy and natural resources, agricultural and infrastructure sectors. The firm benefits from its ability to handle multijurisdic-
tional English law governed deals, most recently acting predominantly on behalf of lenders. The firm constantly advises the EBRD on municipal and infrastructure projects in Ukraine. The firm has vast experience of work with non-performing loans and large restructuring projects. For example, it advised PJSC Alfa-Bank (Ukraine) on the restructuring of a multimillion dollar financing of PJSC TorontoKyiv. Mark Segall, the Prague-based partner, is a lead partner. Other team members are Kateryna Chechulina, Vyacheslav Ovechkin, Tetyana Mykhailenko. Egorov Puginsky Afanasiev & Partners Ukraine has a well-versed banking and finance, capital markets practice. Most recently, EPAP Ukraine acted as legal counsel to the EBRD in connection with the original secured loan facility to an oil and gas production company, and the subsequent restructuring and release of security. The Kyiv team is active in restructuring and advised two major international banks on restructuring of pre-export facilities and issuance of further funding instruments by one of the biggest Ukrainian industrial groups. Among significant high profile clients are Credit Suisse International, Deutsche Bank, Morgan Stanley International & Co PLC, UBS Limited, VTB Capital and others. The team is led by partner Roman Stepanenko. Jeantet, a French international law firm, is active in supporting cross-border lending deals, of late on the lenders’ side in the main, and is particularly often chosen by international financial institutions. The team advised the European Investment Bank (EIB) on matters of Ukrainian law with regard to the USD 260 million loan facility, extended to UkrEximBank and on a USD 75 million secured senior loan to Nibulon Group. This past year Jeantet acted on restructurings, having in its portfolio a number of multimillion cross-border mandates. The largest completed projects were advising Amsterdam Trade Bank N.V. with regard to the USD 436 million restructuring debt owed by a Ukrainian energy holding. Promoted to local partner, Igor Krasovskiy is among extremely busy professionals this year. The project workflow is overseen by Kyivbased managing partner Bertrand Barrier. Integrites is extending its presence on the transactional front, as well as performs a solid record of restructuring work, loans portfolio management. The firm has an established position for trade finance matters, and recently advised Rabobank International on a trade finance facility to Quadra Commodities SA. The firm advised Credit Agricole Ukraine on its participation in the EBRD’s trade facilitation program and signing of a term loan facility agreement, as well as a trade finance facility to boost the export of products from Ukraine. With its well-equipped network of offices, the firm handles a range of regulatory work counseling on
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IN UKRAINIAN LAW BY PRACTICE AREAS â &#x201E; INDUSTRIES Banking & Finance/Restructuring
The strong litigation force that is EQUITY (called FCLEX up till June 2017) is among the highly vivid players on the field of banking disputes and restructurings of domestic industrial heavyweights. The firm represents Vernum Bank in a series of debt collection disputes, and acts for the Corporate Non-Governmental Pension Fund of the NBU in litigation regarding withdrawn pension assets valued at USD 87.5 million. Azovmash entrusted the team to support its debt restructur-
ings. The firm actively works with insolvent domestic banks and bank resolution, supporting subsequent procedures involving Omega Bank and Finance and Credit. Andriy Nikitin is the practiceâ&#x20AC;&#x2122;s lead partner. The litigation workflow is handled by Oleg Malinevskiy and Viktor Barsuk. Vasil Kisil & Partners is involved in financing and refinancing, project financing, specific compliance issues, restructuring, factoring, and most recently is a very active force in debt collection cases, and advice on non-performing loans. The firm advised AWAS,
REGIONAL DESKS OF INTERNATIONAL LAW FIRMS
(Listed in Alphabetical Order) Allen & Overy has a 12-lawyer team involved in banking and finance, and corporate projects involving Ukraine. The London, New York and Amsterdam offices advised Metinvest, a vertically integrated steel and iron ore producer, on circa USD 2.2 billion financial restructuring. The legal team covered advice on English law (Andrew Trahair, Mark Sterling, Jeanette Cruz), Dutch law (Brechje van der Velden) and NY Law (Dan Guyder, Elizabeth Leckie). Herbert Smith Freehills has around 20 lawyers across its global network regularly advising on deals involving Ukraine. The recent portfolio has taken in large-scale restructurings of Ukrainian corporate borrowers. The firm rendered advice on English and Russia law to Sberbank of Russia, and provided coordination of counsels in Cyprus, Switzerland and Ukraine, in enforcement options and subsequent restructuring of the USD 600 million facility to Ukrlandfarming. The project involved a series of partners, namely, Artjom Buligin, Vladimir Melnikov, Edward Baring, Olga Davydava, Jeremy
Garson, Nicholas Peacock, Ian Gatt. The firm advised Sberbank of Russia on restructuring of the USD 400 million facility agreement with DTEK Group. The lead partners were Evgeny Zelensky and Artjom Buligin. White & Case is among the principal international legal counsels on capital markets and subsequent restructuring mandates. The firm acted as international counsel to the Ministry of Finance of Ukraine on the USD 1 billion Eurobond issue due 2021 fully guaranteed by the US, acting through the USAID; on issue of notes and GDP-linked securities (as part of the restructuring of four sovereignguaranteed loans to Ukravtodor and Yuzhnoye State Design Office); on a loan from Turkey to Ukraine to finance the needs of the State Budget. On the restructuring front, White & Case acted as English law counsel to JSC Ukrzaliznytsia in the course of USD 500 million Eurobond restructuring. The Londonbased partners working on Ukrainian matters are Ian Clark, Doron Loewinger, Michael Doran and Stuart Matty.
LEADING FIRMS 1. 2. 3. 4. 5.
AVELLUM Baker McKenzie Sayenko Kharenko Redcliffe Partners Dentons
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
AEQUO Arzinger Asters CMS Cameron McKenna Ilyashev & Partners
LEADING INDIVIDUALS 1. Glib Bondar (AVELLUM)
Restructuring
Ukrainian and Russian law. The practice is led by two partners, Oleh Zahnitko and Vsevolod Volkov.
WHO IS WHO
2. Olexiy Soshenko (Redcliffe Partners) 3. Nazar Chernyavsky (Sayenko Kharenko) 4. Natalia Selyakova (Dentons) 5. Yulia Kyrpa (AEQUO) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Anton Korobeynikov (Sayenko Kharenko) Igor Krasovskiy (Jeantet) Oleksandr Kurdydyk (DLA Piper Ukraine) Andrey Nikitin (EQUITY) Oleksandr Plotnikov (Arzinger) Iryna Pokanay (Asters) Roman Stepanenko (Egorov Puginsky Afanasiev & Partners Ukraine)
COUNSELINK AMBER LAW COMPANY
29 Lesi Ukrainki Blvd., Office 75, Kyiv, 01014, Ukraine Tel.: +380 67 325 9582, +380 44 228 0279 Fax: +380 44 285 5286 E-mail: office_law@amber-corp.com Web-site: www.amber-law.net
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DMITRIEVA & PARTNERS 3 Dniprovska Naberezhna, Kyiv, 02098, Ukraine Tel.: + 380 44 553 7660 E-mail: office@dmp.com.ua Web-site: www.dmp.com.ua
ESQUIRES
40-X Hlybochytska Street, Kyiv, 04050, Ukraine Tel.: +380 44 337 7007 Fax.: +380 44 337 7008 E-mail: info@esquires.legal Web-site: www.esquires.legal
TRUSTED ADVISORS
40/85 Saksahanskoho Street, 5th Floor, Kyiv, 01033, Ukraine Tel./Fax: +38 044 359 0664 E-mail: info@trustedadviors.com.ua Web-site: www.trustedadvisors.ua
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Banking & Finance/Restructuring
international aircraft owner and lessor on corporate, debt and securities restructuring due to change of financing partner from BNP Paribas to Wells Fargo Bank. Another highlight is advising international financing operator of online microlending b2p platforms in numerous jurisdictions on structuring another online platform for borrowing money from both private and institutional investors. The firm’s current dispute portfolio includes representation of Latvijas Krajbanka, one of the major Latvian banks, in debt collection litigations/liquidation procedure of a Ukrainian bank. The clientele of the practice includes BNP Paribas, Hellenic Bank, Confidence and Guarantee Insurance Company, Foreign Alternative Investment Fund Manager, IMS, AFI Development Plc, World Bank, IFC. Alexander Borodkin and Anna Sisetska are the key contacts for this practice. Counsel Oleksiy Sluch, who handled representation of clients in banking disputes, left for Integrites. Launched in Kyiv in March 2016, Kinstellar completed its banking practice with the hire of Andriy Nikiforov from Baker McKenzie. The practice also advises on regulatory and compliance and banking litigation. The office attracted a significant client base out of banking institutions and industrial majors, like Ferrexpo AG and Ukrbud. Managing partner Kostiantyn Likarchuk is known for his strong cross-border dispute resolution skills. Other team members are Iryna Nikolayevska and Serhiy Mykhaylyk.
Spenser & Kauffmann reestablished its practice, accumulating the team into M&A, banking and finance practice by attracting banks, agro-holdings and developers. Throughout the past year the firm actively targeted its service of international asset tracing of debtors, acting for major banks, and added to its profile cross-border loan restructuring assignments. The firm advises INFIKO-HOLDING, LLC, the enterprise of the Slobozhanskaya Building Ceramics group of companies on restructuring of debt to a factoring company with subsequent legal support for court proceedings and business protection. The firm also renders regulatory advice within scaled M&A deals, assets structuring, and has an established following in the insurance industry. The practice head is the firm’s counsel Nickolas Likhachov. Tatiana Daniltseva, partner, heads insurance and tax. Wolf Theiss is known for its experience in financial restructuring and debt collection, while recently the firm has added regulatory and non-performing loans advice. Among the highlights of the team is advising Erste Group on the contemplated sale and transfer of a portfolio worth over EUR 300 million in non-performing loans granted, and financial lease agreements, executed by its related entities. Another project is giving advice to Vakif Bank on Ukrainian laws and regulations applicable to the forced liquidation of a Ukrainian bank. Oksana Volynets is head of practice.
Ilyashev & Partners is active in restructuring and litigation, and is often enlisted for cross-border debt collection matters involving CIS countries. The firm advised SE Antonov on USD 49.4 million bond restructuring of Avian Plant before the state. BTA Bank Ukraine instructed the firm for advice on the buy-out of shares from minority shareholders of BTA Bank and to handle restructuring work with its corporate borrowers. The dispute resolution team acts for PZU Ukraine on challenging decisions by the National Commission on Regulation of Financial Services. Managing partner Mikhail Ilyashev is the primary contact. Oleksandr Vygovskyy is the key practitioner. In 2016 MORIS GROUP followed the path of clientele diversification, focusing on debt collection disputes. The group acted a lot for Ukrainian banks: represented Kambio Bank in USD 4.4 million debt recovery disputes with number of debtors in respect of bank liquidation as an official consultant to the Deposit Guarantee Fund; and UkrInBank, in debt recovery disputes with debtors of the bank as well as foreclosure on mortgaged property caused by bank liquidation. The firm’s established client Lukor PJSC, a subsidiary of LUKOIL, is represented in the USD 4.1 million dispute on termination of agreement and funds collection with PJSC Petrokommerts Bank-Ukraine. The practice combines the forces of two practices: litigation is led by Andriy Savchuk, and competition and financial law is headed by Maryan Martynyuk.
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Education:
Graduated from the Kyiv National Taras Shevchenko University in 2006.
Practice Areas:
Corporate and Tax Conflicts.
Artem PODOLSKIY Partner, Trusted Advisors / Attorney-at-law
Professional experience:
Artem Podolskiy has extensive expertise in solving complex corporate conflicts, especially his main specialization, which is resolving conflicts with bad debt issues in judicial and non-judicial order, and also protection from raiding and the return of property. Mr. Podolskiy provides legal advice to individuals, Ukrainian and foreign companies and provides consultations and legal opinions on various issues. He also provides investment analysis and financial consulting on business development for improving management efficiency and controls of businesses.
Languages: Ukrainian, Russian, English.
www.trustedadvisors.ua Tel.: +380 44 359 0664 E-mail: info@trustedadvisors.com.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Banking & Finance/Restructuring
WHO IS WHO
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Education:
Graduated from the National University Yaroslav the Wise Law Academy of Ukraine in 2003. Artem had earlier earned a bachelor of arts in economics degree at the National University of Kyiv-Mohyla Academy (2000).
Artem SAPRYKIN Partner, ESQUIRES
Practice Areas:
Banking and Finance, Restructuring, Capital Markets.
Languages: www.esquires.legal
Professional experience:
Artem Saprykin focuses on domestic and international mutual investment schemes and private equity transactions, corporate bonds issuances and other financings schemes, including bridge loans, secured loans, cash flow loans. His transactional experience includes complex banking regulatory issues, securities transactions (including projects of professional participants of the securities market), as well as representing clients in international arbitrations and litigations with respect to investments and private equity projects. Artem’s economics background has a positive effect on his understanding of the essence of investment and financing transactions. He advises clients by bringing smart and valuable solutions to complicated legal issues in his field of practice. Artem Saprykin’s recent involvement in currency control, banking regulation, stock and securities legislation drafting brings him broad and clear comprehension of contemporary trends in the development of stock, financial and currency markets as well as the objectives and principles of their regulation.
Ukrainian, Russian, English
Tel.: +380 44 337 7007 E-mail: artem.sapykin@esquires.legal
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Education:
University of Waterloo, Waterloo, Canada College of Law, London, United Kingdom Nottingham Trent University Law School, Nottingham, UK.
Petr MALECEK Counsel, Solicitor, Head of Central European Desk, Spenser & Kauffmann
Practice Areas:
Corporate Law, Commercial Law, Capital Markets, Leveraged Finance, Asset recovery, Litigation / Dispute Resolution, Sports Law.
Languages: English, Czech
www.sklaw.com.ua Tel.: +380 44 288 8383, +380 44 288 6707 E-mail: p.malecek@sklaw.com.ua
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Professional experience:
Petr Malecek has 25 years of experience in international law and finance as both an investment banker and a lawyer with firsthand experience of various financial centers including Tokyo, London and across Europe, having advised Governments, corporate entities and financial institutions. Mr. Malecek has a strong grasp of complex finance and legal issues, particularly in civil and common law, either transactional or dispute related. His key strengths include drafting complex legal agreements, strong negotiation skills along with the ability to build, develop and manage practices/business units and practical familiarity with legal matters raised by economic transformation and privatization. Petr Malecek stands out with extensive transactional, dispute and advisory experience and firsthand knowledge of a wide spectrum of jurisdictions, including Western Europe, CEE, the former CIS and MENA, along with recent and ongoing mandates in The Kingdom of Saudi Arabia. He is a Solicitor of the Senior Courts of England and Wales, BA (Economics) and successfully completed his Registered Representative Exam, Securities and Future’s Authority, City of London. As a counsel, he is responsible for supporting the firm’s clients in Central Europe, as well as for transactional and consulting support to cross-border M&A, banking & finance deals and all English-law related matters. Legal 500 recommended Petr Malecek as a leading individual in Ukraine in 2011. In addition, Mr. Malecek was mentioned as an active practitioner in banking and finance by Ukrainian Law Firms. A Handbook for Foreign Clients in 2011 and 2012. Mr. Malecek left Ukraine in 2013 for assignments in MENA and CEE returning to Ukraine in 2016.
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Attorneys Association PwC Legal is enlisted for projects for Ukrainian and international banking institutions as well as insurance companies, and reports on growing currency control and financing advice. It is experienced in refinancing and restructuring, loan portfolio analysis; and actively takes part in the improvement of corporate governance systems at Ukrainian state-owned banks. The team has a remarkable banking clientele. It regularly advises its established client, the State Savings Bank of Ukraine (Oschadbank). The practice is led by managing partner Andrey Pronchenko and supported by Alexey Katasonov, Anna Lypska, Artem Narodenko and Vadym Romaniuk. EY Ukraine is actively broadening its presence in the banking sector, and completed several major projects. EY performed legal analysis of credit portfolio of a major Ukrainian bank with an aggregate value of several billion dollars. The legal team benefits from cooperation between EY Law, Transaction Advisory Services and Fraud Investigation & Dispute Services service lines. Another recent highlight is advising Rozetka on restructuring of debts of Terminal Brovary before its affiliates and the EBRD, including restructuring of the
relevant security. The practice is led by two partners, Albert Sych and Vladimir Kotenko. Another important practitioner is Bogdan Malnev. Lavrynovych & Partners accumulates experience of capital markets work, regulatory advice, and litigation, the busiest practice of the firm. The firm was recently enlisted for advice on previous bond issues, settlement of credit relationships with banks, corporate matters, debt recovery. Elena Zubchenko has an extensive practice in the sector. The litigation team is led by Stanislav Skrypnyk and Andrey Moroz. LCF Law Group is a domestic litigation practice traditionally renowned for representing banks. The group has a solid client profile with banks and asset management companies, among others Alfa Bank, Oshadbank, OTP Bank, Bank Kontrakt, NEOS Bank, Universal Bank, Allianz Ukraine. The main strength of the Ukrainian firm is litigation, in particular, debt recovery disputes on the side of banks. The landmark one is representing Alfa Bank in USD 70 million debt recovery with the Azovmash Group. Senior partner Artem Stoyanov is the main practitioner. The practice also includes two counsels, Olena
Volianska, and the new addition to the team by the name of Kirill Molodyko. Alekseev, Boyarchukov & Partners is at the forefront of debt recovery litigation work on behalf of banks, and strong presence in indebtedness projects. The firm traditionally has a banking following which includes, among others, VTB Bank, Ukrsotsbank, Ukrgasbank. Maksim Boyarchukov, head of litigation practice, manages the sizeable litigation team. Sergey Boyarchukov is a lead partner. KPMG is chosen for compliance, regulatory and currency control advice. The team, guided by Yuriy Katser, senior counsel, head of legal, represented a leading EU bank in a dispute concerning validity of assigning a Crimea loan portfolio (for a Ukrainian bank to an affiliated Russian bank) in 2014. The team acted for AS PrivatBank (Latvia) on contemplated cross-border aircraft foreclosure and supported intragroup debt financing of AVA Ukraine LLC. Gramatskiy & Partners completed a number of banking and corporate financing projects for Ukrainian industrial companies and developers; reported on growing volume of transactional instructions, especially intragroup deals. For example, the firm represented
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Education:
Semen KHANIN President, Lawyer, Amber Corp
www.amber-law.net Tel.: +380 67 325 9582, +380 44 228 0279 E-mail: office_law@amber-corp.com
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1988-1993: Kyiv Higher Military Aviation Engineering College, field of specialization: mathematical basis for automated control systems. Qualification: Mathematical Engineer. 2009-2012: Y. Buhay International University of Science and Technology, Faculty of Law. Master of Law. Lawyer.
Practice Areas:
Professional experience:
1993 — 2007: private entrepreneur. 2007 — present: President, Amber Corp (www.amber-corp.com). 2014 — present: lawyer. Main areas of expertise are international tax planning; complex corporate and tax structuring schemes; tax risk evaluation and elaboration of proposals of risk minimization; consulting on structuring asset protection, including trusts and funds; consulting on international tax planning and various issues of corporate and tax legislation in Ukraine; structuring of M&A deals; drafting and analysis of various documentation in accordance with English law, including shareholder agreements, options, etc.; establishment and administration of foreign legal entities; selection of foreign banks to implement projects of varying complexity, acquiring residence permits and second citizenship abroad.
International tax planning; complex corporate and tax structuring schemes; tax risk evaluation and elaboration of proposals on risk minimization; asset protection, consulting on international tax planning and issues of corporate and tax legislation; etc.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Banking & Finance/Restructuring Skywind Tech UA on receipt of a loan facility from Skywind Holdings Limited. The firm advises its foreign clients oncurrency regulation and regulatory framework; developed a number of restructuring and refinancing schemes; supported with international procedures for banking operations and financial monitoring. The firm narrowed its offering of managing indebtedness of Ukrainian exporters working under pre-export finance under Chinese ECA, and completed a number of deals with nonperforming banking loans. The firm represented ZED Association in the course of restructuring before foreign lenders. Ihor Reutov heads the banking practice. Andrii Trembich focuses on restructuring. Gryphon Legal1 is a niche counsel advising banks and financial companies on an extensive range of regulatory issues. The firm acted on such instructions as organization of currency exchange, money transfers and payment services, as well as work in the electronic money system. The projects included a multiIn April 2016 Gryphon Investment Consulting Group presented two independent certified units — Gryphon Legal and Gryphon Audit. 1
disciplinary service covering specific IT, compliance, corporate matters, tax, and supported by the team at Gryphon Audit. Helen Lynnyk is the main contact. Cross-border debt restructuring for goods and services supplied is the main focus of the Ukrainian branch of TCM Group. The international network is a benefit. This past year the Kyiv team cooperated actively with offices in UK, Netherlands, Hungary, China. The firm handled an assignment on assessing USD 150 million worth of non-performing loan portfolios of a Ukrainian bank, acting on behalf of an international broker company. Denys Kopii and Dmytro Govorun are the principal port of contact. GOLAW advises on banking and finance matters arising from agrarian, energy and IT sectors. The major long-lasting highlight is project financing for the launch of the Krasyliv Bio Power Plant. Being active on the dispute front, the firm represented Czech export bank in the series of debt recovery disputes with the Kuzmintsi Brick Plant. The firm’s remit includes currency control, corporate and
WHO IS WHO
tax. Sergiy Oberkovych, senior partner, is the main contact. Most recently Eterna Law has been focusing on problem assets and debt recovery for Ukrainian subsidiaries of international branches of leading banks, and has traditionally actively advised banks on corporate matters. The firm reinforced its team with the joining of Yaroslav Berezhnyi as a counsel. Dynasty Law Firm, a domestic practice settled in Dnipro, broadened regulatory instructions and retained its focus on litigation. The firm advised the European Commercial Bank VERSOBANK on issues related to the organization of the bank’s representative office in Ukraine and obtaining work permits for its employees. Managing partner Denys Myrgorodskiy is the prime port of contact. The domestic firm SDM Partners is engaged in supporting financing transactions and in debt collection projects. The firm, as led by Serhiy Dzis, advised an international investment fund on providing a loan to a Ukrainian agricultural company.
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Bankruptcy
Bankruptcy
Vladislav RIEZNIKOV Trusted Advisors
The last few years can be described as the peak of the bankruptcy practice in Ukraine. And it is obvious due to the fact of the large number of business entities that could not stand the pressure of economic instability and went through transition in bankruptcy. According to the statistics of bankruptcy cases in the Kyiv Commercial Court for 20142016, the following are the general trends: some 1,000-1,200 cases remain from the previous year; per year — 1,900-2,000 new cases; year-end — 1,200-1,500 are still pending. The year 2016 was also quite intense in attempts to interpret the application of the Law On Restoring Debtor’s Solvency or Declaring It Bankrupt in the appeal to generalize judicial practice. From all such efforts we do believe it is necessary to emphasize the changes to the automatic system of selection of the court-appointed receiver and order of cognizance of claims within bankruptcy proceedings. As a matter of fact, new market bankruptcy trends for 2017 can be divided into two main areas — (1) accompaniment of the case for the benefit of the debtor, and (2) protection of the rights of the creditor. The primary range of services that are most popular is as follows: — Development of an action plan in bankruptcy proceedings with regard to the individual interests of the client; — Research of business and property information of the bankrupt for predicting possible ways to satisfy creditors’ or debtors’ interests; — Analysis of current judicial practice to select the least risky lines of action in bankruptcy; — Direct representation in court; — Communication with the court-appointed receiver, the debtor, and its creditors to elect a coordinated course of action. Taking the mentioned number of cases into account, and considering the fact that bankruptcy is and will be of great interest, we believe that similar trends and mechanisms will be in demand for the next two years. Also considering the fact that despite lots of reforms and efforts from the Government, the economic situation is still rather harsh and unfriendly, these will lead to similar problems within small and medium-sized businesses that may start suffering from the same financial tension and bankruptcy risks.
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lyashev & Partners has an exceptionally strong bankruptcy standing, being referenced as a consistent practice, with geographical scope covering Ukraine and Russia. The network of offices is an advantage of the firm. The firm supports the bankruptcy procedure of Creative Group in a USD 660 million case; continued support of insolvency procedure of Sumykhimprom that is at the sanation stage. BTA Bank Kazakhstan instructed the firm to represent its interest in the bankruptcy procedures of several corporate debtors in the Russian Federation. Some other clients of the practice include Okean Shipyard, FSC More, Inter-Risk Ukraine, Mikhailovsky GOK, Port of Vitino, White Sea Oil Depot. Roman Marchenko received solid praise from peers for consistency and performance in sound cases. The sizeable team includes Andriy Konoplya, Vadym Kizlenko, Mykola Burtovyi, Lesya Samarina, Oleksandr Denysenko.
Given its extensive experience in debt recovery work and strong litigation capabilities, EQUITY (called FCLEX up till June 2017) is among the brightest legal counsels on the bankruptcy market with a solid portfolio of large-scale projects. The three-partner team is a counsel in the largest bankruptcy at the moment, of enterprises, members of Azovmash Group: PJSC Azovobshemash and PJSC Azovelectrostal, with total creditors claims of around USD 1.3 billion. Another notable representation is acting for Dutch investor Okean B.V. in the bankruptcy case of the Nikolaev Shipyard Okean, where the client’s claims as a creditor amounted to USD 133 million. Other load bankruptcies are the cases of Svitlovodsk Butter and Cheese Making Integrated Plant, Bobrovitskiy Dairy Factory and Milk Canning Plant and PJSC Kherson Factory of Cardan Shafts. Oleg Malinevskiy was very active across bankruptcy projects and related proceedings of the firm’s major clients. Victor Barsuk is a key strategist preferred for practice management. Ario Law Firm is known primarily for its strong dedication to bankruptcy practice, including pre-bankruptcy proceedings, including out-of-court restructuring and commercial disputes. Recent highlights include representation of the Bila Tserkva Dairy Plant as a debtor in bankruptcy proceedings, and resolving its indebtedness before creditors, including a state bank. Another sound ongoing representation is for VTB Bank in the course of recovery of UAH 7.2 billion in loans extended to the enterprises
of the Azovmash Group, which find themselves in bankruptcy proceedings. The partner team is highly esteemed for its market development efforts. Julian Khorunzhyi stands out for his practical experience and established recognition on the market. Iryna Serbin receives strong market feedback on a constant basis. She acts an insolvency official of the Public Joint Stock Company Nikolaev Shipyard Okean in the course of its bankruptcy. Oleksii Voronko is another key team member. Market insiders admire confident market positions of Alekseev, Boyarchukov & Partners. The firm is exceptionally well regarded for complex bankruptcy matters and sophisticated debt recovery litigation. Leading banks are the firm’s mainstay. The firm recently represented PJSC Ukrgasbank in the bankruptcy proceedings of the LLC FFS and LLC Palyanytsya. Another significant case involved protection of the bank’s interests in the bankruptcy procedures of the Mriya group of companies. The firm’s client list takes in Ukrsotsbank, Ukrgasbank, VTB Bank, Blitz Inform, Euro Pharma, Alfa Bank, OTP Bank, GEOS, PU Kievkinofilm. Aleksandr Tkachuk is active in project work. Sergey Boyarchukov is a recognized name known for succeeding in the most complicated projects. This past year the team of L.I. Group developed its track record and extended its portfolio of banking clientele, which includes VTB Bank, VAB Bank, OTP Bank, Piraeus Bank ICB, UkrSibbank, Ukrsotsbank, Finance and Credit Bank. The group is known principally for representing banks in complicated bankruptcy cases, insolvency proceedings and credit recovery. Among the soundest projects undertaken by the firm is a case of bad debt recovery from the guarantor of PJSC Creative in favor of Piraeus Bank which came to about USD 15 million; and represented VTB Bank in the course of the bankruptcy of Rainford Dairy Plant. Both partners Mykola Kovalchuk and Artur Megerya are deeply involved in the practice. Arzinger’s well known insolvency practice enjoys a client following from the banking and finance sector. The practice team is allocated within all three of its offices in Kyiv, Lviv and Odesa. The firm currently represents a syndicate of banks in USD 300 million bankruptcy proceedings of PJSC Creative. Another resonant case of the team is ongoing representation of a manufacturer of alcoholic drinks in the recovery of its Ukrainian assets alienated in the bank-
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Bankruptcy ruptcy procedure of the subsidiary company Belvedere Ukraine. The practice is headed by Anton Molchanov, senior associate and overseen by Markiyan Malskyy, partner. Trusted Advisors, an ambitious young domestic law firm, boasts its bankruptcy practice and showcased a growing portfolio. The firm acts predominantly on the debtors’ side, and is particularly highlighted for its support in bankruptcy related litigations and is noted for its particularly strong presence in the agricultural sector. The firm handled bankruptcy cases representing PJSC Illichivsk Oil and Fat Industrial Complex, Illichivsk Grain Company, PC Bilhorod-Dnistrovskyi Baking Products Integrated Factory, Illichivsk Grain Port and other debtors. Partners Vladislav Rieznikov and Artem Podolskiy, and counsel Dmytro Abramenko are dedicated to the bankruptcy practice. LCF Law Group has a broad litigation practice with exceptional strength in debt recovery cases, including within the framework of bankruptcy proceedings. In 2016 the firm was equally active in representing creditors and debtors. In the ongoing portfolio of the firm is representation of insolvent debtors in litigations with creditors; acting for established client Alfa-Bank in litigations with insolvent debtors. In the past year the firm launched a new multi-structural bankruptcy service for corporations and large business and state enterprises with a complex corporate structure. Anna Ogrenchuk and Artem Stoyanov are lead partners of the practice team. The practice has strong dedicated counsels. Alexander Biryukov brought his crossborder insolvency expertise; Olena Volianska is referred as a professional expert in the bankruptcy area. Sokolovskyi & Partners has a wellestablished practice that covers liability
crisis management, restructuring and bankruptcy. The firm represents both creditors and debtors, works in judicial procedures and supports liquidation proceedings, acts on cases appealing recognition of bankruptcy. Among the complementary strengths of the firm is support from the criminal law practice, to identify signs of a crime during debt-servicing and bankruptcy procedures. The practice is headed by partner Vladyslav Filatov, known as an active bankruptcy administrator. Khomenko, Pita & Partners is a local boutique with well-established market niche. The firm’s recent focus is full scope support in bankruptcy of state enterprises. Outstanding specialist Oleksandr Khomenko is the main point of contact. The bankruptcy practice of Gramatskiy & Partners extends to pre-court sanation, property disposal, liquidation, amicable agreement. The firm is experienced in acting for lenders, borrowers, shareholders and participants, insolvency officials. The law firm gains experience in supporting judicial and extrajudicial bankruptcy procedures such as termination and challenge of bank burdens, issues of a moratorium on creditor claims. Among the landmark projects is supporting the bankruptcy procedure of the Plant Quant and bankruptcy of the Plant Keramic with subsequent amicable settlement. Andrii Trembich is the practice head. Being among the leading counsels for large cross-border restructuring work, Baker McKenzie has a bankruptcy practice and cross-border debt recovery litigation. The office is often enlisted for representing creditors in the course of bankruptcies of Ukrainian borrowers. The practice is part of the dispute resolution practice group headed by partner Ihor Siusel.
LEADING FIRMS 1. 2. 3. 4. 5.
Ilyashev & Partners EQUITY Ario Law Firm Alekseev, Boyarchukov & Partners L.I. Group
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
Arzinger Gramatskiy & Partners Khomenko, Pita & Partners LCF Law Group Sokolovskyi & Partners Trusted Advisors
LEADING INDIVIDUALS 1. Julian Khorunzhyi (Ario Law Firm) 2. Roman Marchenko (Ilyashev & Partners) 3. Sergey Boyarchukov (Alekseev, Boyarchukov & Partners) 4. Mykola Kovalchuk (L.I. Group) 5. Oleg Malinevskiy (EQUITY) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Viktor Barsuk (EQUITY) Vladyslav Filatov (Sokolovskyi & Partners) Oleg Kachmar (Vasil Kisil & Partners) Oleksandr Khomenko (Khomenko, Pita & Partners) Andriy Konoplya (Ilyashev & Partners) Artur Megerya (L.I. Group) Anton Molchanov (Arzinger) Artem Podolskiy (Trusted Advisors) Vladislav Rieznikov (Trusted Advisors)
COUNSELINK AMBER LAW COMPANY
WHO IS WHO
Iryna Serbin (Ario Law Firm)
GENTLS LAW FIRM
Leonardo Business Center, 29 Lesi Ukrainki Blvd., Office 75, 17/52A Bohdana Kyiv, 01014, Ukraine Khmelnytskoho Street, Tel.: +380 67 325 9582, 5 Floor, Kyiv, 01030, Ukraine +380 44 228 0279 Tel.: +380 44 339 9910 Fax: +380 44 285 5286 E-mail: go@gentls.com E-mail: Web-site: www.gentls.com office_law@amber-corp.com Web-site: www.amber-law.net
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TRUSTED ADVISORS
40/85 Saksahanskoho Street, 5th Floor, Kyiv, 01033, Ukraine Tel./Fax: +38 044 359 0664 E-mail: info@trustedadviors.com.ua Web-site: www.trustedadvisors.ua
Ihor Siusel (Baker McKenzie) Mykola Struts (IMG Partners) Andrii Trembich (Gramatskiy & Partners) Olena Volianska (LCF Law Group)
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The Kyiv office of Dentons is known mostly for large-scale restructuring mandates, distressed debt and assets transactions, and also handles representation in insolvency proceedings. The firm has a solid and diversified client base, and often represents lenders in the course of large-scale corporate bankruptcies. The office continues advising CRI Group Limited on complex regulatory and banking and finance matters in connection with the debt and corporate restructuring of Mriya Agro Holding, and its announced bankruptcy. The lead partner is Natalia Selyakova, the head of banking and finance. AEQUO’s bankruptcy and restructuring team advises clients facing financial difficulties and their directors on insolvency. The firm’s recent highlights include representing the
interests of the Latvian financial institution in bankruptcy proceedings against the debtor Upstar Continental in Ukraine. Ongoing work includes representing several debtors in bankruptcy proceedings, Ukrainian operator and producer of the bulk payments systems, and a Ukrainian retailer. Counsel Pavlo Byelousov and senior associate Yevgen Levitskyi are the main practitioners of the practice. Yulia Kyrpa, partner, is head of restructuring and insolvency. Full-service firm Vasil Kisil & Partners is known for its proficient litigation practice and for handling bankruptcy matters. The team’s pending projects take in representing an international shipping company in the insolvency case of Black Sea Shipping Company (BLASCO), the largest state-owned shipping company, and legal advice on liquidation of
a Ukrainian subsidiary of an international pharmaceutical company through the simplified bankruptcy procedure, handling the bankruptcy case. Oleg Kachmar, counsel, is in charge of the practice. NOBILI is a local boutique with its principal specialization in bankruptcy. In the outgoing year the firm supported the bankruptcy case of ALIMPEKS-MERTINGER LLC initiated due to the inability to discharge debt owed to PJSC Ukrsotsbank. Managing partner Natalya Tyschenko is an experienced practitioner and often acts as arbitration manager. The peer review identified the names of Mykola Struts, IMG Partners, and Vitaliy Tytych, Vitaliy Tytych & Partners as vivid practitioners in the field of bankruptcy.
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Corporate and M&A
Corporate and M&A Oleh MALSKYY Eterna Law
Market trends in 2016 can generally be described as volatile and unpredictable. Several deals on the market were quite large and those counsels were lucky to take part in them. Generally, we had a good year. Case volume decreased substantially. There are only a few deals on the market, which are purely cash-based. Debts seem to be prevailing in many areas. Distressed assets and the sale of banks on the rights of demand to further enforce are under collateral prevail on the M&A market or deals that are really small and mid-size in value prevail on the market. It can be basically stated that the M&A market has decreased substantially, continuing its contraction over the last couple of years. Disclosure procedures are becoming more burning, some due to the general trend of allocating the source of funds, refusal to deal with politically damaged persons and absolute transparency, working with offshore companies, while doing deals the old-fashioned way becomes more and more difficult. The banking sector also requires substantial disclosure of clients and the sources of funds, which forces transactions to basically be put on hold or dragging on for substantially long periods of time to secure, so that their payment or esquire mechanisms work well. As for legal practice areas and industries which are developing, I could name corporate law practice, protection of minorities, shareholders agreement are being introduced, which is a substantial move in corporate law. However, in practice only a few clients are seriously considering reform of such legal structures and introducing mechanisms as a current stage it is mostly survival, and not really a development stage with their businesses. Development of the practice is to be expected, but there are few signs to indicate that the market will develop. Everybody is learning to live in new realities and as I expected, a couple of good deals will be happening next year. We see quite a lot of interest from foreign investors in the agricultural, logistics, transportation sectors and after those newcomers we believe there will be new more positive signs for the economy and legal profession too.
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aker McKenzie traditionally has a strong international client base and has significantly enhanced its positions among Ukrainian clients. Throughout 2016 the firm was particularly active in pharma and healthcare, agribusiness, infrastructure, banking and finance, energy, real estate; acted for private equity funds and financial institutions. The firm is top counsel in the banking sector. The team, as led by partner Ihor Olekhov, completed a complex share sale deal for Eurobank Ergasias S.A. which disposed of its Ukrainian subsidiary, Universal Bank, in favor of TAS Group. Another landmark project is acting as legal counsel to Cargill, a leading international agricultural company, in respect of an agreement between representatives of Cargill and MV Cargo to enable MV Cargo’s construction of a new port terminal in Yuzhny. The Ukrainian team commands an unmatched track record in healthcare M&A. Olha Demianiuk, counsel, received strong market feedback as a strong M&A practitioner, and focuses on advising pharmaceutical and healthcare clients. The team is experienced in privatization and acted as a legal counsel to the State Property Fund of Ukraine in connection with the planned privatization of Odesa Portside Plant. The Kyiv practice has advantage in a support from the established London based and CIS-focused English qualified team. Viacheslav Yakymchuk, M&A and private equity partner, is noted for deep transactional focus. The team has been also strengthened with Andrii Moskalyk, senior associate. Sayenko Kharenko is among the national leaders with well versed practice covering the full range of M&A and corporate law matters. The key areas of strength include agriculture, financial services, FMCG, healthcare, insurance, IT, media and retail. The team is present across domestic and cross-border M&A, and often acts as a Ukrainian law counsel in terms of global big ticket deals. For example, the team advised Shanghai Giant Network Technology Co. on the Ukrainian aspects of the USD 4.4 billion acquisition of Playtika Ltd. The firm is known for advising landmark transactions for the Ukrainian market, i.e. the team acted as a legal counsel to Aegon Group on the sale of 100% shares in PrJSC Insurance Company Aegon Life Ukraine to TAS Group and supported the sale of shares in the Ukrainian Exchange and PFTS Stock Exchange. The firm commands a sizeable team, which is led by partners Vladimir Sayenko, highly regarded M&A and antitrust expert, and Andrei Liakhov, focused on cross-border corporate transactions and securities regulations. Counsels Svitlana Kheda, Dmytro Korbut, Alina Plyushch and Oleksandr Nikolaichyk were at the forefront of the majority of the projects handled by the firm in 2016.
AVELLUM is among key transactional Ukrainian law firms, enlisted for major international and domestic deals. The team advised Allergan Inc. on Ukrainian law matters in connection with a USD 40.5 billion global sale of part of Allergan’s business to Teva; advised Canada Pension Plan Investment Board on acquisition of a 40% stake in Glencore Agricultural Products. With the exceptionally good standing in corporate finance, the firm is among major counsels for M&A in the banking sector. For example, it advised Raiffeisen Bank International AG and PJSC Raiffeisen Bank Aval in connection with the acquisition of 30% of shares in Aval by the EBRD. In 2016 the firm rendered support on Ukrainian investments abroad, and advised Farmak on the acquisition of a Polish line of business. Managing partner Mykola Stetsenko maintains a reputation of a high-end M&A lawyer, and handles a big scope of transactional mandates on the market. Yuriy Nechayev, counsel, is noted for a very active M&A practice throughout the past year. Being often named proactive, Ukrainian firm AEQUO rapidly added to its track record of domestic and cross-border transactions with particular industrial extension in agro, banking and finance, consumer and retail, TMT, energy life science and healthcare. In the recent highlight, the team advised Viasat World Limited in the process of acquisition of Viasat Ukraine LLC, a major provider of digital satellite television services in Ukraine, from Modern Times Group. The three-partner strong M&A practice acts on a number of significant domestic deals that effect state of play in various industries. For example, advised Epicenter K, the largest Ukrainian DIY retail chain, on acquisition of a controlling stake in Vinnitsa Agro-Industrial Group. It also offers expertise in restructuring, venture investment, general corporate assignments, and winding up, sanctions regime. The strong roster of local clients (Vodafone Ukraine, Nova Poshta, Starlightmedia Group, Mosquito Mobile, the leading chains of private medical clinics Dobrobut, ATB Market and Novus Ukraine, UBG, NCH Capital) is enhanced with expanding international clientele (George Soros’s Ukrainian Redevelopment Fund, Viasat World Limited, SONAE Group, Trussardi, UniCredit Group, Uralkaliy, Lohika). Yulia Kyrpa, partner, is in front of transactional scope in the banking sector. Anna Babych, partner, head of corporate/M&A, is a non-practicing solicitor (England and Wales), and spent a highly active transactional year. Denis Lysenko, managing partner, is recognized for his extensive background and involvement in antitrust and tax practices. DLA Piper is experienced in transactional work and general corporate matters. Over the past year
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Corporate and M&A the office advised on a number of high profile M&A projects, and expanded its recent transactional portfolio. The office is chosen by international majors and local business groups. Thus, the team advised DCH Group in the transaction of gaining full control over the chain of Karavan trading and entertainment centers via acquisition of stakes from the partners; advised Georgian Industrial Group on acquisition of a 29.29% stake in Ukrainian insulin producer JSC Indar from Polish biotechnological company Bioton S.A. The team often acts in the banking sector, and advised AHBB in a transaction on disposal by UniCredit of 99.9% held in PJSC Ukrsotsbank in exchange for a minority stake in ABHH. Galyna Zagorodniuk, partner, received strong endorsements for handling transaction work. Her focus includes manufacturing, life science, retail, FMCG. Both legal directors Alla Kozachenko and Illya Muchnyk are noted for transactions, general corporate work and securities. Margarita Karpenko, managing partner, supervised the team for many years. The reputed team of CMS Cameron McKenna showcased its growing transactional performance, and also offers its clientele day-to-day legal support in Ukraine. In the Ukrainian market the office stands out for stellar dedication to energy, wealth expertise in private equity, banks, agriculture and machinery. The busy transactional team advised MV Cargo on the USD 100 million joint venture with Cargill for the construction of a new grain terminal in the Ukrainian Black Sea port of Yuzhny. As a stellar energy practice, the team advised NAFTA a.s. in connection with the establishment of a joint venture with Cub Energy Inc., an upstream oil and gas company.
LEADING FIRMS
LEADING INDIVIDUALS
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
1. Mykola Stetsenko (AVELLUM)
Baker McKenzie Sayenko Kharenko AVELLUM AEQUO DLA Piper Ukraine CMS Cameron McKenna Dentons Asters Jeantet Kinstellar
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
Arzinger Eterna Law EUCON EVERLEGAL EY Ukraine ILF (Inyurpolis Law Firm) Integrites Redcliffe Partners Vasil Kisil & Partners Wolf Theiss
29 Lesi Ukrainki Blvd., Office 75, Kyiv, 01014, Ukraine Tel.: +380 67 325 9582, +380 44 228 0279 Fax: +380 44 285 5286 E-mail: office_law@amber-corp.com Web-site: www.amber-law.net
GOLDENGATE LAW FIRM
Business Center Saksagansky, Kyiv, 01030, Ukraine 70 Saksaganskogo Street, Tel.: +380 67 776 6130 E-mail: info@goldengate-law.com Web-site: www.goldengate-law.com
2. Vladimir Sayenko (Sayenko Kharenko) 3. Viacheslav Yakymchuk (Baker McKenzie) 4. Anna Babych (AEQUO) 5. Graham Conlon (CMS Cameron McKenna) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Oleg Batyuk (Dentons) Olha Demianiuk (Baker McKenzie) Yevheniy Deyneko (EVERLEGAL) Oleksiy Didkovskiy (Asters) Taras Dumych (Wolf Theiss)
The well-established CEE network enables benefits for regional mandates. The firm provided advice to DECAPTERUS S.A.R.L. on the EUR 175 million sale of Hamé to the food group Orkla. English law expertise is an advantage for cross-border mandates. Notably, the Kyiv-based corporate and private equity partner Graham Conlon received endorsements for strong general corporate expertise during reviews from peers. The key practitioners of the team are Olga Belyakova, Tetyana Dovgan and Vitalii Mainarovych.
COUNSELINK AMBER LAW COMPANY
WHO IS WHO
Dmytro Fedoruk (Redcliffe Partners) Ernest Gramatskiy (Gramatskiy & Partners) Margarita Karpenko (DLA Piper Ukraine) Armen Khachaturyan (Asters) Andrey Kolupaev (Lexwell & Partners) Alla Kozachenko (DLA Piper Ukraine) Andrei Liakhov (Sayenko Kharenko) Denis Lysenko (AEQUO) Oleh Malskyy (Eterna Law) Volodymyr Monastyrskyy (Dentons) Illya Muchnyk (DLA Piper Ukraine) Adam Mycyk (Dentons)
DMITRIEVA & PARTNERS
3 Dniprovska Naberezhna, Kyiv, 02098, Ukraine Tel.: + 380 44 553 7660 E-mail: office@dmp.com.ua Web-site: www.dmp.com.ua
ESQUIRES
40-X Hlybochytska Street, Kyiv, 04050, Ukraine Tel.: +380 44 337 7007 Fax: +380 44 337 7008 E-mail: info@esquires.legal Web-site: www.esquires.legal
Yuriy Nechayev (AVELLUM) Iryna Nikolayevska (Kinstellar) Alina Plushch (Sayenko Kharenko) Vadym Samoilenko (Asters) Svyatoslav Sheremeta (Integrites)
MORIS GROUP LAW COMPANY
8B Moskovska Street, Kyiv, 01010, Ukraine Tel./Fax: +380 44 359 0305 E-mail: info@moris.com.ua Web-site: www.moris.com.ua
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SERGEYEVS’ LAW OFFICE
11/6 Armiyska Street, Office 2a, Odesa, 65058, Ukraine Tel./Fax: + 380 487 37 7228 E-mail: office@srgv.com Web-site: www.srgv.com
Anna Sisetska (Vasil Kisil & Partners) Albert Sych (EY Ukraine) Illya Tkachuk (Jeantet) Valentyn Zagariya (Spenser & Kauffmann) Galyna Zagorodniuk (DLA Piper Ukraine) Anna Zorya (Arzinger)
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Corporate and M&A
With the enhanced cross-border capabilities, Dentons succeed in winning new big stake mandates for cross-border M&A and joint ventures. The office also provides regular corporate advice to subsidiaries of international corporates in Ukraine. Its recent industry focuses include agriculture, energy, infrastructure, financial services, pharmaceuticals, telecommunications and automotive. The office is among the main counsels in the energy sector, and notably it currently advises GESS Consulting on a number of acquisitions in Ukraine’s energy sector; and represented Serinus Energy on the sale of 70% of shares in KUB-Gas to Burisma, a private natural gas producer operating in Ukraine. Others on its client roster include Cub Energy, Henkel, Turkcell, Noble Resources Ukraine, Human Rights Watch. The sizeable team includes 5 partners and 7 dedicated lawyers. The Kyiv practice is led by office managing partner Oleg Batyuk. Adam Mycyk, a US-qualified attorney, is well-recognized for M&A work; Volodymyr Monastyrskyy is highly active in corporate matters, compliance and employment areas. Asters stands out through its impressive roster of clients active across a range of industries: banking and finance, food processing and agriculture, energy, real estate and construction, pharmaceuticals, telecommunications, automotive. The firm often acts as a local counsel in the course of global mergers, cross-border and domestic deals, establish-
ment of JVs, corporate restructurings, and had a renowned expertise for a wide scope of regulatory work, corporate governance and compliance. The firm is very visible for its many years of work with financial institutions; acted as a legal counsel for the EBRD in connection with acquisition of 40% of the share capital in UkrSibbank, the capital increase of UkrSibbank by UAH 3.29 billion and ‘debt to equity’ swap. Asters regularly supports a wide array of international names on corporate matters, including market entries and exits. The practice advises Molson Coors, Visa, Wizz Air, Monsanto, Boeing Ukraine, ED&F Man Holdings, Tyco Electronics, Arysta LifeScience SAS and others. The practice featured the involvement of five firm partners, namely Armen Khachaturyan (known for many years practice in banking and finance, and energy), Vadym Samoilenko (renowned corporate lawyer), Oleksiy Didkovskiy (managing partner referred for general corporate expertise, telecom projects and dispute resolution). Svitlana Chepurna and Oleksiy Demyanenko actively handled recent corporate instructions of clients. The Ukrainian office of Jeantet, a French international law firm, facilitates advice on multijurisdictional transactions, evolving M&A, JVs, intra-group sale, corporate restructuring, corporate governance, structuring of distribution of dividends. The firm commands a solid portfolio of international clients, especially of French ori-
gin. Jeantet acted as a legal advisor to Logoplaste on pre-closing restructuring of its operations in Ukraine, sale of a Ukrainian subsidiary. The office is a port of call for global deals and, in particular, the team gave advice to Micro Focus International plc relating to acquisition of a number of IT companies, including one located in Ukraine. Illya Tkachuk, counsel, is a seasoned practitioner and key figure in the practice. Market newcomer Kinstellar, which launched in March 2016, assembled a group of experienced corporate practitioners, and possesses the practice among its cores. Throughout the past year the office actively attracted solid mandates, including M&A, establishment of JVs, corporate governance issues. Notably, the office was present across global acquisitions, in particular, advising Arkema S.A., a leading specialty chemicals and advanced materials company, on its acquisition of shares in DBEW Holding B.V.; McCormick Inc., a USlisted company and largest producer of spices, proprietary seasoning blends, herbs, extracts, sauces and marinades, on the M&A deal related to acquisition of Italian company Enrico Giotti S.p.A., an Italian spice house. Other publishable clients are Ferrexpo, Hemo Medika, Mitsubishi, UBER, Ukrbud. Additionally, the team tapped to advising Ukrainian state authorities on corporate reforms related to Ukrainian state enterprises. Kyiv office managing partner Kostiantyn Likarchuk leads the team, which
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Education:
Kyiv Institute of International Relations at Kyiv National Taras Shevchenko University, 1996.
Practice Areas: Valentyn ZAGARIYA Managing Partner, Attorney, Spenser & Kauffmann
www.sklaw.com.ua Tel.: +380 44 288 8383, +380 44 288 6707
M&A, Foreign Investment, Corporate Law, Antimonopoly Law, Real Estate.
Languages: Ukrainian, Russian, English, French.
Professional experience:
Valentyn Zagariya has for many years been consistently recommended by Best Lawyers — CIS in 2010 — 2017 as being among the leading practitioners in Ukraine in investments, banking and finance, corporate law, M&A, real estate, land use and zoning. In addition, Valentyn’s legal expertise in project finance was acknowledged by Who’s Who Legal in 2011. Moreover, Mr. Zagariya was recognized among the top 5 lawyers in Ukraine in investments in 2008 and 2009 and was distinguished in M&A in 2012 by Ukrainian Law Firms. A Handbook for Foreign Clients. Furthermore, Valentyn Zagariya was listed in the survey The Choice of the Client: Top 100 Best Lawyers of Ukraine in 2010, 2011 and 2017 by Yurydychna Gazeta in investments, private public partnership, corporate law and M&A. Valentyn’s professional experience was noted by surveys of Yuridicheskaya Practika Publishing, being listed among 25 most famous lawyers in Ukraine by Ukrainian Law Firms 2011, getting in the top 3 of the 15 Most Powerful Ukrainian attorneys; and receiving the award by Legal Awards as The Best Partner of a Law Firm in 2010 and for outstanding professional achievements in 2016 (the choice of the editor-in-chief of Yuridicheskaya Practika). With regard to his managerial capacity, Valentyn Zagariya was ranked among the top 10 Managers of the Ukrainian Legal Market in 2010-2011 and in the top 5 in 2012. Furthermore, Mr. Zagariya won the nomination of Legal community leader of Lawyer of the Year — 2012.
E-mail: v.zagariya@sklaw.com.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Corporate and M&A includes Iryna Nikolayevska, counsel, head of the department, and Olena Kuchynska, managing associate. Arzinger is active right across M&A and restructuring projects. Recent practice highlights involve representation of the leading telecommunications operators in the CIS market in connection with the acquisition of a systems integration business and the subsequent reorganization of the relevant group. The firm gives advice to a Ukrainian investment company on investments in a number of businesses; and advised Zeppelin International AG in acquisition of shares in one of the assets of TMM Group, a local construction firm. Arzinger’s clients come from the agrarian, food processing, real estate, pharma and telecom sectors. Anna Zorya is the lead partner. Managing partner Timur Bondaryev contributes with his wealth of commercial expertise, and heads the firm’s strong real estate practice. The fast-growing Integrites, an international law firm of Ukrainian origin, continued completion of its network and transactional capacities. The firm’s recent portfolio encompasses domestic and cross-border M&A, comprehensive structuring mandates. The firm advised Dragon Capital on acquisitions of logistics centres in Kyiv Region. Well regarded as a bright transactional lawyer Svyatoslav Sheremeta (previously — co-head of Legal Department at Dragon Capital) joined as a partner to head the corporate and M&A section. Dr. Julian Ries is another Munich-based dedicated partner.
Operating as an independent Ukrainian law firm, Redcliffe Partners preserves its presence in transactional work and continues to get mandates from multinational companies. The firm advised EM&F Group on the sale of Smyk, a leading retailer of children’s apparel, toys and accessories in Poland, to Bridgepoint, an international private equity fund. Another highlight is advising Yildirim Group, one of the leading globally diversified industrial groups in Turkey, on all legal aspects relating to the participation in the privatization of Ukraine’s Odesa Port Plant. Redcliffe is one of the most frequently hired counsels by the EBRD, and advised the EBRD on an increase of a shareholding in Ukraine-based Raiffeisen Bank Aval. The firm is developing its compliance offering and hired Ario Dehghani counsel, who moved from Hogan Lovells to lead the dedicated niche. The sizeable force is led by partners Dmytro Fedoruk (M&A) and Rob Shantz (corporate). Zoryana Sozanska-Matviychuk, counsel, is another important name in this practice. EVERLEGAL is a transactional focus team, proactively wining international and local clients, with the primary focus on oil and gas, renewable, agribusiness, IT and pharma. This dynamic firm is experienced in structuring cross-border M&As and JVs, and extended its recent portfolio with private equity funds. In particular, the team advised a Ukrainian agricultural holding in connection with the acquisition of a foreign-owned agricultural business in Ukraine; advised on the sale of a minority stake in a web-based, digital market research business
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to a Ukrainian investor. The energy practice represented a Ukrainian developer of renewable energy projects on setting up a joint venture with a large Ukrainian industrial and investment group in relation to development of several renewable energy projects. The practice is led by Yevheniy Deyneko, managing partner. Another corporate partner, Andriy Olenyuk, is involved extensively in renewable energy matters. The highly regarded corporate practice of Vasil Kisil & Partners regularly handles corporate work, representing clients from aviation, real estate, construction, agrarian, pharmaceuticals, financial, telecom sectors. It was active lately in corporate and restructuring issues, cross-border and domestic M&A, as well as assistance with privatization matters. The firm advised the concern NICMAS (formerly known as UkrRosMetal) on the corporate restructuring of its group which included more than 30 Ukrainian and foreign companies; advised CEN Biotech Inc. with the intra-group restructuring of the participation structure in Ukrainian subsidiaries. The firm worked as a local counsel to MTG, a Swedish mediaholding, on the sale of its Ukrainian pay-TV channel business subsidiary Viasat Ukraine, LLC to Viasat World Limited. The projects are led by counsels Volodymyr Igonin and Anna Sisetska. Partner Alexander Borodkin, who is also known for his extensive track record of real estate projects, heads the practice. Wolf Theiss is continuously involved in supporting both inbound and outbound investments. Amongst the leading sectors of clients’ interest
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Education:
Viktoria KOVALCHUK Partner & Founder, ESQUIRES, Attorney-at-Law
www.esquires.legal Tel +380 44 337 7007 E-mail: viktoria.kovalchuk@ esquires.legal
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Lviv National University Law School, Master of Law, 2008. Ukrainian Mediation Centre at Kyiv Mohyla Business School, Mediator, Basic Mediator Skills, 2017. Ukrainian Mediation Centre at Kyiv Mohyla Business School, Business mediators (Wirtschaftsmediator/ in (ihk) programme — present.
Practice Areas:
Corporate and Tax.
Languages: Ukrainian, German, English, Russian
Professional experience:
Viktoria is the founder and head of the Corporate and Tax practice at ESQUIRES. Viktoria specializes in commercial law, has extensive experience of consulting national and international clients in a broad range of matters, including the development and implementation of complex corporate governance structures. She also advises private clients on issues related to family law: financial matters, marital agreements, child maintenance and parenting, spouse maintenance and inheritance.
Public activity and Pro bono:
Having extensive experience as an attorney and representing clients in courts, she has moved her focus to alternative dispute resolution, including negotiations and mediation. Viktoria is a certificated mediator of the Ukrainian Center of Mediation. As a member of the National association of Mediators of Ukraine, Viktoria is working on the implementation of laws regulating mediation in Ukraine. She also provides legal advice pro bono to women facing financial hardship (MamaSoS Charity Fund).
Recognition:
Admitted to Ukrainian Bar Association (UBA) ESQUIRES was recognized as newcomer of the year at the Ukrainian Legal Awards 2017.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Corporate and M&A
and projects are banking, insurance, renewable energy, mining and agriculture. With its established CEE network, the firm is mandated for regional M&A. For example, it advised OSRAM, a leading global bulb producer, on the carve-out of the traditional light bulb business to separate it from a new brand, LEDVANCE, in the production of halogen bulbs, energy-saving bulbs and certain LED. Given the established presence in the energy sector, its office provided advice to AMIC on the EUR 3.8 million acquisition of two Ukrainian companies that are engaged in the business of operation of refueling stations in Ukrainian airports. Oksana Volynets, Olena Kravtsova, Olga Ivlyeva, Sergii Zheka are guided by Kyiv managing partner Taras Dumych. Eterna Law (previously known as AstapovLawyers international law group) is traditionally present across regional CIS mandates. Having added two offices — in Latvia (Riga) and Germany (Düsseldorf) after the merger with Baltic Business Group, the amalgamated team entered the European market. The firm rendered advice to energy and telecom players, a slew of IT companies and startups, FCMG, pharma industries. In terms of scope, it retained focus on M&A and JV transactional work, investment structuring, cross-border restructuring, sensitive issues that have arisen out of the status of Crimea and sanctions, as well as giving advice on privatization in Ukraine (potential privatization of Odesa port). At present the team advises Show4Me, the British startup, crowd funding platform. Other clients include Dior and AFK Systema. Additionally, the team members are enlisted for their expertise within high stake corporate disputes. The team is led partner by Oleh Malskyy, renowned rainmaker. Maksym Uslystyi, head of the Kazakhstan branch, was promoted to partner. Corporate and M&A practice is one of the key legal practices of EY in Ukraine. The team
has solid experience of general Ukrainian corporate law matters, local and cross-border private M&A deals, including those governed by English law. The practice works closely with other service lines and possesses a “one-stop shop” approach. Further strength includes advisory on corporate governance and private equity. EY develops a financial and operational performance improvement program and corporate development plan for the Kyiv Metro System. The team has recently had plenty of instructions on liquidations and exits from the Ukrainian market. On the M&A front, EY has advised Altran, a global leader in engineering and R&D services, on acquisition of Lohika, a software engineering services firm; and rendered advice to Euroins Insurance Group in connection with the acquisition of HDI Strakhuvannya from Talanx International. Albert Sych, partner, is at the fore of the practice. The projects involve other partners Vladimir Kotenko and Igor Chufarov, Iryna Kalyta, director, Bogdan Malnev, senior associate.
The sizeable commercial, corporate and M&A practice of ILF (Inyurpolis Law Firm) follows an industry-wise approach. Clients include major IT sector players; highly sophisticated companies of industrial and household chemicals, retail, cosmetics industries; agrarian companies focused on selective agriculture and alternative energy. The team’s offering ranges from business structuring, high-profile contracts, as well as corporate acquisitions and asset deals (e.g. Hemo Medika Group, BASF, DCH, Provectus). Stand-out features of the practice are its PPP expertise with the recent focus on the healthcare sector, support of sophisticated technology contracts, while the recent M&A focus falls within the agrarian sector. The practice is co-headed by two partners, Anton Zinchuk (mostly known for dynamic work in IT) and Artem Naumov (agribusiness dedication). Tetiana Gavrysh, managing partner, contributes with her wealth of general expertise to the most complicated corporate instructions.
International Legal Center EUCON centers its practice around supporting Polish investors in Ukraine, as well as expansion of Ukrainian firms into Poland. It has become the primary choice among domestic counsels for those Ukrainian businesses that entered Poland, and rendered developed investment models and corporate structuring for outsourcing of production facilities to Poland. Other areas of expertise include general corporate and regulatory matters, corporate compliance and shareholders disputes. Among the active clients are Amica Wronki, S.A., Plastics-Ukraine, Hans Einhell Ukraine, AEROMEX, and some new ones, in particular, IPR Group, World of High Technologies; EU VegOils Group, Agrocenter Poland. The firm operates through two offices, with the one in Kyiv headed by Yaroslav Romanchuk, and the Warsaw one by Ihor Yatsenko.
Given its established presence running into many years on the market, the legal team of KPMG Ukraine enhances its positions by rendering advice on M&A, restructuring, compliance. The team is particularly noted for handling tax advisory. M&A side is featured with supporting deals in the agrarian, IT, energy sectors. The team supported Huurre Group Oy, European freezing equipment manufacturer, in an exit strategy through a management buy-out of a Ukrainian subsidiary. In the past year the legal team, as guided by Yuriy Katser, senior counsel, head of legal, was consistently chosen for corporate and business restructuring, for a range of industries, i.e. Volvo Ukraine, Medochemie, Cloudberry Mobile AS, Sanoma Media Russia & CEE B.V., Hearst Communications, Inc, ACP Ukraine and others. Oleg Chayka, director, handles M&A tax advisory and international corporate taxation.
FOREIGN COUNSELS / REGIONAL DESKS Allen & Overy is one of the most active international counsels working, among others, on Ukrainian deals. Most recently, the London-based team, which includes partner Simon Toms and senior associate William Samengo-Turner, advised Shanghai Giant Network Technology Co. Ltd on the USD 4.4 billion consortium-led acquisition of Playtika and subsidiaries, the online social and mobile gaming arm of Caesars Interactive Entertainment. Budapest-based partner Hugh Owen heads Allen & Overy’s South Eastern Europe Desk. The key partners are
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located in Hungary, Slovakia, Poland, Russia, UK and Germany. In 2016 Herbert Smith Freehills has been increasingly visible throughout corporate finance mandates evolving in Ukraine. Around 20 lawyers across the global network are involved in Ukrainian matters. Evgeny Zelensky, partner and Margarita Slavina, senior associate, advised MHP S.A. on the exchange of grain growing assets Voronezh Agro in Voronezh Region of the Russian Federation for Agrokultura in the
Lviv, Ternopil and Ivano-Frankivsk Regions of Ukraine. Key partners Evgeny Zelensky and Tomasz Wozniak are based in Moscow and London, respectively. Linklaters is among key foreign advisors on cross-border M&A transactions. The team in Warsaw, guided by partner Daniel Cousens, advised UniCredit on English law matters in the course of disposal of a 99.9% stake in PJSC Ukrsotsbank, an asset of UniCredit Group in Ukraine, in exchange for a minority stake (9.9%) in ABH Holdings S.A.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Corporate and M&A Attorneys Association PwC Legal, a member of PwC’s international network of firms, benefits from its broader capabilities and geographical reach. The legal team enjoys an impressive client base (Dyckerhoff Ukraine, JT International Ukraine, Oriflame Cosmetics Ukraine, LG Electronics, Honda Motor Europe Limited, Toshiba Corporation, Oschadbank). The office is a point of choice for many international industry leaders with their business operations in Ukraine, as structuring investments and winding up, corporate governance, restructuring, and facilitating advice on acquisitions and joint ventures. The team supported a series of M&A projects of different sizes and industries (including FMCG, banking, auto, technologies). PwC Legal was mandated by Bohnenkamp, AG to support the Ukrainian part of a transaction related to its partial acquisition of Starco Group business, including two Ukrainian subsidiaries of Starco. The practice is led by Andrey Pronchenko, managing partner, supported by team members Alexey Katasonov, Igor Yatsyshyn, Anna Lypska, Olga Melnychenko and Vladimir Zabudskiy. In 2016 Spenser & Kauffmann rapidly extended its capacities as a domestic law firm, expanding its scope of projects. In a recent highlight the firm advised on corporate restructuring, structuring of M&A, regulatory and securities advice, and is supported by its litigation force. The firm is active in agribusiness, renewable energy, technology, finance, construction, automotive. Among the clients to note are Yuyue Home Textile Со., Agrospetsservis, UKRAVTO, Alfa Bank, Metal — Service, Yandex. Taxi Ukraine, Gillsoft Technology. Regular client UKRAVTO, a major carmaker, distributor and services provider in Ukraine, enlisted for advice on corporate restructuring and development of a new optimal corporate model; Yuyue Home Textile Со, Chinese textile company, has received support for an investment project to construct a factory producing and processing flax. The team leaders are Igor Chernysheko, partner, head of corporate, and Nickolas Likhachov, counsel, head of M&A, banking and finance. Managing partner Valentyn Zagariya is known for experience in structuring investment funds and international corporate restructurings. Ilyashev & Partners, a Ukrainian law firm that recently added a new office in Tallinn (Estonia), possesses recognized dispute expertise. The firm acts in high value shareholders disputes, property rights, corporate recovery and insolvency. The firm raised cross-border transactional visibility, corporate restructuring and reorganization. In the client list are BTA Bank, SE Antonov, Algol Ukraine, ArcelorMittal Kryvyi Rih, Group DF, Ukrplastic, Ukrrichflot, E Winter
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Capital Advіsоrs, Danone, ISTIL Management, Olam Ukraine. It advises Port of Vitino on restructuring of the group of companies in order to minimize risks associated with its bankruptcy. Partners Mikhail Ilyashev and Roman Marchenko are the main figures. Gramatskiy & Partners enjoys a loyal following of its long-standing clients, advising across a wide spectrum of their assignments, in particular, share capital increase, shares transfer and sale, corporate governance and control, corporate structuring and restructuring. The M&A performance of the firm centers to intragroup transactions and restructuring within holding structures. Amongst notable highlights is advising Fun Food Family on acquiring shares in several restaurant chains; and covering a full range of corporate matters for its client — City Capital Group in course of widely known projects ART ZAVOD PLATFORMA and FOOD FESTIVAL PROJECT. The head of the 8-lawyer strong practice is Yuriy Zabiyaka. It benefits from the leading name of Ernest Gramatskiy, a renowned general practitioner. GOLAW, a Ukrainian law firm, is focused on regular advice to local and foreign companies on everyday doing business issues. The corporate practice maintains established following from such international names, like Red Bull, Marks & Spencer, GAP, Zara, Bershka, Oysho, Stradivarius, Massimo Dutti, Merkator Medical and others. Corporate structuring, governance and restructuring matters, as well as corporate rights purchase is part of the workflow of late. The firm expanded its geographical reach by establishing two regional offices in Lviv and Odesa. The key practitioners of the corporate practice are Maksym Lebedev and Iryna Kalnytska, supervised by senior partner Sergiy Oberkovych. MORIS GROUP renders advice to clients from the agrarian, building and energy sectors, and is increasingly often seen in private clients and asset management assignments. The firm represented Ivano-Frankivsktsement Eternit on the purchase of shares in Lopatyn Peat Briquettes Plant. The group rendered legal support for restructuring the holding company CemInWest and handled multijurisdictional structuring of an individual’s private capital. The group is traditionally active in litigation and represents Lukor PJSC, LUKOIL Group, in a corporate dispute on recognizing a client’s decisions in general shareholders’ meetings as invalid. The firm started complex advisory on behalf of the Football Federation of Ukraine. The practice is co-headed by two partners, namely Maryan Martynyuk and Oleg Paryliak.
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Established in October 2015, N&D (since 2016 an independent Ukrainian law firm, previously a member of Andreas Neocleous & Co International LLC) has corporate and M&A among its core offerings. The firm was active on the market in 2016 in providing legal advice to Ukrainian companies on several M&A deals complicated by multiparty ownership rights. Thus, the team gave advice to a big agricultural company on acquisition of a plant; provided buy side deal support on investment in a coffee processing and manufacturing plant. Another important highlight was advising a group of private investors on investing in a project on construction and management of a large transshipment grain terminal. The team is led by managing partner Andriy Dovbenko. VB PARTNERS is engaged in corporate structuring/restructuring, corporate governance advice, market exits and divestments, as well as representation in specific litigation. The firm is a constant choice by established clientele out of CIS industrial groups. The team recently rendered legal support on acquisition of business for the production of electric transformers and represented an investment fund in a dispute regarding collection of dividends. Partners Denys Bugay and Oleksandr Lukyanenko are the primary contacts of this team. The team of Sytnyk & Partners (previously part of Schoenherr Ukraine) has a following of German speaking clients, mandating it for corporate work. In a recent highlight the firm advised MANN+HUMMEL on a broad range of Ukrainian law following acquisition of filter production business of Affinia Group. Recent work includes advising a large German based media, services and education company, on restructuring of the businesses of its Ukrainian subsidiary and further spin-off procedure implementation. Artem Sokurov, counsel, and Denys Sytnyk, managing partner, are the primary contacts. Given its bold footprint in domestic litigation, EQUITY (called FCLEX up till June 2017) law firm is in the main seen in shareholder disputes and resolution of corporate conflicts. The firm regularly acts for industrial and energy incentive majors, in particular, represented the interests of Ferrexpo Poltava Mining in corporate dispute lasting since 2005. Another sound representation is acting for investor Andriy Adamovskiy in a dispute with a former partner, namely Estonian investor Hillar Teder, regarding the shopping center in Kyiv Sky Mall. In this past year the firm became increasingly involved in the creation, reorganization and liquidation of legal entities. Viktor Barsuk, Andrey Ni-
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Corporate and M&A
kitin and Oleg Malinevskiy are the points of contact.
practice. Anna Ogrenchuk, managing partner, is the key contact.
The Ukrainian office of Peterka & Partners, a Czech law firm with a sharp CEE regional focus, utilises comprehensive corporate offering, from incorporation, corporate governance and shareholders representation, M&A. The firm advised Tikkurila on the sale of its subsidiaries in Ukraine and Belarus to FarbaHouse OÜ. The main contacts are Tatiana Timchenko, partner, and Taras Utiralov, managing associate.
SDM Partners consider the practice to be among its cores, being enlisted for corporate restructuring, structuring investments and joint venture projects, as well as a Ukrainian counsel within multijurisdictional projects. The firm rendered advice to clients from banking and finance, machinery, medicine, food industries on corporate restructuring relating to announcing Crimea a free economic zone. Dmytro Syrota and Ilya Soykis are the primary contacts.
Law Offices of OMP preserves its primary dedication to agrarian clients. The office is enlisted for sectoral investments, corporate structuring, M&A. The firm recently rendered complex legal support to Vinnytsia Agro-Industrial Group on the sale of company assets to Epicenter K. This dedicated partner team includes Yaroslav Sverdlichenko, Igor Ogorodniychuk, Kyryll Levterov.
ANK Law Office, a renowned legal player in Odesa Region, reported on increasing number of client queries on determining the ultimate beneficial owners, especially in case of attraction of external financing or restructuring of existing loans. The firm has also traditionally acted in projects related to business restructuring and related regulatory work. The major clients in 2016 are HPC Ukraina, HHLA, GNT Group, VA Intertrading, IQ Martrade Holding GmbH, STRABAG, JC Risoil Terminal. Maxim Karpenko, lead partner, is supported by Maxim Kyrylyuk and Elena Koch.
Lexwell & Partners, a local team with regular popularity among industrial majors, particularly active in energy and infrastructure projects recently; advises on general corporate issues and M&A. The firm acted for Yura-Cement-Fabriken AG (CRH Group) in the acquisition of a 49% stake in LLC Cement on the territory of Ukraine from CIMENTO E PRODUTOS ASSOCIADOS, S.A.; gave advice to Amstar on gaining control over the client’s Ukrainian companies. Andrey Kolupaev is the main point of contact in the firm. KM Partners commands a notable strength in corporate restructurings, M&A and divestment projects, as well as seamless tax advisory enabling the mitigation of transfer pricing risks during transactions on the territory of Ukraine. Among the team’s key features is M&A within the focus on the individual business functions (such as manufacturing, logistics, sales) and further optimization of organizational and operational expenses. The clients come from agriculture, energy, technology, manufacturing. Partners Alexander Minin and Maxim Oleksiuk are the key contacts. LCF Law Group is predominantly known as a domestic litigation force, instructed for handling corporate disputes, property rights controversies, corporate governance and control. This past year the group expanded its offering with corporate advice within investment projects, notable in field of infrastructure. The industrial coverage of clients extends to banking, finance, agriculture, energy. Counsels Julia Atamanova and Olena Volianska, Artem Stoyanov, senior partner, are involved in the
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The corporate and M&A practice of ECOVIS Bondar & Bondar is a choice for such primary industries as insurance, agricultural, aviation, real estate sectors. Among the notable clients are Ukraine International Airlines, Reso Group, LLC Interavia, Yara International ASA, Amadeus Group, Lufthansa Group, Aerohandling, Danske Commodities, Europcar Ukraine, Bionorica SE (Germany), OPower Inc. (USA), Advent International. M&A and restructuring featured in the firm’s portfolio. It represented a group of private investors in connection with acquisition and corporate restructuring of its gold ore business in Africa. The lead partners are Oleg Bondar and Oleksandra Nikitina. Ante Law Firm is one of the brightest teams in the aviation sector. The firm successfully represents one of the shareholders involved in a corporate conflict surrounding a Ukrainian airline. Moreover, in 2016 the team performed a full audit of corporate structure and relations in a group of four companies — Technomedex group, and was enlisted by the Council of Europe’s office in Ukraine for corporate structure analysis of media entities in Ukraine and drafting an audition commission statute for the Ukrainian public broadcasting company. Reputed in the aviation field, Andriy Guck is lead partner and the firm’s main rainmaker. Aleksey Pukha and Partners regularly advises on entry to the Ukrainian market and
structuring foreign investments. Over the past year the firm supported large Belarusian construction company Silbud on entry to the Ukrainian market of technical equipment, registration of investments and subsidiary company; legal support for a Bulgarian medical clinic Q-well on signing of investment contracts, registration of subsidiary company to provide plastic surgery services. Aleksey Pukha is the main contact. Juscutum Attorneys Association has recently performed on a vast scale in restructuring of clients for further entry to the EU market, supporting IT Team and Mobius; and structuring clients corporate structures for further investments, like Geozilla, PiBox, Letyshops and others. The team also acts on asset and share deals. The corporate practice is led by Ruslan Redka. Throughout the past year Lavrynovych & Partners received instruction for shares acquisitions, cross-border corporate structuring, business reorganizations, ownership issues and traditional strength of the firm in the field of dispute resolution. Partner Olena Zubchenko is the main point of contact. Gryphon Legal is noted for its focus in the financial sector, being a legal advisor of banks and financial, factoring, insurance and other types of companies regarding corporate structuring, business restructuring; optimization of the ownership structure, sectoral acquisitions. The firm offers tax planning support and compliance, handles a wide scope of regulatory work, supporting banks, financial, factoring, insurance companies. Helen Lynnyk is the main point of contact. ENGARDE provides corporate law support to clients on a daily basis and performs transactional work. The 5-lawyer practice is led by two partners, Andriy Vyshnevsky and Roman Ognevyuk. Advice Group is among the active counsels operating in Lviv and Western regions. During 2016 the team provided legal services to Ericpol LLC, Ukrainian PJSC Ericsson subsidiary on executive body structure amendment. Anton Podilchak, managing partner, is the main contact. Dmitrieva & Partners advises agricultural, energy, industrial, shipping clientele on corporate and M&A assignments. A review by peers revealed a number of names referenced for expertise in corporate and M&A, namely Peter Teluk and Olena Bilozor (Salkom — Squire Patton Boggs), Maria Orlyk (CMS Reich-Rohrwig Hainz).
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Criminal Law / White-Collar Crime
Criminal Law / White-Collar Crime Igor FEDORENKO AVER LEX
Today, the criminal process is overflowing with heinous processes as never before. Public demonstration by law-enforcement of its so-called “efficiency” to for society rather than actual search of those found responsible and bringing them to responsibility is the main target of these detections. To do this, more and more often lawenforcement officers, hiding behind the alleged need to adopt effective mechanisms of the criminal process, are initiating changes that simplify their work. And this has a negative impact on the very procedure of the investigation, in which gross procedural mistakes are allowed, and on those who are being persecuted — by disagreeable officials and “worthy” businessmen. Invariably popular remain accusations of fraud; assignment, embezzlement and acquisition of other people’s property via misuse of an official position; laundering of income received in a criminal manner; evading the payment of taxes; fictitious business; financing of terrorism; abuse of power whilst in office; as well as an offer, promise or payment of improper benefit (bribe). Also during the recent period, they were joined by accusations of creating or participating in a criminal group. And then everything is very simple for lawenforcement bodies: initiation of criminal proceedings for which they are not liable for fictitiousness, search, interrogations, arrests of property, which investigating judges most often do not even penetrate into the essence of the proceedings, and the transfer of the case to court within the terms established by senior officials, and not the Criminal Procedure Code. This situation is accompanied by an active appeal by representatives of business and civil servants to lawyers. In our association practice, we notice that there has been a significant increase in demand for the conclusion of treaties on the provision of legal assistance as a preventive measure. This equates not to wasted time searching for and enlisting a lawyer in case of an attack, and also increases the probability that law-enforcement officers will not be allowed to commit acts in the absence of a lawyer. At the same time, it is necessary for a lawyer to not only protect the interests of the client, but also to control the performance by opponents of their actions within the framework of criminal procedural legislation.
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ighly-specialized AVER LEX commands unrivalled capacities for being a preferred criminal defense team in particularly compound and complex criminal cases with numerous parties, parallel investigations and simultaneous hearings. Over the last year the firm has been working on the complex legal defense of former Ukrainian President Viktor Yanukovych in a range of criminal proceedings, initiated by the Prosecutor General’s Office of Ukraine. Another highlight is the resonant “Oleksandr Onishchenko gas case” — one of the first high-profile cases of the National AntiCorruption Bureau of Ukraine. Among others, the firm has a solid portfolio of corporate clients. Another significant project is representing the rights and interests of ZTE Corporation in criminal proceedings related to protection of the property rights of corporations. The sizeable practice team is led by top recognized criminal defense attorneys Vitaliy Serdyuk and Olga Prosyanyuk. The past year has been busy for another key rainmaker at the firm, Igor Fedorenko. In addition, Artem Drozdov, who leads a member of significant cases, has been promoted to partner. The domestic boutique Solodko & Partners enjoys a reputation of a port of call for criminal defense and business security. The team, headed by managing partner Evgeniy Solodko, has developed unique expertise in the field of protecting the interests of large companies and business groups, and also possesses rich practice in protecting politicians and senior government officials (for example, Oleksandr Yefremov, deputy head of the Party of Regions).
ficials in criminal proceedings, including anti-corruption disputes, as well as with actions aimed at counteracting illegal (raider) seizures of enterprises. The firm’s track record included representing officials of Mriya Agroholding in criminal proceedings opened on the fact of illegal seizure of funds worth about USD 1 billion and the plundering of agricultural machinery (500 units) and representation of the interests of the Azovmash Group of Companies and Helen Marlen Group in criminal proceedings opened on the fact of non-payment of taxes. Senior partner Victor Barsuk and partner Taras Poshivanyuk led the practice, while Sergey Chuev and Vyacheslav Kralevich handled sophisticated business crime projects. VB PARTNERS has reprofiled its focus on white-collar crime as a core practice area. In 2016 the team was busy in numerous criminal proceedings. For example, it protected the interests of two top managers of USB Bank suspected of embezzling about USD 100 million; and acted on behalf of British American Tobacco — the victim and civil claimant in criminal proceedings on charges of committing crimes of illegal use of marks for goods and services and illegal manufacture of excisable goods. Denys Bugay, who is well known on the market, focuses on representing clients from the banking sector, as well as in the oil and gas, alcohol, tobacco industries. Oleksandr Lukyanenko acted as cohead of the team.
EPAP Ukraine’s sizeable criminal law team is frequently instructed in high-profile criminal matters. Particular focus is given to business crimes and business security. The team recently represented members of the Cabinet of Ministers of Ukraine in criminal proceedings related to the first anticorruption investigations in Ukraine; a major crop protection producer, importer and distributor and a major agriculture company in criminal proceedings initiated by the Security Service of Ukraine. Partner Sergiy Grebenyuk is a highly referenced criminal defense attorney, with a broad caseload.
In 2016 the white-collar crime team of Sayenko Kharenko acted in more than 30 highprofile criminal cases. The firm’s sizeable team is often instructed by leading names in the, chemicals, FMCG, healthcare, industrials, mining and metals, oil & gas, retail, technology, TMT and transport sectors. Recent highlights include representing Reckitt Benckiser Household & Healthcare Ukraine in criminal proceeding; protecting the interests of a former head of the State Food and Grain Corporation of Ukraine PJSC in a pre-trial investigation and courts of all instances in several criminal proceedings. The team is led by dispute resolution partner Sergey Pogrebnoy. Counsel Sergiy Smirnov is highly active in representing clients in criminal proceedings. The team includes Igor Voronov and Oleksiy Gerasimchuk.
2016 was a year of dynamic development of the white-collar crime practice at EQUITY (called FCLEX up till June 2017) . The majority of projects were connected with the protective actions of of-
Ilyashev & Partners combine domestic and cross-border practice related to white-collar crime. The team’s recent experience includes legal support of international extradition of the former owner of
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Criminal Law / White-Collar Crime BTA Bank, Mukhtar Ablyazov, to Ukraine and Russia from France. The firm also currently acts in several extradition processes in England, the Czech Republic and Lithuania. In Ukraine the firm protects the interests of National Information Systems LLC in criminal proceedings on the fact of an incident at the Inter TV channel in its news service office. Attorneys are involved in representing officials agricultural holding in criminal proceedings on charges of fraud and protecting a bank’s officers in criminal proceedings regarding embezzlement through abuse of office. Artem Orel is the main criminal defense attorney. The sizeable team includes Galyna Lefor, Iryna Kuzina, Ivan Bozhko, Vasiliy Ocheret. Milkhail Ilyashev and Roman Marchenko are the responsible partners. Arzinger’s criminal defense practice covers business protection and white collar crime. The network of regional offices (Lviv and Odesa) is an advantage for practice development. The team represents the interests of senior management, company’s officers and employees. The caseload includes fraud, embezzlement and seizure of assets, and also supporting banks in criminal cases on non-performance of credit agreements. The firm handles defense to a local agent of a syndicate of European banks, which is a victim in six investigations in criminal cases on non-performance of loan agreements and disappearance of collateral in different regions of the country. Partner Kateryna Gupalo, head of tax and customs disputes as well as white-collar defense practices, is the key contact. Kinstellar opened its office in Kyiv on 1 March 2016 and announced crossborder litigation and arbitration as its core focus. Several multijurisdictional disputes involve the white-collar crimes component. The team acts on behalf of clients in sensitive investigations, enforcement proceedings and cross-border actions and represents individuals as well as domestic and international companies at all stages of criminal procedures. For example, the office represents a client in connection with fraudulent misappropriation of assets committed by former business partners in a number of jurisdictions. Kostiantyn Likarchuk is the lead partner. Vasil Kisil & Partners officially launched its practice in 2016 and spe-
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cialized in matters relating to the whitecollar crime category, which include economic and financially motivated non-violent crimes committed by business and Government professionals. The work highlights are providing legal aid to the management of a leading Ukrainian telecom company, Kyivstar, in a criminal case and administrative case regarding alleged tax evasion as well as providing legal aid to Vitaliy Kasko, a former deputy prosecutor general, in a criminal case. Moreover, Vitaliy Kasko joined the firm as a partner to head the white collar crime practice in March 2017. Andriy Stelmashchuk, managing partner and acknowledged litigator, is another prime contact. GOLAW has an established team of criminal defense lawyers, headed by experienced partner Angelika Sitsko. In 2016 the firm rendered criminal defense services to its corporate clients. The cases related to business, white-collar crimes and corporate internal investigations. Ario Law Firm reports on accompanying nearly 40 criminal trials. The team successfully completed projects, which are connected with representation of interests of the suffered legal entities, interests of persons who are suspects and other persons affected by the actions of law— enforcement agencies. The practice is managed by partner Yevhen Hrushovets, who was active in resonant public cases, and is gaining market visibility. Counsel Vladyslav Hryshchenko also specializes in defense in criminal cases.
WHO IS WHO
LEADING FIRMS 1. AVER LEX 2. Solodko & Partners 3. Egorov Puginsky Afanasiev & Partners Ukraine 4. EQUITY 5. VB PARTNERS
LEADING INDIVIDUALS 1. Vitaliy Serdyuk (AVER LEX) 2. Evgeniy Solodko (Solodko & Partners) 3. Olga Prosyanyuk (AVER LEX) 4. Sergiy Grebenyuk (Egorov Puginsky Afanasiev & Partners Ukraine) 5. Denys Bugay (VB PARTNERS) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Igor Cherezov (Cherezov & Partners) Artem Drozdov (AVER LEX) Kateryna Gupalo (Arzinger) Igor Fedorenko (AVER LEX) Yevhen Hrushovets (Ario Law Firm) Tetiana Lysovets (Sokolovskyi & Partners) Artem Orel (Ilyashev & Partners) Denys Ovcharov (Juscutum)
Alekseev, Boyarchukov & Partners, a three-strong white-collar practice is led by Igor Samoletov. The firm’s caseload includes, inter alia, representing the interests of banks in criminal proceedings, unlawful actions with the bank’s mortgages and protecting the interests of employees of the National Bank of Ukraine in criminal proceedings. Managing partner Sergey Boyarchukov oversees the team.
Taras Poshivanyuk (EQUITY) Igor Samoletov (Alekseev, Boyarchukov & Partners) Angelika Sitsko (GOLAW) Sergiy Smirnov (Sayenko Kharenko) Oleg Vdovychen (Vdovychen & Partners)
COUNSELINK ESQUIRES
40-X Hlybochytska Street, Kyiv, 04050, Ukraine Tel.: +380 44 337 7007 Fax: +380 44 337 7008 E-mail: info@esquires.legal Web-site: www.esquires.legal
GENTLS LAW FIRM
Leonardo Business Center, 17/52A Bohdana Khmelnytskoho Street, 5 Floor, Kyiv, 01030, Ukraine Tel.: +380 44 339 9910 E-mail: go@gentls.com Web-site: www.gentls.com
ZAVADETSKYI ADVOCATES BUREAU
27 Gogolyvska Street, Office 31, Kyiv, 01054, Ukraine Tel.: +380 50 416 9258 E-mail: zk.request@zkadvocates.com Web-site: www.zkadvocates.com
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Criminal Law / White-Collar Crime
Asters, a full-service Ukrainian law firm, provides complex legal support for business activities, including representing clients’ interests in criminal proceedings. Last year the firm was involved in criminal proceeding related to purported tax evasion, abuse of authority, money laundering and fraud. Associates Oleksandr Yakovenko and Oleksiy Ukolov are the primary practitioners. Managing partner Oleksiy Didkovskiy supervises the practice team. Given its established positions in tax law, KM Partners has profound experience of tax evasion matters, both pre-trial and court proceedings. The firm’s attorneys carry out defense in criminal proceedings opened on the grounds of public crimes, qualified as forgery in office, neglect of official duty, fraud, misappropriation, embezzlement or conversion of property through corrupt behaviour, violation of occupational safety law. Cases are supervised by partners Alexander Minin and Alexander Shemiatkin. BOGATYR & PARTNERS represented both corporate clients and individuals in a wide variety of matters, including fraud claims, white collar matters, etc. In the outgoing year the firm successfully challenged Interpol Red notices aimed at international clients and assisted in granting foreign refugee status. It is noteworthy that the team also obtained court orders against extradition from Cyprus and United Kingdom. Volodymyr Bogatyr is known for his active cross-border litigation work. The Kyiv office of Baker McKenzie includes providing legal support to clients in
criminal proceedings, such as pre-trial investigation, provision of information and legal representation before courts. The firm customarily has strong compliance offering, including representation in international investigations. Ihor Siusel is a responsible partner. In 2016 ARBITRADE’s criminal caseload increased. The practice was rich in cases related to fraudulent actions of the counterparties of clients or even third parties unrelated to the contractual relationship but causing losses to both sides. Notably, criminal attorneys are experienced in representing not only the accused, but also victims of criminal activity. Pavlo Trytenichenko and Andriy Shulga lead the dedicated team. A significant part of the criminal practice of Sokolovskyi & Partners is the provision of effective legal aid in tax evasion trials. The firm also represents clients in criminal proceedings related to fictitious entrepreneurship, forgery, violation of safety rules during the execution of works with increased danger, misappropriation, embezzlement or acquisition of property, abuse of power. The practice is led by senior partner Tetiana Lysovets. Attorneys Association PwC Legal expands its offering on criminal proceedings, often initiated on the basis of tax audits. The team recently successfully supported a number of clients who are officials in the course of criminal proceedings, including participation in interrogative actions. The practice is led by Andrey Pronchenko, managing partner.
International Legal Center EUCON traditionally has a strong following from the officials of corporate clients on representation in criminal proceedings. The firm represents the interests of clients in tax evasion cases, and also takes part in criminal proceedings on the facts of possible abuse of authority by tax officials. The resonant Savik Shuster Studio case is a highlight of its work. Practice head Yevgen Petrenko was promoted to partner. Gramatskiy & Partners has two practices: business protection (led by Oleksandr Koval) and criminal defense (headed by Mykola Voitovich). In 2016 the predominant share of instructions and work in the practice involving criminal protection of clients who are officials and employees in various economic-related criminal proceedings. Last year the firm acted in 302 criminal proceedings at various stages and in different forms. Sklіarenko, Sydorenko & Partners defended politicians and top officials in resonant criminal cases, as well as in tax evasion cases, fictitious enterprise cases, fraud, hostile takeovers, money laundering. In the past year the team represented the interests of Davit Sakvarelidze, Ex-Deputy ProsecutorGeneral of Ukraine, during questioning by the Prosecutor-General’s Office regarding the embezzlement of funds given as donor assistance from foreign governments, which had been allocated for reforming the ProsecutorGeneral’s Office. Partner Andriy Sydorenko is the key contact.
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Education:
National Academy of Internal Affairs of Ukraine, Master of Law, 2004.
Practice Areas: Opanas KARLIN Partner, ESQUIRES, Attorney-at-Law
www.esquires.legal Tel +380 44 337 7007
Business Protection, White-Collar Defense, Litigation.
Languages: Ukrainian, Russian, English
Professional experience:
Opanas Karlin specializes in business protection, handles regulatory enforcement proceedings and corporate investigations. Having acquired a huge amount of experience in investigations, deep understanding of business processes and law-enforcement principles, Opanas is able to provide a lot of valuable advice to his clients on a broad range of compliance and regulatory issues. He shows a lot of respect for his clients who are involved in “whitecollar” crime investigations as well as for Government enforcement actions. Opanas also practises in the area of financial and tax services, representing firms and individuals, taking care of litigation and regulatory proceedings. His uninterrupted career involves daily inspections, searches, criminal proceedings and court appeals, which enable Opanas to understand the latest trends in his professional field and to provide pragmatic solutions for effective dispute settlement. With over 12 years of professional legal experience, his many victories in well-known criminal cases and active involvement in a number of large projects have enabled Opanas to become one of best attorneys for White-Collar Defense in Ukraine.
E-mail: opanas.karlin@esquires.legal
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Criminal Law / White-Collar Crime
WHO IS WHO
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Education: Taras Shevchenko National University of Kyiv.
Practice Areas: Oleksandr ZAVADETSKYI Advocate, founder of Zavadetskyi Advocates Bureau
Criminal Defense, Dispute Resolution, Banking, Corporate Finance, Tax, Financial Regulation, Human Rights.
Languages: Ukrainian, Russian, English.
www.zkadvocates.com Tel.: +380 50 416 9258 E-mail: zk.request@zkadvocates.com
Professional experience:
Oleksandr established the firm in 2009 and since then the firm has been recommended by the leading international law practice directories, such as Chambers and Partners, IFLR1000, Legal500, due to its successful work, first and foremost in the areas of dispute resolution and white-collar crime. In the area of criminal advocacy Oleksandr has represented clients both on the defense and complainant sides in various white-collar crime cases. The specific feature of Oleksandr’s competence is his vast experience in representing commercial entities, including foreign ones, in criminal proceedings. Oleksandr’s expertise in white-collar crime area is substantially enhanced by his experience in financial and commercial sectors, where he has held a number of counsel and managerial positions in top-ranked international companies and has been involved in a series of high-profile transactions, such as IPOs and Private Placements, M&A deals, recovery & restructuring of banks’ NPL portfolios. Furthermore, in 2015-2016 Oleksandr was engaged by the National Bank of Ukraine to do the job that is part of the NBU’s program for reforming the Ukrainian banking sector and bringing it into line with best practice standards. At that time, Oleksandr occupied the posts of the head of the Related Parties monitoring department, Registration & Licensing department, head of the Qualification Commission and member of the Banking Supervision Committee.
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Education:
Mr. Bogatyr graduated from Kyiv National Taras Shevchenko University with J.D. in 1999, and received a Ph.D. from the Legislation Institute of the Verkhovna Rada (Parliament) of Ukraine in 2014.
Volodymyr BOGATYR Senior Partner, BOGATYR & PARTNERS. Ph.D., Honorary Lawyer of Ukraine
www.bogatyr.com Tel.: +380 44 363 7722 E-mail: volodymyr@bogatyr.kiev.ua
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Practice Areas:
Litigation, Dispute Resolution, Corporate Fraud Investigation, White-Collar Criminal Defense, Law Enforcement Intelligence, Global Litigation and Enforcement, Transnational Litigation and Foreign Judgments, Internal Investigations, Government investigation, GR, etc.
Languages: Ukrainian, Russian, English
Professional experience:
Dr. Volodymyr Bogatyr acts for clients in complex, fact-heavy and high value cross-border commercial disputes. As part of that work, Volodymyr is often responsible for the strategic coordination of proceedings in multiple jurisdictions. He is the only qualified Ukrainian advocate who is registered as a foreign advocate in both Russia and Poland. Dr. Bogatyr’s practice focuses on a broad range of civil and criminal litigation and investigations involving international and transnational matters. He undertakes international litigation management work, coordinating the provision of legal advice and/or legal proceedings across multiple jurisdictions. Dr. Bogatyr has represented both corporate clients and individuals in a wide variety of matters, including fraud claims, white collar matters, assets tracing, post-M&A disputes, partnership, joint venture disputes and dealing with Interpol Red Notices. He provides advice on contractual and insolvency matters as well as issues relating to the enforcement and recognition of judgments in Ukraine and abroad. Dr. Bogatyr’s deep, yet wide-ranging understanding of his specialty has also benefited from his experience in distinguished public service prior to him entering private practice. Dr. Bogatyr served as an Ukrainian Deputy Minister of Justice from 2007 to 2011. He was recognized as an Honorary Lawyer of Ukraine by the President of Ukraine in 2010. He also possesses acknowledgments from 2008 provided by the Parliamentary Committee on Combating Organized Crime and Corruption. Since his return to private practice, Dr. Bogatyr has developed a strong track record of successfully helping his clients deal with national and cross-border asset recovery investigations in fraud, insolvency and bribery matters.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Criminal Law / White-Collar Crime
Advice Group is focused on white-collar crime matters. During 2016 this Lviv-based firm continued the successful representation of RTi Rohrtechnik International in the complex white collar crime case related to Ukrainian branch management fraud. The team also provided legal support to one of the leading Ukrainian automotive companies in a complex white-collar crime case investigation related to possible fraud and bribery by Ukrainian branch management. Partner Oleh Kyryievskyi is head of the dispute resolution practice. Managing partner Anton Podilchak is another contact. Kharkiv-based Shkrebets & Partners renders attorney services in criminal proceedings instituted against officials of Kharkivoblenergo JSC. The practice is led by partner Olexiy Meniv. Prove Group specializes in protection against accusations of white-collar crimes: tax evasion, fraud, embezzlement through abuse of office, fictitious entrepreneurship. The list of clients includes politicians and the business
community. Managing partner Yuliya Repina is a prime contact.
idly seen in resonant recent cases involving politicians.
Law Firm Dynasty supported corporate clients’ officials in tax evasion matters and accompanied criminal proceedings on charges brought against officials of an enterprise in the forgery of documents. The practice is managed by partners Vyacheslav Kohlyakov and Anna Poddubnaya.
The sizeable white-collar crime practice at Juscutum Attorneys Association, as headed by Denys Ovcharov, is known for its activity on behalf of IT clients. Support in recovery of withdrawn assets and arrest of assets in terms of criminal proceedings fall within the firm’s recent profile.
Trusted Advisors, as led by Ivan Mishchenko, is noticeable in white-collar crimes practice. In 2016 the firm reports on accompanying four criminal trials in the framework of full supporting of criminal proceedings, appeal against the arrest of a client’s property, protecting the rights of witnesses during the interrogation process.
Vdovychen & Partners’ attorneys, as led by Oleg Vdovychen, were active in various criminal issues. S.T. Partners and both founding partners, Svitlana Trofymchuk and Sergiy Tyurin, are known on the market for their criminal defense work. Attorneys’ Association Gestors, under the guidance of Oleksandr Babich, provides protection in a wide range of criminal proceedings, notably abuse of power.
Igor Cherezov, managing partner at Cherezov & Partners attorneys at law, is known for his participation in resonant public criminal proceedings. Major Ukrainian companies and public officials hire the firm to protect their interests. The attorney is viv-
Several law firms established white-collar crime practices in 2016. For example, attorney Irina Kovalchuk headed the new criminal law practice at L.I. Group. Criminal law and procedure became a new niche for MORIS GROUP.
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Education:
Ukrainian Academy of Foreign Trade, European University of Finance, Information systems, Management and Business.
Practice Areas: Sergiy PAPERNIK Head of Banking & Finance, Attorney-at-law, N&D Law Firm
www.ndlaw.com.ua Tel.: +380 44 237 7250 s.papernik@ndlaw.com.ua
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Banking and Financial Law, White-Collar Crime.
Languages: Ukrainian, Russian, English
Professional experience:
Renowned expert in banking and financial law. He is talented in challenging new horizons of legal science in the most complicated business cases. Sergiy’s experience includes legal investigations of offences committed within banking transactions, financial restructuring and other financial activities. He represented clients before law-enforcement authorities as well as in courts at all levels. Sergiy has over 12 years of experience in protection of rights and complex dispute resolution procedures, within the banking system, including criminal cases, litigation, arbitration and restructuring, as well as in the resolution of corporate conflicts. All this resulted in him being selected the head of the Arbitration Committee for financial restructuring procedure, a new board established in compliance with the requirements of Law On Financial Restructuring. Sergiy graduated from the Ukrainian Academy of Foreign Trade with a diploma in law, and from the European University of Finance, Information systems, Management and Business with a diploma in economy. Sergiy is an Attorney at law and a member of the Ukrainian Bar Association.
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Energy & Natural Resources
Energy & Natural Resources Alexey KOT ANTIKA
During 2016 the energy field experienced reform, and this trend will most likely remain in 2017. Gas, electricity, heat energy, alternative energy, including renewable energy, housing and public utilities sectors as well as tariff formation all require sweeping reforms. The principles of market regulation are changing. It is vitally important to introduce reforms in full, as half measures may do great harm. Unfortunately, in practice the situation is different. On October 1, 2015, the Law of Ukraine On the Natural Gas Market came into force. It was to create competitive market and to give free access to the gas transmission network. In practice, the existing situation became even more complicated. The Law introduced the necessity to provide the network’s owner with a “guarantee fee” which, in fact, is a fee for access to the market. There is no talk about having access to the private consumers market. It remains monopolized by Naftogaz. There is a huge need to adopt laws related to electricity market regulation and tariff formation but they are continually postponed. The same situation can be seen in the energy saving and energy efficiency fields. In 2015 the regulation of Ethe SCO mechanism in the budget field was adopted. In 2016 it was discovered that the Law On Public Procurement did not cover the peculiarities of ESCO services procurement. Even after adopting the necessary amendments, it is still impossible to buy ESCO services as the ProZorro system cannot ensure this from the technical point of view. Another trend that occurred in 2016 was IFIs activation in energy efficiency projects. There is a growing demand for legal support on this market. In particular, Antika Law Firm advises on procurement procedures within the framework of modernization of educational buildings in Ivano-Frankivsk and Chernivtsi financed by NEFCO. The EBRD launched the IQ Energy project that consists of granting credits to condominiums and households to implement energy saving measures. At the same time, the need to finance this field considerably exceeds the level IFIs can offer. That is why an effective state program to attract private investments is vitally important.
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MS Cameron McKenna is by far a top reputed market leading team with an impressive track record. The Kyiv-based energy, projects and construction practice group is a point of choice by major international upstream oil and gas companies operating in Ukraine. It is among main counsels working on energy disputes, handling several complex investment arbitrations. The team advised NAFTA a.s., a Slovak oil and gas exploration, production and gas storage company, in connection with the establishment of a joint venture with Cub Energy Inc., to pursue a gas exploration project in Western Ukraine. Renewable projects are another strong focus. For instance, the team advises Vestas on a number of wind power projects. The firm also works with EU energy traders on several major gas import and electricity export projects to/from Ukraine. Partners Olexander Martinenko and Vitaliy Radchenko are eminent figures on the market. Being a particularly vivid player in implementation of energy reforms, Baker McKenzie is traditionally chosen for complex landmark projects. Impressive client roster encompasses local and international names, inter alia, ArcelorMittal Kryvyi Rih, Cargill, DTEK Group. The office is regularly hired to handle corporate advisory, PPP, acquisitions in the sector, restructuring mandates. Baker McKenzie is known for continuously advising the EBRD on the corporate governance reform of the state company Naftogaz of Ukraine. Another highlight is legal support to prepare of Odesa Portside Plant for privatization. In 2016 the team was actively involved in nuclear power projects, advising on construction and operation of nuclear plants, and remains present in the renewable energy sector. The sizeable 8-lawyer team is led by two partners: Serhiy Piontkovsky, managing partner and head of the energy, mining and infrastructure and real estate and construction practice groups, and Ihor Olekhov, experienced in energy and renewable energy sources, PSAs, various aspects of banking and finance, transactions in the energy and resources area. The market also knows the name of Andrii Moskalyk (earlier worked at Clifford Chance) who joined as a senior associate. Highly-reputed national law firm Asters is known for advising prominent international majors and national players on production sharing agreements, investment agreements, high stake corporate matters and M&A, development, construction, financing, restructuring. This domestic energy practice has a wealth of expertise in electricity, renewable energy and energy efficiency. Asters advises Free Energy on supply of equipment for renewable energy projects; and OAK Utility Solutions & Development WLL on implementation of waste-to-energy projects in Ukraine.
The lead partners of the practice team are Armen Khachaturyan (also regarded for extensive banking and corporate practices) and Tamara Lukanina. Counsel Yaroslav Petrov received praise for deep involvement in electricity, renewables, and recent work on energy efficiency projects. The latest development of the Ukrainian branch of Dentons includes established positions in the upstream oil and gas, nuclear and renewable energy (in particular solar and bioenergy). Its strong standing globally empowers the ability to gain mandates from high-profile companies, among others, Cub Energy Inc., Serinus Energy, Nitrofer SARL, OECD. Amongst notable landmark projects is advising Serinus Energy in connection with the sale of a 70% stake in KUB-Gas to Burisma, a private natural gas producer operating in Ukraine. The recent portfolio includes advising Swissbased energy company Nitrofer on natural gas supply and trading. Myron Rabij, lead partner, works in the Kyiv and New York offices, possesses transactional experience and international industry knowledge. Partner Adam Mycyk deals with financial matters and M&A. Maksym Sysoiev is among the most vivid practitioners in the renewable field. Given the sharp industry approach, AEQUO’s practice is entrusted coverage throughout the oil and gas, conventional power and renewables sectors. The recent workload includes both transactional work and significant dispute track, especially international arbitration, sensitive competition issues, financial restructuring assignments. The firm acts as a Ukrainian law local counsel for a large European oil and gas company in international arbitration proceedings against a gas supplier with total amount of claims exceeding USD 65 billion. The firm also succeeds as a choice for inbound and outbound investments, and advised Guris Holding (Turkey) on a wind energy project in Odesa Region. The competition practice advised the client on the investigation initiated by the Antimonopoly Committee in relation to alleged abuse of dominance by Russian Gazprom in gas transit arrangements with Naftogaz/ Ukrtransgaz. Two partners, Denis Lysenko and Anna Babych, manage projects for their energy clientele. The practice involves senior counsels team: Pavlo Byelousov is dedicated to high stake arbitration cases, and Sergey Denisenko is in charge of sophisticated antimonopoly matters across energy tiers. Myroslava Savchuk, senior associate, is an important team member. Arzinger deals with regulatory, transactional and contentious matters, year over year demonstrating broad industry coverage of its presence in the sector. The recent workflow includes energy efficiency and energy supply, structuring investments and joint ac-
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Energy & Natural Resources tivities, renewable advisory, litigation and arbitration cases. The firm acts as a legal counsel to the Ministry of Fuel and Energy of Ukraine, including issues of restructuring Naftogaz of Ukraine according to the requirements of the EU’s third package. The practice is led by managing partner Timur Bondaryev. Maryna Ilchuk, head of the energy and natural resources desk, is noted for regulatory advice; Markian Malskyy, partner and West Ukrainian branch head, is on the forefront of arbitration work; Andriy Selyutin, partner and head of the South branch is dedicated to oil and gas, international trade issues. The energy practice of Sayenko Kharenko utilizes expertise across different practice teams. In 2016 its broad remit covered regulatory, competition, international trade, taxation, debt restructuring and dispute resolution projects. The corporate and M&A practice is among its core strengths for industry specific instructions. The team led by partner Andrei Liakhov advised on the entry of the entire issued shares of Bluebird Merchant Ventures Ltd to the Standard Listing segment and to trading on the Main Market of the London Stock Exchange. He is especially active in acquisition projects in the mining field. The firm also traditionally acted as a Ukrainian law counsel to Nordic Environment Finance Corporation (NEFCO) as related to the project financing to over 20 Ukrainian enterprises and municipalities aimed at the implementation of energy-saving technologies. Other solid clients include DTEK, EBRD, Infracapital, mining, metal and oil and gas players. The firm’s partners are recognized for strong industry expertise: Vladimir Sayenko gets endorsement for transactional work and privatization experience; Nazar Chernyavsky — for project financing, energy saving and ESCO projects. Counsel Konstantin Gribov and managing associate Yuriy Draganchuk are the core members of the practice. Renowned ANTIKA’s energy practice is particularly noted for energy saving and efficiency, energy performance contracting, subsoil use and mining
LEADING FIRMS 1. 2. 3. 4. 5.
CMS Cameron McKenna Baker McKenzie Asters Dentons AEQUO
OTHER ESTABLISHED PRACTICES
LISTED IN ALPHABETICAL ORDER
ANTIKA Arzinger EVERLEGAL EY Ukraine Gramatskiy & Partners Ilyashev & Partners Redcliffe Partners Sayenko Kharenko Vasil Kisil & Partners Wolf Theiss regulations, corporate and development projects. The firm advised International Resources Group during the Implementation of the USAID project “Municipal Energy Reform Project in Ukraine” in the city of Zaporizhia; and counseled NEFCO in the project Implementation Unit Support for Energy Efficiency improvements in public buildings in the cities of Chernivtsi and Ivano-Frankivsk. The client list is rich in significant names like Enesa a.s., Cadogan Petroleum, Chernomorneftegaz, Nadra Ukrayny, Ukrnafta and the EBRD. All partners of the firm are engaged in energy practice. Managing partner Alexey Kot handles current corporate work and arbitration cases being recently attracted as an expert/expert witness on matters of Ukrainian law. Alexander Burtovoy is known for his extensive project finance experience in energy efficiency and conservation projects; Andrey Kuznetsov runs litigation. In 2016 the firm raised activity in energy disputes, inter alia, debt recovery litigations and arbitrations. Counsel Sergii Korniienko (contract and corporate) was promoted to partner in 2017.
18/1 Prorizna Street, Suite 1, Kyiv, 01001, Ukraine Tel.: +380 44 490 6000, +380 44 278 1000 E-mail: kyiv@bctoms.net Web-site: www.bctoms.net
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1. Vitaliy Radchenko (CMS Cameron McKenna) 2. Olexander Martinenko (CMS Cameron McKenna) 3. Armen Khachaturyan (Asters) 4. Serhiy Piontkovsky (Baker McKenzie) 5. Myron Rabij (Dentons) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Oleg Alyoshin (Vasil Kisil & Partners) Alexander Borodkin (Vasil Kisil & Partners) Alexander Burtovoy (ANTIKA) Nazar Chernyavsky (Sayenko Kharenko) Yevheniy Deyneko (EVERLEGAL) Taras Dumych (Wolf Theiss) Dmytro Fedoruk (Redcliffe Partners) Konstantin Gribov (Sayenko Kharenko) Maryna Ilchuk (Arzinger) Mikhail Ilyashev (Ilyashev & Partners) Alexey Kot (ANTIKA) Oleksandr Kurdydyk (DLA Piper Ukraine) Tamara Lukanina (Asters) Denis Lysenko (AEQUO) Oleh Malskyy (Eterna Law) Adam Mycyk (Dentons) Ihor Olekhov (Baker McKenzie) Andriy Olenyuk (EVERLEGAL) Yaroslav Petrov (Asters) Vladimir Sayenko (Sayenko Kharenko)
COUNSELINK B. C. TOMS & CO
LEADING INDIVIDUALS
SAYENKO KHARENKO 10 Muzeyny Provulok, Kyiv, 01001, Ukraine Tel.: +380 44 499 6000, +380 44 389 5000 E-mail: info@sk.ua Web-site: www.sk.ua
Albert Sych (EY Ukraine) Maksym Sysoiev (Dentons) Yuriy Zabiyaka (Gramatskiy & Partners)
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EY has deep, and in some aspects unique, experience in oil and gas, being known for unmatched experience in tax and legal support of production sharing agreements and upstream projects based on a joint activity agreement in Ukraine for one of the largest international oil and gas companies. The team worked as legal and tax counsel with several large international and Russian oil and gas corporations. Albert Sych, partner, law leader for Ukraine, heads the practice. Iryna Kalyta and Iryna Kovalenko are important team members.
2016 the team substantially extended its renewable energy practice throughout involvement in M&A, joint venture establishments and financing matters relating to solar projects in Ukraine. The corporate practice is led by managing partner Yevheniy Deyneko, and partner Andriy Olenyuk extensively develops renewable energy matters.
The team of Redcliffe Partners is particularly known for its corporate, M&A and PSA projects in the oil and gas sector. It has retained a strong following from international players seeking advice in Ukraine, having among its clients Chevron Corporation, General Electric Company, Arawak Energy International Limited. The practice is led by Dmytro Fedoruk, partner and head of M&A, and supported by Zoryana SozanskaMatviychuk, and Svitlana Teush. The firm commands a solid portfolio of finance and high profile restructuring projects. For example, guided by managing partner Olexiy Soshenko, the firm advised Landesbank Berlin AG on the restructuring of EUR 215 million indebtedness under project financing provided to Wind Power LLC, a Ukrainian operating asset of DTEK Renewables Group.
Ilyashev & Partners is well-known for its dispute resolution work handled for respected oil and gas, infrastructure clients. The firm has recently demonstrated an extensive portfolio in international arbitration, litigation, competition, bankruptcy and restructuring projects. The firm acts for Ostchem Holding (Group DF) in the case of recognizing in Ukraine the emergency award ruled by the Arbitration Institute by the Stockholm Chamber of Commerce in the USD 246.5 million suit against the Odesa Port Plant. On the competition front, the team represents Ukrtatnafta in the investigation by the Ukrainian competition authority. The client list includes UkrGaz, UkrGazEnergo, LetterOne Group, Black Iron Inc., Hydro Energy Holding, Group DF, Ostchem Holding, TBC Energy LLC, Zhigermunaiservice LLP (Kazakhstan). Milkhail Ilyashev is the lead partner. Significant team members include Oleg Trokhimchuk and Ivan Stasyuk.
Ukrainian firm EVERLEGAL has already received the appreciation of peers for stepping into an active energy market presence. Notably, the firm regularly advises clients on regulatory matters, cross-border commercial contracts, financing matters and handles M&A work. In
Wolf Theiss continues to register its presence in landmark transactions in Ukraine. The client roster of the outfit takes in AMIC Energy Management GmbH, Rubellius Capital, Kuwait Petroleum, Monstera Invest, Active Energy Plc. In the past year the firm advised AMIC on the
acquisition of two Ukrainian companies that are engaged in the business of operation of refueling stations at Ukrainian airports. Taras Dumych, managing partner, is an experienced market resident, and is endorsed for transactional matters and gas transit knowledge. Vasil Kisil & Partners is seen advising energy assets transactions, survey, exploration and industrial development of mineral deposits, use of natural resources, project implementation under the framework of the Kyoto Protocol. Public clients of the firm include Shell, Hubei Changyang Hongxin Industrial Group Co., Ltd (China). Throughout the past year the firm advised on energy efficiency, electricity networks, renewable projects. Additionally, the litigation practice of the firm is constantly enlisted for various high value disputes. The team combines two practice groups led by two partners: Oleg Alyoshin heads oil and gas, and Alexander Borodkin, who heads renewable. The long-lasting market player Gramatskiy & Partners impresses with a supported track record of diverse commercial transactions, wide-ranging contractual issues, regulatory advice, corporate, restructuring and insolvency matters. The firm’s mainstay covers electricity production and distribution, energy efficiency, utilities, exploration and development, power plant construction. In addition, the firm maintains its dedication to public and municipal infrastructure projects. Among the recently completed projects was preparation of several exploitation and mining companies for merger; a number of projects concerning pro-
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Education:
BATE C. TOMS Managing Partner at B. C. Toms & Co
www.bctoms.net Tel.: +380 44 490 6000 E-mail: bt@bctoms.net
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Mr. Toms studied at Yale Law School (J.D; editor of the Yale Law Journal), Washington and Lee University (B.A., magna cum laude: Phi Beta Kappa) and Cambridge University (Magdalene College — Law Tripos 1). As an undergraduate, he also studied Soviet Studies at the Institut d’Etudes Politiques de Paris.
Practice Areas:
Agriculture, Energy, Real Estate/ Construction, and related M&A, Project Finance, Litigation and Arbitration
Professional experience:
Bate C. Toms is the managing partner of B.C. Toms & Co, which 26 years ago was the first Western law firm to open an office in Ukraine. He has since handled the legal work for many of the most significant transactions in Ukraine, including the largest acquisitions in the oil and gas and agricultural sectors. He more recently acted as the sole Ukrainian legal expert for one of the major arbitrations at the Permanent Court of Arbitration at The Hague, based on claims for Ukrainian law violations occurring during a corporate raid in the energy sector. Mr. Toms has also handled the legal work for the first IPO, and many other large IPO’s, for Ukrainian companies, a number of significant loans for Ukraine and the first successful foreign bank (EBRD) led Ukrainian project financing, as well as many of Ukraine’s largest real estate acquisitions and developments and oil and gas projects. B.C. Toms & Co handles the legal work for a number of important agricultural companies. Prior to founding his firm, Mr. Toms was a partner for many years in London at a major multinational law firm. He has written numerous articles on Ukrainian law and is the principal author of the ICC book “Doing Business with Ukraine”. In addition, he is the Ukrainian editor of the Journal of International Banking Law (JIBL) and the International Energy Law Review (IELR), and is the Chairman of the British Ukrainian Chamber of Commerce (“BUCC”).
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Energy & Natural Resources duction and distribution of biofuel and energy saving technologies. Significant clients include SNT GROUP, Teploenergomontazh, Danfoss Ukraine, Eurotransgaz Corporation Kft, Eurogazinvest and others. Yuriy Zabiyaka oversees the practice. Given international energy companies and strong locals as clients (e.g., ENI SpA, Dragon Capital), DLA Piper in Ukraine possesses comprehensive advice on corporate, competition, regulatory, contractual, trading, licensing, and tax. In the outgoing year the office was busy with energy efficiency and corporate assignments, particularly acquisitions and JVs establishments. Currently, the team is advising GIZ, the German agency for international development and cooperation supporting the German government, on establishment of the Energy Efficiency Fund in Ukraine. Partners Oleksandr Kurdydyk has experience in energy trading, regulatory, oil and gas, power and renewables; while Galyna Zagorodniuk is mandated to advise on oil and gas regulation, M&A and JV mandates. In addition to its well-established position for corporate and banking/restructuring high value mandates, AVELLUM managed to expand litigation, arbitration and tax practices acting for solid industrial clientele. The firm acted as the Ukrainian legal counsel to a Chinese subsidiary of a Chinese state-owned Fortune Global 500 company in connection with the acquisition of majority stakes in Ukrainian SPVs owning solar power plants, generating electricity from alternative energy sources and selling it at a “green” tariff. Three partners works on the projects, namely Mykola Stetsenko (corporate and M&A), Glib Bondar (banking and finance), Dmytro Marchukov (dispute resolution). The energy practice of Eterna Law is one of its key practices. The firm renders advice in corporate, competition, tax, assets sale, wide range of regulatory matters, pricing, sanctions. Among notable ongoing projects is advising DonbassEnergo in the course of privatization of Сentroenergo, one of the leading power generating companies in Ukraine. The practice is supervised by corporate and M&A partner Oleh Malskyy, with involvement of two more partners, Maksym Uslystyi (head of Kazakhstan office) and Oksana Kneychuk (tax matters). KPMG Ukraine is traditionally present in regulatory and taxation, compliance matters. The legal team advised United Mining and Chemical Company on licensing and land law issues; gave legal expert witness services on Ukrainian legal matters to Ministry of Justice of Ukraine, e.g. oil and gas licensing, PPP,
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taxation of oil and gas production, in relation to UNCITRAL proceedings between foreign oil and gas as claimants and Ukraine as the respondent. Yuriy Katser, senior counsel, head of the legal department, leads energy projects. Lexwell & Partners has a solid track record of cases in the sector. The firm rendered legal support to ArcelorMittal Kryvyi Rih in a project on reconstruction of coke batteries, production and installation of equipment; and acted for ArcelorMittal Berislav PJSC in appealing against special permits for subsoil use. The firm stands out for being a legal counsel of Naftogaz of Ukraine in USD 500 million international arbitration regarding a corporate dispute with minority shareholder Ukrnafta PJSC. Andrey Kolupaev and Igor Nagai are primary contacts for energy matters. ILF (Inyurpolis Law Firm), a Ukrainian law firm with offices in Kharkiv and Kyiv, has deepened its focus in the energy efficiency field. The new offering of the firm is support for the energy service mechanism, known as ESCO projects, where the firm acted for Ukrainian Energy Trust, Energytehinvest, ESCO Energy Group and other clients. Other areas of expertise are PPP and renewable, equipment supply, corporate and taxation. The team was supervised by partner Serhiy Silchenko, with a particular contribution from associate Ivan Bondarchuk. Spenser & Kauffmann reaffirms its presence on the market with the rapid expansion of practice areas. Given an accumulated track record within different departments of the firm, a separate dedicated practice has been launched, contributing with the expertise in corporate and M&A, construction, project finance. Among the team’s recent performance are assignments in the renewable sector, including wind, solar and sustainable technologies. The practice is led by the firm’s counsel Vitaliya Karhova. EQUITY (called FCLEX up till June 2017), a domestic law firm, is mostly known for its strong dispute resolution capabilities, while recently it enhanced its portfolio with corporate and M&A, finance, projects development, administrative law and regulatory compliance. The firm is often contacted for ore mining enterprises, energy generating and distribution companies, investors of large infrastructure, energy and transportation sectors. It continues an ambitious project of exploration and development of the Belanovo field and construction of the Ferrexpo Belanovo Mining. Vyacheslav Krahlevych, partner, is the main contact. KM Partners is regularly enlisted for business projects connected with exploration and
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development of minerals deposits, use of natural resources. Standout expertise includes subsoil use, with the focus on tax aspects, specific regulatory compliance and environmental law, including disputes. Partners Alexander Minin, Maxim Oleksiyuk, Alexander Shemiatkin led project work. In 2016 LCF Law Group enriched its clientele with local and foreign energy companies, and reframed its litigation force with special practice focused on energy disputes. The firm represented Golden Derrick Ltd in a dispute on cancelation of special permits for oil extraction. Other areas of expertise cover investment projects support and PPP. Some significant clients include Boston Industrial Corporation, Ares Systems Ltd, PJSC Kyivenergy, Arab Energy Alliance. Anna Ogrenchuk, managing partner, is the main contact. During 2016 GOLAW vividly focused on investment projects, involving regulatory, corporate and project finance matters, development and taxation; EPC contract advisory and construction issues. The firm advised Enkom a.s. on the development of the optimal corporate structure for the implementation of the project on the construction of a heat and power plant with the reconstruction of an administrative and manufacturing complex in Kharkiv. Another continuous highlight is support to the Irish agribusiness Donegal FRS, in the process of attracting new investments into the project to operate a bio power plant. Sergiy Oberkovych, senior partner, is the main contact. Aleksey Pukha and Partners shows active involvement in the sector of alternative energy, energy efficiency, equipment supply, comprehensive investment projects support. The firm also offers expertise on natural resources development and processing, environmental law. Its team advised C.R.E.A.M. Europe PPP Alliance (Belgium) on PPP in the energy field; advises China Insurance on projects to construct social housing using renewable energy sources. Clients include the Gas Institute of Ukraine, Khmelnitsky Dump, Wilo Ukraine, Gas Technology Institute of Ukraine, Mykolaiv Plant of Metal Structures and others. Aleksey Pukha leads the practice. Sokolovskyi & Partners reports on the robust development of its energy practice in the past year. In particular, the firm is active in construction projects of solar and wind power plants, energy-producing facilities, energy saving, electricity networks. The practice benefits from the strong tax practice. The main expert is Oleh Kostiuchenko, overseen by managing partner Vladyslav Sokolovskyi.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Intellectual Property
Intellectual Property Vladyslav PODOLYAK Vasil Kisil & Partners
Tracking IP trends and trying to guess the future is always tricky. Occasionally I follow the global IP news led by the idea “do not miss the next big thing”. On the contrary, my current client workload adjusts my feelings and market forecast. No wonder you hear different opinions from IP practitioners. The year 2016 gave us slight optimism for growth. IP driven start-ups requested legal advice about protection of their IP portfolio, IP assignment in favour of US-based assignees (co-investors). Business goes online and requires development of mobile apps; the total number of IT/IP services is on the rise. At the same time, online IP infringements are also increasing, and some of them are difficult to stop. In this respect, we hope that the new Law On State Support for Cinematography will enable extra options for locating infringers and stopping online infringements. We observe growth in the number of IP-related unfair competition cases considered by the Antimonopoly Committee. Applying to the AMCU is a simpler and cost-effective alternative to dispute resolution. The total number of IP disputes by local commercial courts is just 680 cases (compare this to 30,881 bankruptcy or 61,364 contract disputes). The officially reported total value of IP disputes in these courts was about UAH 80 million in 2016. This figure looks misleading. The majority of disputes pertaining to TM or patent cancellation are the “no value” type; the actual value of the contested IP is left behind the scenes. The key issues for 2017 and beyond: (1) Institutional transformation. The Ministry of Economic Development and Trade will substitute the State IP Service in its role as patent and trademark office. (2) Court reform. The High Court on IP Matters will start to function this year. (3) Parallel imports issue. The proposal to shift the international principle of exhaustion of IP rights for TM to the national principle is one of most controversial IP issues on Parliament’s agenda.
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he IP powerhouse Pakharenko & Partners is consistently referred as a very well positioned top player on the Ukrainian market. The firm is widely known for handling the full spectrum of IP matters, especially anti-counterfeiting and anti-piracy measures, complicated IP infringement matters, trademark and patent cases. Among recent landmark projects is protecting the interests of LRC Products Limited by stopping the illegal use of the TM “SCHOLL” in 43 cases associated with the dissemination of counterfeit/falsified products throughout the year. The firm is enlisted to support the portfolio of IP rights for such regular clients as CHANEL SARL, Pernod Ricard SA, DRISCOLL STRAWBERRY ASSOCIATES, Inc. In 2016 the firm supported a number of criminal cases related to violation of trademarks belonging to companies like Chanel SARL, Gucci Gucci SPA, Burberry Limited, Hugo Boss Trade Mark Management GmbH & Co. KG. KG, Tommy Hilfiger Licensing B.V., Giorgio Armani S.p.A., NIKE Innovate C.V., Syngenta, Procter & Gamble Company, Reckitt Benckiser N.V., Moncler S.p.A. and a further 25 world-famous brands. Highly-respected Antonina PakharenkoAnderson, managing partner, is an outstanding person in Ukraine. Alexander Pakharenko is traditionally acknowledged by IP community for his anticounterfeiting and anti-piracy proceedings. Elena Shamrina and Evgeniy Kompanets are other core team members. Patent and law agency Doubinsky & Osharova is a universal firm for solving IP issues, right from assessing the chances of registration of objects to creating a strategy for IP portfolio, from monitoring violations to the development of a full-scale strategy for the protection of rights. The agency has traditionally had a multi-faceted practice: protection of IP at customs; management of administrative cases; conducting criminal proceedings and litigation; mediation; consultancy; claim settlements; management of out of court cases in recognition of well-known trademarks; IP audits; anti-counterfeiting; forced re-delegation of domain names. The team successfully defended the IP rights of the state-owned bank Oschadbank in a court case in the High Commercial Court regarding early termination of the certificate of Ukraine on the sign “Sberbank” for goods and services of PJSC Oschadbank. It also defended the IP rights of the largest oil and gas corporation in the world, Exxon Mobil Corporation, in cancelling an action against a trademark confusingly similar to the trademark “Mobil 1”. It also defended the rights of The Coca-Cola Company in a case regarding unfair competition actions. Another significant case is acting for Bunge in the case
regarding prohibition of use of the “Oleina” trademark, designations confusingly similar to trademark and delegation of domain names oleina.com.ua. and олейна.com.ua. Michael Doubinsky, managing partner, is often referred as a market authority. Yaroslav Ognevyuk, partner, is known for his strong litigation skills, supplementing experience in all IP matters. Partners Victoria Sopilnyak and Anton Koval are among the key practitioners. Proactive AEQUO stands out for its strong IP litigation practice, with a standalone team dedicated to disputes in this area as well as a full-service non-contentious IP practice, handling trademark and patent prosecution, copyrights, day-to-day advisory work and transactional support. The firm defended Dr. Reddy’s biosimilar product in the High Commercial Court of Ukraine in a “first of a kind” case; and represented Forbes Media in a number of issues related to its American Arbitration Association arbitration proceeding against United Media Holding N.V., Forbes’ former licensee in Ukraine, in the termination of its license agreement as well as in proceedings claiming access to the forbes.ua domain name in Ukrainian courts. Oleksandr Mamunya, partner, head of dispute resolution and IP, is constantly named among leading IP lawyers in Ukraine. Andrey Nikolayenko, senior associate, is highly active across complicated IP project work. Baker McKenzie is a strong hub that provides the full spectrum of services and solutions to protect, manage and enforce the IP rights of international and local companies. The IP group focuses on comprehensive services in connection with structuring transactions related to intellectual property and information technologies, securing IT rights, including registration of trademarks and patents in Ukraine, and protecting against unfair business practices. The IP clients portfolio of the firm includes 3M Company, NISSAN, Total SA, Columbia Sportswear Company, Starbucks Corporation, Alticor Incorporated, Moёt Hennessy and others. In particular, the team recently acted for NISSAN in a number of trademark prosecution, clearance and trademark opposition cases and represented Columbia Sportswear in a major anti-counterfeiting criminal case in Ukraine. Practice head Ruslan Drobyazko, partner, has extensive experience of providing comprehensive services related to IP. Yuliya Kolchenko and Oleksiy Stolyarenko are the key practitioners visible in the market. Sayenko Kharenko’s strongly established IP team is proficient in transactional advice, non-contentious matters and high profile IP litigation. The key highlights include advising Shanghai Giant Net-
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Intellectual Property
AUTHORITIES Michael Doubinsky (Doubinsky & Osharova) Antonina Pakharenko-Anderson (Pakharenko & Partners) work Technology Co. on the IP issues related to the acquisition of Playtika Ltd; maintaining regional patents portfolio of NOVOMATIC AG; representing interests of Porsche Ukraine with respect to protection of VW, AUDI, SEAT brands in Ukraine. The team recently acted as legal counsel to CONSORZIO DI TUTELA DELLA DENOMINAZIONE DI ORIGINE CONTROLLATA PROSECCO with respect to protecting the PROSECCO brand in Ukraine against unfair competition and unlawful use of the brand; as well as maintaining local trademark portfolio of Podravka d.d. Selected clients include Consortium of PROSECCO wine producers, Electronic Arts, NOVOMATIC AG, Porsche Ukraine, Vostok Games. Partners Oleksandr Padalka and Nazar Chernyavsky, senior associate Oleg Klymchuk are primary IP contacts at the firm. Arzinger boosted its IP practice in 2016, providing comprehensive offering related to IP turnover and advises on a wide range of commercial arrangements and transactions with IP objects, including taxation. The client portfolio includes prominent names in pharmaceuticals, construction and development, electronics, telecommunications, energy sectors. In the outgoing year the firm represented a leading manufacturer of industrial equipment in a case relating to combating the import of grey and counterfeit products by different companies into Ukraine. This included development of brand protection mechanisms, and advised the international organizer of retail exhibitions concerning the issues of late trademark renewal procedure envisaged under Ukrainian
LEADING FIRMS 1. 2. 3. 4. 5.
Pakharenko & Partners Doubinsky & Osharova AEQUO Baker McKenzie Sayenko Kharenko
legislation. The team rendered advice on the use of names of places of origins and geographical indications for mineral waters in Ukraine. Counsel and head of IP Kateryna Oliinyk enjoys a growing reputation in the IP community. Asters utilizes hands-on IP experience, both stand-alone and arising from other practices, including M&A, IPOs, securitizations, private placements and other corporate and finance transactions. Notably, the firm is often involved in complex IP projects. In 2016 represented Сar-Freshner Corporation in trademark infringement actions regarding unlawful use of clients trademarks; and also advised Ferrero S.p.A. in connection with pre-trial negotiations and dispute resolution in connection with the unauthorized use of “Nutella”, the famous client’s brand, by a local confectionary producer; and represented The Foundry Visionmongers Limited in matters regarding the unlawful use of computer programs, including representation before the law-enforcement authorities, negotiations with the infringer regarding purchase of licenses. Julia Semeniy, the lead partner, is widely renowned in the IP community. The Kyiv office of DLA Piper commands a stand-alone IP practice with a diverse clientele including e-commerce, IT and technology, luxury brands. In a recent highlight the IP team rendered legal advice to the Norwegian Seafood Council with regards to registration of a trademark in Ukraine, and trademark licensing matters; advised Conair Corporation on several trademark protection matters. The workflow includes complex
21 John Paul II / Patrisa Lumumby, Office 416, Kyiv, 01042, Ukraine Tel.: +380 44 528 3094 Fax: +380 44 528 3054 E-mail: office@puhaipartnery.com.ua Web-site: www.puhaipartnery.com.ua
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BETICAL ORDER
Arzinger Asters DLA Piper Ukraine Egorov Puginsky Afanasiev & Partners Ukraine Gorodissky & Partners Ilyashev & Partners IPStyle IP Law Agency Synergy Konnov & Sozanovsky Mikhailyuk, Sorokolat & Partners Vasil Kisil & Partners
LEADING INDIVIDUALS 1. Yaroslav Ognevyuk (Doubinsky & Osharova) 2. Oleksandr Mamunya (AEQUO) 3. Alexander Pakharenko (Pakharenko & Partners) 4. Ruslan Drobyazko (Baker McKenzie) 5. Julia Semeniy (Asters) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Petro Borovyk (Borovyk & Partners) Zhanna Brazhnyk (PwC Legal) Irina Kirichenko (Ilyashev & Partners) Yuliya Kolchenko (Baker McKenzie) Evgeniy Kompanets (Pakharenko & Partners) Anton Koval (Doubinsky & Osharova) Anna Kravchuk (IP Law Agency Synergy) Taras Kyslyy (Egorov Puginsky Afanasiev & Partners Ukraine) Vadim Mikhailyuk (Mikhailyuk, Sorokolat & Partners) Kateryna Oliinyk (Arzinger) Mariya Ortynska (IPStyle)
COUNSELINK ALEKSEY PUKHA AND PARTNERS
OTHER ESTABLISHED PRACTICES LISTED IN ALPHA-
Oleksandr Padalka (Sayenko Kharenko)
GENTLS LAW FIRM
Leonardo Business Center, 17/52A Bohdana Khmelnytskoho Street, 5 Floor, Kyiv, 01030, Ukraine Tel.: +380 44 339 9910 E-mail: go@gentls.com Web-site: www.gentls.com
Natalia Pakhomovska (DLA Piper Ukraine) Vladyslav Podolyak (Vasil Kisil & Partners) Elena Shamrina (Pakharenko & Partners) Victoria Sopilnyak (Doubinsky & Osharova) Ilarion Tomarov (Taylor Wessing Ukraine)
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projects such as IP structuring and IP audit, IP rights and asset transfer matters. Clients include Bacardi Limited, Nike, Inc., Nu Mark, Norwegian Seafood Council, Conair Corporation, Naspers, Porsche AG. Partner Natalia Pakhomovska, head of IP and technology in Ukraine, had a busy year. IPStyle Patent Law Company is a fullservice IP boutique operating both in Ukraine and abroad. The firm provides for complex management of portfolios for companies including industry leaders and the protection of IP rights worldwide. Among the clients in 2016 are ASHAN, DANONE Ukraine, ROSHEN Confectionery, NOVUS, Nova Poshta, WINNER, Forward Bank, Import Foods, Prolego, Mitek, LOL&POP, IDEO GROUP. One work highlight was ensuring the broadest protection of the IP rights of ROSHEN in Ukraine and whilst operating on foreign markets, including protection at customs, and advising on various complex IP matters. The firm develops its IP litigation department tremendously, and has already won a number of cases representing clients in courts and other judicial authorities. In this past year IPStyle opened a Polish desk for providing services for Polish clients in Ukraine as well as for Ukrainian clients who intend to operate in Poland. Proactive Mariya Ortynska, patent and trademark attorney, manages the team. Vasil Kisil & Partners has by tradition an experienced IP practice. The firm advises clients through the entire IP life cycle, from the development of IP strategies, searches and audits, to the filing and registration of IP rights, structuring of related cross-border transactions, regulatory and tax issues, as well as on-going maintenance issues, such as anti-counterfeiting strategies and dispute resolution. Its overhanging IP litigation practice is particularly extensive and handles disputes regarding registration invalidation and IP rights protection, as well as various types of unfair competition disputes. The recent caseload includes representing a Ukrainian client in termination of a trademark/domain name dispute and representing another Ukrainian client in early termination of a trademark dispute with a major international pharmaceutical company. Vladyslav Podolyak, counsel, is the key practitioner. Ilyashev & Partners is primarily known for its dispute resolution skills, particularly IP litigations. Pharma, aviation, foods, cosmetics are part of the team’s industrial focus. Among the recent landmark projects are protection the intellectual property rights for “Mildronate” produced by Grindex in court proceed-
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ings. Notably, the firm acted as legal advisor to State Enterprise Antonov in disputes with OJSC Aviakor Aviation Plant and for OJSC Aviakor on recovery of losses under a licensing agreement for the right to use the trademark. Irina Kirichenko, patent attorney, is known primarily for successfully advising pharmaceutical companies. Milkhail Ilyashev, managing partner, oversees the practice. Year on year, the IP team of Egorov Puginsky Afanasiev & Partners Ukraine and its counsel, Taras Kyslyy, is a point of reference among IP practitioners. The firm provides comprehensive legal advice related to registration, transfer, and use of intellectual property rights, including trademarks, inventions, copyright, domain names and defends IP rights before patent, customs and law-enforcement authorities, in courts and international commercial arbitration. The patent and trademark attorneys of Mikhailyuk, Sorokolat & Partners provide a full range of services related to obtaining and maintaining legal protection for patents, trademarks, designs, supporting the transactions and enforcement of IP rights, initiating and participating in cancellation actions against patents and trademark certificates. For example, the team was assigned the trademarks portfolio relating to the coffee industry from Intercontinental Great Brands LLC (Mondelez Group) to Koninklijke Douwe Egberts B.V. within the framework of corporate restructuring. The recent achievements encompass the online service on its website — trademark search for similar or identical marks. Partners Anna Mikhailyuk and Vadim Mikhailyuk are well-known IP practitioners. Senior partner Valentin Mikhailyuk is another recognized name in the IP community. IP Law Agency Synergy comprises of specialists in the field of intellectual property, working in two practices — IP registration and transactions & litigation. The boutique firm provides services in all matters concerning to intellectual property, including legal assistance to the IT and e-commerce business. Moreover, one of the main areas of specialization of transactions & litigation practice is taxation of royalty payments. The team led by partner Anna Kravchuk acted as legal advisor to Vivo Healthway LLC in various IP matters; supported Rozetka.ua in trademark rights violation cases; FreeHost PE in numerous cases regarding protection of trademark. The recognized Ukrainian law firm Konnov & Sozanovsky enjoys a strong legacy in intellectual property and helps its clients
to develop corporate IP strategies, programs and policies. The firm stands out for its longstanding practice in copyright and media law. The core figures are Alexandra Odinets and Irina Melika. The local IP boutique Borovyk & Partners is currently undergoing modernization. Olena Kyrylyuk joined the firm as a partner to strengthen the IP dispute resolution practice. The firm handled all the patenting for Alcopack and represented Alcopack in four patent litigation cases; provided legal assistance in protecting trademarks and the domain name of the Porsche Finance Group in Ukraine. It also advised on day-to-day aspects of the use of its trademarks in Ukraine. The team introduced the de-facto administrative patent opposition proceeding, which is formally not foreseen in the current patent legislation. Petro Borovyk, founding partner, is the core contact. Gorodissky & Partners is recognized among leading players in the field of intellectual property rights registration, as well as protection of IP rights in courts and during pre-trial procedures. Oleg Zhukhevych is known on the IP market. Marchenko Danevych is known for its expertise in IP-related matters in life sciences. The firm maintains long-lasting cooperation with global leaders such as Eli Lilly, Johnson & Johnson, Novo Nordisk and others. In 2016 the firm also started cooperation with the EBRD and Gilead in IP area. The team advised the Ministry of Health of Ukraine on development of the medicine registration system, including its IP protection aspects (project initiated and financed by EBRD) as the Ukrainian legal expert within an international consortium; acted as the outside counsel for Gilead in a precedential regulatory/IP case. Borys Danevych is a prime contact. The practice was also strengthened with the arrival of a new partner, Oleksandr Aleksyeyenko. Over the past year PwC Legal has successfully supported a number of prestigious clients (include Cogniance Inc., Oracle Danfoss Jysk, JTI, Arkadia Food International, S.L., GFK, OLX) in IP disputes resolution, transactions and IP rights protection. The practice is co-led by Andrey Pronchenko, managing partner, and Zhanna Brazhnyk. Olga Romanenko joined the firm as head of the IP, IT & data protection practices. For the last year, Integrites’ IP team has been more actively representing the interests
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Intellectual Property of clients in various state authorities on the protection of intellectual property rights. The team is more and more involved in IP dispute resolution projects as well as in projects related to protection of IP rights in the Internet. The CIS network is an advantage of the firm as Ukrainian clients more often require assistance on IP issues abroad, especially in Kazakhstan. Serhiy Shershun and Pavlo Loginov are core practitioners, also involved in competition practice. Eterna Law specialized in advising a range of national and international clients in luxury, telecom, retail, FMCG, IT, pharm sector. The team acted for Swarovski AG on the recording of the TM rights infringement and purchase of the crystals for checking its originality at the InterCHARM15 exhibition, sample purchase on the web-site; advised WEFUTURE Ltd on registration for international trademark designated in Great Britain, Australia, EU, India, Russia, Ukraine, USA, preparation of copyright assignment agreements to computer programs. Practice head Ilarion Tomarov received endorsements for his recent social activities.1 Domestic pharmaceutical companies are presented in the IP-client portfolio of EQUITY (called FCLEX up till June 2017) , in particular, Kyivmedpraparat, NPO Farmatron, Halychpharm. In particular, in 2016 the team led by Oleg Malinevskiy represented the interests of Arterium Corporation in several disputes over the protection of IP rights with regard to the medical preparation “Tiatriazolin”. The team also advised the SOTA Cinema Group on contractual provisions in the process of shooting a film with brand placement. The Kyiv IP team of CMS Cameron McKenna had a vibrant year assisting international companies with IP related matters. The team provided legal services in Ukraine which cover both domestic and cross-border transactions and assignments. It is well regarded in IP litigation and has been acting on a number of confidential cases. Partners Olexander Martinenko and Olga Belyakova are noted as key figures. Dentons’ IP practice is well diversified. The team is particularly active in the field of new technologies, regularly advising on licensing and development of software and software packages, service and maintenance contracts, financing of computer products, database management, protection of software 1
He joined Taylor Wessing Ukraine in May 2017.
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against piracy, and cases alleging unfair competition. The practice also represents numerous clients on Internet issues, predominantly with respect to hosting contracts, licensing online connection facilities, website creation, electronic data interchange (EDI), encryption, e-commerce, copyright infringement, and cases involving operator liability. Oleg Batyuk is a lead partner. Given its industrial niche Legal Alliance Company utilizes experience in protecting both national and international trademarks, patents on inventions, utility models and industrial designs, particularly in areas like pharmaceuticals, medicine, veterinary medicine, pharmacology, immunology, genetic engineering, molecular biology and chemistry. Illya Kostin, partner, and counsel Nataliia Lavrenova, are the firm’s key IP practitioners. Prime in taxation KM Partners provides assistance to clients within a wide range of issues related to intellectual property, from registration of trademarks or plant variety to structuring of complex cross-border transactions related to the transfer of IP rights. The team represents clients in state authorities and courts in tax related matters: license payments as royalty for tax purposes, registration of trademarks in the customs intellectual property registry. Recognized tax advisors Sokolovskyi & Partners provide legal and technological support for the acquisition of IT products, namely, accompany software development contracts, site development, search optimization, SaaS (software as a service) and support for the implementation of information systems and software. The firm drafts contracts for the creation of IP on order, licensing agreements, licenses, transfer of exclusive property rights, as well as protection of IP rights on the Internet and misuse thereof. Counsel Ihor Shevchenko heads the IT/IP practice. The rapidly expanding Ukrainian law firm of Spenser & Kauffmann launched its IP practice in May 2016. Its client portfolio takes in both multinational companies and prospective IT startups. This past year the team, as guided by counsel Tatiana Kharebava, advised several IT startups on the best options to protect IP, including elaboration of different agreements for the transfer and commercialization of IP rights. KPMG Ukraine provides legal support in cross-border registration of changes to registered information with regard to trademarks
WHO IS WHO
owned by Marc Cain GmbH; and also advised a national sports organization on the legality and possibility of contributing certain IP and other rights (video broadcasting, sponsorship rights, etc) into the charter capital of the company’s subsidiary. Yuriy Katser, head of legal services, is a key contact. The IP practice of the International Legal Center EUCON is headed by Yevhen Petrenko, recently promoted to partner. In 2016 the firm acted for Global Message Services Ukraine on supporting national and international trademark registration. In 2016 the IP practice of Gramatskiy & Partners brought many significant projects related to both counseling clients and their protection in courts and pre-trial proceedings. A number of appeals from Ukrainian producers were related to the protection of their copyright to industrial design. There were complex franchising, licensing, software development and complex IP objects. The client lists include KSTT Services, Global Universal Trading Ltd, AgroAlliance Group, PTS UA Services, Skywind Tech UA, Playtech Software Limited, Clickmein. Borys Karas heads the practice. Sklіarenko, Sydorenko & Partners is focused principally on litigation. The firm advised Mr. Andriy Danylko (stage name Verka Serduchka) on copyright protection matters, representing his interests in a court case related to protection of copyrights for the use of the stage name and in enforcement proceedings. Managing partner Oleksandr Skliarenko led the team. SDM Partners has a substantial practice regarding registration of various types of rights to IP objects, protection from infringements (including through the courts, antimonopoly bodies and law-enforcement bodies), advice regarding major deals relating to the sale and purchase/licensing of various IP objects. Serhiy Dzis heads the practice. Aleksey Pukha and Partners acted on behalf DeltaQuest Group for registration of the trademark of the fashion TV in Ukraine. Lavrynovych & Partners provided advice to Sergio LLC on the protection of intellectual property rights against a manufacturer of sweets, which violates the rights protected by patents, and distributors to discontinue the use and sale of goods produced in violation of IP rights. In 2016 Juscutum structured the IP portfolio of Sportlife, protected Miss Internet IP rights during the creation of an international competition.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES International Arbitration
International Arbitration Pavlo BYELOUSOV AEQUO
In 2015 we observed a number of investor-state disputes initiated by Ukrainian companies (mostly Privat / Kolomoisky’s group of companies) against Russia under the Russia — Ukraine BIT, seeking redress for the loss of assets and profits as a result of the annexation of Crimea and illegal seizure of their property by Russia. This trend continued in 2016 when new claims against Russia were brought by Oschadbank and Naftogaz (together with its subsidiaries) over their Crimean assets. Moreover, though Russia denies the jurisdiction and does not participate in any such arbitration proceedings under the Russia-Ukraine BIT, it has been widely reported in 2017 that UNCITRAL tribunals issued their unanimous awards on jurisdiction in disputes brought by PrivatBank, Everest Estate, Belbek and others v Russia, and proceeded to consider the cases on their merits. This is regarded as a clear sign of a growing number of disputes under the Russia-Ukraine BIT and other BITs. We continue to observe a trend for increasing expansion of disputes in Europe (including Ukraine), Russia, Middle East and Latin America related to energy and natural resources, including investor-state and commercial disputes related to, inter alia, pricing in LTG, Transmission and LNG contracts. In 2016-2017 we also noted an increasing number of quite unique arbitration cases that are attractive for Ukrainian practitioners, where Ukrainian law governs contracts while foreign rules of arbitration (LCIA — 3, SCC — 2) would apply to the procedure and administration. Hopefully, this trend will continue and, thus, the workload for Ukrainian arbitration practitioners acting as counsels, experts and arbitrators will also grow. And last but not least, 2017 may become a significant year for the development of the international arbitration practice in Ukraine in view of the following factors. First, in March 2017 new Draft Law No. 6232 amending the procedural laws was submitted to the Ukrainian Parliament to accomplish the pending judicial reform. In particular, the Draft pioneers the introduction of such remedies to be obtained via the national courts such as disclosure and discovery of evidence, witness examination and interim measures in support of international arbitration in Ukraine and abroad in an attempt to develop an arbitration friendly jurisdiction in Ukraine. Second, following recent revisions & updates of its rules by the leading international arbitration centres, the International Commercial Arbitration Court at the Ukrainian Chamber of Commerce and Industry (ICAC Ukraine) initiated revision of its 2007 rules of arbitration in 2016. The new ICAC Ukraine Rules are expected to be approved in 2017.
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uring 2016 the well-regarded arbitration team of Sayenko Kharenko acted as counsel and Ukrainian law adviser in over 15 cross-border disputes and arbitral proceedings under a variety of institutional rules, including those of the ICC, LCIA, SCC, the Netherlands Arbitration Institute and UNCITRAL Arbitration Rules, for a total amount exceeding USD 6 billion. In particular, the firm represented the State of Ukraine in an Energy Charter investment arbitration initiated by the minority shareholders of PJSC Ukrnafta under the Arbitration Rules of the Arbitration Institute of the Stockholm Chamber of Commerce; and representing Ostchem Holding Limited in court proceedings in Ukraine against PJSC Odesa Port Plant in respect of recognition and enforcement of the Partial Award by Consent on collection of undisputed debts and penalties. Arbitration lawyers served as party-appointed and institution-appointed arbitrators as well as presiding arbitrators in over 20 arbitrations seated in Kyiv, Minsk and Vienna. The team is led by partner Tatyana Slipachuk, FCIArb, C.Arb. Counsel Olexander Droug has gained endorsements for his strong involvement in the arbitration practice. Arzinger maintains positions among leading international arbitration teams on the Ukrainian legal market. The firm demonstrates expansion of its caseload of international disputes, representing, inter alia, the State of Ukraine in investment arbitration disputes, and a list of commercial arbitrations. For example, the firm acts as an arbitration counsel of Ukraine in an investment dispute under the ICSID rules on the lawsuit filed by Dutch investors seeking recognition of Ukraine’s breach of obligations under the bilateral agreement on the protection of investments between Ukraine and the Netherlands for the protection of investments in the banking sector as well as obtaining the appropriate compensation is last year’s highlight project. Lviv-based partner Markian Malskyy is known for his extensive practice. Oksana Karel is another important practitioner at the practice. The growing arbitration team of Integrites is one of the busiest on the Ukrainian market and includes 3 arbitration partners and 8 associates on board. The firm added to its portfolio large
multijurisdictional matters, and has a particular focus on disputes involving CIS parties. The firm’s portfolio of arbitration cases includes arbitration and arbitration-related project under the rules of major arbitration centers, including ICSID, LCIA, SCC, ICAC (Kyiv), ICAC (Moscow), GAFTA, etc.). Proactive Olena Perepelynska, President of the Ukrainian Arbitration Association, is the head of CIS international arbitration at Integrites. Partner Vsevolod Volkov is another key figure for arbitration matters. The team was strengthened by the arrival of a new London-based partner, Ivanna Dorichenko, FCIArb, who joined the team after 7 years of practice in various London law firms, most recently at Clyde & Co, to head the trade and commodities practice. Last year was a period of sustainable growth for AEQUO’s arbitration practice. The firm represented the interests of clients in 15 arbitration proceedings according to arbitration rules of the SCC, American Arbitration Association, LCIA, ICC, ICAC Ukraine, ICAC Russia with the claims total exceeding USD 70 billion (including one of the top highest-value international arbitrations in the world). The team, together with Three Crowns LLP (London office), represented Ukrainian net-worth-individuals — shareholders of a large Ukrainian distribution holding, in eight related arbitration proceedings at the LCIA against a large Ukrainian distribution holding and its beneficial owners claiming dividend payments and specific performance. In particular, the firm represented Forbes Media on a number of issues related to its American Arbitration Association (AAA) arbitration proceeding against United Media Holding N.V., Forbes’ former licensee in Ukraine, in the termination of its license agreement. The practice is supervised by managing partner Denis Lysenko and partner Oleksandr Mamunya. Pavlo Byelousov, counsel, is a key practitioner in arbitration matters, who also acts as an arbitrator. International arbitration and cross-border litigation practice at Vasil Kisil & Partners possesses developed expertise in handling complex large stake matters, having represented clients in international and investment arbitrations under major arbitral rules. Last year the team acted as Ukrainian counselor for Ukrainian businessmen Igor Kolomoisky and Gennady Bogoliubov in a major corporate dispute against
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES International Arbitration
LEADING FIRMS
AUTHORITIES
1. 2. 3. 4. 5.
Sergei Voitovich (Grischenko & Partners) Serhii Sviriba (Egorov Puginsky Afanasiev & Partners Ukraine) another well-known Ukrainian businessman Viktor Pinchuk in two disputes: before the High Court of Justice in London regarding the payment of dividends and transfer of shares of one of the major Ukrainian Iron Ore Works and before the LCIA regarding the payment of dividends to the shareholder of the biggest ferroalloy holding. Oleg Alyoshin is lead partner with a growing portfolio of high profile cases. Asters team is rapidly reaffirming its standing on the international arbitration arena. The firm handled disputes under a wide range of arbitral bodies and assisted its clients in enforcing foreign arbitral awards and judgments in Ukraine. One significant case is acting as a local counsel for Quinn Emanuel Urquhart & Sullivan LLP, lead counsel acting for Oschadbank JSC, regarding protection of Crimea-related interests and rights of JSC Oschadbank and the recovery of losses incurred by Oschadbank through an international investment protection mechanism against the Russian Federation (the value of claims is around USD 1.4 billion). Managing partner Oleksiy Didkovskiy leads the team. Yaroslav Petrov, counsel, is a prominent practice figure. Experienced Dmytro Shemelin (previously worked in Ilyashev & Partners) joined Asters as a counsel. Throughout 2016 ARBITRADE continued to strengthen its arbitration practice, adding to the list proceedings before VIAC, ICC, CAS and ICAC at the UCCI. Last year brought many successes in the completed arbitral proceedings,
Sayenko Kharenko Arzinger Integrites AEQUO Vasil Kisil & Partners
a number of positive awards have been received in cases arising out of trade in commodities. The firm also continues to act in investment arbitration proceedings at ICSID. Bright Yuliya Chernykh, of counsel, acted as an arbitrator in more than 30 cases in Ukraine and in foreign arbitral institutions. Andriy Shulga, partner, heads the practice. AGA Partners is known in agribusiness arbitration, and in the main handles cases at GAFTA and FOSFA arbitration institutions. Last year the firm handled about 25 arbitration processes within GAFTA, FOSFA and LMAA institutions coming to a total of USD 80 million. The firm’s clients include: COFCO Agri, ADM, MHP, EFKO Group of Companies, Spike Trade, Industrial group Vioil (Ukraine), RZ Agro Private Company, KZ Agro, AgroFood, Silgosproduct, Fergus Kazakhstan and others. In 2016 AGA Partners developed their practices of international investment arbitration and sport arbitration, where they have several new clients, including Dynamo BC. The lead partners team includes Aminat Suleymanova, Ivan Kasynyuk and Irina Moroz. AVELLUM is noted for the rapid development of its commercial and investment international arbitration as well as cross-border litigation. Respondents note the team’s experience and successful track record. Dmytro Marchukov is lead partner. Serhii Uvarov, senior associate, is active in arbitration circles. Engarde’s strong practice of international arbitration is tradition-
COUNSELINK GOLDENGATE LAW FIRM
Business Center Saksagansky, 70 Saksaganskogo Street, Kyiv, 01030, Ukraine Tel.: +380 67 776 6130 E-mail: info@goldengate-law.com Web-site: www.goldengate-law.com
INTERLEGAL
24B Genuezska Street, Odesa, 65009, Ukraine Tel.: +380 482 33 7528 Fax: +380 482 33 7529 E-mail: odessa@interlegal.com.ua Web-site: www.interlegal.com.ua
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WHO IS WHO
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
AGA Partners ARBITRADE Asters AVELLUM CMS Cameron McKenna Egorov Puginsky Afanasiev & Partners Ukraine ENGARDE Ilyashev & Partners Kinstellar
LEADING INDIVIDUALS 1. Tatyana Slipachuk (Sayenko Kharenko) 2. Olena Perepelynska (Integrites) 3. Markian Malskyy (Arzinger) 4. Irina Nazarova (ENGARDE) 5. Eugene Blinov (Eterna Law) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Oleg Alyoshin (Vasil Kisil & Partners) Oleh Beketov (Eterna Law) Pavlo Byelousov (AEQUO) Yulia Chernykh (ARBITRADE) Markiyan Kliuchkovskyi (Egorov Puginsky Afanasiev & Partners Ukraine) Sergiy Gryshko (Redcliffe Partners) Ivan Kasynyuk (AGA Partners) Kostiantyn Likarchuk (Kinstellar) Roman Marchenko (Ilyashev & Partners) Dmytro Marchukov (AVELLUM) Olexander Martinenko (CMS Cameron McKenna)
TRUSTED ADVISORS
40/85 Saksahanskoho Street, 5th Floor, Kyiv, 01033, Ukraine Tel./Fax: +38 044 359 0664 E-mail: info@trustedadviors.com.ua Web-site: www.trustedadvisors.ua
Yaroslav Petrov (Asters) Dmytro Shemelin (Asters) Ihor Siusel (Baker McKenzie) Anton Sotir (GoldenGate Law Firm) Aminat Suleymanova (AGA Partners) Vsevolod Volkov (Integrites)
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES International Arbitration
ally highly referenced by market players. The team represents clients in a range of complex arbitration regulations, including ICC, LCIA and the SCC. The firm’s recent caseload includes high stake arbitrations of strategic importance. Top arbitration professional Irina Nazarova is the front of the practice. Partner Roman Ognevyuk acted as legal counsel in disputes under ICC Arbitration Rules. Kinstellar opened in Kyiv in March 2016 and rapidly reaffirmed its market positions in international arbitration and cross-border litigation, acting as legal counselor for wide range of reputable clients in a series of international arbitration, around USD 1.3 billion of total value. The firm advised majority shareholders of Nemiroff Vodka Limited on LCIA arbitration on a claim initiated by minority shareholders and Stockman Interhold S.A., a former investor of Sky Mall shopping mall in Kyiv, on a major shareholder multijurisdictional dispute that involves around 30 sets of litigation proceedings. The Kyiv team is also involved in a USD 550 million multijurisdictional shareholders’ dispute, involving assets tracing and fraud investigations. Managing partner Kostiantyn Likarchuk leads Kinstellar’s global dispute resolution practice. Mykyta Nota, managing associate, is another key figure of the arbitration practice.
CMS Cameron McKenna is noted in both investment and commercial arbitrations. The team stands out on the market for its unique expertise in energy disputes. The firm recently acted for leading international clients, in particular acting as a Ukrainian law counsel for JKX Oil & Gas plc in the SCC arbitration proceedings brought against Ukraine under the Energy Charter Treaty over gas market restrictions and punitive taxation measures imposed by Ukraine, including obtaining the first ever emergency award against Ukraine. Senior partner Olexander Martinenko acts as an expert witness on Ukrainian law issues in numerous investment arbitration proceedings. Olga Shenk is an important team member. Egorov Puginsky Afanasiev & Partners Ukraine international arbitration and crossborder litigation practice has built a solid reputation worldwide. They are experienced in all international arbitration rules and have successfully represented clients in various international ad-hoc and institutional arbitrations. Managing partner Serhii Sviriba is year on year named one of Ukraine’s authorities in this area. Partner Markiyan Kliuchkovskyi is highly regarded on the market and referred for his sports arbitration track record. The leading dispute resolution team of Ilyashev & Partners combines its domestic
litigations skills and representation of clients in foreign courts and arbitration institutes. The firm represents the interests of SE Antonov in the arbitration dispute with Libyan Arab Air Cargo in the ICAC at the UCCI regarding arrears for the maintenance of aircraft in Kyiv. Another highlight is representing the interests of the Creative Group in a number of international arbitrations and foreign courts proceedings in disputes with an international consortium of banks under the management of UniCredit Bank regarding the collection of loans from group companies. The firm represented shipowner Cormorant Maritime Limited in eight parallel arbitration proceedings at LMAA regarding the failure to pay for freight. The practice is overseen by partners Mikhail Ilyashev and Roman Marchenko. Eterna Law is traditionally among the busiest market players. The sizeable team receives instructions from clients in agribusiness, energy, banking sectors, IT companies and state enterprises. Among the recent public projects is representing Ukrenergy Trade in arbitration at the VIAC in a dispute with a Ukrainian state company arising from breaches of long-term electricity supply agreements for the export of Ukrainian electricity, and representing the client in GAFTA arbitration proceedings arising from the respondents’ failure to perform a contract of sale. Eugene Blinov, partner and head of the international arbitra-
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Education:
Anton SOTIR Partner, GoldenGate Law Firm
Certificate in International Sports Law, Wolfson College, University of Cambridge. LL.M. (summa cum laude) in International Sports Law, ISDE. LL.M. in International Commercial Arbitration Law, Stockholm University. LL.B. (summa cum laude), National University “Law Academy named after Yaroslav Mudryi”.
Practice Areas: www.goldengate-law.com Tel.: +38 067 776 61 30 E-mail: info@goldengate-law.com
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Professional experience:
Anton Sotir is a partner at the GoldenGate Law Firm. He regularly represents his clients in various international disputes, commercial arbitration and sports law cases. His experience includes handling arbitration proceedings at many institutions, including the LCIA, SCC, ICC, ICAC, VIAC, CAS, GAFTA/FOSFA, and earlier at ad hoc tribunals. He also serves as an arbitrator adjudicating commercial disputes, and acts as a Deputy Chairman in the Dispute Resolution Chamber of the Football Federation of Ukraine. In addition, he has broad experience of enforcing arbitral awards and foreign court decisions in Ukraine. In addition to his private practice, he acts as a consultant at Lombardi Associates, with a special focus on the Central and Eastern European region. Anton is the author of many articles in the areas of commercial arbitration, sports law, maritime law and transportation. He is also a contributor to various books acting as an expert for Ukraine, including the 1st edition of the International Arbitration (2015), The FIFA Regulations on Working with Intermediaries (2015 and 2016), The Sports Law Review (2016 and 2017).
International Arbitration, Sports Law, Maritime Law, International Commercial Law.
Languages: Ukrainian, Russian, English
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES International Arbitration tion department, remains one of the key figures in arbitration in Ukraine. Oleh Beketov, partner and head of international litigation, is acknowledged as a competent expert. Lexwell & Partners’ team led by managing partner Andrey Kolupaev, acted in both commercial multijurisdictional litigation and investment disputes. The firm is Ukrainian law counsel to Naftogaz of Ukraine PJSC in international arbitration proceedings regarding a corporate dispute with minority shareholders of Ukrnafta PJSC. The firm also acted as a cocounsel to the Ukrainian Government in lingering investment arbitrations initiated by JKX Oil And Gas plc and its subsidiaries before the arbitration institute of the SCC; and is a cocounsel to the Ukrainian Government in the Krederi Ltd v. Ukraine investment dispute initiated at the ICSID. The firm represented the interests of Eltax Rubber Trade Corporation in arbitration proceedings in Stockholm ICC, in a debt collection case on commercial contracts with companies belonging to the Metinvest Group. The Kyiv office of Baker McKenzie has been providing legal assistance to clients in complicated disputes, including handling complex cross-border matters. Amongst others, the firm represents international and Ukrainian clients in commercial disputes as to the international sale and purchase of goods and services, corporate rights and real estate, investment protection, real estate and mortgage matters, etc., and acts on recognition and enforcement of foreign arbitral awards. Partner Ihor Siusel heads the dispute resolution practice group in Kyiv. Young domestic law firm EVERLEGAL is currently developing its international arbitration practice. The team is representing the interests of a Ukrainian subsidiary of one of the world's largest snacks companies in an international arbitration dispute regarding supply of goods; acting for a Lithuanian major travel supplier company before the ICAC at the Chamber of Commerce of Ukraine in arbitration disputes with a major freight forwarding company that provides services in the field of railway container transportation regarding breach of a freight forwarding contract. Dispute-focused partner Andriy Porayko heads the practice. Dynamic young Ukrainian law firm Trusted Advisors, is focusing on dispute resolution, including commercial arbitration. The team defended the interests of a leading Ukrainian agricultural trader at the Court of Arbitration of the GAFTA. In June 2016 Ivan Lishchyna,
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previously a partner and head of international dispute resolution practice, was appointed to the position of Government Commissioner for the European Court of Human Rights, which meant the practice passed under the leadership of managing partner Ivan Mishchenko. In 2016 ANTIKA was instructed for representation in the Arbitration Institute of the Stockholm Chamber of Commerce and German Maritime Arbitration Association. Managing partner Alexey Kot is also enlisted as a Ukrainian law expert in investment arbitration. 2016 brought a workload for the Redcliffe Rartners’ multiple dispute resolution practice. In particular the team has been instructed as Ukrainian counsel relating to an investment treaty arbitration under the ICSID Rules. Partner Sergiy Gryshko, a vivid arbitration and litigation lawyer, leads the practice. The dispute resolution lawyers at Marchenko Danevych represent multinational and domestic companies in complex commercial arbitration cases, including construction arbitrations. The team also has a strong focus on investor-state disputes, currently representing French and US investors in two tax/ regulatory and pharma/IP investor-state disputes with Ukraine. Partner Oleh Marchenko, known in the main for his many years practicing tax, reprofiles in dispute resolution and arbitration. N&D (since 2016 an independent Ukrainian law firm, previously a member of Andreas Neocleous & Co International LLC) has gained a reputable clientele and project portfolio, acting previously in debt collection and debt restructuring disputes. Thus, the firm represented a client in the London Court of Arbitration in a multimillion debt collection dispute; and Investohills Capital before the International Commercial Arbitration under the Ukrainian Chamber of Commerce on a debt collection dispute under credit obligations. Enforcement of arbitration awards is an important area of practice. Igor Kravtsov is head of litigation and arbitration. Managing partner Andriy Dovbenko acted as key practitioner in the majority of projects. GoldenGate Law Firm is a Kyiv-based boutique whose main specialization is sports law and resolution of sports-related disputes at international arbitration (mostly CAS and FIFA). Landmark projects include representation of Ukrainian athletes in appeal proceedings before Court of Arbitration for Sport on the decision of the IBU on alleged anti-doping rule violation. Additionally, the firm has also
WHO IS WHO
handled a number of commercial arbitration cases. Partner Anton Sotir is a key figure at the firm. Grischenko & Partners has a long history of being among the oldest domestic arbitration counsels working on investment arbitration cases. Partner Sergei Voitovich is traditionally named among the most reputed practitioners in Ukraine. Odesa-based LeGran.TT wields specialized experience in settlement of maritime-related disputes as well as maintenance of trade arbitrations. In particular, the firm represented Black Sea Commodities Ltd in a dispute under FOSFA with Libyan buyers of sunflower oil, which alleged that the cargo did not meet contractual quality and refused to perform part of the payment. Tatiana Titarenko, managing partner, is the key individual. Dentons extends its position in arbitration, being instructed for representing the interests of clients in disputes related to energy sector, commercial and corporate relations. Kyiv office based managing partner Oleg Batyuk is a prime contact. KM Partners provides legal support through arbitration proceedings, recognition and enforcement of decisions of foreign courts and commercial arbitrations in Ukraine. The team, led by Alexander Minin and Maxim Oleksiyuk, is referred to represent in debt recovery cases under foreign economic contracts, as well as in Ukrainian courts on recognition and enforcement of arbitral awards. The team’s tax expertise is an advantage. The arbitration work at Law Offices of OMP is led by partners Valeriy Bitsuk and Mykola Orlov. Proceedings at the UCC Court of International Arbitration and LCIA are part of its recent portfolio. The Ukrainian and Turkish offices of Interlegal acted for Zaporizhya Abrasives Works upon enforcement of an award by ICAC at the UCCI against a Turkish debtor, acting as a buyer under a sales contract. Attorneys’ Association Gestors acted as legal advisor to Chornomornaftogaz with regard to controversial issues in the return of the Titan-2 crane vessel to its owner. In 2016 Aleksey Pukha and Partners represented Israeli company Hawk Aviation LTD in court settlement of disputes and in international commercial arbitration in connection with the failure of counterparty contract terms in a supply agreement.
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Gleb BIALYI EPAP Ukraine
Trade Remedies/WTO
2016 was a year of internal and external conflicts. Ukraine and Russia conducted numerous trade cases against each other. For example, the Eurasian Economic Union (Russia is one of five member states) initiated six trade cases against Ukrainian imports, and Ukraine — four against Russia. Two separate CVD cases were conducted in both countries for the first time. The Russia — Ukraine fight also continued in the WTO regarding various measures, including anti-dumping, imposed on production imports, restrictions on traffic in transit, etc. Ukraine has re-oriented the export of its main products, and the EUʼs trade vector facilitated the process. However, sudden re-orientation caused new trade cases against Ukrainian products in India, the EU, Turkey, the USA, etc. In 2016, trade cases evolved from purely arithmetical (calculation of sales data, cost of production, etc.) to mainly public ones (valuation of national interests, losses for industry). National interests prevailed and caused a domestic contradiction between the interests of national producers and national consumers. In this regard, the role of a legal counsel is no longer limited to managing legal risks and providing viable and real solutions. The counsel has become a business advisor, a trouble shooter, and a negotiator between business and the Government. In 2017, we expect further positive development of trade policy in Ukraine: a rise in the exports of Ukrainian products to other international markets; initiation of trade duties’ reviews in the USA, the EU and other countries; participation in new trade cases, including WTO cases. The need to update current Ukrainian trade laws is a priority.
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International Trade: Trade Remedies/WTO, Commodities
S
ayenko Kharenko’s international trade team continually receives market praise for its extensive workflow and human capacities. As a leading market force it acts for both national industry heavyweights and multinational corporations in some of the most significant international matters. Throughout 2016, led by partner Dr.Tatyana Slipachuk, the firm handled more than 30 projects, inter alia, advising on contractual structuring, trade remedies, customs, special sanctions, agency and distribution, franchising, WTO, etc. Recent highlights include representing VITA POLYMERS Poland sp. z.o.o. in safeguard investigation; advising PJSC Borshchagivskiy Chemical-pharmaceutical Plant on termination of special sanctions; acting for Khartsyzsk Pipe Plant, Ilyich Iron and Steel Works in Mariupol and related companies (Metinvest Group) in the sunset review of anti-dumping measures applied to imports into the Eurasian Economic Union of pipes originating in Ukraine. Additionally, the firm advises GEOX HUNGARY KFT on the peculiarities of agency agreements application in Ukraine. Two counsels, Andrew Zablotskyi and Anzhela Makhinova, attract peers’ praise for strong experience. Another team member, Oleksandra Brovko, who is active in trade investigations, was noted as a promising young specialist. Egorov Puginsky Afanasiev & Partners Ukraine (EPAP Ukraine) has a consistent following among major metallurgical and chemical producers. In 2016 the team demonstrated strong performance in trade remedies with a vivid record of external investigations. In particular, EPAP Ukraine represents Ukrainian ferroalloy producers in several different investigations against exports of ferrosilicomanganese from Ukraine to Eurasian Economic Union countries, the countries of the Gulf Cooperation Council, and the Republic of Korea; and within the administrative review of antidumping duty against imports to the USA of SiMn originating from Ukraine. Another important recent highlight included representing a leading international chemical producer in an anti-dumping investigation against the import of UAN to Ukraine. Gleb Bialyi, partner and head of international trade, is recognized for his strong track record in trade remedies. Anton Sintsov, associate, is present throughout the firm’s projects. Ilyashev & Partners develops its international trade practice with new instructions on representa-
tion in anti-dumping and safeguard investigations, licensing issues, sanctions, market access, customs. The firm currently handles representation of ROSHEN, Kharkiv Biscuit Factory PJSC, Confectionery Company AVK, PJSC Poltavakonditer, in the anti-dumping investigation against import into Ukraine of confectionery from the Russian Federation. Another important case was acting for UAN in a safeguard investigation against import into Ukraine of pliable porous plates, blocks and sheets from polyurethane foams irrespective of the country of origin. The firm’s client list includes ArcelorMittal Kryvyi Rih, AGC Glass Company, Noble Group, Ukrplastic, FSC More, OSCAR Production Group. Olena Omelchenko is primarily focused on trade law and earned solid feedback from peers. Given the bright presence in the agricultural sector, AGA Partners is consistently active across international trade in commodities, which involves transportation of goods by sea, and most of them are subject to international arbitration dispute resolution. The team stands out for possessing a solid portfolio of Ukrainian agribusiness companies among its clients, which include ViOil Industrial Group, MHP, COFCO Agri, ADM, NCH, State Food and Grain Corporation of Ukraine and Ukrlandfarming. The compact team is the major reference point in niche advisory of commodities, and its three partners are in charge of subsequent mandates — Aminat Suleymanova, Ivan Kasynyuk and Irina Moroz. ARBITRADE is customarily actively involved in international trade in commodities. A large portion of work involved drafting of contracts and structuring of transactions. For example, in 2016 the team was engaged in the structuring of a complex high-value transaction for a long-standing client, EFKO-Trade LLC (Russia) — an exclusive agreement for transshipment at a terminal complex at Taman sea port. The team was also involved in the drafting of other agreements, including contracts for purchase of soybean meal from a Brazilian seller, palm oil from Malaysia and rice from Pakistan. Other clients include Bunge S.A., Exoil S.A., the State Enterprise State Food and Grain Corporation of Ukraine, Tenfore, Stolmina and others. On the contentious side, ARBITRADE has received several positive high value awards in specialized commodities arbitrations during the course of 2016. Moved of counsel Yulia Chernykh is experienced in the consulting and dispute areas.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES International Trade
Commodities
The export of Ukrainian commodities has beaten another record in 2016, showing 36 million tonnes of delivered grains, which is 12% of the global market. Despite these positive figures, traders have faced problems on international markets, namely low prices and an insignificant margin. It affected the nature of requests coming from business. The flat prices decreased the number of defaults (breaches), where parties illegally avoided proper performance of contracts, which is common during periods of high volatility. On the other hand, 2016 brought a significant number of international disputes which were related to trade wars in the Black Sea region involving mostly Ukraine, Russia and Turkey. It is worth noting the prohibition of import of certain types of agrarian products to Russian Federation and number of restrictions imposed by Turkey towards Russia, including the recently introduced 130% duty on grain imports. The newly opened Indian market for Ukrainian grains in 2016 and leaders of growth — Iran, Bangladesh and Thailand has brought additional challenges to lawyers, requiring them to double their efforts and focus on the peculiarities of local regulations and requirements to Ukrainian products. This has led to a significant number of disputes within GAFTA and FOSFA arbitrations, which in most cases govern Ukraine’s exports. There may be no doubt that 2017 is expected to bring new challenges both on internal and international markets. The anticipated low price season and high liquidity inside Ukraine will cut off many traders or will make them much more effective. Cancellation of the special VAT regime and upcoming land reform will also be among the drivers of the market. Nevertheless, the forecast for 2017 is even more optimistic, with Ukrainian traders expecting to export around 40 million tonnes of grain, which will strengthen Ukraine’s position on international markets and, of course, will have a positive effect on the commodities law practice.
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Praised for its extensive global trade network, Baker McKenzie has a well-versed international commercial and trade practice. The team has experience in developing and implementing compliance programs for its operations around the world. The office’s workflow includes a wide array of instruction, in particular, on Ukraine’s obligations under the WTO, international treaties implications, supply contracts, export control regulations, sanctions, public procurement, customs issues. Two partners, Serhiy Chorny and Ihor Olekhov, are in charge of the practice. The team includes Hanna Shtepa, Maksym Hlotov, Ganna Smyrnova. In 2016 at Eterna Law many instructions were centered on market access advisory, trade regimes, WTO regulations and trade remedies. The firm advises Krym-Cement on changing the trade regime in line with the change in the legal status of Crimea, as well as regulations of the Customs Union/Eurasian Economic Commission; Yablunevyy Dar (TM Galicia) on matters related to the EU trade regime, free trade agreement negotiations, export market access. Traditionally, the practice is overseen by Oleh Malskyy, corporate and M&A partner. Asters maintains expertise in an extensive range of international transactions and contractual structuring; and features advice on regulatory and customs issues, export and import
1. Sayenko Kharenko 2. Egorov Puginsky Afanasiev & Partners Ukraine 3. Ilyashev & Partners
LEADING INDIVIDUALS 1. Tatyana Slipachuk (Sayenko Kharenko) 2. Andrii Zablotskyi (Sayenko Kharenko ) 3. Gleb Bialyi (Egorov Puginsky Afanasiev & Partners Ukraine) 4. Olena Omelchenko (Ilyashev & Partners) 5. Anzhela Makhinova (Sayenko Kharenko) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
LEADING FIRMS 1. AGA Partners 2. ARBITRADE 3. Integrites
LEADING INDIVIDUALS 1. Aminat Suleymanova (AGA Partners) 2. Ivanna Dorichenko (Integrites) 3. Ivan Kasynyuk (AGA Partners) 4. Yulia Chernykh (ARBITRADE) 5. Olena Perepelynska (Integrites) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
COUNSELINK DMITRIEVA & PARTNERS 3 Dniprovska Naberezhna, Kyiv, 02098, Ukraine Tel.: + 380 44 553 7660 E-mail: office@dmp.com.ua Web-site: www.dmp.com.ua
Trade Remedies/WTO
AGA Partners
LEADING FIRMS
GOLDENGATE LAW FIRM
Business Center Saksagansky, 70 Saksaganskogo Street, Kyiv, 01030, Ukraine Tel.: +380 67 776 6130 E-mail: info@goldengate-law.com Web-site: www.goldengate-law.com
INTERLEGAL
24B Genuezska Street, Odesa, 65009, Ukraine Tel.: +380 482 33 7528 Fax: +380 482 33 7529 E-mail: odessa@interlegal.com.ua Web-site: www.interlegal.com.ua
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Commodities
Ivan KASYNYUK
Integrites replenished its expertise into the separate trade and commodities practice with the arrival of new London-based partner Ivanna Dorichenko (who previously worked in Clyde & Co). The firm presently commands both contentious and transactional capabilities, having among its clients commodity producers, trading houses, state corporations and other commodity interests. In the list of clients, amongst others, are Astarta, ADM, Promising International, Allseeds, Agrogeneration. In the past year Ivanna Dorichenko assisted the State Food and Grain Corporation of Ukraine in the resolution of a trade dispute with UK buyers and Indian/Pakistani receivers due to allegations of inferior quality of shipped cargo. Additionally, the firm has established a trade finance offering guided by partner Vsevolod Volkov. International arbitration partner Olena Perepelynska acts throughout contentious projects of the new practice.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES International Trade
control mandates, transit and transportation, food safety, consumer protection, labeling, trade regimes, and trade disputes. The firm is regularly seen in setting up comprehensive trade, distribution, manufacturing structures with a blanket range of regulatory, customs and tax issues relating to trade; and is regularly instructed on a broad range of commercial agreements, including supply, license, distribution, franchise, etc. The client base of Asters traditionally stands out for solid international names, among others; Molson Coors, L’OREAL, ED&F MAN. Three partners, Svitlana Chepurna, Oleksiy Didkovskiy and Alexey Khomyakov, manage project workflow. AEQUO renders advice on contractual structuring of complex foreign trade transactions, customs and tax, export control, product safety, technical regulations. The firm advised a leading Norwegian producer of food supplements called Natural Pharmaceuticals on trade and customs aspects of the free trade agreement between Ukraine and the EFTA countries; a leading European manufacturer of IT equipment on export of complex IT equipment to Ukraine. The team is headed by managing partner Denis Lysenko, while partner Anna Babych leads the commercial practice. Associates Oleksandr Tereshchenko and Vasyl Mishchenko are team members. Benefiting from its global experience, Attorneys Association PwC Legal renders support to import/export operations of Ukrainian business and handles restructuring solutions in the international trade area from legal, customs and tax perspectives. In particular,
PwC assisted JOY Global (Poland) with importation of mining equipment into Ukraine. The team is noted for development legislation aimed on customs simplifications for reliable businesses (known as the Authorized Economic Operator Institution). Practice head Denis Shendryk, senior manager, specialises in developing international trade solutions for multinational and local clients, resolving disputes with the customs authorities and introducing internal compliance procedures. Gramatskiy & Partners is customarily well-versed for comprehensive support of cross-border trade, export and import control, customs and market access, currency regimes. The team structures supply operations for a wide variety of items, including soft commodities and especially complicated technological equipment. The clients include international logistics, freight, stevedores, as well as traders, exporters and importers, trade finance institutions and banks. The 8-lawyer practice team is guided by Andrii Trembich. Attorneys’ Association Gestors is hired mostly for representation in trade investigations. The market knows the name of associate partner Yaroslav Snigur, who is focused on anti-dumping and safeguard proceedings. In June 2016 Anna Zvolikevych joined as a partner and became an official representative in Brussels. She deals with EU regulatory policy issues such as international trade, market access, WTO rules, trade defense instruments. Arzinger’s industry-wise equipped expertise in trade includes structuring commer-
cial relations, cross-border supply, customs, regulatory. The firm advises on EU regulatory issues, market issues and sanctions. Andriy Selyutin, partner and head of the Odesa branch, managed trade advice. Interlegal, the Odesa-based niche law firm focused on maritime and shipping, acts on trade related instructions of clients. In particular, the firm represented the interests of a regular client, Duglas Alliance Ltd, under a special equipment supply contract signed for the purpose of construction works. LeGran.TT, the Odesa-based practice, has a maritime law and international trade focus. In the client portfolio are domestic and foreign cargo interests, vessels’ owners, importers and exporters. The team has expertise in economic sanctions controls, exports procedures, WTO legislation and shipping law. The firm supported Datcross Enterprises LLP, an international wine trade company, on its partnership with a Moldovan wine brand, including developing of international sale-purchase agreements for Moldovan wine for further export to China. Clients include Transship, Black Sea Commodities Ltd, MarineTrans, Vtormetexport, Vernon Shipping Ltd., METALSUKRAINE Corp. Managing partner Tatiana Titarenko is the primary contact. Market players single out commodities expertise of Hill Dickinson, an international commercial law outfit that works a great deal on the Ukrainian market. The Dnipro-headquartered Dynasty Law Firm handles structuring of commercial schemes and cross-border trade contracts.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES IT / Telecommunications & Media
IT / Telecommunications & Media Oleksiy STOLYARENKO Baker McKenzie
IT
The Ukrainian IT industry has been growing actively over the past year. In fact, the size of the industry, as well as the public attention that it gets, is pushing many of its members toward greater transparency and compliance with various regulations both in Ukraine and globally. Outsourcing companies have generated a steady flow of work related to acquiring companies, teams and even individual developers, along with some contractual work on MSAs, SOWs, NDAs, etc. Now some Ukrainian companies are switching to product development and there is increased demand for product protection and clearance on the most important markets, namely the US and Europe. Many innovative products and services entered the Ukrainian market in 2016-2017 from abroad. Some with big fuss and publicity, but many simply extended their services to Ukraine without much public attention. One company though, an important industry online payment intermediary, is still resisting the call. We can only hope they will change their mind soon. Entry to the Ukrainian market for many online services and digital products is relatively easy as the relevant areas enjoy little or no regulation. But some areas such as telecommunications and financial services are heavily regulated and could be problematic. Next year IT companies should watch out for the creation of a specialized IP court to ease copyright and patent enforcement; introduction of cyber security regulations to deal with neighbouring state cyber-attacks; and increasing the need to comply with GDPR requirements to continue processing European personal data.
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ayenko Kharenko has a recognized extensive team advising high-profile technology companies, and provides IT advice to corporate clients and the largest IT outsourcing and product companies, IT start-ups on software development matters, mobile applications and gaming. In addition to the traditional transactional presence, the firm’s recent remit has included comprehensive IP due diligence, investments, corporate and tax structuring; various regulatory issues, including data protection and cloud computing matters; sophisticated commercial agreements and tax incentives. The firm is sought for its capabilities in cross-border technology-based transactions, including M&A. In particular, the firm advised Shanghai Giant Network Technology Co. on the Ukrainian aspects of the USD 4.4 billion acquisition of Playtika Ltd. Other highlights included acting as legal counsel to U&Sluno a.s. on recovery of penalties and damages in Ukrainian courts, caused by counteragents in violation of the terms of general cooperation agreements; advising Unirad LLC on distribution of the TRACAB tracking system in the CIS region. The firm has a prominent presence in the telecommunications sector, representing multinational telecom, media and TV broadcasting companies across sector specific regulation, IP, tax, corporate and competition matters. The antitrust team is the premier choice for high-value transactions involving industry heavyweights. The lead partners are Nazar Chernyavsky (sector specific expertise and rainmaker for telecom clients) and Oleksandr Padalka (extensive IP practice). Mykyta Polatayko, IT group coordinator, is described as an open-minded expert and appreciated by the market for his expertise in IT law, tax and contracts. The IP/IT work is coordinated by senior associate Oleg Klymchuk. ILF (Inyurpolis Law Firm) has a fast growing IT practice and maintains strong relationships with outsourcing and product IT companies from Ukraine, the USA, EU and Australia. In 2016 a huge bulk of work was focused on corporate structuring with further opening of foreign companies in different jurisdictions, support for US IT players entering the Ukrainian market, restructuring of IT outsourcing companies and establishment of R&D centers. The team is supported by a group of tax practitioners to perform seamless international tax solutions. It is worth noting that the ILF team has formidable strength in software development contracts and IT outsourcing. One recent highlight of the firm was supporting establishment of a Ukraine-based R&D laboratory for US software company iPiccy; advice to
InsArt, one of the leading IT outsourcing companies in Eastern Ukraine, regarding a software development agreement with a US company. One landmark project of late was representing one of the TOP 25 banks in Ukraine on its agreement with IBM, to outsource IT infrastructure servicing as well as development and support of proprietary software. The client list includes Qualium Systems, SciForce, KnubiSoft, Velton, iPiccy, Echostar Ukraine, InsArt, Provectus, SPS Commerce. Artem Naumov, partner, is getting more involved in the IT sector. Anton Zinchuk, partner, is admired for his strong complete expertise in both IP, tax and corporate law. Given extensive experience in the technology and telecom sector throughout the region, CMS Cameron McKenna is hired to give advice on both domestic and cross-border matters. The Kyiv team is instructed by international players for IP structuring and regulatory work, specific employment, data protection, commercial matters, with notable experience in such specific areas as cloud technologies and social media. Its strong transactional capabilities empower the office to act on M&A deals in the sector. Amongst publishable transactional mandates is advising Horizon Capital on the sale of Ciklum, a leading global software engineering and solutions company to George Soros’s Ukrainian Redevelopment Fund. Highly sophisticated projects for telecom providers are a feature of the recent workload. Olga Belyakova and Volodymyr Kolvakh are the core practitioners. DLA Piper provides extensive expertise in telecom and IT sectors, showcasing booming instructions from technology heavyweights. The wide-ranging work across IT, media and telecommunications spans over corporate and finance, intellectual property, domestic and international employment and compensation plan matters, infrastructure services and facilities development, tax, regulatory compliance, litigation. This robust practice has notable strength in data protection matters, software development and licensing, telecom licenses in Ukraine, and is especially often hired to handle cross-border projects. Among the latest multijurisdictional projects is providing legal support to Impulse Ventures LLC, where the firm acted for the lead investors on fundraising into an English technology company called LoopMe Ltd, which has subsidiaries in Ukraine and the US state of Delaware. The office also advised on Ukrainian law issues (corporate, employment, regulatory and real estate) within multijurisdictional project in which DLA Piper acted for CEB Inc. within
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES IT / Telecommunications & Media
Axon Partners is a new boutique team established in March 2016 that has already gained market praise for its unconventional approach and the personal visibility of its core individuals. The dynamic team extended its capacity in Kyiv, and launched an office in Lviv. The sharp IT focus encompasses contract law, IP, litigation, corporate law, domestic and international tax, and showcases projects in different IT areas like e-commerce, IT outsourcing and R&D offices, IT integrators, product companies, fintech, startups and VCs. The firm completed a complex project, having represented one of the investors in a hardware startup with an R&D office in Ukraine and headquarters in the US. Moreover, the firm advises Invisible CRM, one of the biggest and the oldest Ukrainian IT companies, on privacy shield issues in the US; assists Poster POS, an application for restaurants with R&D office and operations in Ukraine, with tax and legal aspects of expansion in the Russian Federation. Some other selected clients are BlaBlaCar, Innovecs, Stanfy, TripMyDream, Hosting Ukraine, Kuna Bitcoin Agency, DOU, rabota.ua, Wishround, Vitagramma, ProZorro, Clickky, Rialto, Vertamedia, ISM e-Company, Visco, Ecoisme, Yalantis, Myhelix. On the telecom front, the firm acted as a legal advisor to VDNG-TECh, the first corporate startup accelerator built by Kyivstar, drafting service contract and NDA. Dima Gadomsky, CEO, is among the top-recognized experts renowned for deep understanding of the IT business and efforts to try the latest ideas. The team of other partners, namely Denys Beregovyi, Nazar Polyvka, Bogdan Duchak, has been extremely active since the firm’s launch. The key figures in Lviv are Yuriy Kornaga (taxation) and Orest Gavrylyak (international tax). AEQUO enjoys a remarkable client following from technology, telecom companies and media majors, spreading its offering throughout transactional work, regulatory and litigation. Notably, the firm is present in every segment of this industry, dealing with cable, satellite and telecoms media, representing clients in
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M&A, corporate, competition, IP matters. AEQUO advises Viasat World Limited, a leading international TV company, on the acquisition of Viasat Ukraine LLC from Modern Times Group. Another notable mandate is advising on acquisition of 3Mob company — the telecom company is the holder of the first 3G license issued in Ukraine. In the media area the firm represented Forbes Media on a number of issues related to its American Arbitration Association arbitration proceedings against United Media Holding N.V., Forbes’ former licensee in Ukraine, in the termination of its license agreement. The co-heads of TMT is corporate and M&A partner Anna Babych, and IP partner Oleksandr Mamunya. The client following of Arzinger covers foreign product and outsourcing companies, IT corporations, e-commerce, media, as well as the First Television Channel in Ukraine for the IT-industry. The area of queries included establishing effective corporate structures given the applicable tax burden, drafting of contractual background, protecting IP rights issues related to software, considering its peculiarities of IP rights assignment. Given its exceptionally strong standing in life science, the team supported a leading US medical technology company with software as a key non-material asset, on agreements regulating the terms of software creation and further IP rights assignment, subcontractors qualifications as well as procedures on software modification. Olga Baranova, counsel, and Pavlo Khodakovsky, partner, are lead practitioners. Kateryna Oliinyk, head of IP, has been endorsed for her deep knowledge of domain name disputes. National heavyweight Asters is attracted for contractual support and structuring of software development projects, IT-related audits, data protection, specific IP matters, evolving domain names and anti-cybersquatting, IP rights transfer. Other recent queries touched on cross-border tax structuring, employment, corporate, commercial framework and infrastructure. The firm traditionally attracts praise for its advising a prestigious roster of telecommunication clients. The expertise encompasses, inter alia, issues regarding network interconnection, access, licensing, project finance, loan facilities for mobile operators and fixed telephony operators, as well as regulatory for satellite service capacities. The
LEADING FIRMS 1. 2. 3. 4. 5.
Sayenko Kharenko ILF (Inyurpolis Law Firm) CMS Cameron McKenna DLA Piper Ukraine Axon Partners
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
AEQUO Arzinger Asters Baker McKenzie Juscutum Attorneys Association
NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Artem Afian (Juscutum Attorneys Association) Olga Baranova (Arzinger) Nazar Chernyavsky (Sayenko Kharenko) Dima Gadomsky (Axon Partners) Anna Kravchuk (IP Law Agency Synergy) Taras Kyslyy (Egorov Puginsky Afanasiev & Partners Ukraine) Oleksandr Mamunya (AEQUO) Viktoriya Ostapchuk (IP Law Agency Synergy) Oleksandr Padalka (Sayenko Kharenko) Natalia Pakhomovska (DLA Piper Ukraine) Mykyta Polatayko (Sayenko Kharenko) Julia Semeniy (Asters) Oleksiy Stolyarenko (Baker McKenzie) Olena Vardamatska (Wolf Theiss) Anton Zinchuk (ILF (Inyurpolis Law Firm)
client roster includes Tyco Electronics, The Foundry Visionmongers Limited, Motorola Solutions. Managing partner Oleksiy Didkovskiy is known for his legacy in the telecom area. Julia Semeniy, IP partner, is in charge of handling sophisticated queries from sectoral clients in this area. The global presence of Baker McKenzie makes it the port of choice for international operators of software development companies, satellite communication systems, major international telecommunications companies, communications hardware providers and wire and mobile telephone communications operators. Most recently the IT and telecommunications practice group
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acquisition of Maven Research Inc. The firm’s client list includes solid names, with Vocera Communications, Inc., Payoneer, CEB, being publishable to note. Natalia Pakhomovska, partner and head of IPT, added a number of strategic telecom projects to her profile.
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Natalia PAKHOMOVSKA DLA Piper Ukraine
Telecommunications & Media
Telecom companies have usually had strong internal teams of lawyers, with work only being outsourced to law firms on largescale litigations or on acquisitions of telecom assets. Regulatory work (and other routine legal tasks) were, therefore, dealt with by inhouse telecom legal teams. Last year, partly due to redundancies in internal telecom operators and partly due to the scale and complexity of the projects that telecom operators faced, we saw some significant projects outsourced to law firms, especially in the area of the transformation of their operational models and transferring certain functions to global service centers. We also saw certain routine functions, such as the preparation of regular reporting, also being delegated to outside law firms. Over the last year numerous attempts made to change the legislative landscape in the telecom sector have been unsuccessful, with only the draft law on access to infrastructure finding its way into law. The principal draft law on electronic communications has not even been considered by Parliament yet. Although the need for change in this area has become obvious to all, many nuances contemplated in this draft law, such as the level of state involvement in market regulation, are rather controversial and need further balancing. Yet, the further liberalization of licensing requirements combined with more stringent obligations on market players (especially on data security and public safety) will certainly become part of future legislation, if not next year then shortly afterwards.
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES IT / Telecommunications & Media has advised on compliance with domestic and international laws, licensing and the regulatory process, system integration, contractual matters, IP protection, investment and finance, employment, tax and customs. Viacheslav Yakymchuk, corporate/M&A partner, heads this dedicated group. His team acted for Horizon, a US private equity fund, on increasing its stake in Datagroup as part of the debt restructuring of Datagroup owed to VTB Ukraine. The strong IP practice, as led by Ruslan Drobyazko, represents technology majors on trademark protection, counterfeiting and enforcement. Oleksiy Stolyarenko is seen in practice development. Juscutum Attorneys Association maintains good standing in the IT sector, and reaffirmed its niche telecom service with the admission of new junior partner Yuriy Kotlyarov (previously — head of the Legal Department at Ukrtelecom). The IT practice preserves a following from clients seeking corporate structuring and attracting investments. The team recently acted for Creative Quarter in the establishment of an accelerator and the attraction of a strategic investor; supported Smarty Sale in the organization of an Internet service. Managing partner Artem Afian is the head of IT. This past year the team was completed with a number of highly-focused practitioners, Valeria Dyachenko (GR in IT) and Nestor Dubnevych (cryptotechnologies). The cross-practice TMT of Vasil Kisil & Partners has acquired increasing importance in recent years. The experience covers transactional and regulatory matters with respect to industry specifics, as well as intellectual property, labor and employment, dispute resolution. The firm advised a Ukrainian subsidiary of an international IT manufacturer as the choice of an operational structure for doing business in Ukraine, including tax structuring of its relations with contractors, VAT and corporate income taxation of its operations, execution of employment and service agreements with individual entrepreneurs. The team acted as a local counsel in advising Modern Times Group MTG AB, a Swedish media holding, on the sale of its Ukrainian pay-TV channel business subsidiary Viasat Ukraine, LLC to Viasat World Limited. Contractual work for IT developers, IP disputes, tax disputes and criminal cases are all part of the team’s recent caseload. The team encompasses Vladyslav Podolyak, counsel, IP; Oksana Voynarovska — labor and employment, partner; Andriy Stelmashchuk, managing partner — dispute resolution. Volodymyr Igonin, counsel, leads projects in telecommunications and media. Ilyashev & Partners is renowned for its litigation capabilities acting for major TV channels. The team represented the Inter TV Channel in a breach of contract dispute on the supply of satellite capacity by SpaceCom, an Israeli operator of satellite broadcasting. Other clients are represented in a range of commercial litigation, inter alia, debt collection and
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administrative appeals. Some notable clientele includes Ciklum, Datagroup, Sitroniсs Telecom Solutions, Horse Place Ltd. Managing partner Milkhail Ilyashev oversees the firm’s projects. Dentons has a global presence in the TMT sector, advising a roster of international and domestic players. In the public area is advising BIIR on various corporate, IT and regulatory issues related to the company’s commercial activity in Ukraine. The office is traditionally busy with the instructions of telecommunication sector providers, being mandated for specific regulatory assignments, as well as corporate, finance, employment and currency control regulation. The spectrum of TMT clients is serviced by four partners, namely Oleg Batyuk, Markian Silecky, Adam Mycyk, Natalia Selyakova. Given strong M&A capabilities, AVELLUM is often preferred for transactional work in complex regulatory frameworks and handles comprehensive due diligence of acquisition companies, covering specific issues of employment, IP rights protection and compliance. The firm advised Altran, a global leader in innovation and high-tech engineering consulting, on the acquisition of Lohika, a software engineering services firm on the due diligence of IP and employment matters; advised Onex Corporation, one of the oldest and most successful private equity firms and Baring Private Equity Asia, on employment matters in connection with the acquisition of Thomson Reuters’ Intellectual Property & Science Business. Mykola Stetsenko is a lead partner. Yuriy Zaremba, associate, is active in giving employment advice. Eterna Law advises range of IT companies, startups and IT investors on IP, tax and corporate mattes. The firm advised WEFUTURE Ltd on registration of international trademark in UK, Australia, EU, India, Russia, Ukraine, USA, exclusive property copyrights on computer programs; advised Alexander Chernyak, a co-founder of the Russian used cars broker CarPrice, on his investment in a Brazilian counterpart service Instacarro. In addition, the firm regularly acts for well-known telecom companies, providing them support in disputes, on IP and corporate mattes. For instance, the firm advises STB Channel on trademark registration and copyrights. The IP expert Ilarion Tomarov1 is a bright lawyer according to the peers’ survey, being appreciated for promoting IP ideas within the IT industry. Oleh Malskyy, partner, is in charge of corporate and M&A work. IP Law Agency Synergy is known for its niche service, focusing on IP litigation, tax, and commercial contracts. The firm completed the case of trademark violations on the Internet, sites and domain names representing the Internet shop Rozetka.ua. The agency also advises producers of computer games on contractual issues and establishment and trans1
He joined Taylor Wessing Ukraine in May 2017.
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IN UKRAINIAN LAW BY PRACTICE AREAS â &#x201E; INDUSTRIES IT / Telecommunications & Media
Spenser & Kauffmann launched its IT practice in May 2016 with the arrival of new counsel Tatiana Kharebava, who became head of IP, IT and antitrust. The practice covered instructions of existing clients and won new ones. In 2016 the team advised several IT start-ups on IP protection including elaboration of different agreements for the transfer and commercialization of IP rights. Another highlight is support to a leading search engine company in launching an online taxi project in Ukraine. The team advised one of the biggest banks on its negotiating position regarding IT-outsourcing agreement with IBM. The dedicated industry of Gramatskiy & Partners accumulates experience of commercial, tax, employment, IP and business protection practitioners. Apart from industry specific assignments, the firm is enlisted for structuring holding companies, finance of Internet advents, tax and labor relationship structuring, legal support in the course of searches and seizures. On the transactional front the firm completed a number of projects representing foreign investors in the course of the buying out of Ukrainian IT companies, technology transfer, development of IT projects, acquisitions of software produced by local developers. The client list includes Playtech Software Limited, Clickmein, SKYWIND Tech UA, PTS UA Services, Sea Services Ukraine, KSTT Services. Igor Reutov oversees industry workflow. In 2016 Wolf Theiss sustained its IP/IT practice diversity that was developed in previous years. Olena Vardamatska, head of the IT practice, conducted and supervised due diligences of IT aspects in Ukraine as part of huge multinational M&A transactions (e-commerce as well as B2B producers), and also consulted clients on diverse e-commerce aspects, and provided legal support for investment in a Ukrainian e-commerce start-up.
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The Ukrainian IP boutique IPStyle advises IT companies and private entities on the development and use of IT products as well as during transactions. The scope of recent work includes patenting in IT sphere, copyright registration, and development of license and assignment agreements, protection strategies. Mariya Ortynska is primarily known for IP work and is the main rainmaker at the firm. GOLAW puts a great effort on boosting its presence in the IT sector. In this past year the firm advised Ubisoft Ukraine LLC on corporate, commercial and employment matters; represented Vortex Group on various aspects of corporate law, contractual relations, and litigation. The firm is attractive for proficient tax litigation capacities. Thus, Absolut Trading, a distributor of telecommunication services, was represented in a tax dispute. Managing partner Valentyn Gvozdiy is the main point of contact.
LEADING FIRMS 1. 2. 3. 4. 5.
Sayenko Kharenko DLA Piper Ukraine AEQUO Asters CMS Cameron McKenna
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
Arzinger Eterna Law Juscutum Attorneys Association Ilyashev & Partners Vasil Kisil & Partners
NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Anna Babych (AEQUO) Olga Belyakova (CMS Cameron McKenna)
Lviv-based counsel Advice Group is actively involved in advisory of predominantly foreign clients in Western Ukraine. In 2016 the team performed legal support for the international IT company Symphony Solutions, especially advised on contractual relations, personal data issues, intellectual property, corporate and operational activity. Other selected clients include Conscensia, Ericpol, Echovox. The projects are supervised by managing partner Anton Podilchak.
Denys Beregovyi (Axon Partners)
Gryphon Legal, domestic practice focuses on advising banks and financial companies on a bulk of regulatory matters. In 2016 the firm has been highly active in currency exchange, money transfers and payment services projects, and advised on IT issues, inter alia, support of program proceedings and implementation of processing in financial companies, joining payment systems, crypto currencies and other IT aspects of money transfer. Helen Lynnyk and Igor Lynnyk are the main contacts.
Mykyta Polatayko (Sayenko Kharenko)
The IT practice at Sokolovkyi & Partners is focused on tax advice to IT companies and individual entrepreneurs, M&A, termination, support in criminal proceedings and legal due diligence. In a recent highlight the firm supported acquisition of IT products, software development agreement, SaaS (software as a service) advice, implementation of IT
Nazar Chernyavsky (Sayenko Kharenko) Oleksiy Didkovskiy (Asters) Volodymyr Igonin (Vasil Kisil & Partners) Yuriy Kotlyarov (Juscutum Attorneys Association) Oleksandr Mamunya (AEQUO) Natalia Pakhomovska (DLA Piper Ukraine) Ilarion Tomarov (Taylor Wessing Ukraine)
and software. Notably, the IP practice covers protection of IP rights throughout an IT project. Ihor Shevchenko, counsel, is in charge of the practice. Taras Kyslyy, counsel and head of the IP and TMT practice of Egorov Puginsky Afanasiev & Partners Ukraine, has actively practiced as a compliance adviser for IT companies, according to the reviews of peers. Dmytro Ovcharenko, SBT Systems, receives constant reference on advising large IT companies and is involved in the activities of sectoral associations. Yuriy Krainiak, partner of Jurimex Law Firm, is highlighted for his great contribution to legislation amendments regarding the take down notice procedure. Oksana Kobzar, founding partner of the Kharkiv-based Oksana Kobzar Law Office, is appreciated for her IT-dedicated tax advisory work.
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fer of rights on mobile application GO ECO NETWORK. The team often advises entertainment and movie production clients. Recent work also included giving copyright transfer advice to the Atom Film Studio, and taxation of royalty for the organizer of film festivals. Partners Viktoriia Ostapchuk (tax) and Anna Kravchuk (domain name disputes) are the main contacts.
WHO IS WHO
WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Labor & Employment
Labor & Employment Mykola VOITOVYCH Gramatskiy & Partners
2016 was the year of strong expectations for significant amendments in labor legislation. Even the new Labor Code was seriously expected to be passed. The Code was to create revolutionary new approaches to labor relations by ending the era of the existing Labor Code of Ukraine, which was adopted back in soviet times and conserved norms that didn’t respond to the spirit of the time and thus overburdened relations between employers and employees. But, as so often happens, the expectations were not justified, and we continue to live with the soviet era Labor Code, and 2016 has left the labor sphere as one of the least reformed. Occasional amendments were influenced by a complicated domestic situation, which demanded improvement in the status of some employees such as mobilized and internally-displaced persons. The institute of probation has also undergone some transformations. At the same time, it must be highlighted that 2016 gave effect to the Law of Ukraine On State Service. The law, among other things, introduced considerably new approaches to regulation of working for the state and raised broader requirements for civil servants. As to dispute resolution, their numbers continued to grow in 2016. The majority of cases traditionally constituted disputes on the cancellation of employment termination, reinstatement of employment and compensation of the average salary. The New Law On State Service has also triggered disputes in the respective field. In contrast to 2016, the very start of 2017 brought with it sensational amendments: the minimum wage was doubled to UAH 3,200, the wage system has been transformed, new significant fines for violation of labor legislation have been introduced, and municipal authorities have been delegated certain powers of inspection. The important thing is that the current political dialogue displays the readiness of Parliament to adopt the longawaited Labor Code before the end of 2017. In dispute resolution practice it may be predicted that a growth in cases on challenging the decisions of municipal bodies originated from their new inspection authorities as well as cases on cancellation of fines related to them.
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asil Kisil & Partners, member of the largest global alliance Ius Laboris, is known for its high-end employment matters, representing primarily corporate employers. The firm is seen equally in advisory and disputes, labor law issues arising out of corporate reorganizations and mergers, transfer of employees, terminations and redundancies. Among the noteworthy instructions of late is advising a major Ukrainian pharmaceutical company during introduction of the Council of Honor; assisting a Swedish manufacturer of outdoor power tools on the dismissal of the Ukrainian subsidiary’s GM; representing a global money transfer company in a staff reduction matter. The practice also converges with tax services, and advised a Ukrainian subsidiary of an international IT manufacturer on the choice of an operational structure for doing business in Ukraine. Oksana Voynarovska, partner, is a top-referenced practitioner committed to Ukrainian labor law development. The market also knows and endorses the name of another team member, Valeriya Savchuk, especially marking her out for litigation work. Baker McKenzie is particularly renowned for its international ties and strong extensive clientele in Ukraine. The office rendered advice on wage and hour issues, employee privacy rights, employmentrelated tax issues, family and medical leave matters, terminations, compensation, insurance coverage, alternative dispute resolution mechanisms for resolving employee grievances and legal claims, compliance. The team is involved in terminations covering seamless employment related advice, labor safety, disciplinary proceedings, personal data protection. Lina Nemchenko, partner, is a practice head focused on data protection and general labor law. Mariana Marchuk, counsel, specializing in employee compensation, executive transfers and terminations, internal investigations, privacy and data protection, employee termination, collective disputes and collective agreements, trade unions. Dentons employment practice is much diversified and covers contentious, advisory and transactional work. The Kyiv office narrowed its position of a preferred counsel for international companies doing business in Ukraine, on the employment consequences of M&A, restructurings, closures and downsizing. Given the ever-growing worldwide network of this international powerhouse, the practice team assists clients on a wide variety of cross-border employment matters. Recent selected highlights include complex advice given to an international luxury products company on employment, immigration and corporate law
issues in connection with employment of foreign and local employees; representing the Institute of International Education, Inc. on various employment issues related to its operations in Ukraine; providing comprehensive advice to the Salvation Army on employment, immigration and corporate law. Volodymyr Monastyrskyy is an established figure in the Ukrainian market, and combines labor knowledge with corporate law practice, and anticorruption advisory. Sayenko Kharenko has an integrated labor and compliance practice that includes employment, privacy/data protection and anti-corruption/antibribery niche practice groups. The client focus is pharmaceutical, insurance, retail, IT and computer equipment, communications, chemical, food and production industries. Recent highlights included advising on the best possible employee dismissal scenarios, workforce restructurings, moving employees between various entities of the same corporate group, resolving grey area issues in documenting the combining of jobs, employee transfers, employing foreign nationals, compensation and benefits, employment risks of concluding services agreements with private entrepreneurs. The team widely uses mediation techniques and resolved amicably, confidentially and on the clients’ terms a number of complicated disputes. During 2016 the team also advised on personal data protection law implications on conducting internal compliance investigations and implementing global whistle-blower schemes. Dr. Svitlana Kheda is specifically recognized for successfully and amiably (i.e. out-of-court) resolving challenging labor disputes, including those resulting from dismissals related to compliance violations. Asters traditionally advises numerous high-end corporate clients supporting with far reaching advisory instructions and dispute representation. The team is enlisted for labor safety matters, compliance, high-level hiring and firing, termination and severance payments, etc. In the past year, among others, the firm represented Wizz Air Ukraine in a court dispute with a former employee, advised on various employment matters, including obtaining work and residence permits for foreign employees, compensating employees and contractors, hiring and dismissing managers and personnel of a Ukrainian subsidiary and representative office. Other clients include Molson Coors Ukraine and Visa. Armen Khachaturyan and Vadym Samoilenko are lead partners. With a strong client base in healthcare, food and banking industries, Arzinger enjoys demand for compliance, anti-corruption and employees’
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Labor & Employment problematic dismissals and relocation advice. The network of its regional offices (Lviv and Odesa) benefits the firm’s dispute resolution capabilities. Since 2014 the dedicated team has provided complex legal advice on mobilization and relocation of personnel from the temporarily occupied territories (Crimea and Eastern Ukraine). Most recently Arzinger became especially busy with advice on collective labor negotiations and counteraction with trade unions. Among the highlights is supporting a world leading manufacturer of spices with the change of the head of the representative office; providing an international tobacco company advice on data retention in the context of labor law. The extensive client list includes Alumni Fund Ukraine, BrainBasket Foundation, BrainTV, InnerWorkings Ukraine, MAN Truck and Bus Ukraine, FM Logistics, Scientific Games, Emarket Ukraine (OLX), Louis Dreyfus Commodities Ukraine, GK Software. Partner Pavlo Khodakovsky heads the employment department and is the main point of contact. AVELLUM, as led by managing partner Mykola Stetsenko, assists globally active clients on employment matters evolving out of their global transactional activities. Thus, throughout the previous year the team advised Allergan Inc. on sophisticated employment matters related to transfer of employees in Ukraine; Boehringer Ingelheim GmbH on Ukrainian aspects of transfer of employee benefits in connection with a global business swap between Boehringer and Sanofi. The multidisciplinary team demonstrates dedication to employment structuring, compliance, corporate governance related issues, sensitive aspects of personal data protection, collective bargaining agreements, terminations, dismissal. The firm deals regularly with employment instructions common for the Ukrainian IT sector. Yuriy Zaremba, associate, is among key practitioners of the practice.
ILF (Inyurpolis Law Firm), a broadly active Ukrainian firm with offices in Kyiv and Kharkiv, stands out for employment litigation that established precedents in the sphere of labor regulations. Over the past year the firm increased the scope of its advisory work and exceeded in peaceful settlement of disputes before the court. Industry wise, ILF acts for both corporate clients from the agrarian, pharmaceutical, retail sectors, as well as for private clients. Serhiy Silchenko, partner, is the eminent practice head and comes praised for his strong litigation skills. CMS Cameron McKenna possesses an extensive experience in advising both in terms of quite straightforward assignments (employment agreements, internal labor policies and individual dismissals) and more complex ones (implementation of mass layoffs programs, outsourcing projects and other schemes for employment restructuring). Given strong corporate practice, the office acts on employee transfers and advises on issues arising in relation to foreign nationals being employed by Ukrainian companies and Ukrainian representative offices of international businesses or secondments of expats into Ukraine. Olexander Martinenko and Natalia Nakonechna are primary contacts. Ilyashev & Partners, as led by Mikhail Ilyashev, acts primarily for corporate employers on a range of employment disputes, also rendering advisory in comprehensive projects, confidentiality, labor safety, contractual matters. Some representative projects included representing SE Antonov during a series of labor disputes against the Ministry of Industrial Policy and its candidate regarding dismissal and further confirmation of powers of the President of SE Antonov; advising the Embassy of Qatar in Ukraine on potential implementation of a joint project in the Askania-Nova biosphere reserve involving employment issues; acting for VimpelCom on the col-
29 Lesi Ukrainki Blvd., Office 75, Kyiv, 01014, Ukraine Tel.: +380 67 325 9582, +380 44 228 0279 Fax: +380 44 285 5286 E-mail: office_law@amber-corp.com Web-site: www.amber-law.net
GOLDENGATE LAW FIRM
Business Center Saksagansky, 70 Saksaganskogo Street, Kyiv, 01030, Ukraine Tel.: +380 67 776 6130 E-mail: info@goldengate-law.com Web-site: www.goldengate-law.com
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1. 2. 3. 4. 5.
Vasil Kisil & Partners Baker McKenzie Dentons Sayenko Kharenko Asters
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
Arzinger AVELLUM CMS Cameron McKenna ILF (Inyurpolis Law Firm) Ilyashev & Partners Spenser & Kauffmann
LEADING INDIVIDUALS 1. Oksana Voynarovska (Vasil Kisil & Partners) 2. Mariana Marchuk (Baker McKenzie) 3. Svitlana Kheda (Sayenko Kharenko) 4. Volodymyr Monastyrskyy (Dentons) 5. Serhiy Silchenko (ILF (Inyurpolis Law Firm) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Leonid Gilevich (Ilyashev & Partners) Olga Gorbanovskaya (EY Ukraine) Tetyana Ivanovych (Spenser & Kauffmann) Armen Khachaturyan (Asters) Pavlo Khodakovsky (Arzinger) Oksana Kneychuk (Eterna Law)
COUNSELINK AMBER LAW COMPANY
LEADING FIRMS
Valeriya Savchuk (Vasil Kisil & Partners)
SERGEYEVS’ LAW OFFICE
11/6 Armiyska Street, Office 2a, Odesa, 65058, Ukraine Tel./Fax: + 380 487 37 7228 E-mail: office@srgv.com Web-site: www.srgv.com
Anton Sotir (GoldenGate) Illya Tkachuk (Jeantet) Mykola Voitovich (Gramatskiy & Partners) Yuriy Zaremba (AVELLUM)
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lection, processing and protection of personal data of employees and clients. The portfolio of clients include: ProCredit Bank, BTA Bank, ArcelorMittal Kryvyi Rih, Embassy of the Czech Republic in Ukraine, Ukrrichflot, Federation of Trade Unions of Ukraine. In 2016 Spenser & Kauffmann, the rapidly growing domestic market force, reestablished its employment offering. Most recently the practice team received instructions regarding compensation and benefits, compliance, trade unions. Given facilitation of transactional support to its clients, the firm covers subsequent employment matters that arise out of them. The industrial coverage includes but is not limited to the auto industry, metallurgy, recycling, pulp and paper, food and beverages. Tetyana Ivanovych, counsel, is in charge of employment and private client practices. The Kyiv team of Jeantet advised numerous clients on employment of foreign employees, collective bargaining agreements and trade unions; redundancy and social benefits plans. Throughout the past year the team gained extensive experience in transfer of employees located in Crimea and the Eastern part of Ukraine to other regions. Another front of work is advice on mobilization of employees, most recently advising Servier, a world-leading pharmaceutical company. Another notable strength of the team is employment litigation, specifically against former top managers disagreeing with a decision of the group on their dismissal and trying to keep control over the company. The client following includes PACT, Credit Agricole, L’Oreal Ukraine, Daymon Worldwide Europe Inc., SOKA. The team consists of 4 lawyers led by local partner Illya Tkachuk. Over 2016 EY provided ongoing legal support and advisory services for a number of large multinational and local companies. This included employment agreements, internal employment-related documents, labor law due diligences/HR health checks, mediation of conflict termination cases, immigration compliance and advisory services for cross-border assignments, work permits, service cards, residence permits, disputes. As an example, the team accomplished successful pre-court mediation in conflict termination regarding a senior management employee of a Ukrainian subsidiary of a large multinational agricultural company. Olga Gorbanovskaya and Albert Sych, partners, are the key figures of the practice. PwC Legal offers a combination of legal support and HR consulting from advisory lines of service of the PwC network, having on board multinational and local clients. In 2016 the
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team rendered legal support to Hopewell Residential with immigration and labor law matters; Joy Global (Poland) with employment issues related to setting up a legal entity in Ukraine; Can-Pack S.A. with labor issues included in the scope of high-level legal due diligence involving two Ukrainian plants. The practice is led by Andrey Pronchenko, known foremost for his skills in handling complex labor disputes. Olga Melnychenko is another key practitioner, focused on labor and immigration. Following its core specialization, sports law and resolution of sports-related disputes, GoldenGate is kept busy concluding a huge number of contracts between international football clubs and football players (resulted in their employment with the clubs). At present managing partner Anton Sotir leads the representation of an Uzbek football club against a Ukrainian football player at FIFA regarding the payment of salary and enforcement of a decision by world football body FIFA; acts for the footballer Borys Tashchy at the Football Federation of Ukraine in a complex dispute against a football agent regarding the performance of a representation contract. Full-service law firm Integrites offers a range of advice to Ukrainian and foreign clients on various labor law issues, being particularly busy of late with collective bargaining agreements, termination, dismissals, compliance, and foreign specialists’ employment matters. The practice also handles, in conjunction with the dispute resolution team, a lot of labor disputes of its corporate clients. Clients come from energy, metallurgy, machinery, construction, banking, telecom. The practice is currently overseen by two partners, namely Oleksiy Feliv and Julian Ries. Wolf Theiss is centered on advising on employment matters related to top management and personnel of both Ukrainian companies and Ukrainian subsidiaries of foreign clients. The team typically assists on employment matters as part of its corporate, regulatory, finance and tax advice. The office advised OSRAM on a carve-out process, including labor, corporate, contractual aspects, in particular, the procedure of transfer of employees between the Ukrainian companies; represented a large international financial company on internal compensation rules and amending them in line with the mandatory requirements of Ukrainian law; consulted an international drug research and testing company on the use of electronic signatures for employmentrelated documents. The practice head is Olena Vardamatska, who is also known for a solid IT law expertise.
International Legal Center EUCON boosted its employment practice with business migration, handling employment permits, employment contracts, trade unions, and representation in disputes. The mainstay of the center comprises labor migration between Ukraine and Poland. Sound representation of late is acting for Savik Shuster, popular TV host, appealing against the annulment of his permit for employment as a foreigner. The practice works in ties with the firm’s corporate practice and functions in cooperation of two offices in Kyiv, where it is managed by Tetiana Samsina, and Warsaw, guided by Andriy Romanchuk. EQUITY (called FCLEX up till June 2017) possesses strong litigation capacities, internal policies and compliance issues. Among notable long-lasting cases accomplished by the team is providing continuous support to Concorde Capital in a dispute with a former employee. The litigation side works in close connection with the criminal defense practice, in particular, representing the interests of Igor Likarchuk, former head of the Ukrainian Center for Educational Quality Assessment, who is suspected of abuse of office. Partners Oleg Malinevskiy, Taras Poshyvanyuk and Vyacheslav Krahlevych oversee the practice. Over 2016 GOLAW extended its offering to procedures for acceptance/dismissal of employees, documentary formalization of labor relations, compliance of requirements regarding employment of individuals with disabilities. UBISOFT, specializing in the development of computer video games, instructed the firm for due diligence against the requirements of labor legislation; Inditex Group has been advised on indexation of wages, registration and termination of employment relationships, obligations in relation to mobilized employees. The dispute highlight includes representation of Reckitt Benckiser Household Health Care Ukraine in a series of disputes with former employees. Senior partner Sergiy Oberkovych is the primary contact. Gramatskiy & Partners gives visible advice to the firm’s established industrial clients and, notably, was a highly active counsel in the IT sector. For example, the team provided support to international software developers in optimization of staff as well as consulting on qualification of “actual employment relationship” of private entrepreneurs with customers. Additionally, the firm advises on internal documentation on safety and health protection alongside specific workshops to prominent corporate clients, such as Ulma
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Labor & Employment Opalubka Ukraine, Gold Mandarin, Danfoss Group, SNT LLC. The practice is led by Mykola Voitovich. Eterna Law renders a broad range of contractual work and advises on foreign employees employment mostly for international market players. Partner Oksana Kneychuk is practice head, while Oleh Malskyy contributes with his general expertise. Ante Law Firm has a focus on aviation, pharma and healthcare sectors. Throughout the previous year the firm performed a full audit of labor relations in a group of 4 companies (Technomedex group) and Zdravo; handled the closure of a representative office and staff reduction for a big pharmaceutical company. The team dealt with a few labor disputes between top managers and employers and was involved in a number of labor cases on both sides — employer (big pharma corporation) and employees, including a civil servant. Andriy Guck, partner, is the primary figure. With its top tax background, KM Partners became the port of choice for solid for-
eign companies operating in Ukraine in structuring expenses on remuneration of labor, elaborating HR documentation, agreements, contracts, outsourcing relations, consideration of tax risks, compliance, restructuring/ reorganization; support in labor disputes. The practice team is led by partner Alexander Shemiatkin. Law Firm Dynasty handles advisory and day-to-day advice. In 2016 the firm advised Versobank on the organization of its representative office in Ukraine and obtaining a work permit for employees. The firm’s practice is carried out by the Kyiv office partner Antonina Selivanova, and two partners in Dnipro, Viacheslav Kohlyakov and Anna Poddubnaya. The Kyiv outfit of Peterka & Partners has covered obtaining work permits, termination of labor relationships, preparation of a memorandum on transfer of employees within the accession process, change of CEO. The client list includes Nutreco N.V., Velux Ukraine LLC, T Machinery a.s., Tikkurila Oyj, Kiilto Family Oy, European Jewish Cemeteries
WHO IS WHO
Initiative. Tatiana Timchenko, partner, and Taras Utiralov, managing associate, are the core practitioners. Poberezhnyuk & Partners, a domestic litigation-focused firm, is enlisted for disputes and contractual advice. In the past year the firm acted as a legal adviser to the separate subdivision Medecins du Monde Association (France) in Ukraine regarding the development of labor and collective agreements for the activities of its structural subdivision. Founding partner Larysa Poberezhnyuk is the main contact. Vdovychen & Partners handles comprehensive matters involving mass redundancies, employment conflicts, administrative appeals, drafting internal instructions. Oleg Vdovychen, founding partner, is the main point of contact. Aleksandra Yevstafyeva, senior associate in M&A and corporate and head of employment practice at EPAP Ukraine, received the support of peers for her knowledge in employee incentive schemes projects.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation
Litigation
Alexey KHARITONOV ILF (Inyurpolis Law Firm)
Domestic Disputes
According to market data, dispute resolution brought law firms about 20% of their income this year. As relevant as ever remain the disputes of depositors with the Deposit Guarantee Fund regarding the liquidation of banks. In 2016 their number rose by 21. At the start of the year the number of disputes on land and other assets also rose, as did instances of senior managers finding themselves involved in criminal cases, which can often be an excuse for a dishonest takeover. However, the adoption of new anti-takeover regulations by the Ukrainian Parliament helped the situation somewhat, bringing the number of hostile takeovers down by 50%, according to the Ministry of Justice. A new regulatory body called the Commission on complaints against actions of state registrars, and the new SMS Beacon service, now ensure that companies are made aware via SMS or Telegram Messenger when their entry is being tampered with. With the armed conflict in Eastern Ukraine, many companies lost access to their assets and couldn’t pay off their debts in time, which led to a series of disputes with banks. Consequently, those companies whose assets are locked away in occupied territory or Crimea are suffering major losses, making them turn to the ECHR as the last resort. It’s a new kind of litigation for Ukraine. What makes these cases special is the added difficulty of finding evidence in restricted territories as well the considerable time they require. In 2014 only a handful of companies chose this legal remedy, but now, in 2017, dozens of businesses and thousands of citizens are lining up at the ECHR. Their numbers will surely grow, considering how ineffective national remedies are. Furthermore, new anti-corruption legislation and electronic tax-returns from civil servants will increase the number of criminal cases on illicit enrichment as well as proceedings regarding sources of declared assets.
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he sizeable litigation team at Ilyashev & Partners has extremely well-established positions in dispute resolution, both domestic and cross-border. A significant part of projects are being tackled by the firm’s Moscow office. In 2016 the firm represented its long-standing clients State Enterprise Antonov, ArcelorMittal Kryvyi Rih, BTA Bank (Kazakhstan and Ukraine), FSC More, in various disputes. Among others, Creative Group was represented before the High Court of England and Wales as well as in two LCIA arbitrations, arbitration under ICC rules in Munich, the economic courts of Ukraine and Cyprus, in connection with disputes with an international consortium of banks under the management of UniCredit regarding the collection of loans from the group’s companies. RGC-Trading (Group DF) was supported in a dispute with the Odesa Port Plant regarding the recovery of debts for gas supplies. RCB Bank (Cyprus) was represented in a dispute with Foldale Trading Limited about foreclosure on mortgages and ProCredit Bank — in the process of debt collection under lease agreements in the territory of annexed Crimea. The team also represented the port of Vitino, one of the largest northern ports in the Russian Federation, the only port in the White Sea that transports crude oil, in litigation related to bankruptcy proceedings, debt collection, disputing transactions concluded by the company’s former management, and acted on behalf of White Sea Oil Depot, the owner of the main assets of the oil terminals in the port of Vitino. The team is led by Mikhail Ilyashev, managing partner, and Roman Marchenko, senior partner, who are both highly recognized in court matters. Litigation is the core practice for EQUITY (called FCLEX up till June 2017), a renowned domestic dispute resolution force on the Ukrainian market. In 2016, a lot of new clients were attracted, among them — Helen Marlen Group, Frosbi-M (“Furshet”), Platinum Bank, Zaporizhtransformator, Ukrferry, Deposit Guarantee Fund, Brokbusiness Insurance Company. The firm also continues cooperation with key clients, including Azovmash, Ukrainian Business Group, Corporate pension fund of the National Bank of Ukraine, Agro Holding Mriya plc, Vernum Bank, Trust Bank, Stockman Interhold (businessman Adam Adamovskiy), Ferrexpo AG, AutoKRaZ, Concorde Capital, AIS Corporation and many others. In 2016 the firm accompanied more than 1,000 litigation disputes for a total of around USD 3.2 billion, including the representation of PJSC Zaporozhtransformator and PJSC Zaporozhskiy factory of heavyduty transformers in a dispute over the decision of the AMCU to violate the economic competition with participation in tender procedures for the sum of USD 300 million, and representation of the Azovmash Group in more than 30 disputes within the framework of the project on restructuring the debt owed to 10 creditors running to a
total in excess of USD 850 million. The firm represented the interests of Trade Kommodyty in a resonant dispute that arose around the competitive bidding for the supply of fuel and lubricants for JSC Ukrzaliznytsia. Senior partner Viktor Barsuk oversees the practice. Partner Oleg Malinevskiy coordinates most of the litigation, including banking and corporate disputes. Partner Serhiy Chuyev accompanies tax disputes, as well as banking litigation. Partner Vyacheslav Krahlevych is responsible for real estate work. In 2016 LCF Law Group strengthened its prominent positions in litigation. The firm enhanced its team, both qualitatively and quantitatively with counsels Yulia Atamanova and Alexander Biryukov, as well as senior lawyer Julia Lukoshkina, increasing its client portfolio, both through banking institutions and large companies in other sectors (agro, transportation, real estate, energy). In particular, Oschadbank, AVK Group, Fozzy Group, Nikmorservice Nikolayev, TAS Group, YURIA-PHARM, Ovostar Union are the clients of the firm. The group entrenched its position as exclusive litigator of Alfa Bank. Among last year’s highlights is complex legal support of Alfa Bank in a dispute with Azovmash Group for collection of overdue credit debts under three loan agreements for a total amount of more than USD 70 million. Core practitioner Anna Ogrenchuk, managing partner, is also known for active participation in expert groups on judicial reform. Artem Stoyanov, senior partner, is another key contact. Vasil Kisil & Partners is one of the most longestablished players on the litigation market, regularly preferred for representation in matters involving major international investors and the highest Ukrainian Government authorities. The team has recently been representing one of the major Latvian banks in debt collection litigations, liquidation procedure of a Ukrainian bank; acts for a Ukrainian company which provides services in the real estate sphere, in a dispute with the National Bank of Ukraine and Department of the State Enforcement Service of Ukraine related to recognition of an act of property assessment as invalid as well as the mortgage, which provided for enforcement of obligation under the loan agreement in question. In 2016 the litigation team represented big clients (such as Shell, Solum, Imperial Tobacco Production Ukraine, Zelmer Ukraine, Sandvik, Manushar Ukraine) in disputes with the tax authorities. Another highlight was acting as Ukrainian counsel for well-known Ukrainian businessmen Igor Kolomoisky and Gennady Bogoliubov in a major corporate dispute against another well-known Ukrainian businessman, Victor Pinchuk, before the High Court of Justice in London regarding the payment of dividends and transfer of shares of one of the major Ukrainian Iron-Ore Works. Managing partner Andriy Stelmashchuk acts as lead partner of the litigation team, included Oleg Kachmar,
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation Yuriy Kolos, Tetyana Berezhna, Yegor Svidlo. Oksana Voynarovska, partner, is devoted to labor disputes, as is Vladyslav Podolyak, counsel, who acted in IP-related disputes. Oleg Makarov, partner, enjoys a reputation of a high-level litigator. Partner Oleg Alyoshin is noted for rebooting his cross-border litigation activity. Integrites is one of the few firms on the market that have a solid network of operating offices in the CIS supported by an international office network in Europe. The 30-strong practice is structured as specialized tactic groups. During 2016 the list of clients grew with the addition of many reputable names, including the Ministry of Justice of Ukraine, State Defense Concern UkrOboronProm, Farmak, DHL, Bionic Hill Innovation Park, Retail Group, Next Group Plc, Bank of China, China Development Bank, EKF, Morgan Stanley, Palma Group, Plati Spa, Quick Payment System Ltd., Rockwool International AS, Rosatom, RUSAL, St. Jude Medical, Vesta Service, Bank Mikhailivsky. Work highlights encompass representing BIONIC Hill in a domestic real estate litigation case on an acquisition of a land plot as well as complex legal support to the VTB Bank in a range of interrelated trials, initiated against more than 10 retail companies of Fozzy Group. Vyacheslav Korchev, senior partner, is the head of dispute resolution and international arbitration practices. Oleksiy Sluch joined the firm from Vasil Kisil & Partners in January 2017 аs a partner and head of the litigation practice; Volodymyr Pavlenko (prior — KPMG Ukraine) is a counsel of litigation practice since 2016, while Denys Kytsenko, known in bankruptcy left the firm. The sizeable litigation team at Arzinger operates through its offices in Kyiv, Lviv and Odesa. In 2016 its diverse caseload centered on debt collection, tax, commercial, IP disputes, busi-
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AUTHORITIES Oleg Makarov (Vasil Kisil & Partners)
WHO IS WHO
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Viktor Barsuk (EQUITY) Gleb Bialyi (Egorov Puginsky Afanasiev & Partners Ukraine)
LEADING FIRMS 1. 2. 3. 4. 5. 6. 7.
Ilyashev & Partners EQUITY LCF Law Group Vasil Kisil & Partners Integrites Arzinger Egorov Puginsky Afanasiev & Partners Ukraine 8. Sayenko Kharenko 9. Trusted Advisors 10. AEQUO
Volodymyr Bogatyr (BOGATYR & PARTNERS) Sergey Boyarchukov (Alekseev, Boyarchukov & Partners) Pavlo Byelousov (AEQUO) Oleksiy Didkovskiy (Asters) Valentyn Gvozdiy (GOLAW) Oleg Kachmar (Vasil Kisil & Partners) Alexey Kharitonov (ILF (Inyurpolis Law Firm) Mykola Kovalchuk (L.I. Group)
LEADING INDIVIDUALS
Andrey Kuznetsov (ANTIKA)
1. Mikhail Ilyashev (Ilyashev & Partners)
Tetiana Lysovets (Sokolovskyi & Partners)
2. Oleg Malinevskiy (EQUITY)
Kostiantyn Likarchuk (Kinstellar) Markian Malskyy (Arzinger)
3. Anna Ogrenchuk (LCF Law Group)
Oleksandr Mamunya (AEQUO)
4. Roman Marchenko (Ilyashev & Partners)
Dmytro Marchukov (AVELLUM)
5. Andriy Stelmashchuk (Vasil Kisil & Partners)
Artur Megerya (L.I. Group)
The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/professional not mentioned here but which is, nevertheless, active in this field.
Ivan Mishchenko (Trusted Advisors) Denys Myrgorodskiy (Law Firm Dynasty) Maxim Oleksiyuk (KM Partners) Oleksandr Onishchenko (Pravochyn)
OTHER ESTABLISHED IN ALPHAPRACTICES LISTED BETICAL ORDER
Oleksandra Pavlenko (Pavlenko Legal Group)
Alekseev, Boyarchukov & Partners ANTIKA Asters AVELLUM Baker McKenzie EVERLEGAL GOLAW Gramatskiy & Partners ILF (Inyurpolis Law Firm) Kinstellar Law Firm Dynasty L.I. Group MORIS GROUP Pavlenko Legal Group Spenser & Kauffmann VB PARTNERS
Larysa Poberezhnyuk (Poberezhnyuk & Partners)
Olena Pertsova (Pavlenko Legal Group) Yuriy Petrenko (Spenser & Kauffmann) Sergey Pogrebnoy (Sayenko Kharenko) Andriy Porayko (EVERLEGAL) Olga Prosyanyuk (AVER LEX) Tetiana Samsina (EUCON) Andriy Savchuk (MORIS GROUP) Ihor Siusel (Baker McKenzie) Stanislav Skrypnyck (Lavrynovych & Partners) Oleksiy Sluch (Integrites) Artem Stoyanov (LCF Law Group) Olga Vorozhbyt (DLA Piper Ukraine) Andriy Vyshnevsky (ENGARDE)
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation
Kostiantyn LIKARCHUK Kinstellar
Cross-border Disputes
The Ukrainian economy, which is slowly recovering, determines the long-term drivers of any dispute resolution practice. Last year there were many disputes in the financial and banking sectors as well as post-M&A disputes. Civil conspiracy claims and shareholder litigation have also been key drivers of cross-border litigation practices. Another trend is the increased importance of white-collar crime in crossborder disputes. Ukrainian and international clients have become involved in criminal white-collar investigations both in Ukraine and abroad as part of larger dispute resolution cases. Such proceedings are now more frequently seen as a tool for claims for damages in situations where traditional international litigation strategies are viewed as less effective. International clients are becoming subject to criminal investigations in Ukraine by newly formed anti-corruption bodies, namely, the National Anti-Corruption Bureau of Ukraine (NABU). We see increasing demand for advice on various aspects of criminal proceedings in Ukraine arising from the dealings of international clients with state authorities. Despite Brexit, London remains one of the preferred venues for the resolution of post-M&A and shareholders’ disputes, both on the arbitration and litigation fronts. However, it is unclear whether this will remain the case post-Brexit, given the non-applicability of the Brussels Regulation, which provides that judgments rendered by courts of member states should be recognizable and enforceable in other member states. In any event, independently of Brexit, some clients are prepared to switch to arbitral institutions in Asia (e.g., SIAC) to reduce the costs of potential disputes without prejudice toward the quality of services provided by such institutions. Currently, clients do not only expect sophisticated and business-focused legal advice in international litigation, but highly praise industry knowledge and specific focus on client sectors. This encourages law firms to expedite the creation of industry-focused teams within litigation practice groups. We expect this to be a long-lasting future trend in cross-border litigation.
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ness crime matters both domestic and cross-border. In 2016 the team represented an international bank group in a dispute on recovery of payables from a Ukrainian company — a global leader and the largest Ukrainian manufacturer of mono and multi-crystalline silicon wafers for solar cells worth upwards of USD 95 million under a credit agreement governed by Spanish law. Markian Malskyy, partner, head of the firm’s West Ukrainian branch is an important contact as is Andriy Seliutin, partner, head of the firm’s South Ukrainian branch. Partner Kateryna Gupalo, the head of tax and customs disputes as well as white-collar defense practices, is another core practitioner. Egorov Puginsky Afanasiev & Partners (EPAP Ukraine) has a proven track record of resolving the most complex multijurisdictional and domestic disputes across a wide range of industries. This past year the team represented clients in disputes related to antimonopoly regulation, insurance law and practice, maritime and labor law, real estate, IP, debt recovery issues, and tax, as well as unprecedented family law issues. In particular, the team represented a US-based leading provider of larger Offshore Service Vessels to the global energy industry, in a complex dispute involving different spheres of international and Ukrainian law; a Ukrainian leasing company in several multimillion disputes over debt recovery and enforcement proceedings. Gleb Bialyi, partner, is a co-head of the litigation practice. Arsen Miliutin, counsel of the litigation practice, also leads the tax litigation group. Talina Kravtsova heads the family law team, which is the part of the litigation practice. Serhii Sviriba is managing partner and a co-head of litigation practice with a particular focus on international arbitration and cross-border litigation. Sayenko Kharenko’s litigation team handled an impressive portfolio of over 190 projects for the total sum of more than USD 4 billion. The firm maintains an enviable roster of clients in the banking, insurance, IT, metallurgy, oil and gas, retail, machine-building and other industry sectors. The latest work highlights take in protecting the interests of a shareholder in one of the largest plants in Europe, which produces equipment for oil refining, petrochemical and gas industries, appealing around 100 decisions of the Supervisory Board providing approval to go ahead with significant transactions; representing the interests of Financial Industrial Group Altcom in court and enforcement proceedings relating to debt recovery of UAH 52 million. Representation of Azovmash, one of the largest machine-building enterprises in Ukraine, in 13 court cases on debt recovery running to USD 65 million. The team also acted as legal counsel to U&Sluno, one of the leading providers of IT and consultancy services in trade, logistics and distribution, on recovery of penalties and damages in Ukrainian courts, caused by counteragents in violation of the terms of general cooperation agreements. This multi-force team is led by three partners: Sergey Pogrebnoy — domestic litigation, Tatyana Slipachuk — cross-border litigation, Serhiy Verlanov — tax litigation.
The main specialization of the dynamically developing litigation practice at Trusted Advisors is banking and corporate disputes. In 2016, the firm supported about 120 cases, coming to a total of about USD 1.6 billion, including bankruptcy proceedings and represented the interests of debtors in the process of foreclosure on mortgage, as well debt enforcement support. The team’s clientele composes of primarily local clients with a sharp footing of agricultural enterprises (e.g., Agricultural Technology System, PJSC Odesa Oil and Fat Industrial Complex, Ilychevsk grain port, etc.). Ivan Lishchina, previously a partner and head of the international dispute resolution practice, was appointed Government Commissioner for European Court of Human Rights in June 2016, having handed his practice to the leadership of managing partner Ivan Mishchenko. Vladislav Rieznikov, partner, is active in bankruptcy proceedings. AEQUO demonstrated rapid growth in litigation true the year keeping focus in specific industry sectors, namely, banking, pharma, IP, engineering, telecommunications and media. Amongst landmark projects was representing RwS Bank in a series of litigation proceedings in a dispute with a debtor regarding protection of assets; acting for Dr. Reddy’s Laboratories Limited in the first of a kind case involving a biosimilar medicinal product registered in Ukraine; representing Forbes (USA) in Ukrainian courts in proceedings on recognition of the AAA arbitral award in Ukraine as well as in proceedings claiming access to the forbes.ua domain name in Ukrainian courts. Partner Oleksandr Mamunya heads the dispute resolution and IP practice. Pavlo Byelousov, counsel, is dedicated to this practice area. Denis Lysenko, managing partner, acted in tax related disputes. Prominent in corporate, finance and tax, Ukrainian law firm AVELLUM is a notable market player in cross-border litigation as well as domestic high-profile disputes. The team represents the Ukrainian subsidiaries of LSE-listed Ferrexpo Plc in court proceedings challenging the under-recognition and ranking of its claims in the liquidation of Bank Finance and Credit and representing an international investor in commercial court proceeding against an Icelandic company regarding enforcement of claims against a deposit held in a Ukrainian bank with foreign capital. The team’s landmark case was acting for the trustee under two issues of Eurobonds of Mriya Agro Holding Plc in litigation on enforcement of claims (almost USD 600 million) against 68 Ukrainian sureties under Eurobonds. The practice is led by Dmytro Marchukov, active practitioner experienced in both domestic and cross-border litigation, fraud investigation, as well as recognition and enforcement of foreign judicial and arbitral awards. Kinstellar’s Kyiv office was launched on March 2016 on the basis of Legal Bureau of Likarchuk. Throughout the period of its market presence the firm strengthened its position in domestic and cross-
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation border litigation, acting as legal counselor for a wide range of reputable clients in cases totaling USD 1.5 billion in value. The team have been presenting clients in diverse types of litigation, including: corporate and commercial litigation, debt collection, post-M&A and shareholders’ multijurisdictional disputes as well as disputes related to immovable property or immovable property rights. The team represents a Ukrainian high net worth individual in large multijurisdictional shareholders’ dispute involving assets tracing and fraud investigations; advises Stockman Interhold S.A., a former investor in the Sky Mall shopping mall in Kyiv on a major shareholder multijurisdictional dispute that involves around 30 sets of litigation proceedings in order to prevent hostile takeover attempts aimed at the asset. Another highlight is acting for majority shareholders in Nemiroff Vodka Limited on a number of multijurisdictional disputes with minority shareholders valued at USD 350 million. The team includes Kostiantyn Likarchuk, partner, head of dispute resolution practice Kinstellar-wide, Mykyta Nota, managing associate, Andriy Yanchuk and Danylo Volkovetskyi, associates. Alekseev, Boyarchukov & Partners has a reputation for local dispute resolution mandates and acts predominantly for banking clients. In 2016 Ukrsotsbank, Ukrgasbank, VTB Bank, Blitz Inform, Euro Pharma, Alfa Bank, OTP Bank, GEOS, PU Kievkinofilm are all listed in firm’s client portfolio. For example, the team acted for its longstanding client Ukrsotsbank on mortgage and debt recovery and defended the interests of Ukrgasbank in the bankruptcy procedure of the Mriya Group of Companies; represented VTB Bank on the cancellation of registration of the bank’s property right to mortgage from PE ALGOL-2003 (Milkiland Ukraine group). Senior lawyers Aleksandr Tkachuk and Inna Rudnik are key practitioners. Maksim Boyarchukov is head of litigation, while managing partner Sergey Boyarchukov oversees the team.
MORIS GROUP has improved the dynamic of the litigation practice, developing its dispute portfolio centered on banking, finance, corporate governance, tax issues and administrative proceedings. In 2016 the firm represented and still represents Delta Bank in USD 149.7 million disputes on the offset of credits and deposits of a debtor to Delta Bank caused by its liquidation process; National Investments Bank in USD 78.9 million debt recovery disputes with debtors caused by the liquidation process. Debt collection highlights include representing UkrOboronProm in USD 35.7 million debt collection with SEA EMERLAND; Societe Generale Equipment Leasing Ukraine in 8 disputes with various Ukrainian companies on debt recovery and seizing of property. Partner Andriy Savchuk is head of litigation. The sizeable dispute resolution practice at ILF (Inyurpolis Law Firm) consists of 13 fee earners on board. The team encompasses varied expertise in debt recovery, bankruptcy, commercial, defamation cases, criminal defense, as well as unrivalled track record of representations in the European Court of Human Rights (ECHR). Disputes under family law formed the new sphere of practice. Among the key strength of the team last year was bad debt recovery with a special focus on the banking sector (i.e. loan recovery matters and recovery of corporate and individual deposits) and sensitive cases on debt recovery cases from debtors located on the territories that are currently not under the control of the Ukrainian Government. Partner Alexey Kharitonov is a key litigation figure. Andriy Kristenko defends the interests of clients before the ECHR. In 2016 the highly-qualified Pavlenko Legal Group accompanied more than 150 litigations worth a total of USD 400 million: protection of businesses from raiding, bank disputes, disputes in the areas of intellectual property, telecommunications, aviation as well as disputes with state authorities. The team repre-
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CROSS-BORDER LITIGATION LISTED IN ALPHABETICAL ORDER
Arzinger AVELLUM Egorov Puginsky Afanasiev & Partners Ukraine Ilyashev & Partners Integrites Kinstellar Sayenko Kharenko Vasil Kisil & Partners
sents MMDS-Ukraine in appealing against 4G licensing annulment and acted for TAScombank in a deposits recovery case. The firm’s founder and managing partner Oleksandra Pavlenko returned to practice from state service. Olena Pertsova, head of litigation, is an important team member. The Kyiv office of Baker McKenzie has been providing legal assistance to clients in complicated disputes, including handling complex cross-border matters. In 2016 the team acted as legal counsel in bankruptcy proceedings and debt restructuring related issues, disputes on the enforcement of bank guarantees, antimonopoly and trademark related disputes, regulatory disputes challenging decisions adopted by state authorities. Ihor Siusel, partner, heads the Kyiv dispute resolution practice group. The experienced team at ANTIKA has a wide spectrum of litigation matters. It defended the interests of AWT Britannia in a dispute on recognition as wrongful and cancellation of tax decision notices; represented AWT Bavaria in tax litigation as well as in all consumer-related and labor-related disputes. The team also successfully defended the interests of PJSC Energobank (in liquidation) in a range of dispute on debt recovery. Recognized litigator Andrey Kuznetsov, partner, runs litigation work. Maxim Korchagin (partner since 2017) and Alex-
COUNSELINK ALEKSEY PUKHA AND PARTNERS
DMITRIEVA & PARTNERS
ESQUIRES
GENTLS LAW FIRM
MORIS GROUP LAW COMPANY
SERGEYEVS’ LAW OFFICE
TRUSTED ADVISORS
ZAVADETSKYI ADVOCATES BUREAU
21 John Paul II / Patrisa Lumumby, Office 416, Kyiv, 01042, Ukraine Tel.: +380 44 528 3094 Fax: +380 44 528 3054 E-mail: office@puhaipartnery.com.ua Web-site: www.puhaipartnery.com.ua
8B Moskovska Street, Kyiv, 01010, Ukraine Tel./Fax: +380 44 359 0305 E-mail: info@moris.com.ua Web-site: www.moris.com.ua
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3 Dniprovska Naberezhna, Kyiv, 02098, Ukraine Tel.: + 380 44 553 7660 E-mail: office@dmp.com.ua Web-site: www.dmp.com.ua
11/6 Armiyska Street, Office 2a, Odesa, 65058, Ukraine Tel./Fax: + 380 487 37 7228 E-mail: office@srgv.com Web-site: www.srgv.com
40-X Hlybochytska Street, Kyiv, 04050, Ukraine Tel.: +380 44 337 7007 Fax: +380 44 337 7008 E-mail: info@esquires.legal Web-site: www.esquires.legal
40/85 Saksahanskoho Street, 5th Floor, Kyiv, 01033, Ukraine Tel./Fax: +38 044 359 0664 E-mail: info@trustedadviors.com.ua Web-site: www.trustedadvisors.ua
Leonardo Business Center, 17/52A Bohdana Khmelnytskoho Street, 5 Floor, Kyiv, 01030, Ukraine Tel.: +380 44 339 9910 E-mail: go@gentls.com Web-site: www.gentls.com
27 Gogolyvska Street, Office 31, Kyiv, 01054, Ukraine Tel.: +380 50 416 9258 E-mail: zk.request@zkadvocates.com Web-site: www.zkadvocates.com
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation
andra Fedorenko, senior associate, are leading individuals. During 2016 GOLAW acted on a series of large-scale debt collection cases. Thus, Československáobchodníbanka was represented in a complex dispute with its borrower, the Kuzmintsi Brick Plant, on debt recovery, as well as on initiating the insolvency of the latter; Expobank CZ, a.s, was supported in a case with Volnogorsk Glass LLC for the resumption of the rights of a mortgage agreement. Inditex Group, a consistent client of the firm, was represented in a dispute with the supervisory authority in the field of social protection of the disabled on appealing against the imposition of administrative sanctions as well as a series of tax disputes. The litigation team is guided by senior associate Kateryna Manoylenko. Valentyn Gvozdiy, managing partner, is the key contact. In 2016 EVERLEGAL extended its litigation practice through handling a broad range of matters with the primary focus on tax, commercial, corporate, employment and banking disputes. The firm portfolio includes representing the interests of private individuals in a dispute with a major Ukrainian bank regarding early debt repayment, advising a global producer of electrically operated tools in a number of labor
disputes with its former employees, and representing the interests of an international development company in a number of tax disputes. The caseload featured construction, corporate and shareholder disputes. Andriy Porayko is head of the dispute resolution practice. Oleksandr Ruzhytskiy, recently promoted to partner, is another key figure in litigation. Spenser & Kauffmann has a strong litigation force with particular experience in advising banks, insurance companies, retail and FMCG, automotive, construction companies, as well as private clients. In 2016 the team acted for Infiko-Holding, LLC on restructuring of the debt owed to a large Ukrainian bank with foreign capital (factoring company) with subsequent legal support for court proceedings and business protection; provided advice and development of a strategy for protection of Alfa Development Limited in a dispute under a contract on capital repair, concluded with the public authority of a foreign state. Partner Yuriy Petrenko heads litigation, Nickolas Likhachov, counsel, is involved in international asset tracing issues. Dispute resolution is the core focus for AVER LEX attorneys at law, top-tier criminal defense counsel. In addition to possessing a
sizeable portfolio of criminal cases, the firm regularly acts on business protection cases, including commercial and property rights assignments. In particular, last year the team provided representation and protection of the interests of the Ukrainian Interbank Currency Exchange on invalidating the decision by the National Securities and Stock Market Commission, which annulled the license on trade organization on the stock market. Another significant case is protection of the client’s property and corporate rights (a business centre and equity stake in a legal entity) against fraudulent takeover via the forging of documents. Managing partner Olga Prosyanyuk splits her time between litigation and involvement in criminal defense practice. Dynasty Law Firm, which operates through two offices in Kyiv and Dnipro, traditionally has an extensive domestic litigation portfolio. In 2016 the team was highly active in debt recovery disputes, insolvency matters, tax litigation and disputes with state authorities. For example, it advised the Dnipropetrovsk Meat-Processing and Packing plant’s appellation with the lawsuit against the State Inspection of Ukraine for Price Control about the reversal of the defendant’s order and the decision on applying economic sanctions for
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Education:
Mr. Bogatyr graduated from Kyiv National Taras Shevchenko University with J.D. in 1999, and received a Ph.D. from the Legislation Institute of the Verkhovna Rada (Parliament) of Ukraine in 2014.
Volodymyr BOGATYR Senior Partner, BOGATYR & PARTNERS. Ph.D., Honorary Lawyer of Ukraine
www.bogatyr.com Tel.: +380 44 363 7722 E-mail: volodymyr@bogatyr.kiev.ua
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Practice Areas:
Litigation, Dispute Resolution, Corporate Fraud Investigation, White-Collar Criminal Defense, Law Enforcement Intelligence, Global Litigation and Enforcement, Transnational Litigation and Foreign Judgments, Internal Investigations, Government investigation, GR, etc.
Languages: Ukrainian, Russian, English
Professional experience:
Dr. Volodymyr Bogatyr acts for clients in complex, fact-heavy and high value cross-border commercial disputes. As part of that work, Volodymyr is often responsible for the strategic coordination of proceedings in multiple jurisdictions. He is the only qualified Ukrainian advocate who is registered as a foreign advocate in both Russia and Poland. Dr. Bogatyr’s practice focuses on a broad range of civil and criminal litigation and investigations involving international and transnational matters. He undertakes international litigation management work, coordinating the provision of legal advice and/or legal proceedings across multiple jurisdictions. Dr. Bogatyr has represented both corporate clients and individuals in a wide variety of matters, including fraud claims, white collar matters, assets tracing, post-M&A disputes, partnership, joint venture disputes and dealing with Interpol Red Notices. He provides advice on contractual and insolvency matters as well as issues relating to the enforcement and recognition of judgments in Ukraine and abroad. Dr. Bogatyr’s deep, yet wide-ranging understanding of his specialty has also benefited from his experience in distinguished public service prior to him entering private practice. Dr. Bogatyr served as an Ukrainian Deputy Minister of Justice from 2007 to 2011. He was recognized as Honorary Lawyer of Ukraine by the President of Ukraine in 2010. He also possesses acknowledgments from 2008 provided by the Parliamentary Committee on Combating Organized Crime and Corruption. Since his return to private practice, Dr. Bogatyr has developed a strong track record of successfully helping his clients deal with national and cross-border asset recovery investigations in fraud, insolvency and bribery matters.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation violating state discipline of prices. It also provided legal support in the bankruptcy procedure of the Acoustics Company. The management of the firm’s litigation practice is carried out by partners Denys Myrgorodskiy, Yevheniy Smiyuha, Antonina Selivanova, Snejana Karagodina, Viacheslav Kohlyakov, Anna Poddubnaya and Tamila Petrenko. VB PARTNERS diversified its litigation practice, with the mainstay in commercial, debt recovery, banking, tax and customs, regulatory and shareholders disputes. In addition, the firm possesses a separate white-collar crime practice. In 2016 the team acted in a number of complicated disputes, inter alia, Mykolayiv Alumina Refinery, was represented in proceedings on the recognition of illegal inactivity on the part of Mykolayiv customs, which led to a delay in clearance of goods. KIT Yekaterinburg, a shopping mall which belongs to Mallino Development Group, an international holding company specializing in managing commercial real estate, was supported in a trial on debt collection under a surety agreement. Furthermore, the team represented the interests of another client in a lawsuit against Rodovid Bank for the recovery of loan debt. Three partners work in the practice’s litigation work. Volodymyr Vashchenko is focused on tax, commercial and civil disputes. Denys Bugay leads corporate, commercial, regulatory disputes, also heading the white-collar crime practice group. Oleksandr Lukianenko specializes in corporate, commercial, regulatory and criminal disputes. The dynamic local litigation practice of L.I. Group enjoys a strong track record of debt
WHO IS WHO
recovery cases, acting predominantly for banking clients, such as VTB Bank, VAB Bank, Ukrsibbank, Sberbank, Piraeus Bank. In particular the team, led by Mykola Kovalchuk and Artur Megerya, supported the case on debt recovery from the guarantor of PJSC Creative in favor of Piraeus Bank.
FCPA-driven investigations and compliance work. This past year Olga Shenk (previously — the Kyiv office of Baker McKenzie) joined the team as a new senior associate, while partner Olga Vorozhbyt left to join DLA Piper. The reputable Olexander Martinenko, senior partner, heads the practice.
Renowned for its dispute resolution focus ENGARDE is noted for its strong performance in both arbitration and litigation. The past year saw the team’s active engagement in banking and corporate litigation as well as enforcement in Ukraine of international arbitration and court decisions. Recent landmark cases took in representing the interests of clients in a dispute over unjust violation of shareholders’ rights and complex dispute of a major European vehicle producer with its dealer in Western Ukraine. Partners Andriy Vyshnevsky and Irina Nazarova are the main point of contact.
ARBITRADE’s litigation practice has seen some industrial extension and has a particularly good standing in advising state enterprises. In addition to disputes in the agrarian sector and high value tax disputes which have become traditional for the firm, it has become actively involved in disputes in the defense, logistics and IT sectors. Thus, the firm was engaged by a number of companies in the Ukrainian defense industry in disputes with their counterparties. This year ARBITRADE also continued to protect the interests of its clients in cases of unlawful actions by state authorities, in particular, tax offices and provided legal services in connection with the recognition and enforcement of arbitration awards. Managing partner Pavlo Trytenichenko is practice lead. Partner Andriy Shulga is noted in court trials.
Over the past years Ukrainian top law firm Asters’ dispute resolution group has expanded quickly, attaining specialization within the team. The firm is involved in a broad spectrum of disputes, including corporate and contract disputes, multimillion debt recovery, tax and regulatory, antitrust/competition disputes, copyright and IP disputes. The comprehensive recent portfolio includes high-stake cross-border work. Oleksiy Didkovskiy, Svitlana Chepurna and Tamara Lukanina are lead partners. CMS Cameron McKenna’s office in Ukraine possesses expertise in contentious matters including energy, tax and customs disputes as well as cross-border litigation. The team is also instructed by a client for fraud and
2016 was a fruitful year for Eterna Law (emerged as a result of the merger of AstapovLawyers international law group and Baltic Business Group) and its litigation practice. The firm acted as a legal counsel of Concorde Bermuda in a case on securities trading regulation, that resulted in conclusion of a settlement with the U.S. Securities and Exchange Commission. Oleh Beketov, partner and head of international litigation, acted as an expert on issues of Ukrainian legislation, in the litigation Pinchuk versus Bogoliubov and Kolomoisky,
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Education:
Yaroslav the Wise National Law Academy of Ukraine.
Practice Areas: Oleh GROMOVYI Partner, GENTLS LAW FIRM
Web-site: www.gentls.com Tel: +380 44 339 9910 E-mail: go@gentls.com
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Public law disputes, Banking disputes, Defamation, Intellectual Property disputes, International litigations, Court enforcement proceedings.
Languages: Ukrainian, Russian, English.
Professional experience:
Oleh Gromovyi is a highly-qualified lawyer with more than 10 years experience in litigation. He is a practicing advocate, specialized in enforcement of foreign judgments and arbitration awards in Ukraine, public law disputes and white-collar criminal defense as well as intellectual property and other commercial litigations. Oleh Gromovyi has acquired his experience in the one of the top5 international law firms, holding the position of head of the litigation team and was then nominated as a legal counsel to the supervisory board of one of the leading domestic industrial corporations. He successfully represented in court such businesses as Sony Ukraine, British American Tobacco, AIG Ukraine, Confectionary company Konti, etc. As a partner of GENTLS LAW FIRM, Mr. Gromovyi is a personal advocate of high-ranking public officials of Ukraine. He also advises commercial banks and companies on litigation matters and court enforcement proceedings. Oleh Gromovyi holds a master degree in intellectual property and has unique experience in IP litigation, including cases on trademarks, inventions, utility models, industrial samples rights defense, recovery of damage for breach of intellectual property rights. Mr. Gromovyi is an author of numerous publications on dispute resolution issues and regular expert speaker at professional events.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation
which was considered by the High Court of Justice in London. The team was strengthened by the joining of Yaroslav Berezhnyi, on the position of a counsel and head of the Ukrainian litigation practice. Lexwell & Partners regularly acts as a local counsel in domestic and multijurisdictional matters. The firm recently represented ArcelorMittal Berislav, PJSC in a dispute over the cancellation of a special permit for the use of mineral resources as well as recovery of losses caused by the emissions of pollutants into the atmosphere. Another highlight was acting for Pravexbank in a number of debt recovery disputes. The team is led by Andrey Kolupaev. Established in October 2015, N&D (since 2016 an independent Ukrainian law firm, previously a member of Andreas Neocleous & Co International LLC) has gained a reputable client and project portfolio in litigation, acting previously in debt collection and debt restructuring disputes. The enforcement practice is the team’s strong side. For example, the team represented the interests of First Ukrainian International Bank in enforcements of Ukrainian courts’ decisions under 11 debt collection disputes amounting to USD 75 million with legal entities and private clients; represented Prominvestbank’s interests in the enforcements of decisions by Ukrainian courts under 10 debt collection disputes with a total amount of up to USD 110 million. Igor Kravtsov heads litigation and arbitration. Managing
partner Andriy Dovbenko oversees the majority of projects. Litigation is the core practice of Sklіarenko, Sydorenko & Partners. Its litigation record includes corporate disputes (protection from hostile takeovers); bankruptcy; protection of honor, dignity and business reputation; IP and tax disputes. Among the clients: Institute for Reproductive Medicine, Mr. Andriy Danylko (stage name Verka Serduchka), and private clients. Managing partner Oleksandr Skliarenko heads the litigation practice. Redcliffe Partners’ dispute resolution practice generated client workflow out of local litigation, international commercial and investment arbitration. The scope of representations, among others, included debt collection cases and enforcement in Ukraine, shareholders’ disputes. Partner Sergiy Gryshko, the practice head, enjoys a reputation of being a reliable practitioner. KPMG Ukraine is instructed by traditionally sound clientele for representation in tax and commercial disputes. In particular, the firm provided turn-key assistance to Codelouf Limited in the recovery of dividends from one of the biggest Ukrainian gas and oil companies; advises Agrana Fruit Ukraine on potential strategies of recovery of funds frozen in an insolvent Ukrainian bank. Another work highlight is forensic due diligence of one of the largest
insolvent Ukrainian banks (including efficiency diagnostics of the bank’s collection/litigation practices) on behalf of the Deposit Guarantee Fund. Senior counsel Yuriy Katser, head of legal, is a prime contact. Last year the Kyiv office of Dentons was busy with debt recovery proceedings, enforcement of arbitration awards in Ukraine, tax and IP disputes, as well as international arbitration. The industrial focus is primarily centered on energy and financial institutions disputes. Artem Lukyanov, who primarily focuses on litigation and debt recovery as well as on restructuring and insolvency matters, joined the team. Managing partner Oleg Batyuk is a key contact person. Lavrynovych & Partners traditionally provides litigation services. In 2016 the team acted for CS Marcom on reclamation of property from the illegal possession by Devilon Group; advised Avanta-Group LLC in litigation on eviction from previously occupied areas on the basis of a lease agreement. Stanislav Skrypnyck, partner, is the main litigator. Gramatskiy & Partners demonstrates the most significant activity in proceedings against banks and financial institutions, fiscal authorities, credit and mortgage disputes, land, labor, as well as disputes on recovery against the firm’s client debtors. Significant cases include protecting GRAAL in a dispute against the Ministry of Culture of Ukraine,
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Education: Taras Shevchenko National University of Kyiv, 2003.
Practice Areas:
Litigation, Arbitration, Mediation, Bankruptcy.
Yuriy PETRENKO Partner, Attorney, Head of Litigation and Dispute Resolution, Spenser & Kauffmann
www.sklaw.com.ua Tel.: +380 44 288 8383, +380 44 288 6707 E-mail: y.petrenko@sklaw.com.ua
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Languages: Ukrainian, Russian, English.
Professional experience:
Yuriy Petrenko has been heading Litigation Practice at Spenser & Kauffman since its foundation. Mr. Petrenko has extensive experience of representing clients in court in economic, civil and administrative proceedings, as well as in bankruptcy proceedings. Mr. Petrenko was admitted to the Bar in 2003 and received the License of Insolvency officer in 2005.
Recognitions and awards:
Yuriy Petrenko was recommended by Best Lawyers 2013 in CIS litigation and recognized as a leading practitioner of legislation on the judicial system in 2017. In 2012, Mr. Petrenko was also noted one of the leading experts of the Ukrainian legal market and named among notable practitioners in Litigation & Enforcement Proceedings, as well as in Restructuring & Bankruptcy by Ukrainian Law Firms. A Handbook for Foreign Clients, and according to the same research Mr. Petrenko was recommended in 2008 as one of the top 5 lawyers in Ukraine for administrative proceedings. Besides, he was recognized as one of the youngest leading lawyers of Ukraine by an independent survey conducted by Yuridicheskaya Practika Publishing in 2008. Moreover, Mr. Petrenko received the award as the best litigation lawyer by Legal Awards 2013 (ceremony held by Yuridicheskaya Practika Publishing).
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation where the client is an investor in the project concerning reconstruction of European Square in central Kyiv and construction of the Stolychnyi office and hotel complex. Andrii Trembich is the curator of the 18-lawyer team. The litigation practice at Ario Law Firm is supervised by Julian Khorunzhyi, senior partner, as well as Yevhen Hrushovets and Iryna Serbin, partners. This dynamic team is mostly dedicated to representation in bankruptcy proceedings, as well as loan recovery disputes and business protection. The firm boosted its white collar crime practice this past year. ANK Law Office, based in Odesa, has a long-standing presence on the litigation front. Among the major clients in 2016 are Brooklyn-Kyiv LLC, Vector Oil Trade, Olimpex Coupe International, Metalsukraine Corp., KERNEL, HPC Ukraina. The firm recently successfully defended the interests of VECTOROIL TRAD in litigation with the State Fiscal Service on holding as invalid and annulling tax notification-decisions. Alexander Kifak and Nadezhda Sofronkova are noted as responsible partners. In 2016 Ante law firm acted for a number of market defining administrative litigations for its aviation clients. The firm has also successfully handled a number of labor cases on both sides — employer (big pharm a corporation) and employees including a category A
civil servant. Tax litigation ended in favor of the pharma marketing company Zdravo in both the first and appeal instances. A corporate conflict within a Ukrainian airline led to a few litigations where Ante represents one of the shareholders. Partner Andriy Guck leads the firm’s team.
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resolutions on transfer pricing and customs are led by Ivan Shynkarenko. Commercial disputes and international arbitration is led by Maxim Oleksiyuk.
The track record of the Kyiv branch of Peterka & Partners’ includes representation before Ukrainian courts in commercial and administrative disputes, including court proceedings against Ukrainian citizens regarding the collection of debts with further enforcements of court decisions and court proceedings regarding the destruction of counterfeit goods and enforcements. Tatiana Timchenko and Taras Utiralov are the prime figures.
ECOVIS Bondar & Bondar has a strong track record for successfully resolving corporate disputes, especially in the aviation sector. Among the clients are Ukraine International Airlines, Lufthansa Group, Swissair, Boryspil International Airport and a number of other Ukrainian airports as well as a number of handling and catering companies operating at Ukrainian airports, Reso Group, Amadeus Group, Lufthansa Group, Danske Commodities, Europcar Ukraine, Bionorica SE (Germany), Opower Inc (USA), Advent International. Oleg Bondar is a lead partner.
The majority of disputes handled by KM Partners are related to tax matters and white-collar crimes. The firm has considerable experience in representing the interests of clients in disputes with the State Fiscal Service regarding the so-called “reality” of transactions as well as labor and customs duties. In particular, the team defended the interests of a well-known company, whose main activity is wholesale trade in household detergents, in a dispute regarding inclusion of license fees (royalties) into the customs value of imported goods. All partners on the board practice litigation across their practice focuses. The leading experts on tax litigation are Alexander Minin and Alexander Shemiatkin. Dispute
Marchenko Danevych advises and represents multinational companies in complex litigations and disputes, including antitrust, IP, regulatory and tax. The firm has been successfully acting for US and French private investors and their local manufacturing subsidiary (the largest exporter of products in its industry to EU countries) in domestic litigation with the State Fiscal Service of Ukraine and in a related investor-state dispute and negotiations with the Ministry of Justice and the Government of Ukraine. Moreover, the team regularly represents multinational companies in antitrust investigations and white-collar/FCPA investigations and proceedings. Oleh Marchenko is a lead partner.
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Education:
Graduated with honours from the Institute of International Relations of Kyiv National Taras Shevchenko University in 2002.
Practice Areas: Ivan MISHCHENKO Managing Partner, Trusted Advisors / Attorney-at-law
www.trustedadvisors.ua Tel.: +380 44 359 0664
Litigation, International Arbitration.
Languages: Ukrainian, Russian, English.
Professional experience:
Ivan Mishchenko is experienced in successfully representing and defending the interests of his clients at dispute resolution and international arbitration cases in national and international judicial authorities. For more than 10 years now Mr. Mishchenko has been providing legal support in his specialization to foreign and domestic companies in commercial disputes. He has accompanied numerous lawsuits in the banking sector, telecommunications, pharmaceuticals, retail, heavy industry, agriculture, banking and financial activities, as well as in the FMCG sector. Mr. Mishchenko has authored numerous publications in leading Ukrainian and international business media. In addition, he is an experienced speaker at conferences and seminars on judicial reform in Ukraine and procedural law issues. He also participates in social projects, Pro-bono. In 2015, Ukrainian Law Firms. A Handbook for Foreign Clients rated Ivan Mishchenko as a notable practitioner in litigation and he was recognized among the leading individuals in the nomination “Best Lawyer in Litigation Practice” held by Yuridicheskaya Practika Publishing. In 2017, Ivan Mishchenko was ranked among the Top 100 Best Lawyers of Ukraine and recognized as one of the best lawyers in judicial practice (“Client Choice. TOP 100 Best Lawyers of Ukraine 2016/2017” conducted by Yurydychna Gazeta).
E-mail: info@trustedadvisors.com.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS â &#x201E; INDUSTRIES Litigation
BOGATYR & PARTNERS represented both corporate clients and individuals in a wide variety of matters, including fraud claims, white collar matters, challenging sanctions, assets tracing, post M&A disputes, partnership and joint venture disputes. Furthermore, it provided advice on contractual and insolvency matters and issues relating to the enforcement and recognition of judgments in Ukraine and overseas. Volodymyr Bogatyr often acts on cross-border matters. In 2016 Pravochyn attorneys at law was involved in key disputes over the collection of arrears for a special (transport) levy to the aviation finance fund, the so-called aviation charge, where the firm represented the interests of Ukraine International Airlines. Other landmark cases were disputes related to multimillion debt collection. Partners Oleksandr Onishchenko and Oleksandr Pashchenko are both active litigators. Attorneys Association PwC Legal is traditionally strong in tax litigation cases. The firm has also strengthened its litigation practice by hiring new team members, namely Maryna Pavlenchyk and Lidiia Zhovtiak, to form the cornerstone of the new commercial litigation branch. The practice is led by Andrey Pronchenko, managing partner. Kharkiv-based Shkrebets & Partners has a well versed litigation practice with remarkable capacities. In the past year the firm showcased involvement in circa 100 litigation projects. Clients include industrial and municipal
names, as Kharkiv CHP-5, Eristovskiy MPP, Kharkivoblenergo, Zhylkomservis, Kharkivvodokanal, Zarya. The work highlight is a dispute between PJSC Kharkiv CHP-5 and specialist tax inspectorate for servicing of major taxpayers on additional tax liabilities totaling UAH 52 million. Partners Eugene Shkrebets, Andrey Syvak, Yuriy Artukh are active litigators. With an established niche in pharmaceuticals, Legal Alliance Company has litigation experience in legal proceedings regarding administrative disputes, including the tax authorities; commercial disputes; intellectual property rights and copyrights, disputes around the deregistration of medicinal products. Ilya Kostin is a responsible partner. The Ukrainian office of DLA Piper established its litigation and regulatory practice with the arrival of new partner and practice head Olga Vorozhbyt in October 2016. The teamâ&#x20AC;&#x2122;s core specialization lies in the main sub-areas, like domestic and cross-border litigation, arbitration, banking and finance litigation, global investigations, asset tracing, arbitration, white-collar crimes. During 2016, Poberezhnyuk & Partners law group continued to develop its litigation practice, acting on various debt collection and tax-related cases. The dispute caseload was broadened with assignments from private clients, particularly recovery of deposits in Ukrainian banks, loan recovery and bad debts. Partner Larysa Poberezhnyuk is a prime contact. Dmitriy Troekurov, new partner, enhanced the team.
In 2016 the Lviv-based Advice Group has been providing representation of rights to trademarks of Julius Blum GmbH, one of the largest global manufacturers of furniture, in a dispute regarding unfair competition with unlawful use of trademarks involved. The group also represented a major Polish investor, a Western Ukrainian textile manufacturer, in a complex customs dispute with regard to the unlawful charging of additional customs duties. The projects were performed under the leadership of partner Oleh Kyryievskyi. Highly active in the agrarian sector, the caseload of Law Offices of OMP consists primarily of tax litigation, disputes coming out of leasing and supply arrangement. For instance, the firm acted for Cargill AT in a court dispute against the fiscal authorities, including VAT reimbursement. Valeriy Bitsyuk, Yaroslav Sverdlichnko and Mykola Orlov are noted as responsible partners. The litigation caseload of Sokolovskyi & Partners encompasses tax and customs disputes, cases related to bankruptcy proceedings, criminal cases, commercial litigation, civil and employment litigation. Senior partner Tetiana Lysovets leads the practice. Over the last couple of years International Legal Center EUCON has performed largescale tax litigation. The firm has also handled corporate, IP and real estate related disputes. Yaroslav Romanchuk and Tetiana Samsina are the main figures.
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Education:
Academy of Advocacy of Ukraine, 2004. Heriot-Watt University, Edinburgh Business School, Postgraduate Certificate in Business Administration, 2015.
Practice Areas: Oleksandr SHKELEBEY Founder and Managing Partner, ESQUIRES, Attorney-at-Law
www.esquires.legal Tel +380 44 337 7007
Dispute Resolution, Business Security, Real Estate.
Languages: Ukrainian, Russian, English
Professional experience:
Oleksandr Shkelebey is the founder and managing partner at ESQUIRES, which was recognized as newcomer of the year at the Ukrainian Legal Awards 2017. Oleksandr specializes in complex high-value commercial and corporate disputes, strategic planning, protection against hostile takeovers (asset-grabbing), development and implementation of comprehensive corporate security structures. He has been involved in a number of major litigation cases, inter alia, representing investors in a USD 30 million corporate dispute, defending the interests of a leading Ukrainian logistics center regarding its protection against asset raiders. Oleksandr Shkelebey acts for shareholders and companies in relation to M&A disputes, disputes between shareholders, real estate & planning disputes. Having served at the Department of State Registration of the Ministry of Justice of Ukraine, Oleksandr has acquired deep understanding of substantial principles and particularities of the Ukrainian real estate and business register modus operandi. This experience enables Oleksandr to deal with most complicated issues in real estate and planning disputes as well as to find creative and complex solutions.
E-mail: oleksandr.shkelebey@ esquires.legal
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Litigation Suprema Lex is focused primarily on the transportation sector, representing clients from maritime and aviation industries. The firm recently carried out protection of an international carrier in a dispute on the failure by a Ukrainian carrier to carry out freight international shipping terms. The dispute was considered in several jurisdictions, namely Ukraine, Azerbaijan and Germany. Managing partner Victor Moroz is the prime contact.
The team recently accompanied litigation by Interleaseinvest Ukraine B.V. and state registrars regarding the restoration of data in the State Registry of Enterprises that was carried out using forged documents in order to establish control over the enterprise, whose majority shareholder is a client of the firm. It also acted in the interests of Unison Group in an asset recovery case. Julia Repina, managing partner, is the main point of contact.
SDM Partners is focusing on various types of dispute resolution, including amicable pre-court settlement. The team is particularly centered on representing clients regarding disputes with the state authorities, such as tax and customs. It also supported a client on debt restructuring and recovery matters. In particular, the firm represented a major real estate operator in court disputes with a bank on loan restructuring. Serhiy Dzis is the main contact.
Gentls is a new market player that was established in September 2016. Partner Oleh Gromovyi is known for representing highranking public officials on honor, dignity and business reputation protection, as well as intellectual property and other commercial litigations. Recent representations have included acting on behalf of Ukrainian Prime Minister Volodymyr Groisman, ex-Prime Minister Arseniy Yatsenyuk and MP Glib Zagoriy.
Odesa-based LEGRAN.TT utilizes experience in settlement of maritime related disputes and international arbitration. The firm’s expertise is connected with charter party issues, cargo interests, shipping agreements, accidents, employment, payment claims; and also tax related disputes. The key contact is Tatiana Titarenko, managing partner. Domestic litigation is a core focus of Prove Group. The firm is particularly experienced in handling disputes with the state authorities and resolving conflicts between business entities, including countering illegal acquisitions.
Established in November 2016 as a result of splitting off from EVERLEGAL, law firm ESQUIRES has a comprehensive and targeted litigation offering. Apart from commercial disputes, the market newcomer develops collar defense and investigations. Oleksandr Shkelebey, Opanas Karlin, Artem Saprykin, and Viktoria Kovalchuk are the firm’s partners. During 2016 the dispute resolution practice headed by Taras Dumych continued to grow at Wolf Theiss. It acted for both international and domestic companies in Ukraine and abroad. Juscutum Attorneys Association represented the interests of clients in various
WHO IS WHO
disputes, including appealing against a sale contract in bankruptcy proceeding, recognition of an obligation as partially terminated, determining the residence of children, recovery of several debts, as well as recognition of ownership of a domain name. S.T. Partners is an active local team for debt recovery, execution of court decisions, criminal proceedings and disputes under family law matters. Tax litigation is one of the main specializations of Vdovychen & Partners, founded by Oleg Vdovychen. Alexandrov & Partners supported debt collection disputes on behalf of Ukrgasbank and acted in the settlement of real estate litigation matters. Odesa-based Interlegal is highly recognized for its complex maritime practice and known for successfully settling numerous incidents under maritime law. Okhrimchuk Grushyn Khandurin provided legal advice to Rockservice in respect of tax issues, in particular, with regard to the company operations as a VAT payer, and with regard to respective registration procedures and renewal of its VAT payer status. Khomenko, Pіtа and Partners retained a project on the restructuring of assets and debt, including court matters. Aleksey Pukha and Partners represented Bosnian ENKER DD in debt collection from a contractor in connection with the failure of a foreign economic contract. Odesa-based DeJure is noted in litigation circles, acting in a wide range of local disputes, including debt collection. Attorneys’ Association Gestors handled representation of Agrosvit Limited with regard to reimbursement of money from the company Novaagro Limited and the refunding of corporate rights.
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Education: 2000 — 2006 Ivan Franko National University of Lviv Law faculty, specialist degree.
Practice Areas: Andriy SAVCHUK Partner, MORIS GROUP LAW COMPANY, Head of litigation practice, attorney-at-law
www.moris.com.ua Tel.: +380 44 359 0305
Civil litigation, precourt dispute resolution, representation of rights and legal interests in courts, support of enforcement proceedings.
Languages: Ukrainian, Russian, English
Professional experience:
July 2006 — Present: Partner, Head of litigation practice. Head of litigation practice with specialist interests in the areas of banking and financial services, oil and gas industry, petrochemical and refining industry, defense industry, public sector, financial and operational leasing, agricultural sector, construction and production of non-food products. Provides overall leadership and management of the practice. June 2003 — July 2006: Legal Counsel, Hodak LLC IvanoFrankivsk. Legal support of company’s economic activity. Engaged in commercial litigation matters.
Professional Affiliations
2016 — Present: Member of the Public Council at Integrity High Qualification Commission of Judges of Ukraine. A body that will assist the HQCJ in assessing compliance of judges or judicial candidates with the requirements of professional ethics and integrity. In tandem with the Public Integrity Council the HQCJ will form a new type of judge who will judge people as equals to each other. 2012 — Present: Member of Chartered Institute of Arbitrators (CIArb), London, Great Britain March 2010 — Present: Member of Ukrainian Bar Association.
E-mail: info@moris.com.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Pharmaceuticals / Medicine & Healthcare
Pharmaceuticals / Medicine & Healthcare Lana SINICHKINA Arzinger
The Ukrainian pharmaceuticals market is changing due to both local and global factors. Key market development trends are as follows: — Reallocation of patent monopolies to a number of medicinal products driving sales, which caused a need for international companies to reduce operating costs. The transfer of single products or even product portfolios to local market players for promotion and marketing resulted in a number of BD deals. — Increased attention on the part of pharmaceutical companies to their commercial and financial practices driven by the AMCU’s ongoing investigation on the pharmaceutical market, its decisions, which are currently being appealed in court, as well as the position of the tax authorities. Companies are reviewing their models of cooperation with pharmacies and distributors, commercial policies and other internal documents affecting their standing on the market. — Diversification of product portfolios with related products, including dietary supplements, leads to the appearance of a number of new legal issues for pharmaceutical companies. — Participation in public procurements by companies, which have previously avoided participation in tenders, driven by reform of the public procurement sphere (procurement via specialized organizations, e-procurement). A lot of legal inquiries arose from specific regulation of procurements, as well as the attention of the state authorities to this area. — Increase in competition leads to more attention to the competitors’ activities. A number of projects related to companies’ claims against each other’s promotional and advertising materials. Some of these cases were successfully managed via mediation procedures. — Increase in attention to anticorruption compliance driven by specific regulations on public procurements, as well as the first FCPA case on the pharmaceutical market in Ukraine. — Withdrawal of some wholesalers from the market resulted in projects on debt collection and potential insolvency. — Ongoing reform in the sphere of medicinal products’ supply and medical sphere, including reimbursement, simplified registration of medicines and expected reform of financing of healthcare institutions in 2017 will have a significant effect on the pharmaceutical market, which will cause a review of existing practices and a need for legal support in such review.
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rzinger’s sizeable life sciences and healthcare practice is among the largest on the market and has accumulated clients operating in pharmaceutics, clinical trials, medical services, medical devices, cosmetics, special food products and biotechnologies. The team has notable expertise in regulatory, competition, anti-corruption and compliance, intellectual property, labor and contract law. Among the sound strengths of the firm is its specific competition law advice. Thus, Arzinger’s team accompanied provision of information by a leading pharmaceuticals company at the request of the Antimonopoly Committee of Ukraine. As a part of a large-scale competition investigation in the pharmaceutical market, the firm rendered support to an international pharmaceutical company in proceedings on its alleged competition violation in the form of anti-competitive concerted actions with distributors. Additionally, the team extensively advised on public procurement and provided comprehensive legal support to a number of clients that participated in tenders carried out by specialized international agencies. Arzinger benefits established partnerships with legal advisers in foreign jurisdictions and is at the forefront of legislative initiatives. The dedicated partner Lana Sinichkina is praised for her in-depth industry expertise, regulatory, compliance and procurement matters. Managing partner Timur Bondaryev is acclaimed for his strategic vision of the market. Being a full-service international powerhouse, Baker McKenzie utilizes a broad range offering in its healthcare industry group. The firm has a strategic focus on complex transactional, tax, IP, antitrust, investigations and compliance matters. Among the team’s benefits is its unmatched track record in healthcare M&A and significant experience in pharmaceutical products’ portfolio transfer. The current highlight is advising Shire plc and Baxalta Incorporated on Ukrainian law aspects of their integration, following completion of global acquisitions; advising Baxter International Inc. on Ukrainian law aspects of the spin-off of its biopharmaceutical business. The practice group is in the mainstream of reform efforts in the sector and acts as the official legal adviser of the Association of Pharmaceutical Research and Development (APRaD). The office has managed to enhance client portfolio with the local majors, including Farmak, Borschagivsky Pharmaceutical Plant, and is a preferred counsel of choice by global multinationals (e. g., Abbott, AbbVie, AcinoPharma AG, Eli Lilly, Novo Nordisk, Novartis, Takeda and others). The practice group is headed by a highly active transac-
tional practitioner, counsel Olha Demianiuk. The multidisciplinary team comprises dedicated wellknown practitioners Oksana Simonova, Mariana Marchuk, Yuriy Zaluskyy and Yulia Kolchenko, advising on antitrust, employment, compliance, tax, IP, litigation and other matters. Legal Alliance Company is a niche law firm dedicated exclusively to the pharmaceutical sector, with exceptional experience in regulatory, as well as competition, commercial, compliance, tax, IP and dispute resolution. The past year was marked with the development of clinical trials support. The team completed a huge amount of projects in the sphere of advertising and promotion for famous pharmaceutical companies such as Boehringer Ingelheim, MSD, Novartis, Teva, Apotex, Jadran, Reckitt Benckiser, Berlin Chemie, Pfizer, Astellas, Takeda, Roche, etc. The whole partnership team, Oleksii Bezhevets, Andriy Gorbatenko, Dmytro Aleshko, is known for being well-versed to serve the needs of industry clients. Illya Kostin is known for extensive industry expertise and long-standing presence on the market, with special references of late for his IP advice. Marchenko Danevych has a market recognized sizeable life sciences practice advising leading corporations, business associations and governmental institutions. The team is hired for sector specific domestic legal matters advisory, encompassing regulatory, IP, competition, compliance, and features by its unique experience in the legal aspects of conducting clinical trials in Ukraine. The team advised the Ministry of Health of Ukraine on the development of the medicines registration system (initiated and financed by the EBRD) as the Ukrainian legal expert within the international consortium. Other highlights included advising a global innovative pharmaceutical giant, Eli Lilly, on regulatory and compliance, as well as contractual aspects of conducting clinical trials in Ukraine; acted as the outside counsel for Gilead on a precedential regulatory/IP case. The practice team has accumulated top clientele, among others, Novo Nordisk, Baxalta (now Shire), Johnson & Johnson, Ferring. Borys Danevych, eminent partner, is named a top policy expert and strong practical counsel. ILF (Inyurpolis Law Firm), a dynamic domestic firm with offices in Kharkiv and Kyiv, is active primarily in the area of healthcare. In the period of reform the firm develops its notable expertise in public private partnership (PPP) and judicial practice of disputes between patients and clinics. In 2016 the firms proliferates its unique PPP practice, currently work-
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Pharmaceuticals / Medicine & Healthcare ing on landmark projects in this field. Another highlight is advising a foreign client on establishment of a diagnostics clinic on the foundation of a hospital in Kharkiv. The team assisted Hemo Medika Group, the leading Slovakian company producing medicinal diagnostics tools, in tenders of several hospitals in Kharkiv. Other projects of late included corporate disputes, reorganization and restructuring, taxation and sophisticated patient claims. Olena Khytrova, partner, is a lead partner of the healthcare and pharmacy practice. Managing partner Tetyana Gavrysh is an established figure contributing with reform initiatives. Law Offices of OMP enjoys a steady flow of clients and most recently is instructed for corporate restructuring, regulatory and tax, developing supply and distribution contractual base, structuring the relationship between pharmaceutical companies and drug stores. Among illustrative projects of the firm is complex legal support to Glenmark Pharmaceuticals on transformation of the representative office into a trading company and establishment of the unified tax and office maintenance hub issues management center for Novartis Group. The office continues fast development of its tax litigation in the framework of the pharma practice. The practice team is co-headed by two partners, Mykola Orlov and Igor Ogorodniychuk. The Kyiv office of international giant DLA Piper has a strong pharma focus and commands a mixture of international and major domestic players in its client portfolio. In addition to product life cycle and regulatory matters, the team regularly acts across IP, IT, finance, tax, antitrust, employment and other areas. The firm advised the Georgian Industrial Group on acquisition of a 29.29% stake in Ukrainian insulin producer JSC Indar from Polish biotechnological company Bioton S.A. Among recent assignments is also
LEADING FIRMS 1. 2. 3. 4. 5.
Arzinger Baker McKenzie Legal Alliance Company Marchenko Danevych ILF (Inyurpolis Law Firm)
advising British company Crown Agents on legal matters relating to agreements with the Ministry of Health of Ukraine to procure medicines under special statefinanced programs. Partner Galyna Zagorodniuk, who is referenced on the market, is active in M&A, corporate, competition investigations and compliance for pharma companies. Another notable practitioner for corporate and commercial matters is Alla Kozachenko, legal director. Natalia Pakhomovska, partner, has extensive experience of privacy and data protection, advertising and regulatory aspects of the conducting of clinical trials, while the traditionally strong tax team headed by Illya Sverdlov advises clients on VAT, tax controversies, transfer pricing and tax structuring. Sayenko Kharenko’s multidisciplinary group is noted for advising healthcare and pharmaceutical companies across a slew of issues related to developing, importing, manufacturing and marketing pharmaceuticals and medical products in Ukraine. Recent work highlights include representing PJSC Borshchagivskiy Chemical-Pharmaceutical Plant before the Ukrainian Ministry of Economic Development and Trade on the termination of special sanctions; advising one of the leading domestic pharmaceutical companies on protection of the company’s pharma brands from an evolving infringement. The firm is traditionally largely involved in competition law acting for industry clients, among others related to the EUR 22.8 billion acquisition of Sanofi’s animal health business by Boehringer Ingelheim; advised on Ukrainian competition law issues related
21 John Paul II / Patrisa Lumumby, Office 416, Kyiv, 01042, Ukraine Tel.: +380 44 528 3094 Fax: +380 44 528 3054 E-mail: office@puhaipartnery.com.ua Web-site: www.puhaipartnery.com.ua
LAW OFFICES OF OMP
9 Tarasivska Street, 4th Floor, Kyiv, 01033, Ukraine Tel.: +380 44 391 3001 Fax: +380 44 391 3002 E-mail: office@omp.ua Web-site: www.omp.ua
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OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
Dentons DLA Piper Ukraine Ilyashev & Partners Law Offices of OMP Sayenko Kharenko
AUTHORITIES
MEDICINE & HEALTHCARE
Tetyana Gavrysh (ILF (Inyurpolis Law Firm)
LEADING INDIVIDUALS 1. Lana Sinichkina (Arzinger) 2. Borys Danevych (Marchenko Danevych) 3. Illya Kostin (Legal Alliance Company) 4. Mykola Orlov (Law Offices of OMP) 5. Olha Demianiuk (Baker McKenzie) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Dmytro Aleshko (Legal Alliance Company) Oleksii Bezhevets (Legal Alliance Company) Timur Bondaryev (Arzinger) Svitlana Chepurna (Asters) Andriy Gorbatenko (Legal Alliance Company) Irina Kirichenko (Ilyashev & Partners)
COUNSELINK ALEKSEY PUKHA AND PARTNERS
WHO IS WHO
SAYENKO KHARENKO 10 Muzeyny Provulok, Kyiv, 01001, Ukraine Tel.: +380 44 499 6000, +380 44 389 5000 E-mail: info@sk.ua Web-site: www.sk.ua
Olena Khytrova (ILF (Inyurpolis Law Firm) Oleksandr Mamunya (AEQUO) Mariana Marchuk (Baker McKenzie) Oleksandr Padalka (Sayenko Kharenko) Markian Silecky (Dentons) Galyna Zagorodniuk (DLA Piper Ukraine)
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Pharmaceuticals / Medicine & Healthcare
to acquisition of the dermatology business of Astellas Pharma by Leo Pharma. Other significant clients include DENTSPLY International Inc., Novartis, Primester General Partnership, Reckitt Benckiser Household & Healthcare Ukraine, Sirona Dental Systems Solvay. Partner Oleksandr Padalka and counsel Anzhela Makhinova are the key contacts in this area. Dentons advises on a wide range of regulatory matters, including import, production and sale, tax, and has a special focus on corporate and sectoral M&A, IP protection, compliance, employment assignments. International clientele ensures the consistent workflow from global pharmaceutical and healthcare players, clinical trials organizations, wellness solution providers. Partners Volodymyr Monastyrskyy and Markian Silecky handle projects in this industry. Igor Svitlyk, associate, received strong market feedback for his deep expertise in clinical trials. Ilyashev & Partners is known mainly for acting on a great variety of disputes as led by its managing partner Milkhail Ilyashev. IP litigation is one of the firm’s key strengths. The active recent caseload includes representing Megainpharm GmbH in its court dispute with the Pharmaceutical Company Darnitsa regarding patent rights; acting for Omnipharm as for IP rights protection for a trademark that is well-known in Ukraine. In the past year the firm added to its portfolio export and import, regulatory, competition and distribution advice. For instance, the practice developed the delivery of medicines produced by Ukrainian company Biopharma to Yemen. Other active clients are Feron, VILAN, Takeda, Pharmacy of Hormonal Drugs, Business Centre Pharmacy, ERGO International, Valenta Pharm. Irina Kirichenko, IP lawyer with a vivid pharma focus, is recognized. Stanislav Koptilin is another key figure. AEQUO has managed to win consistent praise from prestigious international brands and leading domestic producers. The practice covers regulatory and compliance, corporate and competition matters, and is particularly known for performance on patent disputes. In the list of noteworthy cases of the firm is defending Dr. Reddy’s biosimilar product in the Superior Commercial Court involving a biosimilar medicinal product registered in Ukraine. The team of renowned IP and dispute resolution partner Oleksandr Mamunya handled representation of the client in a utility model cancellation action related to an anticancer drug and representing a US-based clinical stage biotechnology company in a number of patent prosecution matters. Anna Babych, corporate and M&A partner, leads subsequent queries of industry clients.
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The competition practice of the firm, in particular Sergey Denisenko, counsel, rendered strategic advice in a case on unfair competition issues related to advertisement of medicines. Asters advises pharmaceutical/biotechnology and medical device manufacturers and suppliers on M&A, regulatory, trade, customs and distribution. The firm possesses the strongest competition team, which is a preferred counsel for representing pharmaceutical clients in merger clearance and before the Antimonopoly Committee of Ukraine. For example, the antitrust team led by Igor Svechkar, acted on obtaining merger clearances for the acquisition by Aspen Pharmacare Holdings Limited of rights to commercialize AstraZeneca’s portfolio of anesthetic medicines. Svitlana Chepurna is another key partner for the pharmaceutical and healthcare practice. Vasil Kisil & Partners follows a multidisciplinary approach, rendering service in the pharmaceutical sector in finance, M&A, competition, product liability and litigation matters. The firm rendered legal assistance to CEN Biotech Inc. with the intra-group restructuring of Ukrainian subsidiaries. The firm regularly advises clients on developing, manufacturing and marketing medical products, and related regulatory and intellectual property issues, sector specific competition and taxation matters. Pharma clients prefer as a counsel the firm’s employment team. Counsels Volodymyr Igonin and Anna Sisetska are the main figures. The top transactional Ukrainian counsel AVELLUM is a port of choice in terms of global M&A in the sector, covering corporate, employment, tax, regulatory and compliance matters. For example, the firm participated in one of the largest M&A deals on the world pharmaceutical market when it advised Allergan Inc. in connection with the global sale of part of Allergan’s business to Teva. Another transactional highlight is being a lead counsel to Farmak in the course of its acquisition of a Polish line of business. Managing partner Mykola Stetsenko is the top M&A figure. Dmytro Marchukov, dispute resolution partner, brought a wealth of litigation assignments to the firm’s caseload. EY has extensive experience in providing services to the pharmaceutical industry. The legal team is known primarily for complex legal and tax advice on restructuring of operations in Ukraine to multinational pharmaceutical companies, regulatory requirements and taxation, and also for its advice to foreign pharmaceutical companies operating in Ukraine through representative offices regarding the potential risks associated with it. The core team includes
Iryna Kalyta and Iryna Kovalenko, under the guidance of two partners: Vladimir Kotenko and Albert Sych. EQUITY (called FCLEX up till June 2017), Ukrainian legal counsel with a proliferating litigation focus, is dedicated to IP, corporate and tax instructions from its established domestic pharmaceutical clientele (Arterium Corporation, Kyivmedpraparat, NPO Farmatron, Halychpharm). The firm continues to render tax advisory for Arterium and acts for NPO Farmatron in three IP disputes with the Darnitsa Pharmaceutical Company. Oleg Malinevskiy, litigation partner, guides the practice. GOLAW advised pharma companies on IP, finance matters, dispute resolution, corporate, commercial and employment in connection with activities in Ukraine. The firm advised Mercator Medical LLC on the implementation of an uninterrupted supply of medical products in Ukraine. The team is known for its consistent support to the Bogomolets National Medical University in a range of cases. Managing partner Valentyn Gvozdiy is assisted by Iryna Kalnytska and Maksym Lebedev. Eterna Law is made up of lawyers from corporate, tax and IP practices to fulfill pharmaceuticaland healthcare clients’ requests. The firm’s recent caseload includes tax structuring, debt restructuring, corporate matters and M&A. The work is overseen by corporate and M&A partner Oleh Malskyy. Ante Law Firm is catching up assignments of industry clients along with its core practice areas of work. It advised Technomedex group on distribution of unique medical devices to Ukraine that involved IP rights issue, medical devices regulations, taxation and distribution issues. The client list takes in Omega Pharma, Sandoz, and Ukrainian pharma marketing company Zdravo. Managing partner Andriy Guck is the main figure. Aleksey Pukha and Partners commands a following of Asian clients and gained notable experience of contentious work. The firm represented Medrex Trading Singapore Co. (Singapore) in a collection of debts by contract of supply of medical goods, and acted for ApicPharma on conclusion of an agreement on supply of medicines with the distributor Falbi, and acted on a debt collection procedure. Aleksey Pukha is the lead partner. De-Jure, the Odesa-based law firm, guided by Andrii Pavlyshyn, supported one of the biggest private clinics in Ukraine in the course of acquisition of a medical license.
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in medicine and pharmacy www.ilf-ua.com
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Real Estate, Construction, Land
Real Estate, Construction, Land Oleksiy FELIV Integrites
The years 2016-2017 can be noted as a time of implementation of major legislative changes in different legal areas, including that of real estate. As a result, Ukrainian real estate law became much more flexible and predictable. The establishment, transfer and cancellation of ownership and other property rights can be done by a notary without the involvement of any state bodies and on the very same day when the underlying transaction takes place. The same relates to mortgages, which in case of default can be enforced (transfer or sale of mortgaged property) directly by a notary. This gives a person great confidence in the creditor. A rather disputable novelty is the establishment of a special commission at the Ministry of Justice which is called to supervise and, if there is justification, to cancel transactions carried out by notaries or state registries. In fact, this commission has sort of quasi-judicial powers and takes decisions about cancellation of ownership or property rights which are typically the prerogative of a court. Major changes have been introduced to construction laws, resulting in total alteration of classification of constructions into five categories of complexity. Instead, the new system is based on impact (liability) classes, namely minor impact (CC1), medium impact (CC2), and significant impact (СС3), which corresponds with the European approach. We should expect that under the new system, buildings belonging to the third category, which could be constructed by submitting a declaration, will instead require a construction permit. Positive developments on the regulatory real estate framework are greatly welcomed. Based on what we see on the market, 2017 will be a promising year in terms of increases in real estate transactions, especially those relating to the sale of assets enforced by banks in the last couple of years. Increasing interest from potential investors is also pointing in that direction.
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he Ukrainian real estate practice of Baker McKenzie has an exceptionally strong standing on the market. The team is widely referred for expertise in real estate development and construction projects, leases and property mortgages, property investment financing, structuring of international real estate transactions, sales and acquisition, including land issues. The office has a steady flow of commercial, retail, industrial and residential leasing transactions, land acquisition and development, and construction projects. Over the past year the firm advised a number of international and Ukrainian companies, including Amstar Europe, ArcelorMittal, Auchan Ukraine, Billa Ukraine, McDonald’s Ukraine, KFC/GRG. The firm’s team advised US and British investors on the sale of their 100% shareholding in 1849-Apollo Overseas I Limited, the founder of Atlantic-Pacific Ventures LLC, which owns and manages the shopping center Pyramida, to Dragon Capital. Another landmark representation in 2016 was acting as legal counsel to Cargill with respect to an agreement with MV Cargo to enable the construction of a new port terminal in Ukraine’s Black Sea port of Yuzhny. The sizeable practice team is guided by managing partner Serhiy Piontkovsky, head of the firm’s energy, chemicals, mining and infrastructure and real estate practice groups; and Lina Nemchenko, partner of the real estate practice group. DLA Piper has one of the most recognized real estate teams on the market and proliferates its presence across retail, infrastructure and industrial sectors. The firm has of late earned a number of mandates for transaction support and expansion. For example, the Kyiv practice team renders legal support to long-standing client Leroy Merlin DIY in its expansion in Ukraine. Another significant recent highlight is advising CULT Fashion Group, a Ukrainian fashion retailer representing a number of brands in Ukraine (Sonia Rykiel, Polini, Brian Atwood, etc.), on the conclusion of lease and re-negotiation of the commercial terms of lease in the Central Universal Department Store (TsUM) in downtown Kyiv to open a multi-brand shoes and clothes boutique. The team has remarkable clientele, including Leroy Merlin Ukraine, McDonald’s Ukraine, Starwood Hotels & Resorts Worldwide, Inc., Bomond Group, DataRobot, Syngenta, Assos Capital, Jabil Circuit. In addition to strong transactional capabilities the firm extended its offering with real estate litigation and commercial arbitration. Natalia Kochergina, the practice head and partner, is esteemed for her extensive portfolio of projects and strong expertise. Vasil Kisil & Partners commands a reputable team known for extensive commercial, industrial de-
velopment and residential projects, financing, assets transfer, as well as a solid litigation caseload. Among the sound mandates is ongoing advice to Seven Hills, the Ukrainian branch of international real estate subdivision of BSG Investments, on the first Ukrainian residential development project Park Avenue. The firm continues to develop its practice in mining and provides comprehensive legal advice to Hubei Changyang Hongxin Industrial Group Co., on acquiring shares in a Ukrainian company, which has special permits for the development of a manganese deposit in Ukraine. The notable representation of late is acting for Epicenter K on the acquisition of a group of buildings of the former Alta Center Shopping Mall. As for construction, the firm represents Pioneer Hi-Bred International, Inc. and Du Pont Corp. regarding construction of a seed plant in Ukraine. In the previous year the team was busy with a series of disputes regarding leasing of land plots for New Century Holding. Alexander Borodkin, partner, enjoys market recognition. Real estate and construction is one of Arzinger’s key practices. The firm is actively present in commercial and corporate real estate transactions, advises on land plot acquisitions, construction, FIDIC regulations, leasing. With industrial clientele on board and a well-versed regional network of offices in Lviv and Odesa, the firm is constantly preferred as counsel of scaled industrial real estate projects. Industry wise, the client assignments for real estate work come from agriculture, energy, hospitality, financial, construction sectors. Managing partner and experienced practice head Timur Bondaryev is a widely-known figure in the real estate market. Over the last couple of years, Dentons has rapidly expanded its practice through new mandates and clients. The office covers real estate and land work in terms of its M&A and corporate matters workflow, especially in agriculture, energy, retail sectors. The past year was noted for a number of comprehensive projects, in particular, advising COFCO Agri on complex real estate and land law issues in connection with the construction of a transshipment complex for grains and oilseeds and their products at Mykolaiv seaport. The firm constantly enhances its cross-border capabilities and, at the same time, is often hired for lease contracts and regular advisory, representing BIIR on various real estate issues with regard to lease and potential construction project. Myron Rabij, the head of real estate and energy practices, is present in the Kyiv and New York offices. The CMS Cameron McKenna team has developed a fully-integrated real estate practice, and ad-
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IN UKRAINIAN LAW BY PRACTICE AREAS â &#x201E; INDUSTRIES Real Estate, Construction, Land vises local and international developers, investors, credit institutions and public authorities on key aspects of real estate transactions. In the outgoing year the office was enlisted by international clients on arbitration, corporate/M&A, financing, construction. The firm is at the forefront of energy and infrastructure projects. In particular, it advises Vestas on a number of construction matters, including drafting of the core construction agreements for four wind power projects in Ukraine; and rendered support to MV Cargo on a joint venture with Cargill for the construction of a new grain terminal in Yuzhny. In the area of financing, the team acted for Alfa-Bank on restructuring of a USD 67.5 million financing of a hotel/office complex in Kyiv. Renowned in the energy sector, partner Vitaliy Radchenko is the core contact of the practice, since Danial Bilak was seconded to the Ukraine Investment Promotion Office. Other important team members are Natalia Kushniruk and Kateryna Chechulina. AVELLUM, as led by managing partner Mykola Stetsenko, is known for its experience of asset deals, structuring investment into real estate and construction, and growing arbitration profile. Notably, significant developers, investment funds and banks are among the clients. The firm covers the real estate side in terms of M&A and finance support. For example, it provided legal support to UniCredit Group on real estate matters with regard to the sale of its business in Ukraine to Alfa Group, and advised world leading investment funds as owners of the majority of USD 470 million notes issued by Mriya Agro Holding PLC on various real estate matters. The firm works especially actively in the area of shopping and entertainment malls. Sayenko Kharenko commands a multidisciplinary team of specialists in dispute resolution, M&A, tax and finance law. Most recently, the firm has been ac-
LEADING FIRMS 1. 2. 3. 4. 5.
Baker McKenzie DLA Piper Ukraine Vasil Kisil & Partners Arzinger Dentons
tive advising on real estate acquisition and development, leasing, land rezoning, real estate equity and debt finance, real estate securitization, land allocation for oil and gas companies, and alternative energy projects. The firm acts for Soufflet Group on potential investment in the infrastructure of state-owned Illichivsk seaport. Having retail clients on board, the team is hired for investment projects across different regions of the country, as well as instructed for regulatory and land work. In addition, the firm also advises on highly complicated restructuring and real estate litigation. Nazar Chernyavsky and Michael Kharenko are involved in complex investment objects and finance matters; Sergey Pogrebnoy and Sergiy Smirnov are in charge of real estate litigation; Vladimir Sayenko, Konstantin Gribov and Oleksandr Nikolaichyk are focused on transactional support and privatization. Andrew Zablotskyi, known for his proactive presence in the agrarian sector, focuses on infrastructure issues. Eminent national real estate practice Gramatskiy & Partners is one of the leading counsels in the real estate sector. The team focuses on issues related to commercial real estate and residential construction, as well as lease and sale. For many years now their stronghold has been the construction area, including investment projects in infrastructure and public-private partnership, support for construction of residential and commercial premises, and their subsequent servicing. A recent highlight was advising GRAAL, LLC in connection with the reconstruction of European Square and construction
21 John Paul II / Patrisa Lumumby, Office 416, Kyiv, 01042, Ukraine Tel.: +380 44 528 3094 Fax: +380 44 528 3054 E-mail: office@puhaipartnery.com.ua Web-site: www.puhaipartnery.com.ua
GENTLS LAW FIRM
Leonardo Business Center, 17/52A Bohdana Khmelnytskoho Street, 5 Floor, Kyiv, 01030, Ukraine Tel.: +380 44 339 9910 E-mail: go@gentls.com Web-site: www.gentls.com
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OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
AEQUO Asters AVELLUM CMS Cameron McKenna Egorov Puginsky Afanasiev & Partners Ukraine Gramatskiy & Partners Ilyashev & Partners Integrites Law Firm Dynasty Sayenko Kharenko
LEADING INDIVIDUALS 1. Serhiy Piontkovsky (Baker McKenzie) 2. Natalia Kochergina (DLA Piper Ukraine) 3. Lina Nemchenko (Baker McKenzie) 4. Timur Bondaryev (Arzinger) 5. Alexander Borodkin (Vasil Kisil & Partners) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Dmytro Alexandrov (Alexandrov & Partners) Oleg Boichuk (Egorov Puginsky Afanasiev & Partners Ukraine) Alexander Burtovoy (ANTIKA) Taras Dumych (Wolf Theiss) Ernest Gramatskiy (Gramatskiy & Partners) Aleksandra Fedotova (Spenser & Kauffmann) Oleksiy Feliv (Integrites) Konstantin Gribov (Sayenko Kharenko) Alexander Kifak (ANK Law Office)
COUNSELINK ALEKSEY PUKHA AND PARTNERS
WHO IS WHO
SAYENKO KHARENKO 10 Muzeyny Provulok, Kyiv, 01001, Ukraine Tel.: +380 44 499 6000, +380 44 389 5000 E-mail: info@sk.ua Web-site: www.sk.ua
Roman Kostenko (Asters) Vyacheslav Krahlevych (EQUITY) Maxim Oleksiyuk (KM Partners) Myron Rabij (Dentons) Mykola Stetsenko (AVELLUM)
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Real Estate, Construction, Land
of the Stolychnyi multi-storey office and hotel complex in Kyiv; support to Panorama-Invest LLC (City Capital Group) with construction and certification process of the trade centre market. The real estate practice is led by its founder, Ernest Gramatskiy, while the construction industry is handled by Iurii Zabiyaka. Asters is focused on real estate transactions across all types of property, including property development and transactions, corporate and financial structuring, security, litigation and tax issues. Most recently the practice team has been especially active in office and commercial property, as well as industrial construction. Asters has become the port of choice for investors, developers, retail networks, construction companies, property brokers and financial institutions. Among wide-known ongoing projects of the team is advising PRADA Group in connection with the operation of its first mono-brand boutique in Ukraine and Crossfit Ukraine regarding the lease of various real estate objects in Kyiv for sporting and recreational purposes. The lead partner is Roman Kostenko. Integrites sharpened its focus on commercial real estate matters, advising leading investors and developers. The practice team possesses experience in the sale and purchase of real estate and land property, development and construction projects. The firm advised VA Intertrading in connection with forward contracts’ financing secured by real property; Güriş AS on acquisition of land plots (leaseholds and freeholds) and development of wind farms in Ukraine; supported Astarta in an investment project related to the construction of a regional logistics center. The team is also known for constant advice to Novarka with respect to construction of shelter facilities at the Chernobyl Nuclear Power Plant. Among the notable ongoing projects is advising Su-Yapi Engineering and Consulting Inc., one of the leading Turkish engineering and consulting companies, on reconstruction, capital repairs and re-equipping of the Urengoy–Pomory–Uzhgorod gas pipeline. The dispute team is involved in litigation and mediation work. The firm’s client list includes BIONIC Hill Innovation Park, VTB Bank, EBRD, Ukrrosmetal, Astarta, Rikon Group, Kviza-Trade, Allseeds, and others. Managing partner Dr. Oleksiy Feliv is a well-known figure on the market, outline for his BD skills. AEQUO handled a number of notable property transactions, real estate acquisition and property management, as well as public sector projects. The firm also advises on the restructuring of real estate assets located in Crimea in connection with its occupation. Its recent performance took in advising Dragon
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Capital Investments Limited on the acquisition of the Pyramid Shopping Mall. The firm is very active in advising major retail chains, and is regularly hired for supporting regional projects of its clientele. The firm is also engaged in port infrastructure projects. In particular, it advised TIS Group on group restructuring, real estate and regulatory matters related to a greenfield grain terminal project development in Yuzhny port. Three partners manage projects of the practice, namely Denis Lysenko, Anna Babych and Yulia Kyrpa. Ilyashev & Partners renders advice to companies in various industries, especially high value litigation, sophisticated construction agreements and acquisitions. With a presence in industrial and infrastructural construction, the firm advised Ukrainian Chemical Products (Group DF) on the construction of the Stremygorod Mining and Concentration Complex in Zhytomyr Region; advised OLAM Ukraine on the building of a grain terminal in Odesa Region. The firm advised Czech Development Agency (CzDA) during construction of premises for educational institutions evacuated from the armed conflict zone in Eastern Ukraine. The practice currently represents one of the investors in the Respublika trade and entertainment center in a loan recovery dispute with a bank. Managing partner Mikhail Ilyashev heads the practice. Egorov Puginsky Afanasiev & Partners Ukraine possesses experience in transactional real estate matters, assisting clients with legal, financial and tax structuring of real estate transactions and state registration. The team is present in development projects and acquisition of residential real estate, lease, resolving disputes. EPAP Ukraine advises Salini Impregilo S.p.A. on restructuring of its Ukrainian assets and operations in connection with the disposal of Todini Costruzioni Generali, and further operations; acted for Regal Petroleum Plc with respect to acquisition of LLC PROMENERGO PRODUCT. The highlight of its work is supporting the Univermag Ukraina mall across a spectrum of legal matters, including negotiation and registration of leases, advice on operational issues and risks related to commercial real estate in downtown Kyiv. Oleg Boichuk, partner, leads the practice. EQUITY (called FCLEX up till June 2017) stands out for supporting large domestic industrial majors and investors, as well as its recognized litigation capacity. Since 2009 the team has been working on a scaled project to develop the Belanovo field of ferruginous quartzite and construction of Belanovo Ferrexpo mining; and is involved in a project to construct the first
pulp line in Ukraine. The firm works on a range of disputes regarding the Respublica shopping center, and continued to provide legal support for a client in disputes on multi-level parking in Sky Mall, one of the largest shopping centers in Ukraine. Vyacheslav Krahlevych has headed the dedicated team for many years and manages advisory and litigation instructions. Spenser & Kauffmann spans its activity on supporting real estate and land use in connection with commercial, residential and investing activity, including acquisition of land and real estate assets, development, financing and leasing. An established client, UkrAvto Corporation, instructed the team with the process of allotment and registration of leasehold on land plots. The firm advised Yuyue Home Textile Cо., Ltd, a Chinese textile company, in connection with the process of the factory’s construction for the production and processing of flax. Partner Aleksandra Fedotova and counsel Maksim Maksimenko are the core practitioners. Notably, the firms got involved in scaled infrastructure projects. In particular, Volodymyr Yaremko1, counsel, advised a contractor on various issues in a project worth more than EUR 100 million project financed by the EBRD and EIB for construction of the Beskyd Tunnel in Western Ukraine based on the FIDIC Yellow Book. Over the past year the real estate practice of Wolf Theiss has in the main advised industrial companies, constructing and commissioning their properties at their own cost. Among the recent highlights is advising ADMIRANDA Group on acquisition and development of a hotel complex in the Istria area, Croatia; counseling Erste on the contemplated sale and transfer of a portfolio of non-performing loans, inter alia, granted to finance real estate project, and financial lease agreements, executed by Erste/its related entities with respect to real estate properties. In addition to transaction work, the Kyiv office handled a number of real estate dispute resolution cases representing mortgage holders, property owners, and construction companies. Managing partner Taras Dumych is the practice head. Olena Kravtsova and Oksana Volynets are the core team members. EY Ukraine has a dedicated team of lawyers which performs narrowly specialized projects in the sector and provides input on issues that invariably arise in relation to M&A deals. For instance, EY advises Rozetka, the largest Ukrainian e-commerce company, on acquisition of a warehouse complex in the city of Brovary from Secure Property Development & 1
He joined Sayenko Kharenko in March 2017.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Real Estate, Construction, Land Investment Plc. Another current representative work is advising one of the leading developers in Kyiv in connection with real estate development agreements. The main practice figures are Albert Sych, partner, and Bogdan Malnev, senior associate. In 2016 ANK Law Office, one of the main Odesa-based legal counsels, supported clients purchasing internal silos for expanding storage facilities of grain cultures. The past year has been marked as a record for long-term land lease agreements with port operators working in the Odesa and Chornomorsk seaports. The office acted as legal counsel to several stevedoring companies which have successfully legalized their rights over the land plots located under leased open warehouses and other state-owned immovable property (Olimpex Coupe International, Metalsukraine Corp Ltd, BrooklynKyiv, Kernel). The practice is supervised by two partners, Alexander Kifak and Dmitriy Kolodiazhniy. In 2016 Eterna Law extended the list of its clients in real estate practice by advising a range of international investors and Russian developers on the territory of Ukraine. The firm is involved in construction projects, corporate assignments, real estate and land acquisitions, and post transactional support. Among the areas of particular focus are infrastructure, especially ports, energy, hotel industry. Corporate
and M&A partner Oleh Malskyy supervises the practice team. ANTIKA, Ukrainian law firm, has a distinctive focus on real estate development and construction projects, as well as commercial transactions. The firm acted as a legal advisor to Heitman in the sale transaction of a logistics center in Boryspil, Kyiv Region, to Dragon Capital Investments Limited. The long lasting project of the team is support to AWT Bavaria on construction of the new BMW Importer and Dealership Center in Ukraine. Alexander Burtovoy is a lead partner. ILF (Inyurpolis Law Firm), a domestic law firm with offices in Kyiv and Kharkiv, is primarily focused on litigation, in particular, ownership and commercial disputes. The clients’ following is traditional for the firm and comes from the healthcare and agrarian sectors. Another recent feature of the firm’s caseload is protection of assets because of nationalization in occupied Crimea. Last year the firm acted in the interests of Diamant-Agro and represented it in ligation concerning a land plot; defended the interests of the owner of industrial premises and a car fleet. ILF litigation partner Alexey Kharitonov leads the practice. KM Partners has provided legal support at all stages of real estate and construction, and reported on a vast number of matters, includ-
WHO IS WHO
ing representing multinationals in respective disputes. The practice benefits from cooperation with a strong tax team and is a port of call for investment projects. The current workload of the team features construction disputes, disputes against supervisory authorities in architectural control, fire protection, ecology; broad-based construction support, including land title registration, permissive documents, construction agreements and financing. Maxim Oleksiyuk is the main contact. Ante Law Firm is highly active in the aviation sector and is a point of choice for significant industry players. Most recently the firm advised Emirates with regard to lease agreements in Ukraine and big duty free shops operator Pavo Group in connection with their business in determining conflicts with lessees at airports. The firm deals on a permanent basis with real estate issues at airports in the interests of airlines (lessors). Andriy Guck, partner, is the core rainmaker. Law Firm Dynasty, with its head office in Dnipro and an office in Kyiv, showcased involvement in commercial and office real estate transactions as well as evolving business centers. The recent scope included lease premises and sale, construction, regulatory, land and tax disputes. The workflow at the practice is divided among partners Denys Mirgorodskiy, Evgeniy Smiyuha and Vyacheslav Kohlyakov and Antonina Selivanova.
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Education: Taras Shevchenko National University of Kyiv, 2002.
Practice Areas:
Real Estate and Construction, Land
Aleksandra FEDOTOVA Partner, Attorney, PhD, Head of Real Estate and Land Law, Spenser & Kauffmann
www.sklaw.com.ua Tel.: +380 44 288 8383, +380 44 288 6707 E-mail: a.fedotova@sklaw.com.ua
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Languages: Ukrainian, Russian, English
Professional experience:
Aleksandra has 16 years of expert experience in the field of construction and real estate, land and agrarian law. Ms. Fedotova provides professional advice on the implementation of renewable energy projects. She frequently represents lenders and borrowers in mortgage and loan transactions, including office buildings, hotels, malls, trade centers and other types of property. Aleksandra advised clients on real estate acquisitions, as well as on issues of setting-up real estate financing funds. Additionally, Ms. Fedotova has expertise in setting up venture funds and asset management companies. In addition, Ms. Fedotova passed certification and received an Asset Management Certificate under the Collective Investment Institution in 2004. The scope of her scientific interests includes issues regarding the legal regime of land and water areas of sea and river ports. In 2014 Aleksandra defended her PhD thesis in land use regulations of Ukraine; field of research: land law; agricultural law.
Recognitions and awards:
In 2011 Aleksandra Fedotova was named among the 5 leading lawyers in Ukraine in real estate and construction law according to Ukrainian Law Firms. A Handbook for Foreign Clients. According to this research Ms. Fedotova was recognized in 2012 as one of the most notable land practitioners, as well as in real estate & construction. In addition, Aleksandra Fedotova was listed in the “Top 100 best Lawyers of Ukraine. Clients’ Choice” in 2017 by Yurydychna Gazeta in real estate & construction.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Real Estate, Construction, Land
During 2016 the GOLAW practice team headed by partner Sergiy Oberkovych, advised on real estate matters for its established clientele from agribusiness and energy. The advice includes tax issues, i.e. for a number of years the firm has been supporting PSGInternational AS, the Czech company providing engineering and construction services in legal and tax structuring issues of transactions with real estate investments; Real Estate Consulting Ltd (REC) in corporate, tax and litigation issues. SDM Partners provides support regarding various projects including initial advice on the best legal models for putting investments, obtaining all permits and licenses required for construction projects, purchase and sale/lease of land plots, change of land zoning. Over the past year the firm rendered comprehensive legal support to a multinational agriculture holding in leasing agriculture land plots in various regions of Ukraine. Serhiy Dzis is a lead partner. Lavrynovych & Partners, as led by Maksym Lavrynovych, provided comprehensive legal support to its private clients in the acquisition of residential real estate in Kyiv and on investments in commercial real estate in Austria. The firm has a traditionally strong litigation practice, and is enlisted for resolution of commercial and administrative disputes. International Legal Center EUCON has an active litigation practice group rendering property cases, construction and land disputes, and wide-ranging advisory featured with a multidisciplinary offering. Thus, Plastics-Ukraine,
LLC received advice on legal due diligence and real estate property acquisition. Tetiana Samsina, senior partner, supervises the practice. Alexandrov & Partners, under the leadership of Dmytro Alexandrov, traditionally provides a range of services for agrarian clientele offering specific land law advice, especially agricultural land lease and extension of land banks. Other areas of recent focus include commercial real estate lease and structuring investments in construction projects. Public clients include Trigon Capital and ISA Prime Developments. Oksana Kryzhanivska, partner, is another key practitioner. Lexwell & Partners renders advice on construction, property acquisitions, land lease. The firm advised Garant-N, LLC (Group of Amstar) in connection with the construction of a residential complex; advised on potential acquisition of a logistics centre. Andrey Kolupaev and Igor Nagai make up the core input of the practice. Advice Group, the Lviv-based domestic counsel, managed to attract predominantly foreign clients seeking support in Western Ukraine. Recent highlights included complex legal assistance to Belgian furniture producer HIMA NV; legal due diligence for a new production facilities construction project in Ivano-Frankivsk by a major agricultural company with Danish investment; comprehensive legal services to Austrian Airlines AG opening a new Client Services Center in Lviv. Oleh Kyryievskyi and Anton Podilchak are the points of contact.
Shkrebets & Partners, a vivid Kharkivbased law firm, is active in municipal projects. The firm has been chosen by the Department of Communal Services of the Kharkiv City Council to support the scaled reconstruction of the Taras Shevchenko garden and Kharkiv Zoo. Alexey Meniv guided work in the sector. Vdovychen & Partners, founded by Oleg Vdovychen, protects clients in economic courts and law-enforcement agencies in connection with administrative and commercial disputes, as well as criminal proceedings. The firm is also enlisted for contractual work. Peterka & Partners, headed by Tatiana Timchenko, acts on lease, sale and purchase of real estate. Most recently the office advised Regus Podil LLC, a Luxembourg multinational corporation that provides a global workplace (offices), with respect to real estate lease. Headed by partner Andriy Tsvyetkov, Gestors acts on property rights and acquisitions issues. The firm advised TRK INVEST, in connection with reconstruction, commissioning and executing the ownership right to an office building. De-Jure, the Odessa-based law firm, handles deals on property selling/purchasing, making legal opinion on the property. In 2016 ENGARDE advised on issues of acquiring land plot with the purpose of building a new agricultural processing enterprise. Market insiders named Vladyslav Kysil, KPD Consulting law firm, for experience in real estate matters.
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Education: Taras Shevchenko National University of Kyiv.
Practice Areas: Andriy REUN Head of Tax, Attorney at law, N&D Law Firm
www.ndlaw.com.ua Tel.: +380 44 237 7250
Tax Disputes, Tax Structuring, Protection of Property against Illegal Takeovers, White-Collar Crime.
Languages: Ukrainian, Russian, English
Professional experience:
Andriy Reun is a professional attorney at law with a focus on complex tax and legal issues and protection of property. Valued for his talent to analyze an issue from various angles and find unexpectedly effective solutions. Andriy has more than 15 years of professional experience in Ukrainian law firms and the “Big Four” companies, where he advised multinational and domestic businesses on preferred business, tax and transaction structures and supported clients in implementing large-scale projects and reaching set goals. He has significant experience of successfully representing clients in tax disputes before the tax authorities and courts of all levels. Before joining N&D Law Firm, Andriy served as deputy director of the Department for State registration and notarial registration at the Ministry of Justice of Ukraine, where he played an active role in development of recently enacted legislation on protecting property rights to business and real estate. Andriy was named among the top Ukrainian tax dispute resolution professionals in 2014 and 2015 by the International Tax Review Magazine.
a.reun@ndlaw.com.ua
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Retail
Retail Yuriy PETRENKO Spenser & Kauffmann
Ukrainian retail is developing rapidly not only in the economic aspect but also in the functional one. The issue here is about reformatting stores into shopping malls and vice versa, about the closest possible accommodation to the consumer, which is more attractive to the potential buyer. Preference is now given to leasing, therefore attorneys are approached for developing creative mechanisms of concluding long-term contracts for flexible rent. As before, the key legal services for this segment are unchanged. Such legal services as litigation support, tax consulting, legal audit, antitrust law, restructuring of loan portfolios. The last point became particularly relevant due to the problems in the banking sector. One reason for certain transformations and market needs became such factors as investigation of cartel agreements, strict antitrust control and supervision, work in the sanctions regime against Russian counterparts. In 2017, the legal community entered, taking the first step towards implementing the attorneys monopoly. Now representation of the interests in Cassational Сourts can only be carried out by attorneys, and from next year the same rules will apply to the Court of Appeal too, and from 2019 in all Courts only attorneys will have the right to represent the interests of a client. The retail business, which earlier could carry out self-service of legal cases, is increasingly attracting external legal counsels — attorneys exactly for representation of interests in courts and accompanying claim-action job. This became the reason of certain clients growth for many attorneys at law. To prevent negative reputation risks the retail sector is increasingly resorting to antitrust and anti-corruption compliance. Attorneys at law are, in turn, following trends and trying to satisfy the demand of the retail market for such practice and are opening appropriate directions. Tough competition on the market makes participants evolve and enroot innovations to attract clients. Therefore, cases of implementation of artificial intelligence into the work of retail outlets with the aim of increasing the quality of interaction with a buyer, and increasing the efficiency of logistics processes, are not unique. However, such implementation requires certain resource investments, particularly for acquiring the rights to use artificial intelligence, software and so on.
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aker McKenzie acts for international retailers active in Ukraine across a range of matters, including M&A and retail real estate, expansion and development, antitrust. The office is also present in e-commerce, employment, compliance, related intellectual property issues. The Kyiv team is regularly present in M&A deals on the Ukrainian retail market. For example, it advised Billa Ukraine on the sale of two supermarkets in Kharkiv to a Ukrainian trade buyer. The IP practice advises Columbia Sportswear Company in IP matters related to trademark infringement matters, including criminal proceedings against counterfeiters in Ukraine. The majority of transactional projects are handled by Viacheslav Yakymchuk, corporate and M&A partner, while raising IP queries are satisfied by the team of IP partner Ruslan Drobyazko. DLA Piper possesses industry-specific expertise and work with many sound clients across the retail sector. The Kyiv office team is a part of the global market group dedicated to retail. Practice-wise the group includes practitioners from real estate, IP and franchising, competition, finance, tax areas. Among the notable projects is advising CULT Fashion Group, a Ukrainian fashion retailer representing a number of brands in Ukraine (Sonia Rykiel, Polini, Brian Atwood, etc.) on lease issues in the Central Universal Department Store (TsUM) in downtown Kyiv for opening a multi-brand shoes and clothes boutique. The office is a port of choice for largescale development projects, and has been providing full legal support to Leroy Merlin in its expansion in Ukraine. The firm advised Conair Corporation, a private US-based multinational corporation, which sells small appliances, personal care products, and health and beauty products for both professionals and consumers, on trademark protection. The key partners of the retail industry projects are Natalia Kochergina, renowned for her wide real estate and transactional expertise, and Natalia Pakhomovska, handling IP, e-commerce, pharmaceuticals, IT/telecom and technology matters. AEQUO possesses a multidisciplinary advice representing retail and consumer product industries, including major national retail stores, DIY market players, international retailers and consumer electronics producers. The firm represents Novus Ukraine in an alleged cartel case and subsequent challenging in Ukrainian courts of the decision adopted by the Antimonopoly Committee. The significant corporate team advises major retailers on transactions. The firm was mandated by Epicenter K, the largest Ukrainian DIY retail chain, to advise on acquisition of a controlling stake in Vin-
nitsa Agro-Industrial Group, operating a substantial agricultural land bank and several significant silos. The firm is also vividly active in litigation matters, including debt recovery, tax, bankruptcy proceeding. The projects are led by two partners of the firm, Denis Lysenko and Anna Babych; and counsel Sergey Denisenko. Asters, full service Ukrainian counsel, advises retailers, retail landlords and consumer brands on a wide range of retail and trading law issues. The firm is proficient in the lease of warehouse and office facilities, food safety, consumer protection and labeling requirements; regulatory issues relating to imports and distribution. The firm is known for consistent following of luxury fashion brands. In particular, Asters advises PRADA Group in connection with the operation of its first mono-brand boutique in Ukraine, including PRADA Store premises lease agreement regarding reducing the rent. Another notable strength is the sizeable antitrust practice with three partners Igor Svechkar, Alexey Pustovit, Oleksandr Voznyuk and involvement in sound, contentious matters. The firm continues representing AC Nielsen Ukraine in a commercial court in connection with appeal of the AMCU’s decision in a cartel investigation on the Ukrainian retail market. Vadym Samoilenko, Svitlana Chepurna and Oleksiy Didkovskiy are other partners involved in retail-related projects. The full-service Ukrainian firm Vasil Kisil & Partners advises the dynamic retail sector in various segments, including food, electronics, DIY, apparel and accessories. The firm acts for Billa Ukraine in a cartel investigation and further ongoing court proceeding regarding challenging a decision of the AMCU. The firm is known for its strong real estate and construction practice, and is chosen for commercial real estate transactions pertaining retail. Notably, the team guided by Alexander Borodkin acted as a legal counsel for Epicenter K in the course of its acquisition of a group of buildings of the former Alta Centre Shopping Mall. In addition, VKP provided legal advice on the termination of operations of Alta Centre, re-execution of land lease agreements and compliance with antitrust laws. The firm is also proficient in tax disputes representation as led by Andriy Stelmashchuk, managing partner. Anna Sisetska, counsel, is the main contact. Over the last couple of years GOLAW, a Ukrainian law firm with an established network in the regions (Lviv and Odesa), developed its niche in advising fashion and FMCG retail players. An established client of the firm, the Spanish Inditex group
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Retail of companies, received advice on a range of employment matters, including indexation of wages, registration and termination of employment relationship, mobilization, compliance with personal data processing, regulatory matters, technical regulations and safety standards, taxation, representation in disputes. Another notable highlight of the past year is support regarding the startup of a new brand of the group in Ukraine, UTERQUE. The firm constantly advises Marks & Spencer Ukraine on various corporate matters, trade patents, employment issues. The client list includes GAP Ukraine, Reckitt Benckiser Pharmaceuticals Household Health Care Ukraine, kids’ stuff retail store Antoshka and others. Maksym Lebedev is the primary contact. Spenser & Kauffmann advises a range of retailers including apparel, food, furniture industries. The recent workflow encompasses employment, compliance; non-residential premises lease agreement, debt restructuring, tax, including litigation work. Yuriy Petrenko, partner, litigation and dispute resolution, is responsible for retail-related projects. The legal team of EY has a strong presence in retail, performing ongoing tax and legal advisory, tax and legal structuring of business, advice on supply chain structuring and on contractual matters, legal compliance reviews. The client roster includes fashion, food, on-line trading platforms. For example, EY provided comprehensive legal advice to Rozetka on structuring the involvement of third
party vendors to sales through the Rozetka platform; advised with relation to lease of a warehouse and purchase of warehouserelated equipment, and generally provides ongoing advisory support on a broad range of matters related to operations of the clients. Two partners, Albert Sych and Igor Chufarov, are the main point of contact. Clients hire Gramatskiy & Partners for regulatory advice, structuring of big retail chains, developing of tax models, representation in the course of numerous state inspections. The dedicated team handled administrative and regulatory procedures in the course of development of the trading infrastructure of the PJSC Dniprovskyi Rynok market; supported state market inspections of Dniprovskyi Rynok and its tenants — retailers; developed and implemented the petrochemicals retail trade of WOG Retail. With solid presence in e-commerce, the firm supported the launch of several Internet stores. Some other selected clients are City Capital Group (Trade Centre Darynok), Novyi Complex (Trade Centre Chocolate), Lavinia, Finrostorg, Ditrade. The industry practice group is overseen by Denys Boginich. ANK Law Office, the Odesa-based law firm, receives queries from clients operating shopping malls and business centres. In particular, the firm is hired for negotiations with lessors when signing lease agreements and amendments thereto; reconstruction and commissioning new business units (facilities); inspections by state authorities; devel-
LEADING FIRMS 1. 2. 3. 4. 5.
Baker McKenzie DLA Piper Ukraine AEQUO Asters Vasil Kisil & Partners
OTHER ESTABLISHED PRACTICES LISTED IN ALPHABETICAL ORDER
GOLAW Spenser & Kauffmann
COUNSELINK ALEKSEY PUKHA AND PARTNERS
21 John Paul II / Patrisa Lumumby, Office 416, Kyiv, 01042, Ukraine Tel.: +380 44 528 3094 Fax: +380 44 528 3054 E-mail: office@puhaipartnery.com.ua Web-site: www.puhaipartnery.com.ua
GENTLS LAW FIRM
Leonardo Business Center, 17/52A Bohdana Khmelnytskoho Street, 5 Floor, Kyiv, 01030, Ukraine Tel.: +380 44 339 9910 E-mail: go@gentls.com Web-site: www.gentls.com
opment of a tax regime for owners of shopping malls and business centres. The firm’s clients include major players of Odesa: Riviera Shopping Centre, Srednefontanskiy Shopping Centre, Marine Plaza Business Centre, Vuzovskiy Business Centre. Denis Yakovlev is the lead partner, supported by Pavlo Budzar and Victoriya Nogina. Law Firm Dynasty, which has offices in Dnipro and Kyiv, renders day-to-day legal support for the economic activities of clients, which include apparel networks and digital sellers. The key contacts are Anna Poddubnaya and Tamila Petrenko.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Tax and Transfer Pricing
Tax and Transfer Pricing Vadim MEDVEDEV AVELLUM
The legal services market in the tax field was significantly influenced by both global trends and national legislative changes. Global initiatives in the BEPS project resulted in a significant shift towards transparency and the compliance of international structures. Moreover, those initiatives caused further alignment of legal structures with underlying economic activities, increase in substance of legal entities. In addition, we are seeing an increase in interest towards compliant and safer international succession structures. Changes in domestic tax rules resulted in a fall in demand for legal advice on corporate income tax matters — a significant part of such advisory work shifted to accountantbased tax practices. Another significant change in Ukrainian tax practice is the fall in the volume of VAT refund litigations (most likely caused by improvement of VAT refund procedures in 2016). We expect a further reduction in VAT refund cases in 2017 in light of introduction of the transparent VAT refund registry. On the other hand, we have noted an inflow of high profile and more complicated tax disputes related to international tax matters and legal treatment of certain transactions. It is evident that the tax authorities improved their working standards, and, as a result, we can witness a higher complexity of tax assessments and related disputes. Another important observation is an improvement in administrative review of tax assessments. The amount of tax assessments that were cancelled by the State Fiscal Service of Ukraine is rising steadily and the tax authorities have demonstrated a more reasonable approach to administrative appeals. We expect that all these trends will remain in 2017. We would also welcome a decrease in the volume of erroneous challenges of taxpayers’ transactions as sham by the tax authorities. Furthermore, a shift in the tax agenda to more sophisticated tax matters is highly anticipated. However, we do not expect a U-turn regarding the above within the space of one year.
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M Partners, a member of the WTS Global network, is a full-cycle tax practice, involved in complex disputes, tax structuring and transfer pricing. For many years the sizeable 20-lawyer dedicated tax team is preferred by multinational companies operating in Ukraine. Apart from an extensive tax litigation caseload, additional focus lies in litigations with customs, which may formally go beyond pure fiscal aspects but still have a tax-related effect, and defence of a client’s officials in criminal proceedings (such crimes as tax evasion, criminal forgery, criminal negligence, etc). The firm used new tools recently that have come into existence, for example, appeal through the business ombudsmen. The team develops its transfer pricing practice (TP), and notably representation in court proceedings. Broad industrial coverage starts from the agricultural business, glass production, FMCG, retailers’ chains, energy and ends with complex software structuring and television advertising. Three partners are highly active on the market. Ivan Shynkarenko leads the TP practice. Alexander Minin is a top authority with a stellar reputation, who also acts as an expert on Ukrainian tax matters in some international arbitrations. Alexander Shemiatkin is noted as a bright tax litigator. The tax practice of EY, international heavyweight and a member of the ‘Big Four’ is among the largest and strongest in Ukraine. Traditionally, EY has prestigious clientele, while the tax practice has industry wise expertise, such as agriculture, banking and finance, telecommunications, IT, pharmaceuticals, mining and metals, FMCG, oil and gas, hospitality. The team provides corporate and international tax consultancy, including cross-border projects. For example, EY conducted tax due diligence in connection with the acquisition of Lohika by Altran. The dispute resolution team acts on tax and customs disputes, and is chosen by both Ukrainian and international companies. In the past year the team acted for a large Ukrainian bank, a world-known news agency, a large European snack producer, a telecom subsidiary of the world’s largest software company and other clients. Its transfer pricing practice in Ukraine consists of 30 professionals and offers a full range of TP services. Of late the team has handled TP structuring and documentation for a number of diversified Ukraine business groups. Vladimir Kotenko is one of the most reputable tax lawyers in Ukraine. Albert Sych is known for his strong expertise in the oil and gas sector. Igor Chufarov leads the TP practice and director Iryna Kalyta is another important figure in this practice.
Given its international reach, unrivalled capacity and full-fledged tax coverage, KPMG Ukraine is a strong choice for international clientele. The tax practice is highly specialized, involving consulting and deal advisory, international corporate tax and indirect tax compliance, dispute resolution and transfer pricing. The office is regularly preferred for transactional tax support, covering M&A, business restructuring and full-scope tax due diligence. The focus of expertise in tax dispute resolutions is handling complex tax matters. The practice has been completed with the number of strategic hires. Larysa Antoshchuk (formerly of private tax practice Tax Terra) joined as head of the tax dispute resolution group; Taras Koval joined as head of the international corporate tax group.The 30-strong TP practice is among the most sizeable on the market and is led by partner Konstantin Karpushin. Among his major recent clients are Nestle, Auchan, Henkel, Nowy Styl, Carlsberg, Imperial Tobacco, Tarkett, Syngenta. Volodymyr Chyzhykov received market feedback for strong economic expertise in TP documentation. Sergey Popov, partner, Oleg Chayka, director, are established names, who manage the practice workflow. Baker McKenzie has a sizeable tax practice mostly known for being dedicated to international and domestic tax planning, and is hired by major international corporations. The practice ensures tax advisory in line with the transactional activity of subsequent practices, and provides international and domestic VAT planning in relation to the sales structures. The dispute team is receiving instructions for tax controversies and litigations, as well as customs related litigation. The firm stands out for its established global wealth management group, which advises private banks, trustees, wealth management professionals, families. As a global transfer pricing consultant operating in Ukraine, the Kyiv TP team advises clients on global and local TP matters that include preparation of TP documentation, analysis and development of transfer pricing policy, compliance, development of operational transfer pricing models. Partner Hennadiy Voytsitskyi, the head of the tax practice group, is widely known for his strong knowledge of tax structuring. Yuriy Zaluskyy, counsel, is known for his deep technical experience and litigation work. DLA Piper commands a standalone tax team feature whose legacy is its previous experience in the ‘Big Four’ companies. The practice is especially focused on corporate tax matters, VAT and customs, tax-driven restructuring at both domestic and international levels. Additionally, the office is regularly hired for reviews of entities’ tax
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IN UKRAINIAN LAW BY PRACTICE AREAS â &#x201E; INDUSTRIES Tax and Transfer Pricing
International Legal Center EUCON commands a formidable and diversified tax practice, known particularly for large-scale tax disputes and extremely active in offering its transfer pricing service. Sound cases handled in the outgoing year included representing the Savik Shuster Studio, a popular TV production company, in appealing against CPT charges and challenging additional VAT liabilities. Another notable case was representing Alpha Center in USD 4.5 million VAT refund litigation. The core tax litigators are Yevgen Petrenko and Volodymyr Bevza. The center is rapidly expanding tax planning and structuring, and is now among key counsels for structuring inbound and outbound investments with Poland. Having two offices in Kyiv and Warsaw is a significant advantage. The transfer pricing practice group, TPA Global member, is led by renowned expert Larysa Vrublevska. Her team advises established clientele (Ukrrichflot, Pruszynski, Zepter International, Louis Dreyfus Commodities Ukraine) and adds new ones (Heraeus Electro-Nite, GROCLIN-KAR-
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AUTHORITIES Volodymyr Kotenko (EY Ukraine)
LEADING INDIVIDUALS 1. Yaroslav Romanchuk (EUCON) 2. Hennadiy Voytsitskyi (Baker McKenzie)
Alexander Minin (KM Partners)
3. Alexander Shemiatkin (KM Partners) 4. Serhiy Verlanov (Sayenko Kharenko)
TAX: CONSULTING LEADING FIRMS 1. 2. 3. 4. 5.
KM Partners EY Ukraine KPMG Ukraine Baker McKenzie DLA Piper Ukraine
OTHER ESTABLISHED PRACTICES AEQUO Arzinger Asters AVELLUM EUCON ICF Legal Service Sayenko Kharenko
LISTED IN ALPHABETICAL ORDER
5. Sergey Popov (KPMG Ukraine) The selection of firms and professionals in the table reflects the research carried out by the editorial staff of Yuridicheskaya Practika Publishing. It is based on a poll with market participants and submissions of the project portfolio provided by law firms. It remains a subjective view and implies no disparagement of any firm/ professional not mentioned here but which is, nevertheless, active in this field.
OTHER NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Oleg Chayka (KPMG Ukraine) Sergey Chuyev (EQUITY) Igor Davydenko (Dentons) Valentyn Gvozdiy (GOLAW) Andriy Hrynchuk (Hrynchuk & Partners) Pavlo Khodakovskyy (Arzinger)
Tax
profiles, transfer pricing and tax controversies. The team also covers industry-related tax advice, including pharma, telecom, FMCG, retail, manufacturing, real estate. Illustrative transactional tax advice has been rendered to the Georgian Industrial Group on acquisition of a stake in Ukrainian insulin producer JSC Indar from Bioton S.A. The list of public clients takes in Carlsberg Group, Crown Agents, DataRobot, Jabil Circuit, Leroy Merlin, Sanofi, Wix etc. The Kyiv team is also active in transfer pricing, advising clients like Alcatel Lucent, Bayer, EPAM, Maersk, Omya, Studio Moderna, VimpelCom. Svitlana Musienko, who was a lead partner, is now of counsel. Illya Sverdlov was appointed head of tax since 1 March 2017. Dmytro Rylovnikov is in charge of transfer pricing assignments.
WHO IS WHO
Alexey Khomyakov (Asters)
TAX: LITIGATION LEADING FIRMS 1. 2. 3. 4. 5.
KM Partners EUCON Vasil Kisil & Partners PwC Legal Sayenko Kharenko
OTHER ESTABLISHED PRACTICES
LISTED IN ALPHABETICAL ORDER
Arzinger DLA Piper Ukraine EY Ukraine EQUITY GOLAW Gramatskiy & Partners Ilyashev & Partners KPMG Ukraine Marchenko Danevych MORIS GROUP Shkrebets & Partners Sokolovskyi & Partners VB PARTNERS
Dmytro Korbut (Sayenko Kharenko) Natalia Kurilenko (Sokolovskyi & Partners) Denis Lysenko (AEQUO) Oleh Marchenko (Marchenko Danevych) Vadim Medvedev (AVELLUM) Dmitry Mikhailenko (OMP Tax & Legal) Volodymyr Misechko (Misechko & Partners) Andrey Pronchenko (PwC Legal) Eugene Shkrebets (Shkrebets & Partners) Vladyslav Sokolovskyi (Sokolovskyi & Partners) Andriy Stelmashchuk (Vasil Kisil & Partners) Illya Sverdlov (DLA Piper Ukraine) Volodymyr Vashchenko (VB PARTNERS) Oleg Vdovychen (Vdovychen & Partners) Nataliya Ulyanova (ICF Legal Service) Yuriy Zaluskyy (Baker McKenzie)
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Tax and Transfer Pricing PATY, Naturprodukt-Vega, MAGREF, MITEK). Managing partner Yaroslav Romanchuk is ultra active on the market and is widely referred to by peers.
Igor CHUFAROV EY Ukraine
A key observation from last year is that the tax authorities have notably stepped up the audits of transfer pricing rules. Just a couple of years the tax authorities played the role of largely silent observers, limiting their activities to requests and reviews of the transfer pricing documentation prepared by taxpayers. It was only recently that the first specialized tax audits were officially started, but now there are more than 20 such audits in progress. It did not take long for such audits to produce results, with the first multimillion-dollar tax adjustments cases already reaching courts of first instance. These developments naturally introduce a new challenge, but at the same time open a new practice area for transfer pricing consultants who are now expected to defend their benchmarking analyses during the tax audit and in courts. Of particular notice is also the implementation of specific transfer pricing rules for commodity transactions that require mandatory use of comparable prices from recognized international stock exchanges. These rules affect many large companies from the agricultural and mining & metals industries. To avoid many uncertainties intrinsic to the application of these rules, taxpayers are advised to apply for signing Advance Pricing Agreements (APA) with the tax authorities. In this process, tax advisors will play a key role in negotiations with the tax administration. Significant changes that were introduced into the Tax Code starting from 1 January 2017 greatly enhanced the requirements of the content of transfer pricing documentation. Work on further reform is under way, as Ukraine prepares for implementation of BEPS requirements. In this respect, Ukraine still lags behind its neighboring states, but in the near future Ukrainian taxpayers should be ready to meet three-tier transfer pricing reporting requirements, which include the group master file, the local TP file and the country-by-country report (CbCR). Also of note is the implementation of a common reporting standard (CRS) that provides for automatic exchange of information between the authorities about financial transactions in all banks and financial institutions of the world. An obvious result of these developments would be a far greater level of visibility of foreign transactions available to the tax authorities. Offshore structures that proliferated based on assumptions of nondisclosure of information to the Ukrainian tax authorities will no longer be feasible. We are already seeing a steady rise in requests from clients to review their group structures and propose measures to align them in a transparent and tax-compliant manner.
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The team of Vasil Kisil & Partners is known primarily on the market for its strong tax litigation capacities, additionally highlighted by a number of sound recent representations. For example, the firm represented the Ukrainian subsidiary of Sberbank of Russia in a range of disputes (total amount of claims reaching USD 5 million) regarding taxation of banking activities, and particularly, taxation of bank reserves. Another sound litigation includes representing Shell in three disputes with tax authorities regarding the right to automatic VAT refunds. The tax team supports complex transactions like M&A and corporate restructurings, including cross-border mandates. The list of firm’s clients takes in Imperial Tobacco Production Ukraine, Ukrainian Philanthropists Forum, Manushar, Zelmer, Solum, Agro-Region Group. The practice is led by managing partner Andriy Stelmashchuk, a renowned Ukrainian litigator. Attorneys Association PwC Legal, a member of PwC’s international network, has traditionally been a strong tax practice and offers clients a range of complementary services alongside them. The team extends its tax litigation capabilities, including support of companies’ top officials in criminal proceedings involving tax matters. Among the dispute highlights is representation of Winner Imports Ukraine in a dispute related to the assessment of CPT and VAT and supporting criminal proceedings initiated as a result of a tax audit. Other active clients include ADM, Boeing, Oriflame, Subaru, Western Union, Danfoss. The tax dispute team is led by Andrey Pronchenko, managing partner at PwC Legal, who is supported by senior staff — Alexander Protsyuk, Zhanna Brazhnyk and Sergii Papernyk. The 26-strong TP practice has both local and multinational clientele, and stands out for the industry expertise possessed by its team members. Among publishable clients are such names as AMCOR, Beiersdorf, Jacobs, Robert Bosch, S.C. Johnson & Son, Inc., Ukrainian New Forwarding Company. Olga Trifonova, director, leads the TP practice and is referenced as an experienced professional in economic and functional analysis. Partner with PwC Ukraine Vyacheslav Vlasov leads the corporate tax practice, including TP services. The tax practice of Sayenko Kharenko, reinforced in 2015, has demonstrated rapid development in scope, depth and capacities, with further lateral hires. The sizeable team transformed into a one-stop shop advisory, including tax advice, tax administration and compliance, transac-
tional tax, disputes and accounting services. The practice also handles private client related tax mandates. Its enviable client roster includes the largest multinational and Ukrainian companies in the agricultural, banking, chemicals, FMCG, IT, mining and metals, oil & gas, retail industries. The recent non-contentious highlights include representing Interbrew YNTR Holding, a majority shareholder of SUN InBev Ukraine, in the process of intra-group restructuring; advising a global technology company on Ukrainian tax matters arising in connection with a crossborder M&A deal on the sale of its business; performing analysis of regulatory and tax risks for one of the major Ukrainian tobacco producers associated with the peculiarities of calculating VAT and excise tax. The team actively expanded its litigation profile, notably representing Philip Morris Ukraine in a tax dispute with regard to excise tax assessment; acting for a global developer and operator of electric power in a tax dispute with the state tax authorities. The team is led by partner Serhiy Verlanov, vividly active throughout the past year. Dmytro Korbut and Oleksandr Markov make up the core of the tax team. Arzinger was boosted by tax structuring work, including multijurisdictional aspects, and gave a solid performance in business structuring and restructuring, intellectual property rights, cross-border trade and e-commerce. Sectors-specific tax expertise is a notable strength that the team possesses, advising agribusiness, energy, pharmaceuticals, construction, IT, machinery, packing industries. Given exceptionally strong positions in life science, Arzinger is a preferred legal counsel on the tax implications of commercial arrangements between producers and distributors. The dedicated dispute team traditionally represents clients on a wide range of tax controversies, and was especially successful in recent VAT refund cases. The lead partner is Pavlo Khodakovskyy, also practicing labor and employment. Olga Baranova is known for her special expertise in taxation of the IT industry. The tax practice of Asters is integrated into the teams counseling business transactions and specific industry instructions. The firm is mostly known for tax structuring issues, including those related to debt and equity securities issue, lending, providing security, corporate reorganizations, M&A, including asset acquisitions and dispositions, joint ventures, real estate, and project financing. The team regularly acts on the local and cross-border tax implications of trade and commercial arrangements, operating activities, and handles representation in disputes with tax authorities. Among the clients are Aegis Media, Visa Ukraine, Molson Coors, GSN Gamesk, Ukrzaliznytsia, Cub Energy. Constantin Solyar re-
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WHO IS WHO
IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Tax and Transfer Pricing
AEQUO’s tax and customs practice ensures seamless advisory within projects of the corporate practice, and performs a growing profile of cross-border matters, including outbound tax projects for domestic clients. The firm advised Epicenter K on the tax implications of restructuring part of a payment for Nova Linia; advised a Ukrainian group of agricultural companies on tax matters in pre-sale restructuring. Additionally, the team develops its tax litigation focus and, among other things, acted for Inditex Group with respect to challenging the royalties withholding tax charged by the tax authorities, represented several Ukrainian subsidiaries (brands) of the group in challenging the decisions of the tax authorities on the accrual of fines for alleged misreporting of CPT liabilities. Denis Lysenko, managing partner, leads the practice. Ilyashev & Partners is known primarily for its strong litigation capabilities and the recent expansion of its network of offices (the most recent one was unveiled in Tallinn, Estonia). The firm regularly acts on high value tax disputes, challenging tax assessment notices, restoration of the right to VAT credit and VAT refund, appeals against penalties. The firm represented State Enterprise ANTONOV in challenging USD 39 million in penalties and acted in court regarding settlement of arrears of around USD 3 million related to overpayment of income tax. In the advisory area the firm advised Ukrplastic on tax regime and customs duties during the import of equipment belonging to a Swiss company. Other clients of the firm include FSC More, ArcelorMittal Kryvyi Rih, BTA Bank (Kazakhstan and Ukraine), Apopharm. Roman Marchenko is lead partner of the practice. Galina Melnik is another key tax practitioner. AVELLUM has a transactions-centered tax practice, which is experienced in the tax aspects of restructuring of business, cross-border tax structuring, including transfer pricing perspectives. In 2016 the firm advised Ukrainian President Petro Poroshenko on tax and
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legal matters arising within the pre-sale restructuring and further transfer of the Roshen Group into a blind trust to Rothschild Trust (Schweiz) AG. As one of the key Ukrainian counsels for crossborder indebtedness restructuring, the firm covers tax considerations within. The tax team covered all Ukrainian tax matters, having acted for PrivatBank in connection with Eurobonds liability management. Vadim Medvedev, senior associate, is known as a key tax practitioner at the firm. Mykola Stetsenko is a lead partner. Dentons is a hub for tax advice, including customs law, disputes, transfer pricing issues and other cross-border matters. The Kyiv tax practice works closely with other practices, including corporate/M&A, energy, banking and finance, restructuring and insolvency, to provide bespoke tax advice. The office is regularly instructed by its multinational clients on tax, customs and regulatory matters with respect to operations in Ukraine. Igor Davydenko guides the tax practice. CMS Cameron McKenna is focused on domestic and international transactions as well as on their long-term tax planning issues, compliance and consulting services. The office is increasingly active in contentious tax matters and represents clients at the state tax authorities, including disputes at both the administrative and court levels in cases challenging assessment of additional tax liabilities. With its sharp industry wise approach, the team provides sectorspecific tax advice to energy, agriculture, financial, IT sector clients. The tax team works closely with other practices, and provided tax advice to Nafta a.s. in connection with the establishment of a joint venture with Cub Energy Inc. The key individuals are Olexander Martinenko and Anna Demchenko. Gramatskiy & Partners, one of the long-standing local firms, has a special focus on tax planning and structuring, including tax compliance, transfer pricing, corporate taxation, VAT as well as personal income tax. The list of key clients includes City Capital Group, Seven Hills Group of Companies, PTS UA Services, the Ukrainian subsidiary of Playtech Plc, while the major front of tax advice falls within comprehensive investment and corporate projects. The firm
NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Volodymyr Chizhikov (KPMG Ukraine) Igor Chufarov (EY Ukraine) Konstantin Karpushin (KPMG Ukraine)
Transfer Pricing
joined Asters after his secondment to a ‘Big Four’ firm in Luxembourg. Alexey Khomyakov is a lead partner for transfer pricing queries. The firm provided full support to ED&F Man Holdings regarding its tolling transaction.
Yaroslav Romanchuk (EUCON) Ivan Shynkarenko (KM Partners) Illya Sverdlov (DLA Piper Ukraine) Olga Trifonova (PwC Ukraine) Vyacheslav Vlasov (PwC Ukraine) Hennadiy Voytsitskyi (Baker McKenzie) Larysa Vrublevska (EUCON)
COUNSELINK ALEKSEY PUKHA AND PARTNERS 21 John Paul II / Patrisa Lumumby, Office 416, Kyiv, 01042, Ukraine Tel.: +380 44 528 3094 Fax: +380 44 528 3054 E-mail: office@puhaipartnery.com.ua Web-site: www.puhaipartnery.com.ua
AMBER LAW COMPANY
29 Lesi Ukrainki Blvd., Office 75, Kyiv, 01014, Ukraine Tel.: +380 67 325 9582, +380 44 228 0279 Fax: +380 44 285 5286 E-mail: office_law@amber-corp.com Web-site: www.amber-law.net
DMITRIEVA & PARTNERS 3 Dniprovska Naberezhna, Kyiv, 02098, Ukraine Tel.: + 380 44 553 7660 E-mail: office@dmp.com.ua Web-site: www.dmp.com.ua
MORIS GROUP LAW COMPANY 8B Moskovska Street, Kyiv, 01010, Ukraine Tel./Fax: +380 44 359 0305 E-mail: info@moris.com.ua Web-site: www.moris.com.ua
SERGEYEVS’ LAW OFFICE 11/6 Armiyska Street, Office 2a, Odesa, 65058, Ukraine Tel./Fax: + 380 487 37 7228 E-mail: office@srgv.com Web-site: www.srgv.com
TRUSTED ADVISORS
40/85 Saksahanskoho Street, 5th Floor, Kyiv, 01033, Ukraine Tel./Fax: +38 044 359 0664 E-mail: info@trustedadviors.com.ua Web-site: www.trustedadvisors.ua
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Tax and Transfer Pricing
has vast experience of settling tax disputes within administrative procedures as well as in tax litigation. The firm is rapidly developing its transfer pricing offering with queries from its clients, like Seven Hills, Promkabel-Elekrika, Danfoss, Finrostorg, Branoli, Isaveca, Prodmarket. The tax practice head is Vitalii Tymchuk, while transfer pricing is overseen by Ernest Gramatskiy. The tax practice of Integrites is centered principally on tax planning, and primarily on transnational deals which cover foreign jurisdictions. The team is enlisted for implementation of the complex system of international tax planning, tax structuring of sale transactions, and advice on transfer pricing matters and implemented changes to trade flows. Some of the firm’s clients with a well-established network of offices in the CIS, include Palma Group, New Products Group, RikonFisn Group, Amadeus Marine, SBE Sustainable Energy Holding, Philip Morris Ukraine, MTI, Fudmerezha. In this past year the firm also extended its banking client portfolio and national producers and exporters. Managing partner Oleksiy Feliv oversees the practice. The rapidly growing tax litigation portfolio was a standout feature of the recent performance of MORIS GROUP. The firm has a following among agrarian, building and energy clients, as evidenced by notable representation in tax disputes for clients like Karpatnaftokhim LLC, a major Ukrainian petrochemical producer and subsidiary of LUKOIL, UkrOboronProm, a state-owned conglomerate, First Private Brewery, UkrInBank and Omega Bank. The group also facilitates tax planning advice. Volodymyr Rak is head of tax while Andriy Savchuk is head of litigation. Over the past year Marchenko Danevych developed its litigation capabilities. Oleh Marchenko, who has recently been particularly dedicated to dispute resolution work, is customarily referred for deep expertise in tax. As part of post-closing M&A support, the firm acted successfully for a Global 500 manufacturing company in multiple multimillion tax litigations in Ukraine. GOLAW, a domestic counsel with established regional standing, is especially active in the field of tax litigation, and maintains general tax consulting. The tax team represented the firm’s consistent client Inditex Group, a Spanish multinational clothing company in a number of tax disputes on invalidation of supply contracts, accrual of additional tax, illegal application of sanctions. Other clients instructing the firm on litiga-
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tion are Omya Ukraine, Galicia Distillery PJSC, Medcom Marketing and Sales Ukraine, Autoalliance Invest, Tair-Dem Jewelry House. Maksym Lebedev, Iryna Kalnytska and Kateryna Manoylenko make up the core of the tax practice led by managing partner Valentyn Gvozdiy. Sokolovskyi & Partners, a domestic law firm with tax among its core offerings, has kept a principal focus on tax controversies, representing clients in administrative and judicial proceedings. The tax team often works in unison with the criminal practice on cases related to tax evasion. It is noteworthy that the firm acted on initiation of a unique case to bring criminal proceedings regarding officials who work for the tax administration. The majority of clients are Ukrainian businesses with a growing recent following from international companies operating in Ukraine. Natalia Kurilenko is the tax practice head. Managing partner Vladyslav Sokolovskyi is a highly referenced figure on the market. Tetiana Lysovets and Kyrylo Nominas are focused on criminal defence in tax evasion cases. EQUITY (called FCLEX up till June 2017) expands its main strength in tax litigation work, complemented with sustainable addition of advisory on tax structuring. One of the anchor clients of the practice is the Azovmash group of companies, which loaded the firm with challenging tax charges disputes. Among the largest tax disputes in the firm’s caseload is representing Optima-Pharm in appealing against tax notices for the total amount of USD 16.5 million; and representing F&C Realty on appealing against USD 8.6 million in tax liability charges. The firm’s clientele traditionally consists of important local names, like Hotel Salut, Ferrexpo Eristovo Mining, Bank Finance & Credit, Kievmedpreparat, Arterium Corp. Sergey Chuyev is a lead partner. Taras Poshyvanyuk, Vyacheslav Krahlevych, Oleg Malinevskiy are all involved in tax-related matters. ILF (Inyurpolis Law Firm), a Ukrainian firm with two offices in Kharkiv and Kyiv, is hired for day-to-day tax advisory by its consistent clients, representation of their interaction with tax authorities, tax litigation challenging charges on VAT, CPT and customs duties. Recent dispute highlights include representing Mamin Dom, a retail and wholesale trading network of goods and stuff for children, in appealing against UAH 10.6 million worth of tax liabilities in courts; acted for Amcor, a global leader in responsible global packaging solutions supplying a broad
range of rigid and flexible packaging products, in challenging tax charges brought by the State Customs Service of Ukraine. The tax advisory offering emanates from the firm’s extensive corporate practice, especially in ILF’s principal industrial focuses, for example, IT, healthcare, and the agrarian sector. The firm has accumulated a solid clientele, among which BASF, Avon Ukraine, Velton, meat processing plant Rial are public names. Serhiy Silchenko, is a lead partner, and splits his time between tax and labor practices. Law Offices of OMP, a vivid player on the tax market, underwent changes in organizational structure when in July 2016 the group, as led by Dmitry Mikhailenko, left and established a separate company called OMP Tax & Legal. He is known mostly for tax-related consulting services, and is characterized as an all-round lawyer with thinking outside the box. The remaining team is guided by Mykola Orlov and possesses a strong presence in the agrarian and pharmaceutical sectors. In a recent highlight his team’s performance range spanned legal support on tax audits, appealing against tax penalties and VAT related disputes. ICF Legal Service increased its position in providing for tax structuring and international tax planning services. Tax structuring of business expansion to new markets (especially EU, China, middle Asia), structuring of M&A and multijurisdictional corporate structuring are part of the recent workflow of this dedicated practice team. Nataliya Ulyanova is rapidly growing her professional profile and market reputation. Eterna Law provides tax structuring and planning offering, covering a client’s transactional inquiries, i.e., corporate and financial restructuring, trading activities, structuring ownership. The firm provided tax advice to Sports.ru related to the activities of a Ukrainian company. After merger with law firm Baltic Business Group and the addition of two offices, namely in Latvia (Riga) and Germany (Düsseldorf), the tax practice is increasingly often instructed for tax matters related to outbound investments, tax structuring of business activities on the European market, and relocation of business to foreign jurisdictions, tax resident status. Partner Oksana Kneychuk is head of international tax planning and the corporate structuring department. VB PARTNERS is sharpening its focus on tax litigation, representing big industrial enterprises in disputes with tax and customs authorities at all levels. Key clients of the team are Nikolayev Alumina Refinery,
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Tax and Transfer Pricing Public JSC Zaporizhzhya Aluminum Plant, a major Ukrainian aluminium smelter. The firm recently represented Ukraine Estate Management in an administrative process regarding the implementation of changes to the State Fiscal Service’s electronic VAT administration system. Volodymyr Vashchenko is in charge of tax litigation. AVER LEX attorneys at law, the market leading criminal defence law firm, is highly active in complicated tax cases involving criminal prosecution. The tax team acts in challenging tax assessments and works closely with the criminal defence attorneys in such crimes as tax evasion and forgery. Another important area is protecting the reputation of clients as a result of such proceedings. Igor Fedorenko, partner, has tax evasion cases among his strongest focuses. Lexwell & Partners, a domestic firm with a focus on industrial clientele, assists clients in transactional and dispute sides. The firm covers tax aspects of supported M&A, for example, acted as a counsel to Mykolaivcement (CRH Group) in the course of its USD 100 million acquisition from Lafarge. Sound industrial clients ArcelorMittalKryvyi Rig,
Mykolaivcement and Podilskyi Cement have been represented in the course of administrative and judicial appeals against tax notices that appeared after inspections. Igor Nagai leads the tax practice. Spenser & Kauffmann expands its tax offering and clientele, adding agrarian, retail, private clients and insurance companies to its profile. The team covers the tax implications of its corporate structuring projects, sector specific taxation, tax planning and disputes. The team represented PJSC Zhytomyr Furniture industrial complex (MERX), a large furniture manufacturer, in a dispute on the invalidation and abolition of tax notifications. Tatiana Daniltseva, partner, is head of insurance and handles tax disputes projects. In May the practice was strengthened with the arrival of new counsel Maryna Tomash (previously experienced as a tax consultant at Metinvest). SDM Partners has a serious track record under its belt of tax disputes, and implemented tax structures for various multinational and domestics transactions and business models. The firm represented a leading Japanese car producer in court disputes against the tax authorities regarding the corporate tax of
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the representative office; acted for an international medical group in its dispute on CPT and VAT; represented the international IP holding group in its dispute with the tax authorities regarding taxation of their IP licensing activities in Ukraine. Dmytro Syrota and Mykola Melnyk are the key contacts. Aleksey Pukha and Partners is often chosen by foreign companies to provide tax planning and optimization, using foreign jurisdictions, as well as to handle representation in tax disputes. The firm is actively involved in advising pharmaceutical clients, and recently advised Ipca Laboratories International House as to the benefits of using customs warehouses in Europe for tax optimization. The firm also renders tax aspects of cross-border trade. For example, it advised Wilo Ukraine on import operations by inbound machinery. In the area of transfer pricing the team acted for ApicPharma, Aluprof, Wirtgen. Aleskey Pukha is the main contact. The dynamic market player Vdovychen & Partners demonstrates an extensive scope of disputes related to challenging VAT, CPT, income tax, cancelation of tax audits and its
REGIONAL COUNSELS The Kharkiv-based law firm Shkrebets & Partners is one of the major tax dispute points of choice in Kharkiv Region. Last year the firm reported on dozen of disputes in its caseload, illustrated by the representation of local clients like PJSC Kharkiv CHP-5, Eristovskiy MPP, Kharkiv Battery Plant VLADAR. Managing partner Eugene Shkrebets runs the tax practice and is the core contact. Yuriy Artyukh heads transfer pricing projects. Law Firm Dynasty, the vivid domestic legal counsel based in Dnipro and with an office in Kyiv, is focused on tax disputes. In 2016 the firm got complicated tax litigation projects representing domestic clients. Notably, the firm is enlisted on a regular basis for legal assistance and defence in criminal proceedings related to tax issues. The senior team involved in tax matters includes Yevheniy Smiyuha, Anna Poddubnaya and Snejana Karagodina. Advice Group, the Lviv-based law firm, rendered tax aspects coverage within the auspices of support given to clients in the course of transactions. The team provided tax
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advice to a major Ukrainian building materials producer on loan restructuring within the framework of Ukrainian and Dutch legislation; provided tax advice to a major Ukrainian automotive company with foreign investments related to tax compliance within company accounting policies. The group catches up with cross-border projects due to its membership of the Roxin Alliance (a global network of lawyers that deals exclusively with the challenges of corporate crime). Managing partner Anton Podilchak is the main contact. The Lviv-based boutique Hrynchuk & Partners is among the soundest names for tax disputes resolution practice in Western Ukraine, where more than 90% of enterprises are below the moratorium line. The firm represents clients in the IT, pharma-retail, food, logistics and transportation industries in tax and customs court cases as well as business-driven criminal cases. Liudmyla Tyshchuk represented a major pharmaretailer of Western Ukraine that was subject to tax payments based on the regular price concept and ended up proving in court
that the State Fiscal Service’s evidence base was void and not applicable to the taxpayer’s transactions. Managing partner Andriy Hrynchuk is the main tax practitioner, who is deeply involved in various social and business initiatives in the region. ANK Law Office, the Odesa-based counsel, has traditionally received requests for providing legal support during court litigations with tax authorities on appeal of tax notification decisions and conducting of tax audits. Another big portion of clients’ inquiries in 2016 derived from transfer pricing legislation. Established clients who were advised on tax included Brooklyn-Kyiv, Vector Oil Trade, Olimpex Coupe International, Metalsukraine Corp. Ltd, Srednefontanskiy Shopping Mall, Riviera Shopping Mall. Elena Puschenskaya and Sergey Krasutskiy are the key tax practitioners. Law firm DE-JURE, located in the Southern Ukrainian coastal city of Odesa, supports deals on selling/buying property, giving a legal opinion on property. Gregory Tripulskii is the main contact.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Tax and Transfer Pricing
results. The team has expertise in land and transportation duties, customs rules violations, invalidation of individual tax consultations. Oleg Vdovychen is the main contact. The tax practice of LCF Law Group works closely with the firm’s corporate and dispute resolution practices. With an extensive domestic litigation track record, the firm accomplished several complicated tax disputes with particular industrial specifics. The clientele is predominantly domestic. Managing partner Anna Ogrenchuk is the main point of contact. Misechko & Partners boosted its tax practice, broadening tax advisory on a day-to day basis, administrative and judicial appeal. Companies belonging to the agrarian sector generated the bulk of work in appealing against the results of tax audits. Moreover, the firm regularly acts for private entrepreneurs. Managing partner Volodymyr Misechko is the main rainmaker. Gryphon Legal is a domestic counsel primary focused on banking and financial
sector. The tax team’s recent performance covered tax planning for financial companies and structuring their transactional activity, tax compliance, lending and acquisition of corporate rights in the financial sector, advisory on payment transfers and e-money taxation. The firm has a solid portfolio of banking clientele, and is instructed to support the restructuring of bad debt, including tax considerations. One more feature is participation of professional auditors from Gryphon Audit. Ihor Lynnyk leads the tax practice. IP Law Agency Synergy is focused mainly on the taxation of intellectual property. The agency is active in the entertainment and movie industry, and appears in advisory on royalty taxation, copyright transfer and distribution models. In 2016 the tax team advised on the taxation of royalties of a cinema fests organizer and tax aspects of copyright transfer for Atom Film Studio. Viktoriia Ostapchuk, partner, is primarily focused on tax. The Kyiv office of Czech law firm Peterka & Partners renders advisory on tax implications and representation in court disputes
against tax authorities. Some clients include Nutreco NV, Savino Del BeneS.p.A., Velux Ukraine. Tatiana Timchenko and Taras Utiralov are key figures. The tax practice of Juscutum Attorneys Association is led by Natalia Radchenko. Areas of recent performance took in representation in tax compromise matters and litigation appealing against tax charges. Danylo Getmantsev, honorary president of Jurimex Law Firm, enjoys the support of his peers. The firm is known for its strong tax litigation performance and its online analytical service, which is called Taxlink. Legal Alliance Company, which is renowned for its pharmaceutical niche presence, delivers advice on corporate taxation and tax disputes. A survey of peers on transfer pricing identified several TP experts, namely Alexander Cherinko from Deloitte, Vladyslav Papakin from Baker Tilly, Olena Zhukova from Saivena Audit, Alina Bakulina from EBS.
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PRACTICE AREAS Corporate and M&A Tax Law Transfer Pricing Accounting and Tax Accounting Labour & Migration Law Investments and Business Structuring Dispute Resolution Criminal Law / Business Crime Agrarian, Land Law and Real Estate Compliance Electronic and Mobile Commerce Antimonopoly / Competition Law Intellectual Property Property & Business Appraisal
«OUR PHILOSOPHY OF PROTECTING CLIENT’S RIGHTS IS SIMPLE — PREVENT LEGAL RISKS AND LITIGATION» 33 Tarasa Shevchenko blvd, office 12, Kyiv, 01032, Ukraine Tel./Fax: +380 44 238 0944 Tel./Fax: +380 44 238 0413
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Transport: Aviation, Maritime, Shipping
Transport: Aviation, Maritime, Shipping Andriy GUCK Ante Law Firm
Aviation
The topic of aviation has again been in the top news since lowcost provider Ryanair announced its flights to Ukraine. This decision raised lots of questions, which were underestimated just a while ago. The expert community is discussing the peculiarities of state support for airports and airlines as well as the limits of airports’ freedom to make special service offers and discounts to different airlines. A lot of attention is now being given to airport development strategies. State-owned Boryspil International Airport declared its striving towards a hub-model with Ukrainian International Airlines as the base airline. At the same time, the Ministry of Infrastructure welcomes low-cost airlines and expects the cheapening of tickets to raise the popularity of aviation transport among Ukrainian citizens. Regional airports such as Lviv, Chernivtsi, Zaporizhzhya, Vinnitsya, Rivne and Kharkiv are increasing their traffic mainly by charter flights to attractive tourist areas and European airports that serve as hubs. Domestic flight traffic remains low without any serious progress in this regard. But the minister announced that negotiations with a new investor for a domestic carrier are in progress. The New State Program on Civil Aviation Safety came into effect on 12 April 2017. The Program, which is in line with US and EU standards, establishes new requirements regarding collection of advance passenger data (API) and its further transfer to the state authorities. New rules apply to international flights from/to Ukraine and transit flights through airports located in Ukraine and shall ensure aviation safety, regularity and effectiveness of flights. Signing of the initialed Common Aviation Area Agreement between the EU and Ukraine is again postponed for an indefinite period of time due to Brexit and the Gibraltar territory issue, which has no signs of being resolved soon.
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COVIS Bondar & Bondar Law Bureau has an established market niche in the aviation sector. Clients include Ukraine International Airlines, KLM Royal Dutch Airlines, Lufthansa Group, Swissair, Hahn Air, Aviation company Kharkiv Airlines, Boryspil International Airport, Chernivtsi Airport, Donetsk Airport, and a number of handling and catering companies operating at Ukrainian airports. The team advises clients on various legal matters, including corporate, antimonopoly, dispute resolution and tax. The firm recently represented a group of private investors in connection with the financing, acquisition, sale and leasing of 3 Boeing aircrafts. Recognized Oleg Bondar is a lead partner. Ilyashev & Partners has a well-diversified practice as it present both in the aviation and maritime areas. The firm acted for its long-standing client, State Enterprise Antonov, in numerous cases: advised on restructuring of debts owed to the state on bonds of the Aviant Plant; protected their interests in the dispute with the Ministry of Defense of the Russian Federation on recovery of penalties for violation of terms under a state contract and represented the company’s interests in disputes with OJSC Aviakor Aviation Plant and OJSC Aviakor on recovery of losses under the License Agreement for the right to use the trademark. Recent maritime highlights covered representation of Optima Shipping Limited in a dispute with Horndom Limited about non-fulfillment of the freight contract and protecting the interests of the ship-owner; Cormorant Maritime Limited in eight parallel arbitration proceedings at LMAA regarding the failure to pay the freight amount. In addition to the procedures before LMAA the firm also dealt with the arrest of ships in Georgia, Turkey and France and coordinated the provision of legal services in several jurisdictions simultaneously. Senior partner Roman Marchenko, known for his litigation performance, acts a lot in the transport sector. In 2016 Ante Law Firm extended a number of clients in its unique aviation niche. Bravo Airways, Flydubai, Style Avia LLC, Pavo group, Avialiga, Lufthansa, Austrian, Emirates, British Airways, Alitalia, UMAir, Association of Aviation Entities of Ukraine are all on the firm’s client list. Ante’s lawyers provided legal support regarding court claims as well as consulted foreign airlines on Ukrainian market entering issues. The team was involved in taxation and antitrust, public procurement issues
for transport clients. In particular, Ante acted for the interests of a diesel supplier before the AMCU with regard to Ukrzaliznytsia’s public procurement procedure conflicts. There are a few big agent defaults and bankruptcy procedures that are ongoing where Ante acts for a number of airlines. Highlyexperienced partner Andriy Guck is among the most recognized aviation law experts in the market. Market heavyweight Asters has remarkable clientele from the areas of aviation, railways and shipping. The firm regularly advises aircraft and aircraft parts manufacturers, Ukrainian and international cargo and passenger airlines, airports, aviation insurers, tour operators and other aviation industry enterprises on various corporate, finance, regulatory, antitrust, tax, administrative, enforcement, employment and litigation matters. For example, the firm advised the Wizz Air Group on corporate governance streamlining, personnel employment, outsourcing, training and licensing, obtaining work and residence permits for foreign employees, compensating employees and contractors, hiring and dismissing company’s managers, taxation of airline operations, and various aviation law matters. Notably, Asters acted as a legal counsel to Ukrzaliznytsia in connection with restructuring of USD 500 million Eurobonds. Partners Oleksiy Demyanenko and Vadym Samoilenko are the key contacts. The Ukrainian office of Baker McKenzie has a thorough understanding of the aviation industry that was gained through long-term involvement with airlines, Governments and airports. Its sectoral experience includes privatizations, corporatizations, capital raising, financing, general corporate and regulatory advice. The international firm has a sharp footprint of transport infrastructure. The team acted as legal counsel to Cargill in respect of an agreement with MV Cargo to enable the construction of a new port terminal in Yuzhny. Serhiy Piontkovsky led the team. Baker McKenzie is also most active in financing transactions for infrastructure projects. Serhiy Chorny is the main contact for project finance related matters. Odesa-based Interlegal is highly recognized for its complex maritime practice. The firm represents ship and cargo owners, insurers, freight forwarders, charterers, carrier lessees in maritime, shipping, transportation and logistics, including assignments intersecting with international trade
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Transport: Aviation, Maritime, Shipping
Maritime & Shipping
In 2016 the global shipping industry found itself struggling to cope with negative changes brought about by the crash of the financial market in 2008. The full restoration of shipping markets is an issue for the future. Despite small improvement in the European market, the Japan and USA markets are showing zero growth or even stagnation. Modest Chinese growth is not enough to cause substantial demand in maritime industry on a global scale. The market is still showing overcapacity. The 2016 is also marked by the challenging bankruptcy of Hanjin, the largest Korean container carrier and the seventh largest in the world. This bankruptcy appeared to be the biggest in the container shipping industry since the 1986 but far more complex because as a member of the CKYHE Alliance, Hanjin’s problems impacted its partners, namely COSCO, “K” Line, Yang Ming and Evergreen Line, which shared space with the carrier on ships. Hanjin’s bankruptcy would inevitably have an impact on the other alliances of ocean carriers as their members would seek for security against each other to minimize the risks of insolvency of any alliance member, which may lead to a more conservative approach towards the conditions of the vessel sharing agreements. As usual, Ukrainian maritime law practice include charter party and bill of lading disputes, cargo and insurance, claims as well as personal injury and compensation claims. The liberalization of port industry led to execution of a number of long lease land agreements between Ukrainian port authorities and private port operators which give them certainty to expand their investment activity. Cases related to violation of the Crimea sanctions regime are still important and include now not only administrative cases but also criminal ones, with detentions, arrests and fines imposed within the framework of contradictory court practice. Whilst ship arrest cases appear to be considered more often by Ukrainian courts, current inconsistency between Ukrainian legal procedures and International Brussels Convention (1952) rules make such applications not an effective legal instrument in the majority of cases. One may hope that new codes of procedure which could be adopted by the Ukrainian Parliament in 2017, containing novellas which are in line with the rules of the Brussels Convention, will improve the situation with Ukrainian ship arrest practice.
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During 2016 the maritime and law practice of ANK Law Office acted as legal counsel to leading world P&I Clubs, insurance companies on issues related to payment of compensation to seafarers arising out of employment contracts. For example, the office acted as legal counsel to SKULD P&I Club in the case on payment of compensation to the widow of a deceased seaman who died on board a vessel. The firm acted as legal counsel to Ingosstrakh Insurance Company in relation to the insurance event with the Ukrainian tug Neftergaz-67, which collided with bulk vessel Yao Hai in the South China Sea. The team also provided legal support for deals on the sale and purchase of vessels and marine yachts, vessel mortgages and helped clients to settle conflicts related to damage or shortage of cargoes under the contract of sea carriage and other maritime cases. Major clients in 2016 are British Marine, BRITANIA P&I, Monomakh Insurance Company, MSC Shipmanagement, NORTH P&I, London P&I, SKULD, West of England P&I, Ingosstrakh, TT Club, UK P&I Club. Alexander Kifak and Artyom Volkov act as responsible partners. In 2016 Sergeyevs’ Law office, an Odesa-based boutique with a large proportion of maritime clients (SC V. Ships, SC CMA Ships Ukraine, ABC Maritime LLC, Wilhelmsen Marine Personnel Ltd, BSM Crew Service Centre Ukraine Ltd, SC Danaos Ukraine, Deep Sea Supply Crew Ltd) in their portfolio, has been working on shipping and foreign
1. 2. 3. 4. 5.
ECOVIS Bondar & Bondar Ilyashev & Partners Ante Law Firm Asters Baker McKenzie
NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Oleg Bondar (ECOVIS Bondar & Bondar) Oleksiy Demyanenko (Asters) Andriy Guck (Ante Law Firm) Roman Marchenko (Ilyashev & Partners) Viktor Moroz (Suprema Lex)
LEADING FIRMS 1. 2. 3. 4. 5.
Interlegal ANK Law Office Ilyashev & Partners Sergeyevs’ Law Office PRAVO Law Office
NOTABLE PRACTITIONERS
LISTED IN ALPHABETICAL ORDER
Ivan Kasynyuk (AGA Partners) Alexander Kifak (ANK Law Office) Andriy Kostin (PRAVO Law Office) Nikolay Melnykov (Interlegal) Arthur Nitsevych (Interlegal) Andriy Selyutin (Arzinger) Yuriy Sergeyev (Sergeyevs’ Law Office) Artem Skorobogatov (Interlegal) Tatiana Titarenko (LeGran.TT) Artyom Volkov (ANK Law Office)
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Business Center Saksagansky, 70 Saksaganskogo Street, Kyiv, 01030, Ukraine Tel.: +380 67 776 6130 E-mail: info@goldengate-law.com Web-site: www.goldengate-law.com
Aviation
PRAVO Law Office
LEADING FIRMS
INTERLEGAL
24B Genuezska Street, Odesa, 65009, Ukraine Tel.: +380 482 33 7528 Fax: +380 482 33 7529 E-mail: odessa@interlegal.com.ua Web-site: www.interlegal.com.ua
SERGEYEVS’ LAW OFFICE 11/6 Armiyska Street, Office 2a, Odesa, 65058, Ukraine Tel./Fax: + 380 487 37 7228 E-mail: office@srgv.com Web-site: www.srgv.com
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Maritime & Shipping
Andriy KOSTIN
matters. The firm’s caseload includes the sale of the floating dock, representing ISRZ due to debt recovery for wharf dues from foreign-going vessels as well as successfully settling numerous incidents under maritime law. Arthur Nitsevych, Nikolay Melnykov, Natalia Myroshnychenko and Artem Skorobogatov are well-known names in the maritime niche.
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Transport: Aviation, Maritime, Shipping
investment projects, including accompaniment of current activity of their clients with the use of international and foreign law, and representation of interests in foreign jurisdictions.Yuriy Sergeyev and Svetlana Sergeyeva led the practice. Odesa-based PRAVO Law Office is engaged in maritime and corporate law, as well as commercial litigation and arbitration serving various international and Ukrainian clients. Ship arrest is one of the practice areas of their activity. Andriy Kostin, managing partner, is recognized attorney in maritime law. Last year he was included in a recommendatory list of arbitrators of the Maritime Arbitration Commission at the Ukrainian Chamber of Commerce and Industry. Arzinger provided legal support to a major domestic trader and producer of vegetable oils and fats with respect to investment and development in the port of Yuzhny. The team also supported the construction of a sea grain terminal allowing the maintaining of marine vessels for the organization of agricultural exports and represented an international logistics company in a dispute on the termination of an investment activity contract and of a mortgage contract. Odesa-
based partner and head of South-Ukrainian branch Andriy Selyutin is a key contact. Maritime law is the core focus of Odesa-based LeGran.TT. The team represents clients before Ukrainian courts and international arbitration courts in various matters in the area of maritime law. The expertise given related to charter party issues, cargo interests, shipping agreements, accidents, employment issues, payment claims. Olympic Coupe International, a sea port operator, was represented in USD 8 million tax disputes with the Ukrainian tax authorities related to alleged simulated contracts involving the parties as well as in a dispute with a Ukrainian sea port authority on discounts for access to port terminals. Transship, an industry leader in roadstead cargo trade and operations, was represented in matters of vessel arrests in the Nikolayev and Odesa Sea Ports, also a client’s employee, master of the Jupiter vessel, was represented before the European Court of Human Rights in an international dispute on illegal administrative claim for alleged non-declaration of goods in Nikolayev Sea Port. Tatiana Titarenko, managing partner, is the key individual. AEQUO focuses on infrastructure and transport issues across a variety of sub-sec-
tors, including roads, ports, warehouses and other commercial logistics, and aviation, marine, railroad and automobile. Last year the firm acted for some significant infrastructure clients in Ukraine, including TIS Group of Terminals and Illichivsk (Chornomorsk) Grain Port. Partners Denis Lysenko and Yulia Kyrpa head a multi-force practice. Reputable Vasil Kisil & Partners advised AWAS, international aircraft owner and lessor on Ukrainian law matters on corporate, debt and securities restructuring due to the change of financing partner from BNP Paribas to Wells Fargo Bank. Overall transactions involved restructuring of legal ownership to a number of aircrafts operating in 30 jurisdictions. Specific aviation law experience is part of the firm’s remit. The firm also represents an international shipping company in the insolvency case of Black Sea Shipping Company (BLASCO) and acts for logistics company Manushar Ukraine in a dispute with the tax authorities. Partners Oleg Alyoshin and Alexander Borodkin are noted as key contacts. In 2016 the Kyiv office of CMS Cameron McKenna advised clients on potential transport infrastructure transactions and were actively involved in the development of new
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Education:
Yuriy SERGEYEV Managing Partner, Sergeyevs’ Law Office. Ph.D. in Law, Attorney-at-law, Associate Professor of the National University Odesa Law Academy, Head of the Ukrainian Bar Association Branch in Odesa Region
www.srgv.com Tel.: +380 (48) 737 8228, +380 (48) 737 7228 E-mail: office@srgv.com
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LLM (summa cum laude), Odesa State University named after I.I. Mechnikov (1996) Ph.D. in Law, Odesa National Academy of Law (2001) Certificate in Maritime Law and Shipping Contracts, Lloyd’s Maritime Academy (2016).
Practice Areas:
Maritime Law, Commercial, Corporate, Labor Law.
Languages: Ukrainian, Russian, English.
Professional experience:
Yuriy Sergeyev is managing partner of Sergeyevs’ Law Office recognized as one of the leading firms located in Odesa and Southern Ukraine specializing in Maritime Law. As the leader of the team he had built over the years, Yuriy Sergeyev carries out permanent legal support referring to various infrastructure & investment projects; shipowners, representation of ship managers and crewing (manning) full legal support; death and personal injury claims; ship arrest and release; cargo claims, etc. Hundreds of complex maritime cases, including numerous insurance-related disputes, have been effectively resolved thanks to the 20 years of expertise possessed by Yuriy Sergeyev. In addition to Maritime Law, Yuriy Sergeyev acts as one of the leading practitioners in commercial, corporate law and labor law. A variety of matters in these areas include dealing with foreign representative offices, branches and enterprises with foreign capital; commercial contracts; foreign investment; taxation issues, etc. Yuriy Sergeyev’s experience in private practice is enriched and supplemented by his active involvement in educational, public and social projects. Yuriy Sergeyev is a member of national and international associations, including the Association of Personal Injury Lawyers, Seafarers’ Rights International (International Centre for Advancing the Legal Protection of Seafarers), Shiparrested (Affiliation of maritime law experts handling the arrest and release of vessels), Ukrainian Bar Association, etc. Since 2010 Yuriy Sergeyev has been an expert of the International Labour Organization (regarding ILO Maritime Labour Convention, 2006).
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IN UKRAINIAN LAW BY PRACTICE AREAS ⁄ INDUSTRIES Transport: Aviation, Maritime, Shipping legislation necessary to facilitate private investment in Ukraine’s infrastructure. The firm advised MV Cargo on the USD 100 million joint venture with Cargill for the construction of a new grain terminal in the Ukrainian Black Sea port of Yuzhny. The lead partner is Vitaliy Radchenko. The year 2016 was a fruitful one for the transport, maritime and shipping practice at Eterna Law. The firm provides legal services with respect to investing in the port infrastructure of Ukraine. Oleh Malskyy, partner and head of corporate and M&A, was at the forefront of clients instructions. Eugene Blinov and Maksym Uslystyi were also actively involved in the practice development.
The rapidly growing Ukrainian law firm SupremaLex is a new name in the aviation and maritime fields. The firm provides legal support to shippers and servicing companies in aviation, vehicular transport and carriage of goods by sea. Clients include Khoriv-avia, Ukrainian Helicopters, Ukraine International Airlines, Imperator-avtotrans, The great bear (BM-TRANS), Cordo International, Yunico Logistics Baku. Last year the firm supported a dispute on failure to carry out freight international shipping terms by a Ukrainian carrier, and protected the rights of an aviation company to intellectual property objects in an unfair competition case. Managing partner Viktor Moroz is the main rainmaker and project leader.
AGA Partners advises international traders and ship-owners in the course of transportation of goods by sea. Recent cases in maritime and shipping field concern advising clients on issues of recovery demurrage and detention costs that have arisen during fulfilment of international sale contracts. Ivan Kasynyuk and Irina Moroz act as lead partners.
Gramatskiy & Partners is traditionally active in transportation matters. In 2016 the firm worked for a sizeable pool of projects such as signing of general cooperation agreements between Ruskon Ukraine, Finrostorg Group and stevedoring and survey companies; supports acquisition and registration of vessels by private individuals; supported transit transportation and transshipment of
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goods from vehicles to the sea. The practice is coordinated by Iegor Ignatichev. The transportation practice of KM Partners includes supporting investment in projects for the creation, reconstruction and operation of transport infrastructure, as well as providing comprehensive support for those relationships that arise in the provision of freight services between different transport institutions, businesses and customers. Alexander Minin and Maxim Oleksiyuk are the lead partners. Lviv-based Advice Group acted as the sole legal advisor in providing comprehensive services to Austrian Airlines AG in its unveiling of a new Client Services Centre in Lviv. The case was led by partner Oleh Kyryievskyi. Attorneys’ Association Gestors acted as legal advisor to Chornomornaftogaz with regard to controversial issues of the return of the Titan-2 crane vessel to its owner. The project is being fulfilled under the guidance of Andriy Tsvyetkov.
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