Russia ordered to pay $159 million in compensation to Ukrainian companies in Crimea

By Natalia Datskevych.

The Permanent Court of Arbitration in The Hague has ordered Russia to pay $159 million in compensation to 18 Ukrainian companies and one individual for property seized after Russia’s occupation of the Ukrainian territory of Crimea.

The decision, issued on May 10, is the first ruling on compensation issued against Russia in the wake of its 2014 invasion and subsequent occupation of the Ukrainian peninsula. Russia claims to have annexed the territory, but this has only been recognized by a dozen-or-so states, such as Cuba and North Korea.

It is expected that the Russia will appeal against the court ruling.

The main plaintiffs were Everest Estate LLC, the builder of an apartment complex in Gurzuf and a hotel in Yalta, and radio company Zhisa, which was previously part of the 1+1 Media holding.

Some of the companies have been linked to Ukrainian oligarch Ihor Kolomoisky. According to the Prosecutor General’s Office of Ukraine, Everest Estate was associated with PrivatBank, which was previously owned by Kolomoisky.

Two other companies, Dyries and Dilayn Ltd., which were also among the plaintiffs and owned land in Alushta and Foros, had as end-beneficiaries Kolomoisky and Gennady Bogolyubov, another Ukrainian oligarch.

Another plaintiff, the Energetik Sanatorium, belonged to Kolomoisky as well.

In 2014, the Russian occupation authorities in Crimea started the “nationalization” of the assets of Ukrainian-owned private companies. The assets were confiscated by force and placed on a list of property in Crimea that was no longer considered to be Ukrainian-owned.

More than a year-and-a-half later, on Dec. 28, 2016, the Russian occupation authorities in Crimea passed a law stipulating a procedure for reimbursing Ukrainian owners for the “nationalization” of their assets.

However, it does not apply to individuals against whom criminal cases have been opened in Russia, especially those accused of crimes of extremism.

In Russia, Kolomoisky has been accused of murder and using of prohibited methods of warfare.

The Russian occupation authorities in Crimea therefore declared that Kolomoisky would not receive any reimbursements for the seizure of his property.

Subsequently, the Ukrainian billionaire sued for $2 billion in compensation from Russia for the “nationalization” of more than 100 of his assets in Crimea.

The main asset seized by the Russian occupation authorities was the PrivatBank network in the peninsula, with its 39 branches, 359 ATMs and 557 payment terminals.

Furthermore, a network of 32 gas stations in Crimea, Belbek airport, and a tank farm in Sevastopol, which Kolomoisky co-owned with Alexander Annenkov, a former deputy minister of transport of Russia, were “nationalized” as well.

The Permanent Court of Arbitration located at The Hague in the Netherlands.
Photo by Facebook/Permanent Court of Arbitration

Source: Kyiv Post

Ukraine Is Worth Fighting For

May 3, 2018

Kyiv. The new conventional wisdom is that four years after Maidan, reforms have stalled in Ukraine and corruption has consumed the leadership. But this picture is hardly true.

Certainly, the economy has stabilised, but economic growth stopped at 2.1 per cent last year. Yet a broad reform agenda is still proceeding, though everything is contentious. The most striking impression from one week of intense meetings with senior policymakers and businessmen in Kyiv is that every issue is contested. The many conflicts slow down the speed with which things move forward, but they also block reversals.

Open and transparent

Ukraine is a remarkably open and transparent society, making it easy to figure out what is going on, while the drama is multifaceted and complex. Nobody seems to be afraid. A lively and competent civil society usually starts the criticism and comes up with concrete reform proposals.

The Cabinet of Ministers is divided on almost every issue between reformers and those preferring to make money on government. Wealthy businessmen dominate the parliament, but even so the parliament promulgates surprisingly reformist laws. Ukraine has not stopped. It is fighting its internal battle over reform or corruption.

The political options remain open. Ukraine is scheduled to have presidential elections in March 2019, and parliamentary elections in October 2019, though the latter can be moved forward. President Petro Poroshenko wants to stay on for another term, but the latest poll put his rating at a miserable 12.7 per cent, while former Prime Minister Yulia Tymoshenko leads all polls, though only with 15.2 per cent. Ukrainians hold all institutions – apart from the military and the church – in low esteem.

Kyiv is a lively place. Few places have so many protests, because there is a lot to protest about. Last October, a major public manifestation in Kyiv set the political agenda for the current debate. Ukrainians oppose corruption and demand the rule of law, which tops the political agenda. Therefore, the first popular demand is the establishment of an independent corruption court, the second is for proportional parliamentary elections, and the third the abolition of parliamentary immunity.

The divide is clear

On September 15 last year, Poroshenko made an impressive speech on foreign policy at the annual Yalta European Strategy Conference in Kyiv, but when responding to a question about the formation of an independent anti-corruption court, he stated it was necessary. He preferred an anti-corruption chamber within the ordinary court system, but presently the courts are pervasively corrupt. The next day, Prime Minister Volodymyr Groisman stated softly that he did not oppose an independent anti-corruption court. The divide was clear to all.

In parallel, Ukraine was pursuing a complex judicial reform. A civil society body evaluated that one-quarter of the more than 114 new Supreme Court judges had tainted integrity, but even so last November the president swore in all but one of them. Apparently, corrupt behaviour did not preclude anybody from being appointed to the Ukrainian Supreme Court.

The botched judicial reform has convinced Ukraine’s reformers and the international community that the formation of a truly independent anti-corruption court is vital. Just before the Christmas holidays, Poroshenko submitted his much delayed proposal to parliament. Three weeks later, the International Monetary Fund, the World Bank, and the European Union each presented very similar criticism of the draft law. It would not make the judges independent, sufficiently many, or give them the relevant jurisdiction. Poroshenko passed on the responsibility to parliament. On February 28, the parliament voted for the draft law on the anti-corruption court with a large majority. The question is whether the parliament, through its amendment, will make the court truly independent.

Reform is possible

In January the Ukrainian parliament, to general surprise, also passed a draft law on proportional elections in a first reading, showing that reform is possible. The reason for the strong demand for the abolition of parliamentary immunity is the many dubious businessmen in the parliament who hide there from prosecution.

The international community maintains strong leverage in Ukraine. Unless the country receives IMF financing, it can hardly get through 2018 without a major depreciation of the Ukrainian hryvnia, which would be devastating in the 2019 elections. Politically, Ukraine needs Western support against Russian military aggression. This is well understood in Kyiv.

As usual, the IMF has a brief but firm reform agenda. Its foremost demand is an independent anti-corruption court, followed by an alignment of domestic gas prices with international prices. Next comes the legalisation of private sales of already private agricultural land. Macroeconomic policy, the traditional IMF focus, is much less controversial, since the central bank and the ministry of finance remain bastions of reform.

Stability takes hold

The battle for and against reform is going on every day. Macroeconomic stability has taken hold and can be defended, and Ukraine has proven that it can stand up against Russia’s military aggression. But the victory will not be safe until rule of law has been established so that Ukrainians can trust their property rights to home and land.

The West cannot reform a country without domestic support, but in Ukraine there is strong popular support for sensible reforms. The West needs to offer sufficient conditional support and engagement to the good causes so that the balance can tip to victory for the reformist circles.

In Ukraine, Europe and the West can stand up and deliver or fail. This is the joint front against corruption, state capture, and Russian aggression, all in one. The West had better win this battle, but then it needs to engage fully, offering more financial support, albeit with strict conditions.

The views expressed in this opinion editorial are the author’s own and do not necessarily reflect Emerging Europe’s editorial policy. 

Source: Emerging Europe