ODESA, DECEMBER 30th, 2010, CONTEXT-PRICHERNOMORIE — The Supreme Commercial Court of Ukraine has declared the joint venture agreement between Illichivsk Port and Ukrtranscontainer null and void, Context-Prichernomorie correspondent reports.

The agency has been informed about it today, 30 December, at the press office of GE Illichivsk Commercial Sea Port.

According to their information, 29 December, the Supreme Commercial Court of Ukraine satisfied the cassational appeals of the Prosecutor’s Office, the Ministry of Transport, Illichivsk Port and its trade unions. The cord declared its final decision as to the argument of many years going on between the port and Ukrtranscontainer company recognising joint venture agreement No 435O null and void.

Thus, the press office added, the Court denied re-hearing the case taking into account newly disclosed circumstances leaving the previous decision with no changes.

The decision is in force, since announced.

As the Context-Prichernomorie previously reported, 12 May Economic Court of Odesa Oblast heard a case initiated by the Prosecutor’s Office in Odesa Oblast on behalf of the Ministry of Transport and Communications of Ukraine and Illichivsk Merchant Sea Port against Ukrtranscontainer.

In course of hearing the case Ukrtranscontainer was demanded to provide documents that, in the Prosecutor’s Office’s opinion could prove the company had broken the articles of the agreement and the order of their execution.

At that, Ukrtranscontainer ignored the court’s demand and refused to provide the court and the parties with the documents of cooperation.

Having examined the evidences and the parties’ opinions, the Court delivered its Judgment annulling the agreement due to Ukrtranscontainer’s violation of the articles of the agreement.

The press-service reminded, the Prosecutor’s Office appealed the Court to annul the cooperation agreement and signed by State-owned Enterprise Illichivsk Merchant Sea Port and Ukrtranscontainer, pointing at numerous cases of the agreement by the company.

Prosecutor’s Office informed the main infringements were Ukrtranscontainer’s ill-timed fee payment (and as the result violation of the planned indices of development of the container terminal), paying the fee by the currency not specified in the contract, self-willed capture and use of the property that had not been rendered for mutual activity, financing their own spending at the expense of mutual activity, the company’s refute to cover the port’s expenses related with mutual activity.

Official statement of the Port says it in reply to the information spread by National Container Company. Full text of the document is available at the agency’s disposal.

The statements in particular says “The actions of the administration of Ukrtranscontainer (founded by NCC) in June-July of the current year were directed at blocking the operation of the container terminal, violating the agreements signed with container lines and forwarders. These actions lead to breaking the deadlines in operation of the ships and cargoes, to losses of budget payments. A broad campaign has been started in the media aiming at discreditation of the leading container port of Ukraine and the Black Sea Region. Juggling the facts and economic indices some periodicals spread tendentiously represented information, thus deluding the citizens, the real current situation and the role of agreement No 435-O dated 22 June 2005 are distorted.

“To provide the community with true information, the port’s authorities officially state: execution of the agreement’s articles negatively impacted the port’s economic situation for the following reasons listed further.

The port’s contribution to mutual activities was many times underestimated. At the in some points it reached 37 times. According to the agreement the port was deprived of a possibility to invest in its own container terminal; the port does not influence the process of realization of investment projects, which is unacceptable for the container terminal functioning as a subsidiary of the entire port complex.

Not having created a single object, Ukrtranscontainer receiving income yet in 2006 using the capacities entirely belonging to the port. As a result the port’s share in money equivalent, thus its income for the terminal’s operation made ¼ too. Ukrtranscontainer has been growing proportionally to Illichivsk Merchant Sea Port’s losses”, — the statement says.

“By their actions and seeking super-profit at any cost, NCC discredits the idea of mutual cooperation itself of state-owned enterprises with foreign investors creating negative image for internationally recognized practice of state-private partnership”, according to the document.

“In spite of this, GE Illichivsk Merchant Sea Port will keep within the acting legal norms and its competence taking all possible measures to provide rhythmic operation of container capacities, their development, and improvement of the service level for cargoes and our partners transport”, the document summed up.

Later, the press-service reported: “26 August the Supreme Commercial Court of Ukraine made a Judgment concerning Ukrtranscontainer’s claim against the port about the cancellation of the cooperation agreement between the Port and UKrtranscontainer.

This Judgment cancelled that of the court of original and appellate jurisdictions.

“Informing about it we think it necessary to inform this decision is not final being just another stair in the process of a complicated judicial argument. The port’s administration believes this decision to be illegitimate and unfair, this is the reason why the court will appeal to the Supreme Court of Ukraine.

In particular, we consider the absence of General Prosecutor’s Office’s statement dated 04.08.2009 in the case materials to be the element of unfairness”, — they stressed at the press-service.

“The position of the port’s administration remains the same – this agreement is fettering and breaking the interests of both the port and the state, so we will further take all legitimate measures to establish justice and protect our rights. The result of this struggle is that the question of rendering berths No 2 and 3 to joint use has been removed from the agenda.

We ask to observe complete calmness and not to undergo provocations – they container terminal and other property are in the ports property and the decision saying to render it into operation to other bodies will be made legitimately only.

The port’s administration has no intentions to stop their persistent and legal actions to protect the governmental enterprise and its employees.

There is no full stop in this argument yet”, — they emphasized at the press-service.

krtranscontainer intends to initiate a suit against Illichivsk Commercial Sea Port.

6 November 2009, UTC declared they were initiating a suit against the port.

“Both NCC and UTC confirm their previous statements and prepare an appeal to the International Arbitrage with the claims of the foreign shareholders of the Ukrtranscontainer Company against Illichivsk Commercial Port as a state-owned enterprise. They have all the necessary ground for suchlike appeal, as an international legal body, Ukraine signed and ratified an intergovernmental agreement in 1994 regulating legal bases of private financing. In compliance with this international act, Ukraine is to provide security of foreign investments”, they reported in the press-service.

23 June the Association Union of Port Operators addressed President Yanukovich asking for help in the conflict between Ukrtranscontainer (UTC) and Illichivsk Port.

The appeal signed by the President of the board of managers Oleg Kutateladze reads: “Russian investor having believed the statements of the former president and former government invested in reciprocal activities about USD 56 million for construction of a container terminal. Further on, acting on the basis of the Ministry of Transport’s Bill, the joint activity agreement was juridically cancelled 13.11.2009 by the Supreme Court of Ukraine, though the Supreme Commercial Court of Ukraine supported UTC’s position. If the case were heard in 2010, then, in accordance with the Decision of Constitutional Court of Ukraine, the court of the last instance would be the Supreme Commercial Court of Ukraine. However, the Decision of the Supreme Court of Ukraine had been carried out before the Constitutional Court gave its official construction as to the matter. Taking into consideration the clarification provided by the Constitutional Court, the decision of the Supreme Court seems very disputable, however this circumstance has a legal sense.”

“I will dare express my true hope that you, being the Protector of the Constitution, take measures to protect the rights of the investors and will help a member of our association protect their rights”, Mr Kutateladze proceeds in his appeal.

18 June the founder of Ukrtransconatiner (UTC) Transportation Investment Limited (TIL), being part of National Container Company (NCC) notified the Cabinet of Ministers of Ukraine they were preparing to bring in a suit in compliance with Article 8(1) of the Agreement of the Government of Ukraine and the Government of the United Kingdom of Great Britain and Northern Ireland on Assistance and Protection of Investments dated 10 February 1993, Context-Prichernomorie correspondent reports.

According to their information, this suit is being prepared claiming to cover loss caused to TIL as the Stated represented by GE Illichivsk Commercial Sea Port has violated their rights as investor in UTC – the port and UCT signed joint venture agreement, which was unilaterally cancelled henceforth.

“As a result the investor suffered a loss amounting to USD 1.4 billion, including possible income for 35 years. Moreover, the State of Ukraine keeps using the equipment gratis not belonging to it for over a year.

In compliance with the intergovernmental agreement between Ukraine and Great Britain, Ukraine has three months since the notification has been received to settle the conflict with the investor peacefully or deal on the arbitral body”, they added at the press service.

According to UTC, “In their notification the company stresses they would like to settle the long-lasting conflict fairly and in a due way within the shortest terms. However, if the agreement cannot be achieved the investor will have to appeal to the international arbitration for hearing the case, as it is provided by Article 8(2) of the Agreement.

TIL forwarded their notification to the President of Ukraine, Prime Minister, Ministry for Foreign Affairs, Ministry of Justice, Ministry of Transport and Communications, Ministry of Finance of Ukraine, Governor of the Odesa Oblast, and Illichivsk Commercial Sea Port and I expecting their practical steps in solving the conflict.”

As the agency reported before, 12 May Economic Court of Odesa Oblast heard a case initiated by the Prosecutor’s Office in Odesa Oblast on behalf of the Ministry of Transport and Communications of Ukraine and Illichivsk Merchant Sea Port against Ukrtranscontainer.

In course of hearing the case Ukrtranscontainer was demanded to provide documents that, in the Prosecutor’s Office’s opinion, could prove the company had broken the articles of the agreement and the order of their execution.

At that, Ukrtranscontainer ignored the court’s demand and refused to provide the court and the parties with the documents of cooperation.

Having examined the evidences and the parties’ opinions, the Court delivered its Judgment annulling the agreement due to Ukrtranscontainer’s violation of the articles of the agreement.

The press-service reminded, the Prosecutor’s Office appealed the Court to annul the cooperation agreement and signed by State-owned Enterprise Illichivsk Merchant Sea Port and Ukrtranscontainer, pointing at numerous cases of the agreement by the company.

According to the Prosecutor’s Office the main infringements were Ukrtranscontainer’s ill-timed fee payment (and as the result violation of the planned indices of development of the container terminal), paying the fee by the currency not specified in the contract, self-willed capture and use of the property that had not been rendered for mutual activity, financing their own spending at the expense of mutual activity, the company’s refute to cover the port’s expenses related with mutual activity.