12:15 21.01.2013

Ukraine's High Economic Court upholds rulings obliging Ukraine to pay UESU debt to Russian Defense Ministry

3 min read
Ukraine's High Economic Court upholds rulings obliging Ukraine to pay UESU debt to Russian Defense Ministry

The High Economic Court of Ukraine has upheld rulings by Kyiv Economic Court and Kyiv Economic Court of Appeals obliging the Ukrainian government to pay over UAH 3.1 billion (about $390 million) in debts of United Energy Systems of Ukraine (UESU) Corporation to the Russian Defense Ministry.

The panel of judges made the ruling on Monday upon hearing the appeal of the government, the State Treasury and the UESU Corporation with regard to the decisions of the first-instance and appeal courts.

The decision is final and cannot be challenged.

As reported, the Russian Defense Ministry filed at Kyiv Economic Court a lawsuit against the Ukrainian government for the non-payment of UAH 3.239 billion under a criminal case on the activities of the UESU Corporation. The plaintiff also asked the court to summon the State Treasury Service of Ukraine as a third party on the side of the defendant in the case. The UESU is also a third party on the side of the defendant in the case.

The Russian ministry claims that, in the 1990s, the UESU, which was then headed by former Ukrainian Premier Yulia Tymoshenko, failed to meet its commitments on supplies for the Russian military under a 1997 agreement. The then Ukrainian Prime Minister Pavlo Lazarenko allegedly provided state guarantees that the commitments would be fulfilled.

UESU representative Oleksandr Kovalchuk said in court that Lazarenko had made promises that the UESU would meet its commitments in letters, and that they could not be legally qualified as state guarantees. Kovalchuk also said that alleged pressure from the Ukrainian government had prevented the UESU from fulfilling its commitments.

The Ukrainian government representatives also told the court there had been no state guarantees and argued that the statute of limitations made the suit invalid.

On September 19, 2012 Kyiv Economic Court partially satisfied a suit from the Russian Defense Ministry concerning a debt accumulated by the UESU, ordering Ukraine to pay UAH 3.11 billion ($400 million) to Russia's defense agency.

On September 25, 2012 the Cabinet of Ministers of Ukraine filed an appeal against the ruling of the Economic Court. The State Treasury and the UESU also appealed against the decision. The agencies' appeals were united in one proceeding.

On October 11, 2011, Pechersky District Court in Kyiv sentenced Tymoshenko to seven years in prison for overstepping her authority when signing 2009 gas contracts with Russia. She has served her sentence in Kachanivska Penal Colony in Kharkiv since late December 2011. Currently the ex-premier is undergoing treatment at a Kharkiv-based hospital.

On December 3, 2012, Kyiv Economic Court of Appeals upheld the ruling by Kyiv Economic Court obliging the Ukrainian government to pay the debt of the UESU Corporation to the Russian Defense Ministry.

On December 17, 2012, the Justice Ministry of Ukraine filed a counterclaim to the High Economic Court of Ukraine against a ruling of the economic court of appeals on the payment of the debts of the UESU by Ukraine to the Defense Ministry of Russia.

On January 21, 2013, Ukraine's Prosecutor General Viktor Pshonka said that the Ukrainian government has started paying the debt of the UESU to the Russian Defense Ministry under a ruling of Kyiv Court of Appeals. According to him, Ukraine has paid UAH 15 million to Russia.

Pshonka also announced that the criminal case on the murder of parliamentarian Yevhen Scherban and the criminal case on the embezzlement of public funds to repay debts of the UESU to the Russian Defense Ministry have been united in one case.

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