14:00 18.08.2018

Poroshenko signs law releasing Ukroboronprom from MTC contracts with Russia

3 min read
Poroshenko signs law releasing Ukroboronprom from MTC contracts with Russia

Ukrainian President Petro Poroshenko has signed a law introducing amendments to laws of Ukraine on resolving several questions of the debt of defense enterprises, part of the Ukroboronprom State Concern, to the aggressor country and/or occupying country and providing for their stable development, the presidential press service has reported.

The law proposes mechanisms for protecting the economic activities of defense industry enterprises included in the list of state-owned objects of strategic importance for the economy and security of the state against negative consequences of the impact of legal entities registered on the territory of the aggressor country and/or occupying country or legal entities with foreign investment of the aggressor country and/or occupying country.

The law ends enforcement proceedings and enforcement measures for judicial decisions to recover debts from listed enterprises of strategic importance for the economy and security of the state in favor of legal entities of the aggressor state and/or occupying state, legal entities with foreign investment and foreign enterprises of the aggressor state and/or occupying state.

In addition, judicial proceedings in the case of bankruptcy of these defense enterprises are not allowed on applications of legal entities of the aggressor state and/or occupying state with foreign investments or foreign enterprises of the aggressor state and/or occupying state.

As reported, on July 12, the Verkhovna Rada adopted at second reading and as a whole a law releasing the state-owned Ukroboronprom concern from contractual military technical cooperation (MTC) obligations with Russia (draft law No. 6697).

The explanatory note refers to the decision taken by state leaders in 2014 to terminate MTC with Russia and cancel MTC contracts with Russia, because until 2014 it was impossible to appeal to Russian courts to recover debts, fines and other penalties, as well as for Ukrainian enterprises invoke force majeure provisions.

"Conducting legal proceedings in the territory of the aggressor state resulted in the issuance of a number of court decisions, according to which the Ukrainian party is obliged to pay amounts exceeding the cost of the agreement itself," the law says.

Violation of the rules of jurisdiction for adjudicating decisions on the territory of the aggressor state against Ukraine's defense industry enterprises resulted in the accrual of excessive fines, authors of the bill said.

According to the estimates made in parliament, the amount of indebtedness for termination of MTC contracts with Russia, including fines and interest, is an estimated UAH 3.8 billion.

Ukraine in 2014 stopped exports of military equipment and dual-use goods to Russia, citing the latter's illegal annexation of Crimea and invasion of eastern Ukraine.

The government in May 2015 terminated the intergovernmental agreement with Russia in the field of military-technical cooperation from 1993. In August of the same year, the government denounced the intergovernmental agreement with Russia on the production and scientific and technical cooperation of defense industry enterprises signed in 1993.

In August 2017, the Cabinet terminated the 2003 intergovernmental agreement with Russia on cooperation in the export of military products to third countries. In October 2017, it cancelled an intergovernmental agreement with Russia signed in 2000 on retaining the specialization of enterprises and organizations involved in the production of military products, and in November 2017, it cancelled the agreement with Russia signed in 2005 regulating the procedure for the mutual supply of weapons and military equipment, military components and services.

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