Container Terminal Illichivsk turns to Higher Business Court for investment protection

Odesa, March 5, 2015. Private enterprise Container Terminal Illichivsk (CTI) appeals to the Higher Business Court of Ukraine to review the court ruling on termination of the joint venture agreement concluded by CTI with the state enterprise Illichivsk Commercial Seaport (ICSP) in 2005. CTI challenges the court ruling, because termination of the joint venture agreement violates the rights of investors, is contrary to the Law on Sea Ports of Ukraine and leads to extremely negative social consequences. In 2014 ICSP, without holding the contractual preliminary negotiations with the investor, regardless of the state guarantees that the investment agreements will continue to have effect, filed a court claim to terminate the joint venture agreement with CTI. On January 27, 2015, nonetheless, Odesa Regional Economic Court decided to terminate the agreement. CTI appealed the court ruling. On March 4, 2015, Odesa Business Court of Appeal sustained the decision of the court of primary jurisdiction. CTI considers the decision to be unlawful, which violates the rights of investors and that could cause significant social harm. Notably, investors and beneficiaries of CTI (including investment fund Siguler Guff & Company, the United States, and SRR Deutschland, Germany) have already invested $56 million in the joint venture with ICSP. As reported earlier, the management and the staff of CTI turned to the Ukrainian president with an open letter, pleading to ensure objective and impartial resolution of the present dispute between CTI and ICSP. "Private enterprise with foreign investments Container Terminal Illichivsk is on the verge of terminating its operations as a result of the direct disregard of the Law on Sea Ports of Ukraine by the state enterprise Illichivsk Commercial Seaport," reads the open letter. "In addition to violating the rights of foreign investors, the arbitrary termination of the joint venture agreement will implicate a number of negative consequences for the social welfare of 600 CTI’s employees, who will lose their jobs and thus their only source of income," state the authors of the collective appeal. "Moreover, termination of the agreement in question will oblige the state enterprises, parties to the agreement, to return the received investments as well as compensate the lost profits (a total of about $206 million). This, in turn, will lead to negative consequences for the solvency of these state-owned enterprises and affect the social welfare of Ukrainian citizens – employees of these companies," points out the open letter published in the Mirror Weekly newspaper (Dzerkalo Tyzhnia) on February 28, 2015. Additional information can be found at www.kti-terminal.com or via phone +38 (063) 725-22-22 or e-mail: [email protected].