10:42 04.11.2021

The Supreme Court returns the British investor's case for damages for retrial in the court of appeal

4 min read

The Supreme Court returns the British investor's case for damages for retrial in the court of appeal

Kyiv, November 4, 2021: The Commercial Court of Cassation within the Supreme Court of Ukraine partially satisfied the cassation appeal of the Ukrainian company "Kyiv-Terminal" LLC, owned by a British investor in Ukraine, Mr. Tamaz Somkhishvili, overturning the appellate court's decision regarding the refusal to compensate the company’s losses caused by the termination of the investment agreement for the reconstruction of the Kharkiv Square. The Supreme Court pointed out the mistakes made by the Court of Appeal and decided to remand the case for a new examination to the Court of Appeal.

According to the court's decision, "[…] the Court of Appeal came to an erroneous conclusion about the refusal to satisfy the claim of "Kiev-Terminal" on the basis of the latter's omission of the statute of limitations.

The appellate court did not take into account that the dispute over damages did not arise from the moment of termination of the Investment Agreement, but from the moment when the Department of Economics and Investments of the Kyiv City State Administration did not approve the amount of losses indicated in the report of the appraisal firm. Due to the Department's objections regarding the amount of losses, the parties were unable to conclude an agreement to resolve issues related to termination of the Investment Agreement, which would determine the procedure, timing and method of losses compensation.

During the new trial, the courts should take into account the above, define the actual amount of damages to the plaintiff, the beginning of the statute of limitations, taking into account the circumstances of the plaintiff's right to sue and make a lawful and reasoned decision".

In the course of a new trial, the court should take into account the above, determine the actual amount of the plaintiff's losses and define the beginning of the limitation period, taking into account the circumstances of the plaintiff's right to file a claim, and make a lawful and reasoned decision".

"Kyiv-Terminal" LLC welcomes the professional approach of the judges of the Supreme Court of Ukraine, which was demonstrated in a detailed study of all case materials and the examination of aspects that relate to both the investor and the behavior of the state bodies.

"The decision of the Supreme Court gives us a chance to continue the fight to protect our legal right to compensation for losses, and also inspires hope that the appellate court will correct the mistakes pointed out by the Supreme Court and deliver a fair decision on the case. However, returning the case to the appellate court also means loss of time again - only the last appellate trial in the case took a year and a half, and efforts to protect our rights.

Our experience shows that foreign investors planning to do business in Ukraine have to be prepared for the fact that here they may face injustice and unfair behavior even on the part of the state bodies, which is particularly disappointing. Also, investors should be prepared for the fact they will have to spend millions of hryvnias and years to defend their legal rights, the protection of which, however, is not guaranteed in the realities of Ukrainian legislation", — said Tamaz Somkhishvili, a British investor and beneficial owner of "Kyiv-Terminal".

Taras Dumych, a partner at Wolf Theiss Law Firm, which is Mr. Somkhishvili's legal adviser, added: "As a result of the consolidated position of the Kyiv authorities, which was demonstrated at the Supreme Court hearings and consisted in refusal to take any responsibility for the investor's losses and shifting responsibility between these authorities, the case turned from an investor protection case into a more serious case of public policy. We are glad that the Supreme Court did not tolerate this practice, otherwise Ukraine would risk becoming an "anti-investment" country. However, since the struggle for violated investor’s rights is still ahead, we hope not only for the fulfillment of its obligations by the state and protection of the legal rights of investors in Ukrainian courts, but also for a civilized and bona fide behavior of Kyiv city authorities in resolving the dispute, that arose as a result of their own actions".

The first hearing in the Northern Commercial Court of Appeal in this case has already been scheduled for December 6, 2021.

For more information, please contact Maria Bukhtoiarova, a representative of CFC Big Ideas, which is a communications advisor to Tamaz Somkhishvili, by email at: mb@cfcbigideas.com or by phone: +380 99 317 93 46.

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