British investor Tamaz Somkhishvili sent a notification of a dispute to the Government of Ukraine on the basis of the Agreement between Ukraine and the UK on the reciprocal protection of investments
Kyiv, November 18, 2021: Tamaz Somkhishvili, the beneficial owner of the Ukrainian enterprise “Kyiv-Terminal” LLC and a long-term British investor in Ukraine, sent a notification of a dispute to the Cabinet of Ministers of Ukraine on November 8, 2021 and a proposal of amicable settlement of the investment dispute on compensation of losses in accordance with the Agreement between the Government of Ukraine and the Government of the United Kingdom of Great Britain and Northern Ireland for the Promotion and Reciprocal Protection of Investments. If the investor and the state fail to reach an amicable settlement of the dispute within three months after the receipt of this notification, the investor will be ready to commence arbitral proceedings against Ukraine.
Since 2018, British investor Tamaz Somkhishvili has not been able to compensate for his losses - $ 98.5 million, incurred as a result of the termination of the investment agreement on the reconstruction of the Kharkiv square by the Kyiv authorities.
The foreign investor made every effort for the peaceful settlement of the issue of the compensation of losses, negotiating with the representatives of the Government of Ukraine and the Kiev City State Administration (KCSA) management. The latter did not question and confirmed the investor's right to compensation for losses, but insisted that the amount of losses be determined by Ukrainian courts.
However, in the courts, representatives of the Kyiv authorities, as well as the Kyiv City Prosecutor's Office, changed their position and began to unfairly declare that “Kyiv-Terminal”, and thus the investor, has no right to compensation for any losses at all. This is despite the fact that the legislation of Ukraine directly provides for the obligation of the authorities to compensate for the losses that the authorities caused by their actions to investors.
In turn, the Prosecutor's Office of the city of Kyiv took an even more unreasonable position, stating that the investor's entry into the project with the authorities is the investor's activity at his own risk. In fact, this means that any violations on the part of the authorities are the problem of investors, not the authorities.
The investor, desperate to defend his legal rights within the national legal field and faced with an unfounded and unfair position of the authorities, sent a notification of a dispute to the government of Ukraine.
For Ukraine, which is already among the leaders of the respondent states in international investment arbitrations, this public dispute may undermine the efforts of the President and the Government to attract foreign investment and send an extremely negative signal to the international investment community.
“This case is not only a case about the fulfillment of the state's obligation to compensate the investor for losses caused by the authorities. It is also a matter of whether government authorities are capable of resolving disputes in a fair and civilized manner. In our case, the investor was faced with the exact opposite situation. However, do these authorities understand that they are questioning not only their own reputation and the reputation of the country, but also the rationality of the existence of many state institutions for attracting investments and holding numerous investment forums. What is the point of these initiatives if the state cannot fulfill its obligations on existing investments?”, — commented Taras Dumych, a legal adviser to Tamaz Somkhishvili and partner at Wolf Theiss international law firm.
For more information, please contact Maria Bukhtoiarova, a representative of CFC Big Ideas, which is a communications advisor to Tamaz Somkhishvili, by email at: firstname.lastname@example.org or by phone: +380 99 317 93 46.