News (#01-02 January-February 2020)


Court discovered allocation of illegal agricultural subsidies in 2018

On 10 December Kyiv City Court of Appeals found unlawful and cancelled the resolution of the Cabinet of Ministers on distribution of state subsidies in the agricultural sector of Ukraine of 7 February 2018.

The court partially upheld the claim of the Ukrainian Agrarian Council, which means that the said resolutions have lost their force and are no longer valid. The legislation does not provide for the mechanism of repayment of funds received on the basis of the above-mentioned resolutions.

Following the decision of the Court of Appeals, the Cabinet of Ministers has the right to file a cassation.

Six months ago, the Verkhovna Rada filed documents to the NABU confirming unfair distribution of state subsidies in the agricultural sector in 2017-2018, according to the UAC.

According to the Agrarian Council, in 2018, in Ukraine only one company received compensation in the amount of more than UAH 150 million for one facility. That company was Myronivsky Hliboproduct. A total of UAH 932 million was transferred from the state budget, which is almost a quarter of all state subsidies paid out in 2018.

Amicable settlement of the dispute on the terms proposed by the UAC will enable the current government to continue operations in a routine mode, and to demand the return of more than UAH 600 million worth of state subsidies received by MHP in 2018 from persons guilty of violating the law.


PrivatBank case: NBU won first victory in determining companies affiliated to bank

On 10 December the District Administrative Court of Kyiv recognized Samtek-Service LLC the affiliated entity of PrivatBank before the nationalization of the latter.

The National Bank emphasizes that they got the first victory in courts in determining the legal entities affiliated to PrivatBank.

On 13 December 2016, the NBU Commission on identification of entities affiliated to banks and verification of transactions held by banks with such entities determined Samtek-Service LLC as the affiliated person.

Later, the funds held in accounts opened on the name of Samtek-Service LLC were exchanged by an authorized person of the Deposit Guarantee Fund for additional issue of shares and sold in the process of withdrawal of the insolvent PJSC CB PrivatBank from the market with the participation of the state of Ukraine.

The National Bank hopes that such case law will be applied by other courts when considering relevant lawsuits on the judicial review of issues related to PJSC CB PrivatBank. As of today, more than 40 such claims have been filed with the National Bank to appeal against the affiliation with the bank. It should be noted that it was the District Administrative Court of Kyiv that in April 2019 declared PrivatBank’s nationalization illegal.


EU imposed another fine on Google worth EUR 150 million

France has imposed a fine of EUR 150 million on the Internet giant Google for using its dominant position in the search engine advertising market.

French antitrust authorities have claimed that the rules of the Google Ads advertising platform are not transparent and are difficult to understand.

The American company has also been ordered to clarify advertising policies and the procedure for blocking the accounts of advertisers.

The investigation of Google policy was initiated following the statement filed by Gibmedia, a French company that manages a variety of websites. Google blocked Gibmedia from its advertising platform in 2015.

Google has already stated that they will appeal against the decision adopted by the French antitrust authority. The company’s representative also explained that Gibmedia’s activities were terminated, as Internet users “expect protection from exploitative and offensive advertising”.

Gibmedia advertised sites that cheated people who pay for services under unclear billing terms. We do not wish this kind of advertising appear on our systems, so we have suspended Gibmedia activities and refused from advertising revenue to protect consumers from damages, the representative added.

It is well known that EU antitrust authorities have also conducted investigation of Google for advertising on search engines, following which in March the company was fined EUR 1.49 million for illegally interfering in the services of other companies through its own product, Adsense.


Swiss court ordered RF to pay indemnification to Ukrainian companies

The Federal Court of Switzerland has ordered Russia to pay 80 million Swiss francs (USD 82.1 million) to indemnify 12 Ukrainian companies, whose property was confiscated following annexation of Crimea in 2014.

The court rejected the appeals filed by Russia against decisions made by the International Court of Arbitration in Geneva last April.

Russia argued that the Geneva court had no jurisdiction to make rulings on the case as in doing so it determined the status of Crimea.

It also argued that the argument put forward by Ukrainian companies stating that they should be protected by the Investment Protection Agreement concluded between Russia and Ukraine in 1998 was inapplicable.

According to the Federal Court of Lausanne, the jurisdiction of the Geneva court cannot be called into question. At a preliminary hearing held in October 2018 It was already confirmed, when the court also rejected Russia’s argument about the agreement from 1998.

In 2015, 12 Ukrainian companies, including Ukrnafta, which filed the first claim, and 11 other Ukrainian companies, filed another claim to indemnify damages at the Permanent Court of Arbitration, aka The Hague. Some of these companies were previously connected to the group of companies owned by Ihor Kolomoyskyi.

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