Export-import bank SAUDI Exim Bank (Saudi Arabia) will provide state-owned Ukreximbank (Kyiv) with $ 25 million in financing as the first stage of support for importers of Saudi goods, services and products in the Ukrainian and neighboring markets.
The framework agreement signed on October 13 during the Berne Union’s Annual General Meeting in Budapest (Hungary) is the first in the history of Ukreximbank to be signed with Saudi Arabian banks, the Ukrainian bank said.
“The beginning of our cooperation with SAUDI Exim Bank will give impetus for the further development of international cooperation between Ukraine and the Kingdom of Saudi Arabia, will contribute to the implementation of joint projects in various sectors of the economy and the strengthening of trade ties, which have been developing intensively in recent years,” deputy chairman of the bank’s board Oleksandr Schur said.
Earlier in August, SAUDI Exim Bank CEO Saad Alkhalb announced the approval of more than 80 funding requests for 9 billion Saudi riyals (about $ 2.4 billion) for more than 46 countries over the course of the year to fill funding gaps and reduce export risks for Saudi products in the world. All these decisions were made as part of the implementation of Saudi Vision 2030, which provides for reducing the dependence of the economy of Saudi Arabia on oil, according to the Ukraine in Arabic online edition.
According to the information on the official website, SAUDI Exim Bank was established in 2020 and is the state export agency of the Kingdom of Saudi Arabia. The bank focuses on building capacity in high-growth industries, improving Saudi Arabia’s trade balance and strengthening the economy in non-oil industries, and provides exporters with the opportunity to promote the development and diversification of Saudi Arabia’s non-oil exports.
Source: Ukraine in Arabic
On October 7-8, the Kyiv International Economic Forum (KIEF) was held at the Parkovy Exhibition and Convention Center. Over 1,500 participants attended the event, during which 25-panel discussions took place. Over 120 speakers from leading international organizations and private companies, in particular the European Investment Bank, BlackRock Investment Institute, WTO, EBRD, OECD, Club of Rome, World Economic Forum, McKinsey & Company, and others, shared their vision of the future of the global economy.
The initiator of the Forum was the UFuture holding company, headed by the entrepreneur Vasуl Khmelnytsky. KIEF is a platform for the formation of a strategy for the economic development of Ukraine. The Forum is focused on organizing a dialogue between experts, business, and government, borrowing the best world experience, creating a roadmap for development, and facilitating the conversion of ideas into real actions.
In his opinion, Ukraine has significant prospects in the world market. A powerful agricultural sector creates prospects for the development of modern production in FoodTech. The government and businesses must invest more in the processing of raw materials and the creation of finished products, which creates additional jobs and contributes to overall economic growth.
According to the founder of KIEF, there is a problem with the development of the infrastructure of startups, now in Ukraine. Despite the availability of high-quality technical education, university graduates do not have a proper business education. For this, the state must create an ecosystem for the development of startups.
Vasуl Khmelnytsky noted the positive changes in the state’s approach to the development of small and medium-sized businesses in Ukraine. A positive example is the «5-7-9» lending program, which made it easier for entrepreneurs to access capital. However, according to the entrepreneur, the state has a lot to do. Thus, the share of SMEs in the structure of the Ukrainian economy is 1.5%, while in the world it is 3-4% on average. For the development of entrepreneurship, the state must conduct educational work, in particular, starting from school.
General Director of the Forum Yurii Pyvovarov noted that the country’s reputation is important for leaders of business, and the country itself. The world should understand that it is comfortable to live, work, invest, develop business here. Therefore, it is necessary to develop a long-term strategy for the development of the image of Ukraine, and KIEF has been making a great contribution to the development of this reputation for the eighth year.
“There are three major trends to be an economically successful country. First: money goes into innovations and ideas. Here we have a chance. It is necessary to develop the infrastructure of incubators, start-ups, and the state to support promising projects. The second trend is climate. There is a lot of money going there, new, more environmentally friendly production facilities are being built. The third trend is the development of production. The pandemic has shown that there are logistical difficulties in transporting from China to Europe. There is a window of opportunity in Ukraine, but it is small. Work is underway to develop production, in particular, the Verkhovna Rada adopted a draft law on the development of industrial parks. But this requires more effort,” said Pivovarov.
During the forum, the issue of investment in developing countries, their risk, and profitability were raised. If earlier it was more profitable than investing in developed countries, in the last decade the trend has reversed. And we need to understand whether Ukraine in such conditions can be attractive for foreign and domestic investors. Among the advantages of Ukraine, the speakers named low competition, which creates the preconditions for a quick return on investment and getting large profits. Another plus is that Ukraine is striving to join the European Union. This choice means harmonization of legislation and regulation with the European one, predictability, and building a level playing field. Experts named IT, infrastructure, agriculture, banking, fintech, e-commerce, and big data as the most attractive in terms of investment.
During the panel “Can Developing Markets Fuel Global Recovery?” panelists noted that the digital trend is growing all over the world, and the covid only contributes to this. Beata Harasim, the senior investment strategist at BlackRock Investment Institute, said many countries are underfunded to move to green energy. Emerging markets need additional support from wealthy countries. “Covid has helped reinforce several trends, one of which is the transition to zero carbon emissions. Countries whose economies are based on exhaustible resources should pay more and more attention to renewable energy sources,” said Beata Harasim.
One of the discussions was: “Financing the Future: Money for Sustainable Development”. Speaking during the meeting, EBRD Director for Eastern Europe and the Caucasus Matteo Patrone said that in order to achieve the sustainable development goals set by 2030, it is necessary to invest about $30 trillion, at least $1 trillion annually. The private sector should also make a contribution because the state does not have the necessary resources. The $27 trillion invested in low and negative yield bonds could be reinvested to achieve sustainable development goals, he said. He believes that the time for such investments is not lost yet. “In Ukraine and many others, there is a deviation from the goals of sustainable development. Approximately $1 billion of investments in Ukraine are under threat, ”said Patrone.
Ann Cairns, the Executive Vice-Chair of Mastercard, spoke at the panel “Economy of the 21st Century: An Era of Changes and Opportunities”. She said that Mastercard has seen a change in online shopping in the past 10 months, more than in the last 5 years. People started spending more locally, which is understandable due to widespread lockdowns. Almost a billion people received payments from their governments around the world during the period of covid. The corona crisis has intensified digitalization: we see the development of artificial intelligence and the introduction of digital currencies, as well as a huge development in the financial sector.
And Vice Prime Minister – Minister of Digital Transformation of Ukraine Mykhailo Fedorov noted that during the pandemic, technology companies developed most of all, those that are convenient: Uber, Booking and the like. They have transformed established business models. According to the speaker, states should turn into technology companies, be fast, convenient, and develop those areas where there is no business component. And the best way for Ukraine is to become the most comfortable country in the world, and this is possible thanks to technology. Digitalization has made a leap in our country, not only thanks to the pandemic but also because of a change in consumer culture and a change of government. Fedorov believes that Ukraine has made digitalization a certain pop culture, which is why we are on the right path, where convenience is a competitive advantage in the struggle for development.
KIEF remains a permanent discussion platform for developing strategic decisions for the Ukrainian establishment, business, and society. The organizers predict that next year the Forum will be even larger and expand the geography of its participants.
Siemens in Ukraine in the 2021 fiscal year (October 2020 – September 2021) has doubled the volume of orders and turnover in comparison with FY2020, CEO of Siemens Ukraine Maciej Tomasz Zielinski has said.
“Despite the COVID-19 pandemic, supply chain difficulties associated with supply disruptions, rising prices for materials 2021 turned out to be excellent from a financial point of view and the implementation of the set goals,” he said at a press conference in Kyiv in Tuesday.
Zielinski said that growth was recorded in all businesses of the company in Ukraine, including taking into account the growing demand of companies for digitalization solutions. At the same time, he did not specify the size of the company’s turnover in 2021.
As reported, the company’s initial plans for FY2021 envisaged at least maintaining turnover at the FY2020 level.
Referring to the issue of the company’s work in FY2022, Zielinski expressed his hope for the further development of all sectors.
“I hope that all sectors will develop in Ukraine. The sector where the lack of chips is most affected is the automotive industry, which is practically absent in Ukraine, and for example, the agricultural sector will develop rapidly, since it is a necessary resource for humanity, and Ukraine has a chance here [to increase supplies], including taking into account the disruption of supplies from the same Far East. And here we will continue to work, for example, with Kernel,” the CEO of the company said.
He also said that the pharmaceutical industry of Ukraine now using digital technologies can produce products at the level of European and American standards.
“I think that mechanical engineering will also develop, again due to the disruption of supplies from the Far East,” the CEO of Siemens Ukraine said.
Zielinski said that Siemens Ukraine itself continues to transform, and this year it has introduced a regime for its employees when an employee can work remotely for two or three days. According to him, today 85% of employees are vaccinated and provided with insurance in case of COVID-19 disease.
At the same time, according to him, only vaccinated or tested employees, or those with a doctor’s certificate, can work in the office.
Founded in 1997, Siemens Ukraine is a supplier of products, services and integrated solutions for energy, industry, transport, building automation and urban infrastructure. The central office is located in Kyiv, regional branches in Lviv, Dnipro, Kryvy Rih, Odesa and Kharkiv.
International arbitration proved to be thorough, efficient, trustworthy, and, thus, attractive mechanism of dispute resolution. The story, however, rarely happy-ends with obtaining an arbitral award in favour of either party. Quite often the succeeded party needs to go through recognition and enforcement proceedings in the national courts to restitute its violated rights. Such recognition and enforcement proceedings frequently become even more interesting battle terrain and create preclusive case-law in this sphere.
State’s Immunity
The decision of the Ukrainian Supreme Court issued on 25 January 2019 in case Everest Estate LLC and others v Russian Federation[1] was widely covered and discussed both in Ukrainian and foreign arbitration communities. And it is no surprise since in the said decision the Supreme Court for the first time dealt with the issue of the state immunity and enforcement of investment arbitral awards against foreign state’s assets located in Ukraine.
As a general rule a state has an immunity from a) a lawsuit against it, b) interim relief, c) enforcement of a court decision against it. This “absolute” state immunity, however, was shattered by the Supreme Court in its decision in Everest Estate LLC case.
Everest Estate LLC and others applied for recognition and enforcement of the UNCITRAL arbitral award rendered with respect to the expropriation of their property and real estate in the Crimea by the Russian Federation. The recognition and enforcement of the award was sought in Ukraine where the assets of the Russian Federation were allocated against which the enforcement could be levied. The court of the first instance granted the enforcement of the arbitral award but left out the issue of state immunity of the Russian Federation.
Having reconsidered the case the Supreme Court dealt with the state immunity of the Russian Federation and found that consenting for the arbitration under Ukraine-Russia bilateral investment treaty (BIT) which provides for contracting states’ obligations to recognize the finality and binding effect of an arbitral award rendered in any dispute arising from the BIT, the Russian Federation ipso facto waived all its jurisdictional immunities.
The case became notable since the Ukrainian court nearly stripped off the absolute immunity of the state and allowed recognition and enforcement of the arbitral award against Russia’s assets located in Ukraine.
Recognition and Enforcement of Emergency Arbitral Awards
Another investment arbitration case JKX Oil & Gas PLC & Others v Ukraine made quite a stir in arbitration community in Ukraine and abroad but not just because of the final award rendered in favour of the investors but in relation to the emergency arbitrator interim award. In fact, this was the first case where the Ukrainian Supreme Court considered the issue of enforceability of the emergency arbitral award in Ukraine.
In January 2015 the appointed emergency arbitrator rendered an interim award by which ordered Ukraine to refrain from collecting gas production royalties from the investors at the rate exceeding the previously applicable fee. JKX Oil & Gas PLC & others applied to the Ukrainian court for the enforcement of emergency arbitral award in Ukraine.
Despite the fact that the Ukrainian courts of first and appeal instances granted the recognition and enforcement of the emergency award, the Supreme Court’s position was the opposite. In particular, the Supreme Court found that enforcement of such interim award would have been contrary to the public policy of Ukraine and be considered as interference in the Ukrainian tax legislation and legislative activity.
Remarkable, that the issue of the finality of the emergency arbitral award was not considered by the Supreme Court at all. Under the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”) the recognition and enforcement of the award may be refused inter alia if the award has not yet become binding on the parties. Thus, by not inferring to the issue of the finality of the emergency arbitral award the Supreme Court indirectly construed that arbitral interim measures are enforceable in principle under the New York Convention.
Sanctions as Public Order
In 2014 the legal environment in Ukraine was highly affected by the illegal annexation of the Crimea and Russian hostilities in the East of Ukraine. A vast range of economic sanctions were introduced by Ukraine in response to the Russian aggression and, thus, lots of overseas contracts concluded by the Ukrainian companies with Russian sanctioned counterparties defaulted. This gave a rise to multiple arbitration claims brought by Russian companies against Ukrainian entities. As a result, Ukrainian courts faced the problematics of recognition and enforcement of arbitral awards amidst special economic sanctions. економічних санкцій
In cases PJSC “Avia-FED-Service” v State Joint-Stock Holding Company “Artem” two different approaches were taken by the Ukrainian court with respect to granting recognition and enforcement of the arbitral awards rendered in favour of sanctioned Russian companies.
In first case[2] the Ukrainian Supreme Court considered the issue of sanctions and public policy of Ukraine and granted recognition and enforcement of the Russian ICAC award in Ukraine. In particular, the Supreme Court found that sanctions are not part of public policy and thus did not preclude recognition and enforcement of the arbitral awards issued in favour of the sanctioned companies in Ukraine.
In the second case[3] the position of the Supreme Court was quite the opposite. During the cassation review of the case the Supreme Court overruled the decisions of the courts of lower instances and refused recognition and enforcement of the Russian ICAC arbitral award in Ukraine. In its considerations the Supreme Court took into account the legal nature of PJSC “Avia-FED-Service” (the claimant) being the entity directly related to the Russian military enterprises and the fact that further enforcement of the Russian ICAC award would be for the benefit of the aggressor-state enterprises.
In its deliberations the Supreme Court assessed also the issue of further enforcement of the arbitral award in Ukraine which in fact would have been impossible in the circumstances of the imposed sanctions. The Supreme Court inter alia found that “sanctions represent one of the new aspects of the public policy in Ukraine” and, that the recognition and enforcement of the arbitral awards is within the competence of the court, but not of the enforcement authority. The Supreme Court, however, noted that the restrictive measures (sanctions) taken by Ukraine against the Russian PJSC “Avia-FED-Service” do not terminate the debtor’s obligations, nor do they make it impossible for it to comply with the Russian ICAC arbitral award after the termination of the sanctions against PJSC “Avia-FED-Service”.
The further court practice proved that the Ukrainian courts tend to follow the second approach while considering applications for recognition and enforcement of the arbitral awards issued in favour of sanctioned companies. Hence, even if such company has a favourable arbitral award it has to wait until the sanctions are lifted (if lifted at all).
The Limits of the Enforcement
Case Ostchem Holding Limited v Odesa Portside Plant (OPP) became another notable case related to granting enforcement of foreign arbitral awards in Ukraine. Ostchem Holding Limited applied to the Ukrainian court for recognition and enforcement of arbitral award against the state-owned Odesa Portside Plant (OPP). OPP was ordered to pay to Ostchem Holding Limited approximately USD 251 million under a gas supply contract.
Following success in arbitration proceedings Ostchem Holding Limited filed its application for recognition and enforcement of the arbitral award in Ukraine. While Ostchem Holding Limited succeeded in the first instance court, the appeal proceedings in the Supreme Court, however, turned to be a backblow.
In its decision issued on 8 June 2021[4] the Supreme Court refused recognition and enforcement of the arbitral award on public policy grounds. In particular, in its decision the Supreme Court found that the enforcement of the recovery of the debt and the accrued penalty under the arbitral award would make it impossible to keep OPP in a condition safe for its proper operation and, as a consequence, may threaten man-made and environmental disasters in the Odessa region (Ukraine).
The decision of the Supreme Court, though doubtful on the legal grounds, evoke though the issue of reasonable limits of enforcement of the arbitral awards against strategic enterprises and the impact of such enforcement to public interests.
The above cases became remarkable and wildly discussed in arbitration community as they set the further trends to be followed by the Ukrainian courts while considering arbitration related matters.
[1] Case No. 796/165/2018 (https://reyestr.court.gov.ua/Review/79573187)
[2] Case No. 761/46285/16-ц (https://reyestr.court.gov.ua/Review/86903591)
[3] Case No. 824/100/19 (https://reyestr.court.gov.ua/Review/87760125)
[4] Case No. 824/241/2018 (https://reyestr.court.gov.ua/Review/97736188)
Zaporizhia Ferroalloy Plant (ZFP) in January-August this year increased its output by 0.7% compared to the same period last year, to 139,810 tonnes.
As the Ukrainian Association of Producers of Ferroalloys and Other Electrometallurgical Products told Interfax-Ukraine, over eight months of the year, the plant reduced production of silicon manganese by 29.4%, to 46,310 tonnes, but increased output of ferrosilicon – by 34.4%, to 53,840 tonnes, and ferromanganese – by 11%, to 34,840 tonnes.
The enterprise also increased production of metallic manganese by 2.7 times, to 4,820 tonnes.
In August, 21,000 tonnes of ferroalloys were produced.
Zaporizhia Ferroalloy Plant is one of three Ukrainian manufacturers of these products. The share of the domestic market of its supplies is 30-35%. Products are exported to the CIS countries, the European Union, Asia and Africa.
Ferroalloy enterprises of Ukraine in January-August of this year increased their production by 8% in total compared to the same period last year, to 587,620 tonnes, including 88,930 tonnes produced in August.
As the Ukrainian Association of Producers of Ferroalloys and Other Electrometallurgical Products told Interfax-Ukraine, in January-August 2021 production of silicon manganese at Zaporizhia and Nikopol Ferroalloy Plants increased by 11.3%, to 458,360 tonnes. At the same time, the total production of ferromanganese at three plants decreased by 22.1%, to 70,600 tonnes: Zaporizhia, Nikopol and Kramatorsk Ferroalloy Plants (Kramatorsk plant was idle in January-August 2021, while in the same period of 2020 it produced 34,090 tonnes).
In addition, in Ukraine, production of ferrosilicon (equivalent to 45% ferrosilicon) increased by 34.4%, to 53,840 tonnes, and metallic manganese – by 2.7 times, to 4,820 tonnes.
Pokrov (previously Ordzhonikidze) and Marhanets Mining and Processing Plants (both located in Dnipropetrovsk region) which extract and concentrate manganese ore, in January-August 2021 produced a total of 1.122 million tonnes of manganese concentrate, which is 3.8% lower compared to January-August 2020. At the same time, Marhanets plant produced 364,100 tonnes of concentrate (a decrease of 1.06% compared to the same period in 2020), and Pokrov plant produced 757,940 tonnes (a decrease of 5.1%).
In January-August 2021, Pokrov Mining and Processing Plant also produced 195,040 tonnes of iron ore sinter (93% more compared to the same period in 2020), supplying it to Dniprovsky Metallurgical Plant (DMZ), part of DCH Steel from DCH Group of businessman Oleksandr Yaroslavsky.
