Business news from Ukraine

LEADING UKRAINIAN LAWYERS LOOKING FOR MECHANISMS TO RECEIVE COMPENSATION FOR DAMAGES CAUSED BY AGGRESSOR

Lawyers are looking for mechanisms to guarantee compensation for the losses inflicted by the aggressor on Ukrainian business, according to the results of a poll conducted by Interfax-Ukraine.
“The topic of losses and compensation is one of the most relevant among business and the legal community. Now, there is not a single guaranteed algorithm or tool for obtaining such compensation. Actually, not only Ukraine, but the whole world, for the first time in the last few decades, met with such a large-scale military conflict,” partner at Sayenko Kharenko law firm Olena Sukmanova said.
In her opinion, there may be two sources of such compensation in the future. In particular, these are compensations that can be paid to citizens and businesses by the Ukrainian state on the basis of specially adopted regulations, and compensations based on decisions of international or Ukrainian courts.
“In both cases, especially for businesses, it is very important to have enough evidence of damage and its causes,” the lawyer said.
In turn, Hleb Bialy, partner at Asters law firm, said that there is still no clear sequence of actions to record losses.
In particular, the procedure for determining the damage and damage caused to Ukraine due to the armed aggression of the Russian Federation, approved on March 22 by the Cabinet of Ministers, contains a definition of the concept of losses for individuals and legal entities, the state, as well as a list of types of damage in 18 areas, but does not regulate the issue of sequence actions to record them.
“Each case of damage can be unique depending on the nature and extent of the damage, the activities of the enterprise, etc. That is why it is very difficult to talk about a single clear algorithm of actions for recording them,” Bialy said.
He conditionally divided the sequence of recording the damage into three separate blocks: the state before the injury, the circumstances of the injury and the state after the injury.
Bialy advises, in case of damage, to record it as early as possible and as detailed as possible, indicating the source of evidence and information about the person who recorded it, to carry out the proper identification of witnesses, and also to trace the chain of evidence owners from the moment they are received to the moment they are submitted to the competent authority.
In addition, the lawyer recommends ensuring the authenticity of the evidence, not changing the evidence after it has been recorded, and taking care of the security of the evidence, providing for the creation of backup copies of it.
Bialy said that Ukrainian legislation lacks a clearly defined methodology for recording losses for intangible assets, as well as intellectual property.
“In our opinion, the best option for recording such losses may be to carry out actions that are usually performed when considering litigation – this may be an examination in the relevant areas or an independent assessment, etc.,” he said.
For their part, the experts of the law company Ri Group also said that a detailed and complete list and description of the damaged destroyed property will significantly speed up and facilitate the procedure for compensating for damages. In addition, they recommend collecting title documents for the property and making copies of them.
“You should not count on a projectile, bomb or rocket to bypass you. The enemy is acting insidiously and directs his aggression precisely at the civilian population. First of all, we advise you to collect title documents for property right now, as well as find checks, receipts, warranty certificates for household appliances, equipment, furniture, etc., make copies of them. It is better to keep all documents in one place with you,” Ri Group said.
The company believes that a detailed description with video and photography of real estate, vehicles, etc., to record the current state of the property, can be useful in establishing the market value of the property in the event of its destruction and will facilitate its assessment by an expert appraiser.
Lawyers of Ri Group advise in case of damage to property from enemy shelling, call the employees of the State Emergency Service to eliminate the consequences and draw up an appropriate act, get a copy of it, file a complaint about the crime with law enforcement agencies, providing evidence of property destruction, and get an extract from the unified register of pretrial investigations.
If the local administration is working, file an application for drawing up an act of inspection of housing and / or draw up an act of destruction on your own with neighbors and make photo and video recording of the destruction.
As reported, Gennady Borisichev, the founder of the Konkor law firm, believes that business should not only talk about compensation for the damage caused to it as a result of the Russian aggression, but also about compensation for all the damage caused. The lawyer drew attention to the fact that when assessing damage, it is necessary to follow government decree No. 326 of March 20, which establishes the procedure for determining the damage and damage caused to Ukraine as a result of the armed aggression of the Russian Federation.
The lawyer emphasized that in the near future it is expected to adopt an appropriate methodology for assessing harm and approving acts to fix it.
In addition, he noted the need for a correct legal characterization of the actions resulting in damage, as this would affect the prospects for redress.
“War is not an ‘event’ such as a natural disaster or accident, nor is it a private conflict that results in harm. Business harm is just one of those severe consequences of war. Which, in turn, entitles a business to receive the status of the victim. That is, the use of such a legal approach allows us to involve the law enforcement agencies of the state in fixing the damage. This method of fixing the damage when assessing evidence both in Ukraine and in foreign jurisdictions will have certain advantages and allows you to attract the state to the side of the victim, “the lawyer explained .
Borisichev also stressed that the problem of compensation for damages caused by Russian aggression is not a common well-established practice for law firms, and there is no mechanism for enforcing decisions on claims for damages against the Russian Federation.

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BUSINESS SHOULD TALK NOT ONLY ABOUT COMPENSATION FOR DAMAGE CAUSED BY AGGRESSOR, BUT ALSO ABOUT COMPENSATION FOR HARM CAUSED – LAWYER

Business should talk not only about compensation for the damage caused by the aggressor, but also about compensation for the harm caused – lawyer
Business should talk not only about compensation for the damage caused to it as a result of the aggression of the Russian Federation, but also about compensation for all the harm caused, Gennady Borisichev, founder of the Concor law firm, believes.
“Please note that damage is only part of such a concept as harm, in particular, harm caused by Russian aggression. Damage includes not only direct losses, but also additional costs, lost profits, and there is also moral damage. For example, for legal person to really prove the existence of moral damage caused, in particular, due to the loss of non-property assets, goodwill and others,” he told the Interfax-Ukraine agency.
The lawyer noted that for each of these types of damage there are specific features of fixation – the collection of evidence about the existence of the fact of damage and its size. At the same time, it is important to clearly establish all types of damage caused and prove both the very fact of the existence of damage and its size.
“It is important to consider and prove all components of the damage caused in a complex, that is, in interconnection. It is a mistake to break down the fixation and assessment of the amount of damage by separate objects of one business that suffered damage, since a business (enterprise) is a property complex, and includes both property, and non-property assets,” he said.
Borisichev drew attention to the fact that when assessing the damage, it is necessary to follow the Government Decree No. 326 of March 20, which establishes the procedure for determining the damage and damage caused to Ukraine as a result of the armed aggression of the Russian Federation.
The lawyer emphasized that in the near future it is expected to adopt an appropriate methodology for assessing harm and approving acts to fix it.
In addition, Borisichev noted that the need for a correct legal qualification of the actions that caused damage, which will affect the prospects for compensation.
“War is not an “event” like a natural disaster or accident, and not a private conflict, as a result of which harm is caused. Harm caused to a business, just refers to such grave consequences of war. Which in turn entitles a business to receive the status of a victim “That is, the use of such a legal approach allows us to involve the law enforcement agencies of the state in fixing the damage. This method of fixing the damage when assessing evidence both in Ukraine and in foreign jurisdictions will have certain advantages and allows you to attract the state to the side of the victim,” the lawyer explained.
Borisichev drew attention to the fact that the problem of compensation for damages caused by Russian aggression is not a common well-established practice for law firms. At the same time, an important point is the lack of a mechanism for enforcing decisions on claims for damages against the Russian Federation.
“This problem is extraordinary and has not yet been solved anywhere in the world, it requires the development of law enforcement practice. Ukrainian courts have positive experience in claims against the Russian Federation, there is positive experience in arbitration, but an important nuance has not yet been taken into account – the mechanism for implementing such decisions “, – he said.
Borisichev clarified that earlier the Konkor law firm won the right to the status of a victim as a result of Russian aggression several years before the start of the second hot stage of the war on February 24.
“Now our developments and experience in this area have become relevant and unprecedented,” he said.
The lawyer noted that among foreign jurisdictions, the most promising for the restoration of the violated rights of war victims are the jurisdictions of Britain, the United States and Canada.
He said that the law firm will focus on the development and implementation of the legal mechanism in Ukrainian courts.
Borisichev noted that at present, the current issues are the adoption in Ukraine of a law on compensation for damage to victims of Russian aggression and the creation of a common accessible mechanism for all categories of victims in Ukraine to obtain the status of victims and compensation for damage.

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CEO OF UIA: MULLING POSSIBILITY OF ARBITRATION APPEAL TO IRAN FOR COMPENSATION

– The Supreme Court of Ontario ruled to pay the relatives of the six victims of the UIA plane crash about $ 78.7 million plus interest. How can this affect the situation as a whole?
– It is difficult for me to comment on what is happening in Canada, to what extent this decision is final, whether it will be implemented … It’s hard to judge. Lawyers will certainly be able to better assess the situation. We live in the situation in which we live. All passengers and all crew members were insured, the families of the victims received all the first insurance payments. The second payments are part of the assessment process between the insurance company and the families regarding the extent of the damage caused, because this damage, as defined by insurance legislation, can be assessed differently depending on the composition of the family: whether the deceased was a breadwinner, whether he had dependents, etc.
This process is long, and in all countries it takes a long time, but it is going on. We control how this happens. We believe that all the issues will be resolved in relation to the relatives of both the deceased passengers and the deceased crew.
– How exactly are negotiations with Iran going on compensation for the cost of the plane? Has Iran started returning funds?
– As for the compensation to the lessor, the owner of this aircraft, it has already been settled, there is no more dispute there.
As for the damage caused directly to UIA, experts are now assessing its size, and we are considering the possibility of arbitration in order as a company to demand compensation from Iran. UIA, with its specialists, experts in the field of aviation, participated in almost all the meetings between the governments of Ukraine and Iran. The last meeting took place in June, there were no more of them. It is difficult to say how much progress has been made on this issue.
– The Foreign Ministry of Ukraine claims that progress is not great.
– Alas, not great. When people turn to us for an expert opinion, we are interested in participating in all negotiations. We’ve also prepared a very serious document – comments on the technical report of Iran, which was posted on the websites of IATA and the Iranian State Aviation Administration. There are comments from all institutions: the Security Service of Ukraine, the Prosecutor’s Office, the National Bureau of Air Accidents Investigation of Ukraine (the authority that conducts investigations into air crashes from the Ukrainian government).
We are forced to state the fact that the investigation itself in Tehran was carried out with insufficient quality, while, according to international law, no one except Iran has the right to conduct this investigation at the site of the disaster. The prosecutor’s office is seriously aimed at continuing the criminal case against, as I understand it, the Iranian authorities, the military authorities, etc. on this issue and establishing criminal facts in this catastrophe.
The process, unfortunately, is not supported by Iran’s goodwill and, accordingly, will go against their wishes. Let’s hope that the common will of Canada, Sweden, Ukraine – the entire coalition will be enough to politically apply the necessary pressure.
– Do you need more trips of Ukrainian specialists to Iran to continue the investigation on this issue? And can this be somehow organized in the current situation?
– There is no point in traveling to Iran. Not so long ago, we organized a trip for the families of the deceased crew members to the crash site, which they visited for the first time in two years, and from their words I know that there is no crash site as such, everything has been cleaned up. It’s just that there is a geographical place where it happened, the Iranian government installed some kind of memorial sign here. But there is nothing left to investigate at the very scene of the incident.
How do we, as an airline, plan to honor this tragic event? Kyiv gave us a site in a public garden in the Dniprovsky Hay (a small forest), which we have already partially landscaped. Trees have been planted there according to the number of dead passengers and crew members; in the spring it is planned to build a symbolic memorial. Now this place is already landscaped. And on January 8, we plan to invite there everyone who is ready to honor the memory of this tragic event, including representatives of the government and relatives of the families of the victims. Many of our workers who carry this pain in their hearts will surely come. We will continue to look after this park and support it as a place of memory.
– Iran avoids negotiations with the international coordination group on compensation for damage to the UIA aircraft. The Foreign Ministry noted that the coordination group will have to seriously consider other ways of resolving this issue within the framework of international law. How will UIA react if Ukraine files a claim with Iran at the UN International Court of Justice?
– This is a government decision. It’s hard for me to judge, but I think that any pressure that Ukraine can exert on Iran in this matter plays an important role.
After there was no fair solution to this disaster, we cannot say that the skies over Iran are safe for civil aviation. That is, Ukraine, taking into account this catastrophe, firmly estimates the sky over Iran as unsafe. None of Ukrainian airlines fly there and there are no plans to fly there. Therefore, maybe, at least by increasing legal pressure, a fair decision will be reached, there will be compensation for the country, the relatives of the victims, and the issue will be settled. This is important for civil aviation. Therefore, we welcome any attempts by the state to move forward on this issue.
– In fact, shortly after the Iranian tragedy, you received another blow – the beginning of the pandemic and an almost complete stop of air traffic between the countries from 2020. Airlines had to pay large amounts of compensation for canceled flights. Have you already settled with your clients on this issue?
– We, of course, did not have the opportunity to immediately pay our passengers all the tickets they had not used. But for almost a year and a half, they paid more than $ 55 million in money for unused tickets. At the same time, we also issued a huge number of flights to passengers with vouchers with an additional bonus of 25%, and in most cases they were already used on flights.
– If to take a percentage, how many of your customers chose a voucher, and how many – payment in cash?
– In total, during the pandemic in 2020-2021, UIA issued refunds for passengers for a total amount of about $ 57 million with “real” money. At the same time, vouchers (promotional codes) were issued for about the same amount, taking into account a 25% bonus. That is, in proportion over 60% of refunds were actually issued in cash. At the same time, the lion’s share of promotional codes has already been converted into tickets, but not all of them are used for the flight.
Today I can honestly say that my conscience before our passengers is clear. We really fulfilled all obligations. If there are any unfulfilled ones, then these are already processes of later cancellations, etc., but we will definitely execute them. After all, we have already proved to our passengers that we fulfill all obligations: either in the form of money (albeit later), or in the form of vouchers that can be used for other flights.
It is due to the fact that the calculations were carried out for a long time, that we were slowly able to practically “wash” $ 55 million out of the circulating assets and at the same time not “kill” the company. But it is still very difficult for us, so at the moment UIA needs to resolve financial issues to support the company in the winter.
– And what about the staff now? How much has these two years of the pandemic changed your approach to personnel policy?
– In the aviation world, people are the most valuable asset. I don’t even know in what other businesses people are such a valuable resource. After all, aviation competence is learned for a very long time and is expensive.
We regret that we were forced at a difficult time in 2020 and 2021 to carry out such a massive layoff, having reduced the staff by almost 40%. Before the pandemic, we had about 2,600 people, but due to the crisis provoked by COVID-19 in the aviation market, we had to reduce the staff to about 1,600 people.
However, we keep in touch with all our dismissed pilots and flight attendants, we know where they are, what they are doing. These are people who left the company not voluntarily, but they probably retained a certain loyalty to the company. And as soon as we begin to increase the volume of traffic, build up our fleet, first of all, we will begin to return these people as well. We are confident that the company will be able to return most of the employees who grew up in the company and are trained in the procedures for working at UIA, especially the young copilots.
This question is very sensitive and important for us. And we want to get back to growth as soon as possible so we can start getting our people back to work.
https://interfax.com.ua/

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ISSUE OF COMPENSATION TO AIRLINES FOR ‘COVID’ FLIGHTS NOT RESOLVED

The Ministry of Infrastructure of Ukraine under the leadership of ex-minister Vladyslav Krykliy has failed to implement a program of state support for Ukrainian airlines that carried out evacuation flights during the coronavirus pandemic in 2020.
“We prepared the logic of compensation and relevant initiatives, submitted it to the Cabinet of Ministers. Then the Ministry of Finance refused with the classic explanation – there is no money. But they promised to return as soon as possible … But this is not even direct funding, but a loyalty program for airport and air navigation services … But even so we were not allowed to realize this,” Krykliy said in an interview with the Interfax-Ukraine agency.
He also noted that the issue of compensation to air carriers for 2020 is “not about reforms, but about justice.”
According to Krykliy, absolutely all countries in Europe help their air carriers, but this item was not included in the priorities of the Ukrainian government.
As reported, earlier the Ministry of Infrastructure planned to provide targeted assistance to state airports to create discount programs for airlines that participated in the evacuation of Ukrainian citizens during the first wave of the pandemic lockdown.

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UKRAINIAN MINISTRY OF CULTURE PREPARES PROPOSAL ON COMPENSATION FOR CULTURE SPHERE

Minister of Culture and Information Policy of Ukraine Oleksandr Tkachenko says that the ministry is already preparing a proposal to the government on the regime of financial compensation for cultural sector.
“The Ministry of Culture is already preparing our proposal to the Cabinet of Ministers on the regime of financial compensation. We will appeal to the European experience, because the introduction of a lockdown there provided for financial compensation from the state to business entities (including self-employed ones) for a period of downtime,” Tkachenko wrote in the Telegram channel on Wednesday.
In this connection, the minister cited calculations on the impact of quarantine on culture, tourism and creative industries.
So, according to the minister, 2% of the country’s GDP, or more than UAH 83 billion, is the total loss of business in the cultural sector, creative industries and tourism from lost income since the beginning of March, taking into account the first lockdown.
In particular, in the field of tourism: a decline in the tourist flow by 75%; average loss of income for one weekend – UAH 1,045 million.
Hotels – drop in average occupancy from 50% to 20%; average loss of income for one weekend – UAH 119,7 million.
Cinemas – 39% loss of visitors; average loss of income for one weekend – UAH 17,13 million.
Culture and creative industries (excluding IT and film networks) – loss of 50% of income due to restrictions on holding events and entering institutions, loss of solvency; average loss of income for one weekend – UAH 324.16 million.
In addition, the minister said that a lockdown of tourism, culture and creative industries could lead to a loss of about 10% of GDP over the next five years.
According to him, the recovery of markets will take place slowly due to the migration of specialists to more protected industries, and the negative balance of the labor force in creative industries will lead to the loss of their export potential and the possibility of promoting Ukraine in the world through creative products and services.

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KYIVSTAR WANTS COMPENSATION FOR EXTRA RF IN 900 MHZ

The National Commission for Communications and Informatization Regulation (NCCR) has proposed to telecom operators within one month to file an application to the regulator about the early introduction of the new radio technology in the radio frequency (RF) band lower 1 GHz and settle the issue of concentration of a part of spectrum with two market players via quitting some RF by them on a voluntary basis. According to the regulator’s website, the applications on behalf of operators about the early introduction of the new technology are required because NCCR lacks the legislative authority to make regulatory decisions aimed at changing the current situation.
The commission recalled that, unlike the 1800 MHz band, suitable for the introduction of new radio technologies, the RF spectrum in the 900 MHz band is almost five times smaller, and it is simultaneously used by both general and special users; that this RF is licensed to operators for 3-11 years; that a significant fragmentation of the spectrum and the available concentration of the RF with one telecommunications operator also adversely affect the possibility of introducing new communication technologies in the specified band.
“It was also established that defragmentation of the spectrum would not provide an opportunity of introducing new radio technologies by all operators, given the limited RF they have in use,” the commission said.
The regulator also said that in 2018-2019, the commission, together with industry associations and government agencies, was working to find options for a voluntary frequency exchange, but no agreement was reached between telecommunications operators.
NCCR recommended RF users who, in accordance with the law, carry out operator activities in a certain radio frequency band below 1 GHz, within one month to apply to the commission with an application on the early introduction of new radio technology in this band.
At the same time, the commission recommended to Kyivstar and Intertelecom simultaneously with the said application to submit applications for reducing the relevant RF bands taking into account: the fundamentals of public regulation and the basic principles of using RF spectrum of Ukraine, as well as the number of subscribers of each operator involved by these operators’ resource, as well as the percentage of RF in the 900 MHz band used by EU telecommunications operators, and taking into account the problems of international coordination of RF.
At the same time, the commission considers it advisable to include the liabilities to ensure within 12 months from the date of issuance of a new license to comply with the indicators of the quality of mobile communication services using 3G/4G radio technologies in the territory of each settlement of Ukraine, and on regional, national and international highways of the region, provided for in the new license (except for territories where public authorities are temporarily not exercising their powers, and the territories in which the restrictions for the operation of radio electronic facilities are set) in the special conditions for using RF spectrum under new licenses.
In turn, the Kyivstar mobile operator said that it understands the importance of reducing the digital gap in Ukraine and is ready to consider a possible partial return of RF to the state.
“We have repeatedly offered options for the exchange of frequencies in the 900 MHz band, because this exchange will increase the available spectrum size. We are ready to consider the possibility of a partial return of frequencies to the state under certain conditions… The company acquired RF on legal grounds, at market value, through effective mergers and acquisitions, observing all legislative procedures. It is important for us to understand the regulator’s vision regarding compensation for Kyivstar, as well as the step-by-step reorganization algorithm for the 900 MHz band and their refarming,” President of Kyivstar Alexander Komarov told Interfax-Ukraine, adding that only in 2018, the operator paid more than UAH 1 billion for the rental of RF spectrum.
He also said that the necessary condition for the exchange of radio frequencies in the 900 MHz band is the subsequent introduction of the principle of technology neutrality on the Ukrainian telecom market, which will enable all telecom companies to develop any communication services in frequencies that have already been issued to operators.
Intertelecom has not yet commented on the statement of the commission.

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