Business news from Ukraine

Ukrainian parliament plans to apply EU legislation in field of geographical indications of spirits

The Verkhovna Rada adopted as a basis the European integration bill No. 6480, which implements the provisions of EU Regulation No. 2019/787 in the field of geographical indications of alcoholic beverages and the production of alcoholic beverages according to EU standards into Ukrainian legislation.
The corresponding bill, submitted by the Cabinet of Ministers of Ukraine, was adopted at a parliament meeting on Friday by the votes of 266 people’s deputies (with the minimum required 226), Taras Melnichuk, representative of the Cabinet of Ministers in the Verkhovna Rada, said.
“This bill establishes general rules for the definition, description, presentation and labeling of alcoholic beverages, the rules for using the official names of alcoholic beverages; defines the features of the use and protection of geographical indications of alcoholic beverages; introduces a system for controlling geographical indications of alcoholic beverages,” the deputy wrote in his Telegram channel.
According to the text of the document, Ukrainian alcoholic beverages with geographical indications have significant potential in the European market, however, their sale and legal protection in the EU is possible only after successful state registration in Ukraine, the procedure for which currently does not exist due to the absence of the concept of legal protection of geographical indications of spirits.
To solve this problem, bill No. 6480 legislates the concept of “alcoholic beverage” and establishes a unified classification list of categories of alcoholic beverages and requirements for them; introduces requirements for ethyl alcohol and distillates used for the production of alcoholic beverages; ensures compliance with the rules for the definition, description, presentation and labeling of alcoholic beverages, including alcoholic beverages with geographical indications; ensures compliance with the requirements for the official names of alcoholic beverages.
“The implementation of the law will have a positive impact on the market environment, the state – by ensuring that Ukraine fulfills its obligations under the Association Agreement by bringing national legislation closer to the EU acquis in the field of legal protection of geographical indications; consumers – by ensuring transparency and fair competition in the alcohol market and providing information on alcoholic beverages,” is indicated in the explanatory note to the document.

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Ukrainian parliament improves procedure for preparing bills to adapt Ukrainian legislation to EU stantards

The Verkhovna Rada has improved the procedure for preparing bills on adapting Ukrainian legislation to the provisions of European Union law (EU acquis).
Draft resolution No. 7595 was supported by 297 MPs at the plenary session on Friday, parliamentarian Yaroslav Zhelezniak (the Holos parliamentary faction) said on his Telegram channel.
The resolution provides for the consideration of bills aimed at adapting the legislation of Ukraine to the provisions of the law of the European Union, the fulfillment of Ukraine’s international legal obligations in the field of European integration, the availability of tables of correspondence to them, as well as official translations of relevant acts of EU legislation and / or other sources of EU law.
According to the resolution, subcommittees will be created in the committees of the Verkhovna Rada to adapt the legislation of Ukraine to the provisions of EU law, the implementation of Ukraine’s international legal obligations in the field of European integration.
The resolution also provides for an additional examination of the compliance of European integration bills with Ukraine’s international legal obligations in the field of European integration and EU law in the Parliamentary Committee on European Integration and / or in the Cabinet of Ministers.

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UKRAINE CALLS ON GERMANY TO CANCEL EXCEPTIONS IN ITS LEGISLATION FOR SEVPOTOK-1 GAS PIPELINE

The GTS Operator of Ukraine (OGTSU) and NJSC Naftogaz Ukrainy have sent an appeal to the German Ministry of Economy and the BNetzA regulator to suspend the previously granted exemptions in the legislation for the Nord Stream 1 gas pipeline, head of the Ukrainian operator Serhiy Makogon said in a statement. TV on Friday.
He noted that the exceptions granted by JS1 were based on the fact that this gas pipeline would contribute to strengthening the security of gas supplies to Europe, the principles of market competition and the energy solidarity of the continent.
“But we see that Russia completely violates such principles. We know that they created an artificial gas deficit last year, that they unilaterally insist on paying for gas in rubles, that Russia unilaterally suspended gas supplies to Poland, Bulgaria and Finland,” Makogon recalled.
In addition, the Russian Federation seized part of the territories of Ukraine, where gas transportation infrastructure facilities are located.
“Therefore, we see that the grounds on which these exemptions for SP1 were given no longer correspond to reality. We suggest that the German government review these exemptions and actually suspend or significantly limit gas supplies to Europe through SP1,” he said.
According to the head of the OGTSU, if such a decision is made, European consumers will not suffer, since there are enough free capacities for the transit of Russian gas to the EU, incl. through the GTS of Ukraine.
Makogon recalled that it is possible to pump gas through the Sudzha gas measuring station in the amount of 244 million cubic meters. m per day with the current use of this route is about 45 million cubic meters. m.
As reported, in May 2020, the German Federal Grid Agency granted the Nord Stream gas pipeline the opportunity to derogate from the application of the main provisions of the EU Gas Directive. The adopted decision on derogation is valid for 20 years and began its effect retroactively from December 12, 2019.
When reviewing the application, the regulator noted that the gas pipeline contributed to the security of supply and did not harm competition in the European internal gas market.
Trans-Baltic gas pipeline with a length of 1224 km with a capacity of 55 billion cubic meters. m per year was introduced in November 2011.

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CLASS ACTION LAWSUITS FORESEEN IN UKRAINIAN LEGISLATION, BUT NOT WIDELY USED YET – LAWYERS

Class actions lawsuits are foreseen in Ukrainian legislation, although their tools are not regulated, and practice is not spread, according to lawyers polled by Interfax-Ukraine. Lawyer from Egorov Puginsky Afanasiev & Partners (EPAP) Ukraine law firm Yuriy Nekliayev said that class actions lawsuits are rather popular in legal practice of western countries. Court rulings on class actions lawsuits could synchronously defend the interests of a large circle of persons, which allows decreasing loading on courts and observing the balance between defending the public and personal interest.
The lawyer said that the main feature of class actions lawsuits is that if it is satisfied, the court decision will be binding for all members of the group who potentially incurred losses from the defendant’s actions, even if such persons did not take direct part in the lawsuit.
At the same time, he drew attention to the factor of choosing a representative who would act in court in the interests of the “injured” group of persons, since the possibility of satisfying the claim, which applies to a wide range of persons, largely depends on the professionalism and qualifications of the representative.
“In Ukraine, unfortunately, the category of class actions lawsuits is not clearly regulated by law, and therefore is not widely spread,” he said.
Nekliayev said that these claims can be filed, in particular, against tour operators/airlines.
He pointed out the unsettled state of this legal category as “a class action” in Ukraine, while the legislator introduced other procedural possibilities that allow for more rapid hearing of court cases. For example, the Ukrainian courts can unite a homogeneous case in one proceeding, if the basis for such lawsuits are the same circumstances (legal relationship) or they are closely related.
“Consumers of services, including tourism and air transportation services, have the opportunity of defending their rights by merging into nongovernmental organizations and submitting relevant lawsuits to the court by applying to already existing nongovernmental organizations to protect the rights of a certain group of consumers of goods or services, and personally applying to the court to reimburse the losses caused by a tour operator/air carrier and moral damage,” the lawyer said.

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NON-BANKING FINANCIAL MARKET REGULATION BILL TO EXPAND POWERS OF REGULATOR, TO STREAMLINE LEGISLATION

A new bill amending some laws regarding the public regulation of financial service market (No. 8415) would not reduce the number of fair market players, but it would expand powers of the national commission for financial service markets regulation, according to lawyers polled by Interfax-Ukraine.
“The non-banking financial market, which actual neglect is currently at some stage discrediting the NBU’s impressive work on streamlining and cleaning up the banking sector, will obtain a regulator with the stronger powers in the person of the national commission for financial service markets regulation,” Adviser to the Asters law firm Diana Holanova said.
“At the same time, the situation that has developed in the financial market certainly requires taking measures to clean it up, bringing its participants to European standards. The reduction of participants cannot affect the financial market negatively on the condition that this reduction will be carried out with the aim of identifying the structures of owners of commercial banks and taking adequate measures, insolvent insurance companies and other participants, creating risks for consumers of financial services and financial markets in general,” she said, adding that “not all the provisions of the bill guarantee the neutrality of possible measures, underscoring the need for their revision.”
In turn, Senior Lawyer of the Evris law firm Kateryna Breduliak said that the rules of the current law on financial services and public regulation of financial services markets have long been outdated, not to mention that some financial service markets use specialized laws, in particular, laws on insurance, credit unions, and private pension provision. Thus, the introduction of changes to the current legislation of the non-banking financial market would streamline legislation in this area.
“The bill will not affect the reduction in the number of fair market players. The legislative initiative is aimed at making changes to the framework law, since the requirements are duplicated in several laws. If it is presumed that all operating non-banking institutions comply with the law, the adoption of the law will not affect the number of players on the non-banking market in the future. If it is a question of those financial institutions that avoid taxation, then, with changes, the activity of fictitious financial institutions will be stopped,” she said.
Breduliak said that, in accordance with the bill, in addition to measures of influence and sanctions, if the circumstances and risks affecting the solvency of a market player are negative, the national commission will be able to apply corrective measures. These measures are recommendatory in nature and are not binding on the market player, but if applied, the financial service market player automatically falls under the suspicion of the commission.
Commenting on the effectiveness of the supervision mechanisms of players in the non-banking financial market prescribed in the bill, Breduliak said that the regulator plans to implement public control measures in the form of planned inspections, unscheduled inspections and unscheduled field inspections, and the bill determines the procedure, deadlines and rules for conducting these inspections.
“Preventive and corrective measures will certainly contribute to the observance of the requirements of legislation by players of the non-bank financial market,” the lawyer said.
At the same time, according to the expert, at present not all players of the non-banking market are ready to confirm the transparency of the financial services provided.
“In any case, equal conditions for both banks and non-bank financial institutions will only contribute to competition in their provision. The regulator should rule out the sudden disappearance of financial market players, since in the end the consequences and losses are borne by consumers,” she said.

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