DOCSLIB.ORG

29 April 2021 VIA EMAIL and CERTIFIED MAIL President Of

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
29 April 2021 VIA EMAIL and CERTIFIED MAIL President Of 51 LOUISIANA AVENUE, N.W. • WASHINGTON, D.C. 20001.2113 TELEPHONE: +1.202.879.3939 • FACSIMILE: +1.202.626.1700 Direct Number: (202) 879-5409 [email protected] 29 April 2021 VIA EMAIL AND CERTIFIED MAIL President of Ukraine Volodymyr Zelenskyy Cabinet of Ministers of Ukraine 11 Bankova St., 01220 Kyiv 12/2 Grushevskogo St., 01008 Kyiv [email protected] [email protected] [email protected] [email protected] Ministry of Justice of Ukraine Ministry for Development of Economy, 13 Gorodetskogo St., 01001 Kyiv Trade and Agriculture of Ukraine [email protected] 12/2 Grushevskogo St., 01008 Kyiv [email protected] [email protected] [email protected] [email protected] Ministry of Finance of Ukraine Ministry of Foreign Affairs of Ukraine 12/2 Grushevskogo St., 01008 Kyiv 1 Mykhailivska Sqr., 01018 Kyiv [email protected] [email protected] Prosecutor General’s Office of Ukraine Security Service of Ukraine 13/15 Riznytska St., 01011 Kyiv 33 Volodymyrska St., 01601 Kyiv; [email protected] 16 Malopidvalna St., 01601 Kyiv [email protected] State Judicial Administration of Ukraine 18/5 Lypska St., 01601 Kyiv [email protected] Re: Notice of Dispute under the Agreement between the Government of the Republic of Estonia and the Government of Ukraine for the Promotion and Reciprocal Protection of Investments Dear Sir or Madam: I write on behalf of Jones Day’s clients Hillar Teder, Rauno Teder and Juri Põld (all Estonian nationals), as well as Riverside OÜ, Retail Real Estate OÜ, DeltaMax Group OÜ and OÜ Ekspert Kapital, legal persons incorporated in accordance with the laws of the Republic of ALKHOBAR AMSTERDAM ATLANTA BEIJING BOSTON BRISBANE BRUSSELS CHICAGO CLEVELAND COLUMBUS DALLAS DETROIT DUBAI DÜSSELDORF FRANKFURT HONG KONG HOUSTON IRVINE JEDDAH LONDON LOS ANGELES MADRID MEXICO CITY MIAMI MILAN MINNEAPOLIS MOSCOW MUNICH NEW YORK PARIS PERTH PITTSBURGH RIYADH SAN DIEGO SAN FRANCISCO SÃO PAULO SHANGHAI SILICON VALLEY SINGAPORE SYDNEY TAIPEI TOKYO WASHINGTON Page 2 Estonia (together, the “Investors”).1 I wish to inform you of a dispute that has arisen between our clients and the Government of Ukraine (the “Government”). The Government’s conduct toward the Investors and their investments in Ukraine has violated the Agreement between the Government of the Republic of Estonia and the Government of Ukraine for the Promotion and Reciprocal Protection of Investments (the “Treaty”) and caused the loss of their investments in excess of US$ 750 million. This letter serves as notice of the dispute, an invitation to negotiate an amicable settlement pursuant to Article 8(1) of the Treaty, and a statement of the Investors’ intention to submit the matter to arbitration pursuant to Article 8(2) of the Treaty if a suitable resolution to the dispute is not promptly achieved. Below, we describe the basic details of the Investors’ interests in Ukraine (infra § A), the Government’s illegal conduct (infra § B), and the applicable provisions of the Treaty and international law (infra § C). Upon request, we would be pleased to provide you with relevant documentation substantiating these claims. A. The Investors’ Investment in Ukraine The Sky Mall Shopping and Entertainment Center (“Sky Mall”) is one of the largest commercial shopping centers in Kyiv. It is located on the left bank of Dnipro, in the Dniprovsky Administrative District. The construction of Sky Mall began in 2006. Mr. Hillar Teder was an early investor in the project. In 2005, he purchased shares in Dniprovska Prystan PJSC (“Dniprovska Prystan”), a Ukrainian corporate entity that owned the lease rights to the land where Sky Mall would be built. In January 2006 Mr. Hillar Teder formed Pryzma Beta LLC (“Pryzma Beta”), also a Ukrainian company, which would eventually own Sky Mall. Construction of Sky Mall was done through Dniprovska Prystan and another Ukrainian company, Stilf LLC (“Stilf”) that is wholly-owned by Riverside OÜ. In 2012, Stilf acquired an unfinished parking lot attached to Sky Mall from Dniprovska Prystan. Mr. Hillar Teder played a major role in Sky Mall’s construction. He and his team introduced a number of technical and architectural innovations that helped shape Sky Mall’s design and its balance of retail galleries, restaurants, parking and entertainment. Mr. Hillar Teder also financed much of Sky Mall’s construction. Through his indirect but wholly-owned Cypriot entity, Filgate Credit Enterprises Limited (“Filgate”) 2 , he loaned substantial sums of money to Dniprovska Prystan and Pryzma Beta, sums which were used to build Sky Mall. Arricano Real Estate Plc (“Arricano”)3, a Cypriot company, was formed in 2008 to focus on Mr. Teder’s real estate interests in Ukraine. Arricano’s wholly-owned Cypriot subsidiary, 1 Duly executed and valid powers of attorney are attached hereto as Annexes A through G. 2 Mr. Hillar Teder remained the sole indirect shareholder of Filgate, until 2016, when Arricano acquired a 49% share in Filgate. 3 Until 12 September 2012, known and doing business as Arricano Trading Limited. Page 3 Assofit Holdings Ltd (“Assofit”), was formed the same year and became the sole owner of Pryzma Beta—and thus the sole, indirect owner of Sky Mall. The company is now held directly and indirectly by the Investors—Mr. Rauno Teder, Mr. Juri Põld, Retail Real Estate OÜ, DeltaMax Group OÜ and OÜ Ekspert Kapital, as well as by Dragon Capital Investments Limited (a Cypriot company). Phase 1 of Sky Mall opened in 2007. Phase 2 of Sky Mall opened on August 27, 2010. Arricano has also developed five other shopping centers in Ukraine between 2008 and 2014. Arricano has at least three other projects under construction in Ukraine, demonstrating its long- term future commitment to the Ukrainian economy. B. The Government’s Illegal Conduct against the Investors and Their Investment In 2009, just before Phase 2 of Sky Mall opened, it needed an injection of capital to finish the construction. A third party incorporated in the British Virgin Islands, Stockman Interhold S.A. (“Stockman”), invested approximately US$ 30 million in capital and loans to the Sky Mall project in exchange for 50.03% of the shares in Assofit. This money, along with approximately US$ 125 million from Mr. Hillar Teder and Arricano, was loaned to Dniprovska Prystan and Pryzma Beta through Filgate. A shareholders’ agreement and call option agreement, signed in February 2010, gave Arricano the right to repurchase the shares owned by Stockman at a predetermined price; this arrangement allowed Arricano to reacquire full ownership and control of Assofit once Sky Mall opened, with Stockman earning significant return on its investment. In November 2010, Arricano exercised its call option to repurchase the Assofit shares. Rather than transfer its share and earn its promised return, Stockman terminated the shareholders’ and call option agreements and sought to retain its majority share in Assofit—and thus Pryzma Beta and Sky Mall. The parties instituted parallel arbitrations under the UNCITRAL and LCIA rules regarding the ownership and control of Assofit. While those arbitrations were ongoing, Andrey Adamovsky (a Stockman principal and director of Assofit), his son Dmitry Adamovsky (a purported beneficial owner of Stockman) together with Alexander Granovsky (a minority stakeholder of Stockman and its de facto director in matters regarding Sky Mall, former director of Assofit and former member of the Ukrainian Parliament), Liudmyla Parkhomenko (director of Assofit), Olga Tkachenko (director of Pryzma Beta), Kostiantyn Likarchuk (lawyer of Andrey Adamovsky), PJSC Bank Pivdennyi and AS Reģionālā Investīciju Banka worked to retain control of Pryzma Beta and siphon millions of dollars in loan proceeds and other assets to themselves and their various corporate affiliates. But they did not do so alone; they worked in concert with Ukrainian courts and other Government authorities. The Government’s acts and omissions vis-a-vis the Investors’ came in three waves—the first in early-to-mid 2013 (as the LCIA arbitration was sub judice), the second in mid-2014 (after Arricano was successful in the arbitration), and finally again in 2017: Page 4 First, in February 2013, the Commercial Court of Kyiv removed Filgate as the lender and creditor on over US$ 100 million in loans it made to Pryzma Beta. In its place, the court named Assofit—which was still controlled by Stockman (and thus Mr. Adamovsky)—thereby divesting Filgate and Mr. Hillar Teder from any right or ability to direct the actions of Pryzma Beta. Within a month, Assofit (controlled by Stockman) transferred the loan again, this time to Torsem Co Limited (“Torsem”), a Cypriot corporate entity purportedly beneficially-owned by Dmitry Adamovsky. No consideration was paid for this transfer, and the Investors lost any status as a creditor to Pryzma Beta. This decision was affirmed by the Ukrainian Supreme Court, leaving Pryzma Beta fully controlled by and deeply indebted to Adamovsky-affiliated companies. This was an irregular decision with no basis in Ukrainian law; it was clearly aimed to strip the Investors of their rights and to benefit Stockman and Adamovsky. And it opened the door to a quintessential corporate raid. Pryzma Beta quickly obtained many millions in new loans from Financing and Invest Solutions BV (“FIS”) (a Dutch company which will have greater relevance a few months later); Pryzma Beta paid those borrowed funds directly to Torsem (and not to Filgate); and Torsem eventually transferred those funds to Dmitry Adamovsky. This charade— facilitated by and executed through the Ukrainian courts—was found by the sole arbitrator in the LCIA proceedings to be a “deliberate misappropriation of assets and a fraud on Arricano, Filgate and Mr. Teder.”4 In light of these developments, Arricano and the Investors moved to protect their investment in Sky Mall, and obtained a series of injunctions in the hope of doing so.
Load more

Recommended publications
  • Directorate Change Wed, 30Th Oct 2013 13:30
    Directorate Change Wed, 30th Oct 2013 13:30 RNS Number : 7733R Arricano Real Estate PLC 30 October 2013 30 October 2013 Arricano Real Estate plc ("Arricano" or the "Company" or, together with its subsidiaries, the "Group") Board Appointment Arricano (AIM:ARO), one of the leading real estate developers in Ukraine specialising in operating shopping centres, announces that Raul Parusk has been appointed to the board of directors as a non-executive director with immediate effect. Raul Parusk, an Estonian national, has an extensive background in banking and finance having held senior positions at Bank of Tallinn and then Hansapank, a large regional financial group, where he oversaw its operations in Estonia and Lithuania. Following this, Raul was chief executive of two industrial companies (one in Canada and one in Estonia) and then, in 2007, he was appointed as chief executive of Expert Capital Management, providing the management services to Expert Capital Group, which is 100% owned by Hillar Teder, founder and a significant shareholder of Arricano. In 2009, Raul left Expert Capital to focus on his own private ventures. He is currently principal of Sulvanius Invest that provides financial and management consultancy services for Ukraine, Russia and the Baltic region. Raul has been interim chief executive at Enterprise Estonia, the investment, export and tourism agency of the Republic of Estonia. Raul is an economics graduate of Moscow State University and received an MBA from the Vienna University of Technology. Disclosures under Schedule
    [Show full text]
  • Notes to the Consolidated Financial Statements 33 Petrivka (Kyiv) Lukianivka (Kyiv) Independent Auditor’S Report 71 Investment
    Annual Report 2020 Arricano is one of the leading real estate developers and operators of shopping centres in Ukraine. It owns and operates completed shopping centres comprising over 147,900 sq.m of gross leasable area and three land plots in strategic cities for further development. Our portfolio at a Glance Strategic Report Completed Properties 2020 Highlights 1 Chairman’s Statement 2 Chief Executive Officer’s Report 4 Operating Portfolio 6 Development Properties 11 Finance Report 14 Directors’ Report Prospekt (Kyiv) Rayon (Kyiv) Management Report 16 Management Analysis of Corporate Governance 20 Board of Directors 22 Senior Management 24 Audit Committee Report 26 Remuneration Committee Report 27 Sun Gallery (Kryvyi Rig) City Mall (Zaporizhzhia) Financial Statements Development Properties Consolidated Statement of Financial Position 28 Consolidated Statement of Profit or Loss and other Comprehensive Income 30 Consolidated Statement of Cash Flows 31 Consolidated Statement of Changes in Equity 32 Notes to the Consolidated Financial Statements 33 Petrivka (Kyiv) Lukianivka (Kyiv) Independent Auditor’s Report 71 Investment 49,9 per cent shareholding in Assofit, ex-holding company of Sky Mall, one of Kyiv’s largest shopping centres, home to a range of leading retail brands in- cluding H&M, Zara, Pull&Bear, Bershka, Stradivarius, New Yorker, Mango, Tommy Hilfiger, Adidas and Nike Sky Mall (Kyiv) 2020 Highlights • Recurring revenue decreased by 13% to USD 32.3 million • As at 31 December 2020, net asset value was USD 119.4 million St (2019:
    [Show full text]
  • Shelling Russia's White House in 1993
    WWW.BNE.EU Russian retail investors piling into the stock market for the first time, but CBR worried about rising risks Estonian premier quits after Tallinn development scandal February 2021 Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’ Making Magnit great again Has Navalny started a revolution? SHELLING RUSSIA’S WHITE HOUSE IN 1993 What a real coup looks like Belarus’ IT industry The oligarch problem OUTLOOKS 2021 in meltdown p.35 p.42 p.24 ISSN 2059-2736 ISSN 2 I Contents bne February 2021 Senior editorial board Ben Aris editor-in-chief & publisher I Berlin 206 +49 17664016602 I [email protected] Clare Nuttall news editor I Glasgow +44 7766 513641 I [email protected] William Conroy editor Eurasia & SE Europe I Prague +420 774 849 172 I [email protected] ——— Subscriptions Stephen Vanson 7 London I +44 753 529 6546 [email protected] ——— COMPANIES & MARKETS 14 Russian petrochemical giant Sibur Advertising closes $11bn joint venture deal to 4 Hungarian official threatens build Amur Gas Chemical plant Elena Arbuzova to wage war on foreign with China’s Sinopec business development director I Moscow +7 9160015510 I [email protected] retailers ——— 16 Rio Tinto reports maiden ore 5 Hungary's largest bank reserve at Jadar project in Serbia Design merger granted exemption Olga Gusarova from competition scrutiny 17 Turkish hotels in fire sale art director I London +44 7738783240 I [email protected] 6 Foreign investors eye 18 Online video service ivi.ru starts bargains on distressed NASDAQ IPO registration procedure Please direct comments, letters, press releases Budapest hotel market, but and other editorial enquires to [email protected] owners won't budge 19 AFC CAPITAL: Uzbekistan’s stock market re-rating has much further All rights reserved.
    [Show full text]
  • Policies First, Institutions Second: Lessons from Estonia’S Economic Reforms
    forthcoming in Post-Soviet Affairs 31, 6 (2015) (accepted for publication May 25, 2015) Policies First, Institutions Second: Lessons from Estonia’s Economic Reforms Neil A. Abramsa* and M. Steven Fisha* aDepartment of Political Science, University of California, Berkeley It has become convention in recent years to treat the building of institutions as the centerpiece of successful economic reform. The case of Estonia challenges this view. Although effective economic institutions eventually arose, Estonia began its transition bereft of the institutions that supposedly serve as the requisites of robust achievement. The institutions only emerged after an ideologically-driven core of leaders implemented policies that laid the groundwork. In particular, the imposition of hard budget constraints sidelined political capitalists opposed to the rule of law by severing them from the state subsidies, soft loans, and other privileges on which they thrive. In the absence of a powerful class of political capitalists, Estonian governments were free to forge and continually improve a collection of institutions that sets the country apart among its postcommunist peers. Good institutions are desirable but not necessary for policy reform, and they are better seen as auspicious knock-on effects than as prime movers. Keywords: Estonia, institutions, postcommunist economic reform, property rights, corruption Introduction Writings on economic transformation in developing countries, including those emerging from decades of Soviet-style economic statism, often treat the building of institutions as the centerpiece of successful economic reform. According to such thinking, in order for economic reforms to yield improvement rather than disorder and opportunities for predation, a sound set of well-enforced rules is needed.
    [Show full text]
  • Consolidated Interim Condensed Financial Statements 30 June 2016
    Arricano Real Estate PLC Consolidated interim condensed financial statements 30 June 2016 These consolidated interim condensed financial statements contain 34 pages Arricano Real Estate PLC Consolidated interim condensed financial statements as at and for the six months ended 30 June 2016 Contents Consolidated condensed statement of financial position 3 Consolidated condensed statement of profit or loss and other comprehensive income 5 Consolidated condensed statement of cash flows 6 Consolidated condensed statement of changes in equity 8 Notes to the consolidated interim condensed financial statements 10 Independent auditors’ report on review of consolidated interim condensed financial information 33-34 Arricano Real Estate PLC Consolidated interim condensed financial statements as at and for the six months ended 30 June 2016 Consolidated condensed statement of financial position as at 30 June 2016 Note 30 June 31 December 2016 2015 (unaudited) (in thousands of USD) Assets Non-current assets Investment property 4 167,460 160,310 Long-term VAT recoverable 2,395 3,364 Property and equipment 192 230 Intangible assets 37 36 Total non-current assets 170,084 163,940 Current assets Inventories 3 3 Trade and other receivables 1,102 890 Loans receivable 336 347 Prepayments made and other assets 893 952 VAT recoverable 1,084 1,086 Assets classified as held for sale 1,742 1,804 Restricted deposits - 800 Cash and cash equivalents 5,442 3,349 Total current assets 10,602 9,231 Total assets 180,686 173,171 The consolidated condensed statement of financial position is to be read in conjunction with the notes to, and forming part of, the consolidated interim condensed financial statements set out on pages 10 to 34.
    [Show full text]
  • Estonian Investment Relations with the Eastern Partnership Countries
    Analytical overview ESTONIAN INVESTMENT RELATIONS WITH THE EASTERN PARTNERSHIP COUNTRIES Raul Mälk, Senior Research Fellow, ECEAP 1. EU FDI IN EASTERN PARTNERSHIP COUNTRIES After ten years of Eastern Partnership (EaP), it is possible to say that the investments flow between the EU and Partnership countries is still rather limited1. The potential for investments has not yet been fully used. Looking forwards to post-2020, it is clear that further progress in investments is one of the crucial elements of the development of the EaP and relations with the partner countries. The European Union has concluded Association Agreements and Deep and Comprehensive Free Trade Area agreements with Georgia, Moldova and Ukraine. Membership in the Eurasian Economic Union affects EU economic relations with Armenia and Belarus. Investment activity between EU and the six Eastern Partnership countries has been influenced during the past decade by the global economic crisis, political tensions including the Russian war against Ukraine from 2014, Armenia-Azerbaijan war in 2020, the business climate and the problems with the rule of law in six countries. In the World Bank’s Ease of doing business index, the six EaP countries have improved their standings – Georgia is now (surprisingly) 7th, Azerbaidjan 34th, Armenia 47th, Moldova 48th, Belarus 49th and Ukraine 64th among 190 economies. For comparison, Estonia is 18th, Poland 40th, Hungary 52nd and Romania 55th2. However, despite such high rankings, the economic progress is still modest, and the living standards in most of the EaP countries are relatively low. The indexes tend to overestimate the legal acts and underestimate the real implementation.
    [Show full text]