Cases (#3-4 March-April 2021)

Cases

Ukraine wins billion dollar energy dispute in Stockholm

The Stockholm Arbitration Court has dismissed a complaint filed by Igor Kolomoisky and Gennady Bogolyubov, who challenged the violation of investors rights and asked to recover more than USD 6 billion from the State of Ukraine.

In 2015, three Cypriot offshore companies (Littop Enterprises Limited, Bridgemont Ventures Limited, and Bordo Management Limited), the ultimate beneficiaries of which were the above-mentioned persons, applied to the Stockholm Arbitration Tribunal with a claim against the State of Ukraine. All three plaintiffs are shareholders of Ukrnafta OJSC and own
40.1009% of the shares of the said company.

The plaintiffs indicated the following grounds for their claims:

repeated withdrawal from Naftogaz of Ukraine gas storage facilities of gas owned by Ukrnafta for the populations needs at a reduced price (including the same following the decisions of the regulator NERC/NEURC);

failure of Ukrtransgaz and Naftogaz of Ukraine to comply with the decisions of Ukrainian courts on the return of a part of withdrawn gas to Ukrnafta, which came into effect;

a sharp increase in the rate of payment for the use of subsoil for gas production;

adoption of the Law of Ukraine of
19 March 2015 No. 272-VIII On Amendments to the Law of Ukraine On Joint Stock Companies (regarding the quorum reduction required for holding a general meeting by joint-stock companies) by the Verkhovna Rada of Ukraine.

The claim was filed under the Energy Charter Treaty. This is the only international treaty that enables Cypriot investors to complain about violations of their rights by Ukraine. Therefore, investors cannot file the same demands to another international or arbitration court.

The Stockholm Arbitration concluded that the plaintiffs claims were essentially not subject to consideration under the
Energy Charter Treaty.

US court halts sanctions against Xiaomi

The District Court at District of Columbia has suspended sanctions imposed against Chinese company Xiaomi.

The court lifted restrictions imposed on the purchase of company securities and requirements for US citizens to sell their assets.

A reminder that in January 2021, the United States imposed economic sanctions on 9 Chinese companies, including the world-famous smartphone manufacturer Xiaomi. The companies were added to the so-called blacklist of companies cooperating with Chinas military-industry complex.

Xiaomi was subject to a new ban on investing in the USA, which will force American investors to sell their shares in blacklisted companies by 11 November 2021.

Court seized property and 100% of shares in Motor Sich

According to the Security Service of Ukraine, the Shevchenkivskyi District Court of Kyiv ruled to seize the entire property complex and 100% of shares in plane engine maker Motor Sich JSC.

Following the court hearing, the property was transferred to the management of the National Agency for the Detection, Tracing and Management of Assets Derived from Corruption and Other Crimes with the obligatory appointment of a state-owned management company.

The Main Investigation Department is currently conducting pre-trial investigations into Motor Sich in two areas.

The first one is on the elements of crimes related to sabotage and subversive activities for the benefit of Russia.

The second one is regarding possible violations of the law during the initial privatization and subsequent illegal concentration of shares.

Motor Sich JSC will continue its operations in accordance with the requirements of current legislation, with the preservation of jobs and fulfillment of obligations under production orders.

A reminder that the National Security and Defense Council recently ruled to return Motor Sich to state ownership in the near future. The Chinese investor in Motor Sich called the statements made by the Ukrainian authorities about the possible nationalization of the enterprise unacceptable and threatened new lawsuits.

President Volodymyr Zelensky
enacted the decision of the National Security and Defense Council of 28 January 2021 via a presidential decree, which provides for the application of special economic sanctions against Chinese investors in Motor Sich.

The National Securities Commission has initiated a case against the depository institution of Dragon Capital JV for violating requirements for depository activities in terms of information and organizational support for the general meeting of Motor Sich PJSC. Dragon Capital has rejected
these accusations.

Investors have now filed claims to international arbitration to recover USD 3.5 billion from Ukraine, as prosecutors have made additional seizures of shares in Motor Sich after Chinese businessmen and Oleksandr Yaroslavskys DCH had earlier announced a joint bid to buy shares filed to the AMCU and complained of pressure.

Brazil fined Apple for non-inclusion of adapter, waterproof phone claims

Brazilian regulator Procon-SP has imposed a fine of more than USD 1.8 million on Apple for selling iPhone models without a charger adapter included, as well as for inaccuracies in claims made about the waterproof features of devices.

The agency considers the companys actions a violation of consumer law. As a result, the agency fined Apple for the companys statements related to the waterproof nature of the iPhone 11 Pro. According to the report, users had problems with their smartphones after contact with water, while Apple, on its part, refused to repair them.

In December, the regulator sent a request to Apple to explain the reason for selling new iPhones without an adapter. In response, the firms representatives explained that in this way they wanted to reduce the amount of waste from electronics and carbon emissions.

However, the regulator concluded that Apple does not show any positive changes in terms of environmental impact due to the absence of an adapter. Moreover, the company has no plan on collecting and recycling old devices and adapters, which would actually help to reduce environmental damage and amounts of waste.

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