Updated 13:18 October 29, 2021
The ongoing case of TIU Canada against the notorious oligarch Igor Kolomoisky in the courtrooms of Ukraine is a microcosm of Ukrainian judicial and governing life, and of the problems that plague authorities as they seemingly struggle to transform a post-Soviet, oligarchic economy.
The gist of the case is that after becoming the first foreign investor in Nikopol since the Romanov era, a Canadian solar energy producer found its connection to the electricity grid indefinitely disconnected by the neighboring Nikopol FerroAlloy Plant, whose direct beneficiary is Igor Kolomoyskyi.
Despite an ongoing legal battle, and despite producing electricity which Ukraine must now purchase from Russia and Belarus, the repairs that supposedly necessitated the disconnection have never been started and the solar station remains dormant. Observers see the disconnection as an old fashioned oligarchic raid on a foreign investor.
In the two years since the case began, the most recent court date revealed that some of the key questions are only now being asked. For example, the court only recently asked for documents regarding the responsibilities of the electric sub-station controlled by Kolomoisky to grant access to the plaintiff, or simply, two years into the case the contractual documents that guaranteed governing access by TIU are being asked for.
Second, the court is only now asking which governing or regulatory authority approved the alleged “repairs” for the substation, that, according to TIU’s argument, was deliberately closed to cut off their access to the substation and which was responsible for the loss of revenue for the company amounting to almost €3 million.
Third, the court is again being asked to determine the ultimate venue where the court is to decide this case.
What’s becoming clear is that Ukraine’s judiciary system is not procedurally prepared to adjudicate fundamental disputes in its commercial courts.
For what in other free-market jurisdictions, would be routine. In Ukraine, it is a maze of uncertainty.
With years of promised reforms to judiciary practice and operations, it is evident that the courts do not seem to be able to adequately and efficiently adjudicate, let alone even be aware of the fundamentals of case preparation.
Ukraine has not established, and neither does present practice suggest, that it has an adequate legal system to deal with the fundamental issues that consistently arise within a free market and rules-based economy. For example, the identification of key informational data, its efficient gathering and distribution, or the need for criminal investigation if the evidence suggests as such.
In a country whose future economic growth will largely rely on foreign direct investment, the question that begs to be asked: is it possible for a foreign entity to acquire proper and timely judicial recourse within Ukraine’s courts? The answer is becoming a clear “no!”
To put it simply, why, after numerous court hearings, does the court still not have the fundamental and essential contractual documents? Why does it still not have the regulatory data that governs the behavior of a regulated substation? Why, after all these years, has the appropriate venue not been decided upon to render a final decision?
Even more, why has there not been an adequate criminal investigation conducted by the police authorities even when there was adequate suspicion that a criminal act occurred when TIU was cut off by the substation controlled by Kolomoisky, and when the results of a criminal investigation are needed to render a decision on proper damages? These are fundamental questions that of course must be asked, but haven’t.
And perhaps even more ominously, can Ukrainian courts expect that the police will perform a proper investigation upon which they can factually rely?
Furthermore, the lack of such an investigation, especially in this case, even begs for further questions to be asked: Why hasn’t a police investigation been conducted? What are the reasons? And in addition, is there an issue of malfeasance, or is it a question of incompetence?
And then, even greater questions arise: Are the authorities even aware of the depth of their responsibilities in such a case? Ultimately, which institutions are responsible for justice?
The responsibility for such inadequate practice lies with the government and its lack of focus and determination to make the appropriate changes in practice within the judicial system. The lack of progress not only challenges the veracity of government promises being made, but also its competence, if not, its willingness.
A presidential administration in mid-term has had adequate time and opportunity to establish the priorities of its course and to be judged on its accomplishments or the lack thereof.
One of the primary roles of government is to create an environment whereby both domestic and international investors are confident and prepared to risk their investment capital.
An investor’s primary objective is of course to make a profit and to sustain a rate of revenue, whereas a responsible governments’ ultimate objective is to stimulate and create economic growth, jobs for its citizens, and increase tax revenue that would ultimately benefit society.
To this end, every government must create and communicate a clear economic plan.
It must act with clarity.
It must act consistently.
Its actions must inspire confidence.
It must create a stable rule of law society.
In regard to direct foreign investment in Ukraine, the question that must be asked: Has the government of Volodymyr Zelensky specifically addressed its long term economic growth plans within which its foreign economic partners can play a key role?
Does the Zelensky government act with clarity, not only in its public announcements regarding its plans, but in the actions of its judicial system, whereby investors not only receive clear signals of the government’s intentions, but know how the government will act?
Can the Zelensky government be counted upon to act consistently in the fulfilment of its promises to its investors?
Do the actions of the Zelensky government inspire confidence in investors to choose Ukraine as the place where they would agree to invest in its future? Talk of Investment nannies may seem fashionable, but it is a transformative paradigm shift that is needed.
The question that should be asked: Is the government acting as a watchdog to protect foreign investment and rule of law in Ukraine, or is the Ukrainian government simply a servant of oligarchic interests?
The TIU case against Kolomoisky both questions and challenges the Zelenskky government’s commitment to creating a prosperous, fair and just investment space. Will the Zelensky administration choose to be a responsible watchdog?
The international investment market is watching and is making its decision on future investment in Ukraine. It is closely following the TIU Canada case.
Source: New Europe
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