OREANDA-NEWS. November 09, 2009. The Russian National Container Company (NCC) received a verdict from the Supreme Court of Ukraine this Wednesday ruling to terminate NCC’s Joint Operation Agreement with the state-run Sea Commercial Port of Illychivsk (SCPI). The court deemed the Agreement “fettering and economically inefficient”. This means Ukrtranscontainer (UTC), NCC’s Ukrainian subsidiary operating at SCPI, has to wind up its business in that country. The Supreme Court’s ruling completely overturned the previous judgment of the High Court of Arbitration in Kiev that had acknowledged the legitimate and binding status of the disputed contract.

NCC has become fifteenth company in a row of international investors that have been recently forced to terminate their operation in Ukraine. Dozens of mid- to large size companies are currently awaiting court verdicts on similar cases with little hope to win. NCC leadership is convinced that the Ukrainian government has been deliberately pursuing a course towards nationalizing private enterprise and embezzling the assets brought into the country by foreign and domestic entrepreneurs. This course withstands no criticism especially in the view of this country’s strive to be accepted to the EU and other international organizations.

Under the given circumstances, NCC is determined to bring the UTC vs. SCPI case to an international court of law. NCC is prepared to resolutely defend its standpoint based on the following key messages. Firstly, the company had invested over USD 61 mln  into the project and contributed over USD 92 mln into the budget of Ukraine since 2005 when the agreement with SCPI was signed. UTC terminal’s throughput capacity has increased almost five-fold to reach 600 TEU since then. Secondly, out of 100 percent of SCPI’s annually posted consolidated earnings, 80 percent is contributed by NCC and only 20 percent is delivered by SCPI itself. Calling this sort of UTC’s operation “inefficient” is a cynicism going beyond common sense. Finally, NCC will never accept a situation whenever its good name within international shipping community is intentionally damaged.

As there is no more opportunity to right a wrong in Ukraine, NCC is going take SCPI to an international court as an enterprise run by the Ukrainian state, the state that doesn’t stop saying it respects international law. In 1994, the Ukrainian parliament staged a spectacular ratification of an international agreement on foreign investment protection. It is evident today that Ukraine is far from meeting the clauses of this legally binding accord. Therefore NCC will use all legal tools in its possession to make sure Ukrainian authorities follow their international obligations and discontinue expropriation practices.