Lawyers Act for U.S. and French Private Investors in a First-Of-A-Kind Tax-Related Investor-State Dispute

  • Dispute Resolution

Marchenko Danevych has successfully acted for both U.S. and French private investors and their local manufacturing subsidiary (the largest exporter of products in its industry) in domestic litigation with the State Revenue Service of Ukraine and in the related investor-state dispute and negotiations with the Government of Ukraine.

The domestic litigation concerns an illegal assessment by the Revenue Service of multimillion fines for an alleged infringement by a local manufacturing subsidiary of Ukrainian currency control regulations. The Revenue Service claimed that the subsidiary could not set-off receivables and payables under group export-import contracts.

The investment dispute concerns infringement by Ukraine of its obligations under the applicable Bilateral Investment Treaties to accord fair and equitable treatment to the investments of the U.S. and French Investors in the territory of Ukraine and to protect the investments from unreasonable or discriminatory measures. Ukraine breached its treaty obligations by imposing as a result of the illegal, arbitrary and confiscatory fine imposed by its Revenue Service on the Investor’s subsidiary combined with the arbitrary and unreasonable provisional ban imposed by the Ministry of Economic Development and Trade of Ukraine on export-import operations of the subsidiary.

As a result of the negotiations between the Investors and the Government of Ukraine, the export-import ban was lifted by the Ministry of Economic Development and Trade.