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Comments - Opinion: Cement packers inspection may result in AMCU penalty to its initiator

Opinion: Cement packers inspection may result in AMCU penalty to its initiator

Kyiv. September 14, 2010

Ukrcement Association’s initiative to inspect all cement packers in the Ukrainian market may be interpreted as a sign of anticompetitive concerted actions and lead the initiation to a material penalty imposed by the Antimonopoly Committee of Ukraine, supposed Sergii Koziakov, the senior partner of Volkov Koziakov & Partners law firm.
This was his comment to Interfax-Ukraine Agency on the relative application of Ukrcement Association to the Cabinet of Ministers of Ukraine, the State Committee of Ukraine for Technical Regulation and Consumer Policy (Derzhspozhivstandard) for conduct of such inspection aimed at detecting packaged counterfeit cement.
“Should the AMCU admit the violation of the Competition Law of Ukraine as a part of Ukrcement Association’s moves, it can decide to impose rather tangible penalty,” Mr. Koziakov said.
According to him, few applications will be enough for the AMCU to notice the situation.
As Sergii Koziakov highlighted, the aforesaid Association’s moves have signs of anticompetitive concerted actions as envisaged by the Law of Ukraine "On Protection of Economic Competition". He pointed out that the Law, inter alia, interdicts the restriction of production or commodity markets, technological development, crowding out of or restraint of other business entities’ access into the market.
Moreover, Mr. Koziakov believes such actions should also involve a substantial restriction of competitiveness of other business entities without reasonable grounds.
Reportedly, Ukrcement has recently filed to the Cabinet of Ministers of Ukraine and Derzhspozhyvstandard a request to inspect all companies packing cement in the Ukraine’s market in order to detect packed counterfeit cement.
The key point of the request is to include inspections of such packers into 2011 plan with funds to be allocated for that purpose.
In its turn the Association informed that if required it could provide the information on which firms should be inspected.
The Association was earlier reported to estimate counterfeit products in the Ukraine’s cement market in the approximate amount of 1 mln tones per annum.
Ukrcement Association was established in January 2004 through reorganization of Ukrcement Ukrainian Concern of Enterprises and Organizations of Cement and Asbestoscement Industry and became its legal successor. The Association comprises of 24 members-legal entities, among which there are enterprises producing cement and concrete, as well as repair and research & development enterprises of the sector.
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Ukraine must settle the issues of certification of grain and elevators, the activities of the Guarantee Fund for the grain warehouse receipts

Kyiv. July 18, 2013

Ukraine taking into account the feedback from the participants of the grain market in the near future has to resolve all the issues of certification of grain and its storage services, as well as the activities of the Guarantee Fund obligations under warehouse receipts for grain.
This opinion was expressed by the head of the practice of the international trade law of Volkov & Partners Andriy Zablotskiy during a press conference at the Interfax-Ukraine agency on Tuesday.
"Despite the fact that, in general, the legislation is moving in the right direction, we believe that these two issues - the certificate of quality and Guarantee Fund – are to be adopted in the near future," - he said, commenting on today existing laws ruling these issues.
According to A.Zablotskiy, in particular, the bill number 2459 presented by MPs on amending the law on grain and grain market in relation to deregulation is the most optimal for today.
In addition, the bill number 2436, initiated by the president, on the total abolition of grain and its storage services certification may have a positive impact on the market, provided it is revised according to the comments of market operators.
At the same time, the bill number 2361a, initiated by the government, comprising the necessity of the examination on GMOs  to be reflected in the certificate of quality "will let the government control exports."
"Today, the issue of GMO in Ukraine is governed in a complicated way, no GMO has been registered. This suggests that if the lawmaker is trying to fix the necessity of obtaining a certificate for each shipment on the presence or absence of GMO, they will be able to control exports. We do not believe it is appropriate at this time because the country lacks registered GMO ", - he said.
Commenting on the initiative to establish a guarantee fund obligations under warehouse receipts for grain, A.Zablotsky said: "In Ukraine, this mechanism is turned on its head."
"Today, there remain a number of open questions regarding the activity of grain warehouses that are required to enter the Guarantee Fund. In our view, they are incorrect, since they create the possibility of the influence of the fund on the warehouses if the current legislation is not changed. We would want the comments of the market participants to be accepted, because, given the potentially large export forecasts, the activity of the warehouses can pause at one point, "- he said.
As reported, the Ukrainian Agrarian Association has critically evaluated the prospects of implementation of the law on the establishment of the Guarantee Fund commitments on warehouse documents. In February, they appealed to the Ministry of Agrarian Policy and Food requesting to amend the law and to create for this a special working group comprising experts of the market.
The Verkhovna Rada on December 6, 2012 adopted the Law 5462-VI, which ammended the requirements for certification of the warehouse services for the period of one year and a mandatory certification of grain quality and its products both in domestic transportation, and in the export-import operations.
Before that, in July 2012, the Cabinet of Ministers simplified the procedure of certification of the grain warehouses on compliance of the services for the storage of grain and products introducing an unlimited duration of the certificate, and also gave the right to certify the grain warehouses to the persons who use them under the contract of rent and lease.
By another ruling in September of the same year, the Cabinet abolished the mandatory registration of the certificate of quality of grain and its products when moving within the country, including in the directions of ports (except for the purchase of grain at the expense of state and local budgets).


Compensation of losses of travel agencies to social and natural disasters possible with official declaration of force majeure, - Oleksyi Volkov

Kyiv, June 12 2013

An official declaration of force majeure by a country that tourists visit is required to compensate for losses which face travel agencies sending tourists abroad and caused by social and natural disasters, a managing partner of Volkov and Partners Law Firm, Oleksiy Volkov, said at a press conference at Interfax-Ukraine on Tuesday.
"The force majeure circumstances have to be formalized and declared by the state agency of a certain country as a fact of force majeure, to declare that force majeure circumstances have appeared. Until there is such a declaration, travel agencies, insurance companies and travel agents will not consider events in the country as force majeure and pay claims to tourists," the lawyer said.
Volkov said that "irrespective of the information stipulated in the contract signed by the travel agency and tourists, a range of events, which are declared in the concrete legal system as force majeure events, which the sides cannot foresee, have to occur so that one can say that a force majeure occurs.
"Both for international trade and international tourism, a force majeure is to be recognized by the chambers of commerce of the concrete country. The recognition – a specially published bulletin – says that a force majeure event has occurred, and it fixes not only its start, but also the expected duration. In addition, the next declaration should state the prolongation or the end of the force majeure events. These are all official documents that are spread via the foreign ministries of the countries and sent to all foreign diplomatic organizations," he said.
Commenting on the situation on the tourism market due to events in Turkey, Volkov said that if people bought trips in January-February 2013, it is likely that they did not expect that the said events could occur and the events could be considered a force majeure for them.
"Those who buy trips today know about the events and it is unlikely that they can appeal to a force majeure, not only because the force majeure was not declared by the country, but because the tourist was informed on the events not only via media reports, but also by his travel agency," he said.
Volkov said that the major part of the countries where the said events happen, does not hurry to declare the events a force majeure.


Iryna Polovets: "Investigation of the USA in the case about recognition of Ukraine the most pirate country can last 6-9 months"

Kyiv, June 1, 2013

Investigation of the USA in the case about recognition of Ukraine the most “pirate” country can last six up to nine months, Iryna Polovets, the lawyer of Volkov and Partners Law Firm considers.

“Usually, investigation of violation of intellectual property rights in accordance with the Special section is carried out within six months, but it can be prolonged up to nine months. If countries will not succeed to find a compromise in investigation, and similar practice will be applied by Ukraine, the USA can unilaterally take measures in regard to Ukraine”, so she commented to Interfax-Ukraine agency the report about beginning of such investigation. According to Iryna Polovets, in particular, such measures as additional duties or non-tariff limits on goods which Ukraine exports to the USA can be introduced.

The lawyer noticed also that the Special section of chapter 301 of the Trade Act 1974 authorizes trade representative of the USA to investigate the cases of gross violation of intellectual property rights. The countries in which the level of protection of intellectual property rights is extremely low, and who violate the rights of holders of intellectual property in the USA, are included into the list of so-called "Priority foreign states" of the annual special report 301. In 2013 Ukraine became the only country which got such status, while China, Thailand, Russia, India, Indonesia became the category of the states, in which the supervision of the observance of intellectual property rights was introduced.

Sanctions for violations of intellectual property rights were already applied in relation to Ukraine in 2001, when the USA found guilty Ukraine in the most production volume of pirate CD and DVD in Europe. Then the USA excluded the country from the list of countries, which was given trade preferences, and introduced additional 100% duty on some groups of goods with the purpose of indemnification of losses of the American companies from a failure to observe the intellectual property rights. As reported, the USA started investigation in the case about recognition of Ukraine the most “pirate:” country.

Within the framework of the case the USA expects to receive comments and remarks from parties involved, and plans to carry out the public proceedings of this case on July 18 of this year. In the annual special report the trade mission of the USA placed Ukraine on first place in the list of countries which are not providing effective legal protection of intellectual property rights. In opinion of authors of the report, Ukraine held the lead in the list “according to its deserts" and went to this during several years. With the volume of use of unlicensed computer software the country exceeds nearly all other countries together included into the list.


Introduction of special import duties on cars contradicts WTO norms, says lawyer Andriy Zablotsky

Kyiv, March 15, 2013

The introduction of special import duties on cars regardless of the country of origin contradicts the norms and practice of the World Trade Organization (WTO), the head of the international trade law department at Volkov & Partners law firm, Andriy Zablotsky, has told Interfax-Ukraine.

"A WTO member has the right to introduce special duties after a special investigation. Given the materials of the investigation, the Economic Development and Trade Ministry did not consider the practice of the WTO when conducting the investigation, as well as a number of important factors that, according to the WTO norms, do not allow to apply special protective measures," he said.

According to the lawyer, to apply special protective measures it is necessary to prove a causal link between the sharp, sudden and substantial increase in imports and a serious damage made to national producers as a result of such imports.

"It should be mentioned that during the period of investigation in 2008-2010 car imports declined significantly, which, according to the WTO norms, does not allow to conclude its negative effect. Moreover, import prices were higher than the prices of national producers," he explained.

In addition, Zablotsky noted that the ministry in its report did not provide a list and the justification of the influence of other factors on the national producers.


Roman Drozhanskyi: Lowering of quorum in joint stock companies will lead to more balanced management

Kyiv. January 24, 2013

The proposal to reduce quorum for holding meetings of stockholders (SH) from 60%+1 to 50%+1 voting share is a positive step, which will afford to make the process of company management more proportional, considers partner of Volkov and Partners Law Firm, Roman Drozhanskyi.
Mr. Drozhanskyi expressed this opinion to the Interfax-Ukraine Agency, commenting draft amendments to the Law on Joint-Stock Companies (regarding the quorum for holding general meetings of the JSC to assure steady investment regime in Ukraine) proposed by the Head of the Parliamentary Committee for Industrial and Investment Policy Yuriy Voropayev (the Party of Regions). According to the lawyer, the draft law is yet another attempt to harmonize legislation of the country with international practice.
“The current Law that stipulates for 60% quorum level for holding general meetings of SH is not efficient and affords minority SH to receive disproportional impact over the process of company management”, the lawyer concluded.
Roman Drozhanskyi believes that proposal of the author of draft law to leave existing quorum level as it is for stockholders of the private joint-stock companies is also a progressive one. He also stated that the same regulation has to be introduced for limited liability companies.
Reportedly, this draft law was just another link in a chain of similar documents concerning reducing a quorum for holding meetings to 50%+1 voting share. In October 2006 one of such drafts was adopted, but afterwards former President Victor Yuschenko vetoed it, and the veto was never passed.
Yu. Voropayev and his colleagues had already introduced similar draft law in June 2012; however, Verkhovna Rada did not make time to consider the issue.


Resumption of Certain Requirements for Grain Certification Creates Barriers to Its Exports, Says Andrii Zablotskyi

Kyiv. December 25, 2013

The repeated introduction and creation of new requirements for grain quality and its storage services certification creates barriers to its exports and affects the competitiveness of the Ukrainian grain market, the head of the international trade department at Volkov&Partners law firm, Andriy Zablotsky, considers.
"Law No. 5462 signed by the president on December 8 repeatedly introduced the certification of granaries for one year and renewed the need to pay an appropriate fee to the national budget, as well as resumed the requirement to obtain a grain quality certificate for grain transportation inside the country," he said at a press conference at Interfax-Ukraine on Tuesday.
In addition, according to the lawyer, the law adjusted the procedure of obtaining grain quality certificates for its exports, in particular, expanded the list of grounds for refusal to issue grain quality certificates to the market participants.
"Now they [exporters] must provide a certificate of the presence or absence of GMOs in agricultural products. Grain quality certificates will not be issued without the document, which will make exports and imports impossible. In our opinion, this creates a threat to grain exports and, of course, affects the competitiveness of the entire grain sector. If the norm is not changed, it will affect the flow of foreign currency to Ukraine," said the expert.


Membership fee tax introduced from January 1, 2013 says new Law on NGO

Kyiv, December 24, 2012.

The new law on nongovernmental organizations (NGOs), which takes effect from January 1, 2013, introduces a tax on profit received from membership fees, President of All-Ukrainian medical union Oleh Musiy said at a press conference at Interfax-Ukraine on Monday.
"The state will additionally levy a membership fee tax. When organizations obtained the status of unprofitable organizations, one of the obligatory requirements was the availability of membership fees – this allowed obtaining the status," Musiy said.
Thus, from January 1, 2013 all of the organizations which collect membership fees automatically become commercial organizations. They will be considered commercial organizations until they re-register the status of unprofitable organizations in the tax body.
"Now we will have to re-register the status of unprofitable organizations in the State Tax Service and from January 1, 2013 we'll automatically become the commercial organization until we re-register the status," he said.
The head of the legal department at Ukrcement Association, Yevhen Miliavsky, said that at present, all the sector associations are unprofitable organizations and they do not pay value added tax.
He said that Article 19 of the said law establishes some criteria for the All-Ukrainian association status, and many existing organizations are not in line with them.
"One of the [criteria] is the number of branches. For example, our regulations and specifics of our operations do not foresee the availability of structural divisions. We don't have structural divisions. We have plant-members in the regions," Miliavsky said.
A managing partner at JSC Volkov and Partners Oleksiy Volkov said that the law has created many difficulties in understanding and using the institution of nongovernmental organizations in Ukraine, although its introduction from January 1, 2013 will be a first step of testing it in practice.
"The law is the required step, despite the fact that it should be revised. However, we should start from the implementation of the law. The next step will be its modification," Volkov said.
As reported, members of the forum of nongovernmental organizations of Ukraine called on the Ukrainian president to submit a draft law on the postponement of the taking effect of the law on NGOs for January 1, 2014.
Forum members said that the law brings a threat to operation of NGOs and Ukrainian society as a whole.


Lenders do have right to collect debts from companies of FEC

Kyiv. December 20, 2012

Suspended enforcement proceedings with regard to substantial quantity of court decisions on collection of debts from the companies of the Fuel and Energy Complex (the FEC) have to be recommenced due to the Decision of the Constitutional Court of Ukraine (the CCU); in particular, lenders did received the possibility to collect debts from indebted companies.
This opinion Ihor Martsyn, partner at Volkov and Partners expressed to the “Interfax-Ukraine” information agency, commenting the Decision of the CCU dated December 13. This Decision prescribes that enforcement proceedings connected with collection of indebtedness from the companies of the FEC may be suspended just in case, when such indebtedness resulted from partial energy settlements.
“Therefore, lenders to the companies of the FEC, which cannot be associated with the Law “On Measures Purposed to Ensure Sustainable Work of Companies of the Fuel and Energy Complex”, get a real possibility to collect debts from debtors,” commented on the Decision Ihor Martsyn.
According to him, until recently one could not have been on the safe side in cooperation with the FEC: in case a company of the FEC did not fulfil its responsibilities there is a slim chance of debt to be returned.
“This fact was based on the provision of the Law of Ukraine “On Enforcement Proceedings”, according to which the bailiff could suspend the proceedings, referring to the registration of the debtor in the Register of the companies of the FEC. However, the CCU provided official interpretation of the indicated provision of the Law “On Enforcement Proceedings,” said the lawyer.
In particular, the CCU indicated that enforcement proceedings connected with the indebted company of the FEC could be suspended only in case if the debt-to-be-collected defined in the Law on the FEC, namely, debt for energy, only if the parties to the enforcement proceedings are also parties to settlements under the Law on the FEC.
Additionally, Ihor Martsyn underlined that real enforcement proceeding with regard to the monetary responsibilities of the FEC’s companies, though restarted, and might not be useful in practice, whereas the debt amounts are rather sustainable and accrued during many years (within the standstill period on enforcement of the adopted decisions).
Reportedly, on December 18, the CCU announced a Decision in the case initiated upon request of Volkov and Partners Law Firm filed in favour of the DID Kons Ltd. and with plea for official interpretation of the provisions of the Law “On Enforcement Proceedings” considering their relation to the Constitution of Ukraine, Economic Procedural Code and the Law “On Measures Purposed to Ensure Sustainable Work of Companies of the Fuel and Energy Complex”...


Volkov and Partners Law Firm: Ukraine sets precedent, requesting the WTO to modify duties for almost 400 products

Kyiv. December 5, 2012

United States’ and other WTO members’ concern over Ukraine’s intent to renegotiate duties, first and foremost, is rooted in the long list of tariff rates planned for discussion, considers a senior associate, and head of the International trade department with Volkov & Partners, Andrii Zablotskyi.
Commenting to “Interfax-Ukraine” information agency on Ukraine’s request to the WTO, he noted that the list provided for discussion includes 371 tariff lines and creates a precedent, which may encourage other countries to file similar requests.
Mr. Zablotskyi believes that Ukraine will hardly be able to renegotiate tariff levels on all products proposed, though the grounds for review are indisputable, and additionally, upon renegotiation, if successful, new level of duties for products of the weakest industries may be anticipated.
“Ukraine has the right to  modify import duties on specific products. This does not contradict the WTO rules, whereas Ukraine has complied with all prescribed procedures, having reserved the right according to Article XVIII of the GATT 1994 as early as on November 9, 2011,” said Mr. Zablotskyi.
According to him, Article XVIII does not restrict a number of lines for renegotiation. Consequently, it is incorrect to declare, as certain countries do, that the quantity is not equal to the volume prescribed pursuant to the WTO tariff negotiations.
“We believe, that the foregoing was declared because previously Article XVIII of the GATT 1994 has been applied to rather rarely, and mostly to revamp insignificant number of tariff rates (from 10 to 20 lines),” mentioned the lawyer...


Additional Import Duty Requires Consultations with WTO Trade Partners Lawyer

Kyiv. November 22, 2012.

Additional import duty may be applied in case of country’s balance of payment breakdown and does not contradict to the provisions of the General Agreement on Tariffs and Trade (GATT), requiring, however, consultations with trade partners within the Balance of Payments Committee of the World Trade Organization (WTO), informed Irina Polovets, an associate in Volkov and Partners Law Firm to the “Interfax-Ukraine” agency.
“Measure of the additional import duty application complies with the WTO rules,” noted Ms. Polovets, commenting on the previous mass media information concerning the Cabinet of Ministers plans to impose additional import duty amounting to 10% of products customs cost in case of balance of payments sharp decrease.
“Another issue is how it will be adopted and which products the duty will cover. Applying such measures, Ukraine has to conduct consultations with trade partners whose interests may be affected by the measure within the Balance of Payments Committee of the WTO. As a rule the International Monetary Fund takes part in the consultations to evaluate the country’s balance of payment,” she added.
According to Iryna Polovets, an additional import duty, if imposed, will not itself contradict to the article 12 of the GATT, however, this article requires that the Members of the WTO gradually reduced the duties progressively as the balance of payments improves.
“Indeed, provisions of the article were initially drafted in 1947 allowing for restrictions in case the balance of payments changes for the worse. Still, according to the agreement with regard to provisions of GATT on balance-of-payments the WTO members bound to give preference to the measures, which would have the less adverse affect to the trade,” noted Ms. Polovets.
These are the so-called “price-based measures”, additional import duties, import deposit requirements and other measures, explained the lawyer.
“In case of commodities subjected to additional duty, according to the WTO rules, countries applying restrictions have to try and avoid unnecessary damage to commercial and economic interests of the other WTO members; in particular adverse effect to the export of primary commodities,” underlined the lawyer.
Furthermore, according to her the duty must not be of a protectionist’s nature...

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