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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...


Opinion: Increase in VAT-bonds to turn them into instrument for VAT settlements with state

Kyiv. September 14, 2010

”The government’s desire to continue issuing sovereign bonds (OVGZ) to redeem overdue payments on VAT refund (VAT-bonds) and impossibility to refund VAT by hard cash could lead to VAT settlements with the state through these securities, in particular, settlements on import operations”, believes Associate of Volkov Koziakov and Partners Ruslan Malinovskyi, commenting to Interfax-Ukraine on the issue related to another VAT-bonds issue being up for debate by the government. The latter was informed by First Deputy Head of Administration of the President Iryna Akimova.
"After having received VAT-bonds a number of companies decided to sell their VAT-bonds to accelerate replenishment of their working capital. At that, discount on such sales attained 19– 22 percent of bonds par value. At the meantime, other companies are willing to use VAT-bonds as a payment instrument, i.e. redemption of current VAT-liabilities", Mr. Malinovskyi said.
In his opinion, VAT-bonds could be best used without losses at discounted sales in case of VAT refunds on import operations. VAT-bonds may also be used as a financial instrument to repay current loans or as a pledge on long-term liabilities to banks and investors.
Moreover, Mr. Malinovskyi added that the moves taken by the government in relation to VAT-bonds issue do not fundamentally address the issue of cutting the amounts of outstanding VAT refunds.
"The offered mechanism has partially proved its value, and many companies agreed to get VAT-bonds. However, a monthly increase in current indebtedness on VAT refund would force the government to continue issuing them", suggests the Associate...


Associate: Ukraine has right to restrict grain export only in case of deficit

UNIAN. Economy
September 13, 2010

Ukraine has the right to restrict grain export with no relevant measures applied by the World Trade Organization (the WTO) only in case grain is in short supply as stated to UNIAN by Associate of Volkov Koziakov and Partners ANNA GLADSHTEIN.
"Having acceded the WTO Ukraine undertook to avoid export restrictions. Any grounds for relevant measures other than the justified conclusion on the deficit of certain product shall be ruled out", said Ms. Gladshtein.
According to her, WTO Agriculture Agreement includes a possibility to impose restrictions on foodstuff export only by virtue of paragraph 2(), Article XI of GAAT 1994, addressing to prevent or ease down sharp deficit of foodstuff or other goods being of high significance for exporting country. This was the argumentation Ukraine provided before to justify export restrictions and protection of its interests, precluding, thus, any sanctions from the WTO and its members.
Moreover, Ms. Gladshtein explained that in case of export ban or restriction subject to the said paragraph other WTO members may not take retaliatory actions against Ukraine, as in such case it is envisaged not a full export prohibition but only interim restraints governed by the exception under WTO’s rules.
Anna Gladshtein added that prior to a WTO member imposes export ban or restriction it shall submit an advance written notification to WTO Agriculture Committee, which informs about the nature and duration of such measures. Besides, the country imposing the aforesaid measures shall be assigned a commitment to carry out consultations in relation to any issue concerned with any other WTO-member (upon its request) having substantial interest as an importer... 


Terms of negotiations about construction permit may be reduced when Urban Development Code adopted

Kyiv. September 10, 2010

According to Anatolii Chebukin, Senior Associate of Volkov Koziakov & Partners, implementation of the governmental project on reduction of the term of preparation of construction permits from 475 to 60 days is expected when the Urban Development Code is adopted. This will become a solution to simplify the issuing procedure of such permits locally.
“This project (the Urban Development Code – Interfax-Ukraine) envisages the harmonizing mechanism for regional and local construction rules, including the terms of negotiations about construction permits”, - Mr. Chebukin revealed to Interfax-Ukraine commenting Sergii Tigipko’s, Vice Prime Minister of Ukraine, construction projects.
As the lawyer stated, the draft Urban Development Code of Ukraine being currently considered by the Parliament of Ukraine is designed to codify the urban development & architecture legislation.
For instance, as set forth in the draft code, regional construction rules are based on typical regional construction rules approved by central executive government authority for construction, urban development and architecture issues. In the meantime, procedures envisaged by local construction rules must comply with regional construction rules and laws of Ukraine.
As Mr. Chebukin revealed to Interfax Agency, regulation of issuing procedure of permits refers to the Law of Ukraine On Permit System in Economic Sector and Other Legislation. This will definitely establish the unified time period of negotiations about permit for all urban development entities.
The lawyer believes that this scheme will allow avoiding difficulties in implementation of the governmental projects and harmonizing regulatory acts of constructing communities with further changes in the national legislation.
Reportedly, the Cabinet of Ministers of Ukraine intends to reduce the term of preparation of construction permits from 475 to 60 days...


Lawyer: Recommended procedure for appeal against arbitration courts decisions creates legal collision

Kyiv. September 9, 2010

“The procedure for appeal of arbitration courts’ decisions, being on the anvil in the Verkhovna Rada and should be adopted, would create legal collision as the recommended amendments into the Code of Civil Procedure of Ukraine mismatch the provisions of the Code of Commercial Procedure of Ukraine and the Law “On Arbitration Courts”, Associate of Volkov Koziakov & Partners Mykhailo Spasov believes."Should the Code of Commercial Procedure not be respectively amended, there would arise a distorted interpretation of the provisions of the Law “On Arbitration Courts” that are applicable to competence of local commercial courts as an instance for appeal against arbitration courts’ decisions and enforcement documents issue", Mr. Spasov informed to Interfax-Ukraine, having commented upon the draft law that is based on by the Parliament in consideration of the procedure for appeal against arbitration courts’ decisions.
The Associate believes that in such case a litigant dissenting from a commercial court’s decision would have good reasons to appeal against such decision and/or an enforcement document issued by the court, pleading the violation of jurisdiction rules.
Mr. Spasov emphasized that it is possible to avoid such collisions by means of amendments introduced into the Law “On Arbitration Courts”. More specifically, it is necessary to provide local courts with exceptional powers in accepting complaints against respective arbitration courts’ decisions as well as in issuing enforcement documents on such decisions.
Today the issues concerning appeal against arbitration courts’ decisions and issue of enforcement documents on their decisions are regulated in Ukraine by the Law “On Arbitration Courts".
Reportedly, the Verkhovna Rada of Ukraine supported the draft law, regulating the issues of appeals against an arbitration court’s decision and issuance of writs of execution for an arbitration court’s decision, in the first reading...


Ukraine tries to facilitate tobacco products import to Armenia with WTOs assistance

Kyiv. July 26, 2010

Last week Ukraine first exercised its right to request consultations from the World Trade Organization (the WTO) and submitted a request for consultations with Armenia to WTO Dispute Settlement Body. According to Ukraine’s statement published at WTO’s website, Armenia applies so-called "presumptive tax" to Ukrainian tobacco products.
Under the Law of Armenia "On Presumptive Tax for Tobacco Products" of March 24, 2000 the excise rate is 6,500 drams per 1,000 cigarettes for imported products and 4,750 drams  - for domestic products. Thus, the regime for Ukrainian products is less favorable than for like domestic products.
Ukraine states such actions are inconsistent with paragraphs 1, 2 and 4 of Article III of the General Agreement on Tariffs and Trade 1994 (GAAT 1994) envisaging the establishment of national regime of internal taxation and regulation in relation to imported products.
Moreover, under the Law of Armenia "On Excise Duty” of July 7, 2000, Armenia imposes excise tax on alcoholic beverages (Customs commodity codes: 2203, 2204, 2205, 2206, 2207, 2208) in violation of its commitments before the WTO as it protects national producers via discrimination of the products imported from Ukraine.
Earlier similar things with Ukrainian products occurred in the Georgian market. Ukraine saw discrimination in that excise duty on imported tobacco products was one and a half times higher than for domestic cigarettes. The Ministry of Economy of Ukraine conducted nonofficial consultations to protect interests of Ukrainian producers. As
a result, in November 2009 the Georgian Parliament decided to set the unified excise rate.
Similar nonofficial consultations were held with Armenian representatives;
however, this resulted in unsatisfactory outcome for Ukraine. Hence, this apparently became the reason for Ukraine to request for consultations within the WTO.
As Associate of
Volkov Koziakov and Partners Anna Gladshtein explains if Ukraine-Georgia consultations pass properly than mutually agreed solution will be made. Otherwise, if the parties fail to agree within due term set for consultations than Ukraine could call for a Panel to settle the dispute.
Ms. Gladshtein added that under Article 4.3 of the WTO Understanding on Rules and Procedures on Dispute Settlements, Armenia has to respond to the request not later than 10 days from the moment of its receipt, unless otherwise provided, and come into consultations not later than 30 days after the receipt of the request for consultations.


Opinion: Procedure of tax clarifications in draft Tax Code hard to apply

Kyiv. June 30, 2010

The provisions of the draft Tax Code stipulate no binding nature of enforcement by taxpayers of tax and customs clarifications, and contradictions in practices of imposition of value-added tax (VAT) on export of services could trigger forfeit of price competitiveness of Ukrainian service suppliers on world markets, suggest the lawyers interrogated by Interfax-Ukraine.
"The draft Tax Code sets out that tax consultations and tax clarifications given by controlling authorities under the proper procedure are not binding for taxpayers. As such, a taxpayer is not obliged to fulfill and put them into practice", reported Associate of Volkov Koziakov & Partners Ruslan Malinovskyi.
According to him, the draft of new Tax Code contains new procedure for the state tax and customs services to provide tax consultations and clarifications on the issues of practical application of certain provisions of the tax or another legislation, the enforcement of which shall be controlled by these authorities. In case where a taxpayer dissents from tax clarifications, such clarifications may be challenged in a judicial procedure.
At that, as Mr. Malinivskyi pointed out, consultations and clarifications are not legal acts by their nature so may not be appealed through the courts.
"In practice one may appeal to the court only with decisions and actions of tax or customs authorities, which entail respective legal consequences", explained the Associate.
Mr. Malinovskyi believes that without detailed determination of the procedure of provision of the said clarifications and clearer wording of the provisions stipulating the practical application of such clarifications one may witness the confusion, conflict of interests of different structures, or the procedure will no go...


Lawyer offers to acknowledge eligible recurring general meeting of economic associations with 50 percent of voting shares

Kyiv. June 11, 2010

“The recurring general meeting of LLC (JSC) should be regarded eligible even though its members (shareholders) hold just 50 percent of voting shares instead of over 50 percent, as stipulates respective government draft law,” suggests a counsel from Volkov Koziakov and Partners Nataliia Isakhanova.
This was her comment to the Interfax-Ukraine Agency on the Draft Law “On Amendments to Some Laws of Ukraine with regard to the reduction of quorum needed to conduct recurring general meetings of the Economic Association” (No.6504), which had been recently registered with Parliament.
"According to the pattern, the problem of blocked general meetings of members (shareholders) by means thereof regards both JSC (LLC), in which minority members (Shareholders) hold, in general,  40 percent of voting shares, and   JSC (LLC), the body of which includes two persons/entities holding voting shares in halves," Ms. Isakhanova said.
She also explained that in case one of the members (shareholders) in such companies does not visit the meeting, whereby putting obstacles in the way of decisions affecting their economic activity, it seems unfeasible to hold the meeting.
"It makes sense to amend the draft law No. 6504 in a part of the number of voting shares necessary to conduct a recurring general meeting of the members (shareholders). To wit, a recurring general meeting should be regarded eligible even if participating members (shareholders) holding just 50 percent of voting shares, and not over 50 percent, as it is set out in the reading of document registered with the parliament," Ms. Isakhanova resumed.


AMCU likely to acknowledge requirement to serve state enterprises in state banks as anticompetitive


The requirement of the Ministry of Industrial Policy of Ukraine to transfer the state enterprises under its control to servicing by state banks has signs of the competition violation. Therefore, the Antimonopoly Committee of Ukraine (the AMCU) is likely to decide against the Ministry, Senior Partner of Volkov Koziakov & Partners Sergii Koziakov believes.
"Actually, in interpretation of the Law of Ukraine “On protection of economic competition” such Ministry’s requirements could be acknowledged “anticompetitive actions of government bodies," Mr. Koziakov informed to Interfax-Ukraine, commenting on the Ministry’s relevant order released on its website.
According to Mr. Koziakov, as defined in the Law “such actions include: taking any acts (decisions, orders, instructions, regulations, etc.), issuing written, oral directions, entering agreements, or any other acts or omissions by bodies of power, bodies of local self-government, administrative self-control bodies and bodies of administrative management and control (a collegial body or an official), which have led or may lead to denial, elimination or distortion of competition”.
"The order stipulates the transfer of accounts to Ukreximbank and Oschadbank. These banks may benefit the thing that is defined by the Law as "favour of unlawful advantages in competition". In other words, as Mr. Koziakov explained, this is the case when a bank attracts clients as a result of unfair competition and, moreover, under the order issued by the government body.
In addition, according to him, the situation arises when state enterprises cannot be serviced by other banks offering, perhaps, rather better conditions of servicing.
"Analysis of AMCU decision practice gives some cause for hope that in such situation the committee, most likely, will take a decision against the Ministry of Industrial Policy,” Mr. Koziakov said.
Reportedly, the Ministry of Industrial Policy in an order No. 160 of March 30, 2010 demanded that state enterprises belonging to its administration area to move to servicing by the state banks until April 30, 2010.
The Association of Ukrainian Credit-Bank Union (KBS) applied to the AMCU with a request for rapid measures to stop anticompetitive actions of bodies of power allowed for by the Ministry’s order.


Canada establishes fact of dumped imports of Ukrainian steel


Canada has established the fact of dumped imports of carbon and high strength low alloy steel plates originating in Ukraine, has reported Canada’s authorized agencies
The respective information has been posted at the official web-site of the Canada Border Services Agency (CBSA) on January 4, 2010.
According to this information, margin of dumping – amount to which the normal value of the product in the country of origin exceeds the export price of the product for Canada – for Azovstal Metallurgical Complex (Mariupol, Donetsk region), which is a part of the Metinvest Group, as well as for other group companies, amounts to 15 percent, and for all other Ukrainian exporters – to 21.3 percent.
Here until February 2, 2010 the determination will be made of whether or not there exists an injury caused to the Canadian domestic producers of the like product by the Ukrainian dumped imports.
"In case the fact of injury is not proved the investigation may be terminated without application of anti-dumping measures. If according to the results of the Canadian domestic industry analysis the existence of the mentioned fact is proved, the final anti-dumping duty will be imposed. Yet, the latter scenario is more probable," reported a counsel of Volkov Koziakov and Partners Viktoriia Kotsiubska to the Interfax-Ukraine agency on Monday.
She explained that in accordance with provisions of Anti-dumping Agreement executed as a part of accession to the WTO by Ukraine, a final anti-dumping duty may be imposed only in case if both the fact of dumping and the fact of injury caused to domestic producer by the imports are proved.
V. Kotsiubska mentioned that by virtue of the WTO rules, the final anti-dumping duty cannot exceed the magnitude of the margin of dumping. In other words, for Azovstal and the Metinvest Group that will total 15 percent, and 21.3 percent as for all other producers, but may also be lower, in case it is enough to cover the losses suffered by the Canadian metallurgy...

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