Ukrainian grain exports: one-man show?
Vol. 26 • February 2011
Iryna Polovets, Tetiana Kheruvimova – Associates with Volkov and Partners
Before the ink could dry on Cabinet of Ministers of Ukraine’s (the
CMU) Decree No. 1254, which has established compulsory registration of
the foreign economic contracts with the Agrarian exchange (see “Grain
Saga”: new season, old story for details ), as the producers “got a buzz”
from another great surprise.
On February 2, 2011, Draft law No.8053 “On Amendments to the Law of
Ukraine “On State Support of Agriculture” (regarding specifics of
exports subject to state price regulation)” was registered with the
Committee on Agrarian Policy and Land Relations of the Verkhovna Rada of
Ukraine. This Draft law states that export of commodities subject to
state price regulation (including inter alia wheat, corn, barley,
sunflower seeds, rape seeds, flour, granulated sugar, dried milk, cattle
and poultry meat, butter and sunflower seeds oil) shall be effected
only by the agricultural producers within in-house volumes and a state
agent in charge of exports subject to state price regulation. The list
of exported products subject to state price regulation will be defined
by the government annually based on results of monitoring of the
agricultural products market. In other words, during sowing period a
producer will hardly know whether it can freely sell its products in
external markets afterwards.
Pursuant to Draft Law No. 8053 “a state agent for ensuring exportation”
is a state enterprise or a business entity with a state share in its
statutory fund, which is determined on a competitive basis by the
Cabinet of Ministers of Ukraine. However, Draft Law No. 8053 provides
for neither a size of the state share nor requirements to private
participants in “the state agent”...
Adopted law facilitates procedure for decision-making on conclusion of transaction with value exceeding 50% of company’s assets value
Kyiv. February 4, 2011
Roman Drozhanskyi, partner with Vokov & Partners
The Law of Ukraine “On Amendments into the Law of Ukraine “On Joint Stock Companies” adopted with inclusion of the President’s propositions does not contain now the main inconsistent provision that drew a wide response after its initial enactment by the Verkhovna Rada, believes Mr. Drozhanskyi. “So, stakeholders owning 95 or more per cent of a joint stock company’s shares will have no right to force other holders to sell their stakes”.
The provision in question disappeared from the final wording of the Law possibly due to foreign investors’ criticism implying that Ukrainian companies’ shares would enjoy low attractiveness in case such provision is introduced. Moreover, it was doubtful whether this provision is consistent with the Constitution of Ukraine saying that the enforceable expropriation of private property shall be in place only as an exception and based on social necessity.
The adopted law simplified the decision-making procedure as regards the execution of a transaction the value of which exceeds 50 per cent of a company’s assets value. Now more than 50 per cent of shareholders, but not over three fourths as before, must vote for such transaction execution.
The law concerned, however, kept in force the provision on requirement for joint stock companies to be admitted for trading at one, at least, stock exchange. This requirement, in the expert’s opinion, is rather cumbersome and contradicts the announced state’s policy on business deregulation.
At the same time, holders of over 25 per cent of shares can no longer block the transaction execution the value of which exceeds 50 per cent of the total company’s assets, or in fact any (even the most major) transaction of the company. But such shareholders will be able to block some decisions like the introduction of amendments into the charter, changes of the incorporation form, stock placement or change of the authorized capital of the company.
Proposed amendments to tariff quota distribution procedure for raw cane sugar import to Ukraine create prerequisites for restraint of competition in Ukrainian sugar market
Kyiv. February 3, 2011
Andrii Zablotskyi, associate with Volkov and Partners
The Cabinet of Ministers of Ukraine (the CMU) proposed amendments to the procedure of tariff rate quota distribution applied to raw cane sugar import to Ukraine, whereby creating prerequisites for restriction of competition in Ukrainian sugar market, which is unallowable in terms of sugar deficiency in the market.
Although introducing ‘first come, first served’ principle Ukraine fulfils its WTO commitments, the drawback of the document cannot be but mentioned, namely, creating preconditions to limit competition in the market.
In case licence issue depends on the State Reserve Agency’s consent, it may be considered as an action able to restrict competition. Besides, such condition complicates administrative course of the licence issue procedure, which conflicts with the fundamental WTO principles.
Today, we see an explicit tendency towards tighter regulation of the agricultural products market and a sugar sector, in particular. In addition to the aforementioned, changes were also offered into the Law “On State Regulation of Sugar Production and Sale” that envisages the establishment of several commissions – technical, joint commission, and approval commission. However, the aim of their establishment and division of powers are far from being clearly outlined. The only undoubtful and clear point is that they may become another administrative barrier for sugar producers.
Duties prolonged despite technical delay of official publication of government decree “On Prolongation of Anti-dumping Duties”
Kyiv. February 2, 2011
Tatiana Kheruvimova, associate with Volkov and Partners
The anti-dumping duties have been prolonged, notwithstanding the
technical delay of the official publication of the Government’s Decree
“Îon Prolongation of Anti-dumping Duties”.
Draft Decree of the government of the Russian Federation (RF) “On
Protection of Business Interests of Domestic Producers of Certain Types
of Steel Pipes" was posted on January 20 at the official web-site of the
Ministry of Industry and Trade of the Russian Federation. As the draft
reads, the Decree shall be valid from January 31, 2011. Therefore, the
Act has come into force on the due date, in case it is signed by head of
Speaking about official publication, one cannot but admit that, subject
to provisions of the Order of Head of the RF “On Procedure of
Publication and Enforcement of the President’s Acts, Government Act and
regulatory acts of the federal executive agencies”, decrees of the
Russian Government must be officially published in “Rosiyskaya Gazeta”
(Russian Newspaper) within 10 days after signing thereof. Government
acts can also be published in other printed editions, as well as
publicly read on TV and radio, served with state agencies and
authorities, …, enterprises, offices, organizations, communicated
through other communication channels”.
Admittedly, the Ministry of Industry and Trade of the Russian Federation
assures that the Decree has already been signed and is going to be
officially published soon. Thus, the issue on non-compliance to the
procedure can be raised only after 10 day term for official publication
of the document from the date of signing of the Decree.
Spinning a coin: Dispute Settlement Mechanism under Free Trade Agreement or the WTO?
The Ukrainian Journal of Business Law
Vol.9 #1-2 January - February 2011
Andrii Zablotskyi, associate with Volkov and Partners
Iryna Polovets, associate with Volkov and Partners
Tetiana Kheruvimova, associate with Volkov and Partners
This article addresses the dispute settlement mechanism under free trade
agreements which have flourished in the last few decades, and considers
their potential as an effective substitution of WTO dispute settlement
mechanism and a tool for reducing potential conflicts of norms and
Currently, the European Union has provided the boldest and perhaps most
advanced example of regionalization in the world . Within the
framework of the WTO, the European Union has become a major proponent
and user of the approach to stipulate specific dispute settlement
mechanism as a solution of trade disputes. A fundamental shift occurred
with the conclusion of the free trade agreements with Mexico (2000),
Chile (2005) and Korea (2010), which incorporate a dispute settlement
mechanism. Since 2000, the EU has sought to introduce similar procedures
to all ongoing free trade negotiations. Negotiations on the free trade
agreement between the European Union and Ukraine (hereinafter — the
EU-Ukraine FTA), which began in 2007, are still ongoing. Although
information about the course of these talks and their current state is
scarce, we also made an attempt to analyze the transformative power on
Ukraine in the sphere of dispute settlement taking into consideration
previous EU experience...
Ukraine’s grain export commitments under national legislation and WTO law
(Law Magazine) ¹1 (103) 2011
Tetiana KHERUVIMOVA, Associate with Volkov and Partners Law Firm
Iryna POLOVETS, Associate with Volkov and Partners Law Firm
Definition of “Export restraints”
Specificity of the export restraint institute, hard-to-get initial
information, exporting entities trying their best to keep information on
conflicts arising during their activity confidential made investigation
of the legal aspects of the respective Ukrainian institute
unattractive. Analysis of scientific legal literature devoted to the
separate aspects of foreign economic activity restraints, showed that
there is lack of publications concerning legal regulation issues as for
Presently, national legislation lacks determination of ‘export
restraint’ term. First legal definition of this term was provided in the
case on subsidies and export restrictions filed against USA. The issue
of United States - Measures Treating Exports Restraints concerned
conformity of the US laws with the Agreement on Subsidies and
Countervailing Measures . Therefore, the term was defined by the
Panel as “a border measure that takes the form of a government law or
regulation which expressly limits the quantity of exports or places
explicit conditions on the circumstances under which exports are
permitted, or that takes the form of a government-imposed fee or tax on
exports of the products calculated to limit the quantity of exports.”
Ukraine: the Most Recent Novelties in Export-import Regulatiom of Sugar Market
the World Trade Organization
Andriy Zabolotskyy, lawyer at the Volkov & Partners
The Ukrainian market of agricultural products becomes increasingly
overregulated. Following the imposing the quota system on grain exports,
the Cabinet of Ministers goes on by planning to make amendments to the
Procedure for distributing the tariff quota on imports of raw cane sugar
Talks about some possible amendments to the above
Procedure and preparation of a respective Draft Regulation of the
Cabinet of Ministers of Ukraine have been going on since as far back as
early September 2010. As per statements by representatives of the
Ministry of Economy of Ukraine, the main aim of the development of that
document has been the harmonization of the procedure for distributing
the quota with the commitments undertaken by Ukraine when acceding to
Before the country’s accession to the WTO, the
distribution of the quota on imports of raw cane sugar was carried out
by means of auctions. As such a mechanism for distribution of quotas is
in breach of the relevant WTO norms, among other, Articles II and VIII
of GATT 1994, as well as Article 4 of the Agreement on Agriculture,
Ukraine has committed not to use any mechanism of conducting auctions
for distribution of the quota on import of sugar starting from the date
of its accession to the WTO. In addition to the above, the item 136 of
the Report of Working Party on the Accession of Ukraine to the WTO
explicitly states that Ukraine would adopt a system of allocating raw
cane sugar quotas on a first-come first-served basis within three years
of the date of its accession...
¹9-10 (93-94) September-October 2010
Roman Drozhanskyi, Volkov and Partners Law Firm
Lately, Julian Assange, previously hardly known by anyone, has broken
into the information realm acting in a way that provoked a blow up in
the world of diplomacy and journalism. Particularly, the newspapers all
over the world published correspondence between American embassies and
the State Department on different issues: from special features of
French president’s character to course of acts of war in Afghanistan.
Such vast information «leak» has been possible owing to the nature of
the Internet, where the freedom can hardly be restricted even by the
American government. Official and off-the-record ‘witch-hunt’ by the US
triggered off sudden upswing in hacker’s, journalists and average
people, whose efforts transformed the documents disseminated by
Wikileaks into ever existing in the network.
In my opinion, information of this kind, disclosed through the Internet,
has the adverse effect, as it can hinder rather then help American –
and not only American – diplomatic officials to work efficiently. Free
communication with the sources and possibility to hand down this
information to the governments is all part and parcel of the diplomatic
duties, and it is hardly possible to imagine international relation on
the hole without it.
However, the positive result of the Wikileaks scandal is that it has
made possible to watch a reaction of the western governments who used to
be proud of freedom of speech as the main achievement of their legal
systems. As ever, some governments failed the test for response adequacy
and showed hypocrisy – awaited by some critics – where the freedom of
speech was used against them...