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Chinese investors in Motor Sich intend to demand $4.5 billion from Ukraine in Hague court

The Motor Sich case. Skyrizon plans to sue Ukraine for $4.5 billion. Photo: Pixabay

The Motor Sich case. Skyrizon plans to sue Ukraine for $4.5 billion. Photo: Pixabay

The company Skyrizon, together with several other Chinese investors, announce their intentions to go to the international arbitration and recover $4.5 billion from Ukraine for the losses they incurred due to the Ukrainian Motor Sich. They state that Ukraine violated international obligations under an agreement on promotion and mutual protection of investments between the Ukrainian government and the government of the PRC, the outlet Global Times writes.

Quote"In accordance with the Agreement between the Government of Ukraine and the Government of the PRC for the Promotion and Reciprocal Protection of Investments that entered into force on October 31, 1992, Chinese investors demanded that Ukraine be declared in breach of the bilateral investment agreement and that the plaintiffs be paid full compensation for all losses incurred in the amount of over $4.5 billion," is stated in the Chinese investors’ report.

The corresponding claim has already been sent to the Arbitration Court in The Hague.

Skyrizon, together with its partners, stresses that Kyiv politicizes the economy and abuses the concept of national security. Investors intend to return the invested funds.

Context. Recall: Skyrizon acquired 56% of the Zaporizhzhia aviation enterprise in 2016. However, the asset was never transferred to the management of the company due to the arrest on the SSU initiative. Moreover, the AMCU, on formal grounds, delays considering the case on concentration or acquisition of shares.

Proceedings are now ongoing in the courts of various instances on the claims of Motor Sich shareholders with a demand to lift the arrest, but the judges refuse to satisfy the petitions to summon the representatives of the Ukrainian authorities, in particular the SSU (Security Service of Ukraine), AMCU (Antimonopoly Committee, of Ukraine), OP (Office of the President), CMU (Cabinet of Ministers of Ukraine), to court.

On January 29, 2021, President Volodymyr Zelenskyy signed a decree imposing sanctions on three Chinese citizens and four Chinese companies, including Skyrizon, in order to freeze their assets in Ukraine. All the companies included in the "black list" were investors of the Ukrainian manufacturer of aircraft engines Motor Sich. The sanctions include blocking assets, restricting trading operations, partially or completely halting the transit of resources, flights and transportation through the territory of Ukraine, a ban on the withdrawal of capital from Ukraine, as well as a complete ban on transactions in securities. The companies are also prohibited from increasing the authorized capital of enterprises they own more than 10% in.

In February 2021, the Ukrainian Foreign Ministry received a note from the Chinese authorities in connection with imposing the aforementioned sanctions.

In March 2021, President Volodymyr Zeleskyy put into effect the decision of the National Security and Defense Council (NSDC) on returning Motor Sich to state ownership.

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