Month: March 2025

Author: Oleksandr Fedoryshyn, Managing Partner at F&P

Entering the international market opens up many opportunities for business, but it also brings new and quite complex legal risks. Conflicts with foreign counterparties, investors, or government agencies can result in financial and reputational consequences. This is why international arbitration is a key element in the strategic protection of business abroad. It offers a flexible, confidential, and effective dispute resolution mechanism. How it works will be explained in this article.

International Arbitration: Definition and Key Importance

International arbitration is an out-of-court dispute resolution process arising in the field of international commercial relations. It is based on the voluntary agreement of the parties (arbitration agreement) to submit an existing or future dispute to an independent arbitration tribunal. Its decision is binding and enforceable.

Why Is International Arbitration Critically Important for Business Abroad?

Unlike national courts, which may be influenced by local political or economic interests, international arbitration provides a neutral platform for dispute resolution. The parties have the right to choose arbitrators from different countries who have the necessary expertise and no conflicts of interest.

The arbitration process is usually confidential. The parties can independently set the rules: choose the location of the arbitration, the language of proceedings, and the applicable law. In other words, there is the possibility to adapt the process to the specifics of a particular dispute.

Another important point: thanks to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, verdicts rendered in one country can be enforced in most other countries worldwide.

Leading International Arbitration Institutions:

• -International Chamber of Commerce (ICC) Arbitration Court (Paris): One of the most authoritative and oldest institutions, known for its high-quality rules and experienced arbitrators. It is often used for complex international commercial disputes.
• London Court of International Arbitration (LCIA): Noted for its efficiency and flexibility in procedures. Particularly popular in disputes involving English law and financial transactions.
• Stockholm Chamber of Commerce (SCC) Arbitration Institute: Specializes in disputes with countries in Eastern Europe and Russia, known for its impartiality and professionalism.
• International Centre for Settlement of Investment Disputes (ICSID): A specialized institution within the World Bank group. It resolves disputes between states and foreign investors based on international investment treaties.

When is Arbitration an Inevitable Choice?

Choosing arbitration is a strategic decision that should be made during the drafting of international contracts. Let’s look at situations where arbitration is particularly advisable.

International Commercial Contracts:

Sales agreements, service contracts, licensing agreements, joint ventures, and other types of international commercial contracts almost always should include arbitration clauses to minimize risks in case of disputes.

Investment Disputes:

To protect foreign investments in countries with unstable legislation or high levels of corruption, arbitration is necessary, especially investment arbitration (via ICSID or based on bilateral investment treaties).

Disputes with Government Agencies:

If a business faces actions by government agencies that violate its rights, arbitration ensures a more independent and objective examination of the case.

Cross-Border Disputes Difficult for National Courts:

When a dispute involves the legal systems of several countries, arbitration allows the selection of a single procedural law and location for proceedings.

Contracts with Unique Expertise Requirements:

In industries requiring special technical or sectoral knowledge, arbitration allows the appointment of arbitrators with the relevant expertise.

Enforcement of Arbitral Awards: Potential Challenges

While the New York Convention has significantly facilitated the enforcement of international arbitral awards, the challenges do not end there. Specifically, states may refuse to enforce an arbitral award if it contradicts their public policy or the fundamental principles of national law.

Even with an arbitral award, its enforcement becomes complicated if the debtor lacks sufficient assets or if these assets are hidden or moved to other jurisdictions.

The process of recognition and enforcement of an arbitral award in national courts may be prolonged and accompanied by various legal formalities. In some cases, political factors may influence national courts’ decisions regarding the enforcement of arbitral awards.

Can These Risks Be Minimized? Yes, but for this, it is essential to carefully analyze the potential jurisdictions for enforcement at the contract drafting stage and anticipate asset protection strategies.

Effective Strategies for Protecting Business Using International Arbitration

For international arbitration to be a truly effective tool for protecting your business, certain strategies must be followed. Let’s explore them in more detail.

The arbitration agreement must be clear, unambiguous, and cover all key aspects:

• Seat of arbitration: This significantly affects the procedural law to be applied, as well as the possibility of appeal and enforcement of the arbitral award.
• Governing law: This is crucial for predicting the outcome.
• Arbitration institution: It determines the rules of procedure and the level of administration of the process.
• Number of arbitrators: Usually, one or three arbitrators are chosen.
• Language of the arbitration process: This helps avoid misunderstandings.

Before concluding an international contract, a thorough legal analysis of potential risks should be conducted, and the most favorable arbitration institution and seat should be selected based on the specifics of the contract and the counterparty.

Additionally, before starting cooperation, the financial capability of the counterparty and the presence of assets in jurisdictions where the arbitral award can be effectively enforced should be assessed.

If your business is making investments abroad, it is essential to study the availability of bilateral or multilateral investment treaties. These treaties can provide additional protection mechanisms through investment arbitration, such as within ICSID.

Furthermore, including provisions in the contract for mandatory pre-dispute resolution steps (such as negotiations or mediation) can sometimes help avoid arbitration and reach a mutually acceptable solution at an early stage.

In certain situations, it is advisable to take interim measures through the arbitral tribunal or national courts to preserve assets or prevent actions that may cause harm.

The Key to Successful Signing of International Contracts and Arbitration Proceedings Remains Qualified Legal Support. Experienced professionals will help develop an effective strategy, prepare the necessary documents, and represent the company’s interests in the arbitral tribunal.

International Arbitration — A Strategic Advantage for Business

Indeed, international arbitration is an effective tool for protecting the rights and interests of businesses. Given the potential risks and challenges, businesses should proactively foresee legal mechanisms to protect their investments and commercial interests abroad.

If your company needs expert consultation on international arbitration matters and the development of an effective strategy to protect your business abroad, contact our qualified lawyers. We are ready to provide comprehensive support at every stage: from drafting international contracts to representing your interests in arbitration proceedings.

Author: Viktoriia Staryk, lawyer at F&P

The Law of Ukraine No. 263-IX dated October 21, 2019, introduced the procedure of civil confiscation, i.e., the recognition of assets as unjustified and their seizure if a public servant does not prove the legality of acquiring such property.

Assets are monetary funds (including cash, funds held in bank accounts or in custody with banks or other financial institutions), other property, property rights, intangible assets, including cryptocurrencies, the amount of reduction in financial obligations, as well as works or services provided to a person authorized to perform state or local government functions.

If the court establishes that the assets or funds for their acquisition were not obtained from legal income, such assets will be recognized as unjustified.

Assets may be considered unjustified if acquired by a person authorized to perform state or local government functions, provided that the difference between their value and the person’s legal income is between UAH 1,003,500 and UAH 9,841,000.

If the amount exceeds the specified threshold, criminal liability for the crime of “Illegal enrichment” under Article 368-5 of the Criminal Code of Ukraine is provided, instead of civil confiscation. Moreover, unjustified assets may only be recognized if they were acquired after November 28, 2019, i.e., after the date when the law on civil confiscation came into effect.

The identification of unjustified assets is authorized by the NABU, SAP, and, in certain cases, the DBR and OGP. These bodies are authorized to collect information by sending written requests without a court decision for the disclosure of bank secrecy concerning a person’s assets in a bank.

If the NAPC establishes that a civil servant has acquired unjustified assets and there are grounds for civil confiscation, the National Agency has the right to raise the issue with the SAP or OGP regarding the filing of a lawsuit for civil confiscation. If signs of unjustified assets are found as a result of a full verification of the declaration, the NAPC gives the declarant the opportunity to provide a written explanation with evidence within 10 working days. If the declarant does not provide written explanations and evidence within the specified period or provides them incompletely, the NAPC informs the NABU and SAP.

Judicial practice regarding the recognition of assets as unjustified and their seizure for the benefit of the state is still in the process of formation, but the VAKS has already highlighted the circumstances that need to be considered when reviewing such cases (VAKS decision of July 13, 2022, in case No. 991/366/22):

• whether the defendant (the person who acquired unjustified assets, according to the plaintiff) had the status of an authorized person to perform state or local government functions at the time of acquiring these assets;
• whether the provisions of Law of Ukraine No. 263-IX dated October 21, 2019, apply to the assets in question;
• whether there is a connection between the assets and the defendant;
• whether the person acquired the assets in one of the ways indicated in paragraph 2, part 8, Article 290 of the Civil Procedure Code of Ukraine (acquisition of ownership, acquisition of ownership by another person on behalf of the defendant, actions with such assets equivalent to exercising the right to dispose of them).

In the event of opening proceedings to recognize assets as unjustified and their seizure for the benefit of the state, it is extremely important to seek qualified legal assistance in a timely manner. Such cases are usually complex and require thorough analysis of evidence and proper interpretation of legislative norms.

The FEDORYSHYN & PARTNERS team is ready to provide the necessary legal assistance to reduce the risk of losing your property. Remember, timely consultation with a specialist is the key to effectively protecting your rights.

 

Author: Olena Andriyko, lawyer at F&P

Investing in art and antiques is not only a profitable financial instrument but also a field regulated by special legislation. Transactions involving such objects require legal expertise, as they may have the status of cultural value, be subject to customs restrictions, and also be the subject of copyright and inheritance law.

Investing in art objects (paintings, sculptures, iconography) is not a classical form of investment. In fact, such objects are purchased for their subsequent sale, rental, with the aim of making a profit. The formation of the value of objects is influenced by numerous factors, such as: the author; the author’s reputation; the “age” of the object; the materials from which the object is created, etc. An important aspect for the formation of the object’s value is intangible assets, and intellectual property that arises as a result of the creative process.

An important role in investing in art objects is played by copyright. In particular, the author of the original work retains personal non-property rights to the work even after its alienation, such as:

• the right to demand recognition of their authorship by properly indicating the author’s name in the original and copies of the work and in any use of the work, if practically possible;
• the right to prohibit the mention of their name during any use of the work if the author wishes to remain anonymous;
• the right to choose a pseudonym, to indicate and demand the indication of the pseudonym instead of the author’s real name in the original and copies of the work and in any use of the work;
• the right to demand the preservation of the integrity of the work, to oppose any distortion, alteration, or other modification of the work, including the accompaniment of the work with illustrations, prefaces, postfaces, commentaries, etc., without the author’s consent;
• the right to give a title to the work or leave it untitled;
• the right to dedicate a work to a person (persons), event, or date.

Personal non-property rights belong solely to the author and cannot be transferred (alienated) to other persons and do not pass to heirs.

The author may transfer (alienate) their economic rights to another person based on law or transaction either fully (for all methods of using the work in the territory of all countries of the world) or partially (for specific methods of using the work in the territory of all countries of the world or for specific methods of using the work in the territory of individual countries of the world, or for all methods of using the work in the territory of individual countries of the world). The person to whom the economic rights to the work have been transferred in full or in part is a subject of copyright within the limits of the acquired rights.

If copies of a work have been lawfully introduced into civil circulation through their first sale in Ukraine, further transfer of these copies is allowed without the consent of the copyright holder and without payment of remuneration (exhaustion of rights), except for original works of art, the further transfer of which is carried out with the payment of remuneration for the right of suite.

Depending on the price of the next sale excluding taxes, the amount of fair compensation (right of resale) provided by the first part of this article is:

• 6 percent – for the sale price equivalent to between 50 euros and 3000 euros inclusive;
• 5 percent – for the sale price equivalent to between 3,000.01 euros and 50,000 euros inclusive;
• 3 percent – for the sale price range equivalent to 50,000.01 euros to 200,000 euros;
• 1 percent – for the sales price range equivalent to 200,000.01 euros to 350,000 euros;
• 0.5 percent – for the sale price range equivalent to 350,000.01 euros to 500,000 euros;
• 0.25 percent – for a sale price above the equivalent of 500,000 euros.

Thus, the acquisition of an art object requires conducting a legal examination regarding the authorship of the work and the necessity of making additional payments to the author (or their heirs) during the resale of the work, which, undoubtedly, can affect its investment attractiveness.

Particular attention in the context of investing in art should be paid to transactions involving the acquisition of antiques. Antique items differ from ordinary works of art in that they possess historical and cultural value. They may be subject to special legal regulations, including:

• restrictions on their sale;
• prohibition of export abroad;
• mandatory authenticity examination.

Legislation defines antiques as objects created more than 50 years ago that have cultural, historical, or artistic value. The sale of such objects is possible only through specialized institutions – auctions, antique shops, or galleries.

The antique buyer has the right to demand from the seller an expert opinion on the origin and value of the item. This will help avoid the purchase of a counterfeit or an item subject to legal restrictions.

For individuals, the legislation does not impose restrictions on the purchase of paintings, sculptures, iconography, antiques, and jewelry, as these objects are considered civil rights objects according to the provisions of the civil code. However, if such objects have cultural value, established restrictions on import and export may apply to them.

In turn, a number of specific requirements are established for legal entities. In particular, for business entities engaged in the sale of antiques, requirements are set that such entities must meet. Moreover, legal entities must keep records of their assets in accordance with the current legislation of Ukraine.

Thus, when investing in art objects, the most important stage is the verification of the object and the conclusion of a contract with the author or owner. These processes have the greatest impact on the subsequent realization of the investor’s rights and the reduction of the risks of negative consequences.

When investing in antiques, it is essential to demand expert conclusions and research from the seller. The conclusions will help determine the level of cultural value and the absence or presence of restrictions regarding the further disposal of the acquired assets.

The company FEDORYSHYN&PARTNERS provides support for transactions related to investing in art objects and offers a full range of services in this area.

Author: Oleksandr Fedoryshyn, Managing Partner at F&P

According to a study by the Centre for Economic Recovery, about 40% of Ukrainian companies are already integrating ESG into their operations, and more than 60% of managers consider ESG implementation important for the success of their business. Modern business can no longer exist in a vacuum, ignoring environmental, social and corporate governance issues. How can Ukrainian companies increase their competitiveness and remain relevant in the global economic environment? Let’s learn more about the concept of Environmental, Social, Governance and its implementation in Ukraine.

ESG: why is it important for Ukraine?

ESG (Environmental, Social, Governance) is a concept that encompasses the environmental, social and governance aspects of a company’s operations. It determines the extent to which a business complies with the principles of sustainable development and social responsibility. Here’s what the main components include:

• Environmental aspect (E). This includes reducing environmental impact, energy efficiency, waste and emissions management, and biodiversity protection. Current challenges for Ukraine are the impact of agriculture on soil and water resources, as well as the effects of pollution due to military operations.
• Social aspect (S). It covers relations with employees, customers, suppliers and local communities, as well as issues of occupational safety, human rights, gender equality and personal data protection. An additional challenge is the social responsibility of business to rebuild war-affected communities, as well as support for veterans and IDPs.
• Governance aspect (G). It concerns corporate governance, transparency, ethics and anti-corruption. An independent supervisory board, transparent decision-making procedures, and effective internal controls are key elements of good governance.

International organisations, investors, and donors analyse potential partners by ESG factors. Obviously, this gives them the opportunity to assess the transparency and reliability of organisations. This is the foundation for building trust. That is why businesses aiming for long-term growth in the market should implement the ESG concept.

What are the business benefits of ESG?

Strategically, the concept serves as an additional tool for attracting investment from international partners. This is one of the key areas for Ukraine’s economic recovery after the end of the war.

Another important factor is access to European markets. The EU is actively implementing ESG standards. Among the well-known initiatives: Green Deal and the Sustainable Finance Taxonomy. To remain competitive, businesses need to adapt to these conditions.

Ultimately, ESG practices help to increase business efficiency, reduce risks and improve reputation. Companies that care about the environment and society have an advantage in attracting talented employees and loyal customers.

Sustainable development through ESG: practical steps for business

To effectively implement ESG principles in business processes, you need to:

1. Conduct an audit of the environmental and social impact of the business.
2. Identify key areas for improvement and develop an ESG strategy.
3. Ensure transparency of corporate governance and compliance with ethical standards.

We recommend engaging legal expertise to achieve compliance with ESG requirements and mitigate legal risks.

Sustainable development at the level of the state strategy

Ukrainian legislation enshrines the concept of sustainable development in several key documents:

• The Sustainable Development Goals of Ukraine until 2030 (adopted in 2019). They help to develop government programmes and laws aimed at balancing the economy, social sphere and environment.
• Targets and indicators for achieving the goals (approved in 2024). They cover all three ESG pillars, and their implementation means gradual integration of this concept into government and business strategies.
• The National Economic Strategy until 2030 (adopted in 2021), which takes into account sustainable development goals.
• The Strategy for the Implementation of Sustainability Reporting (adopted in 2024). It stipulates that companies should publish information not only on financial results, but also on environmental, social and governance impact. Starting from 2025, such reporting will be in line with European standards (ESRS).

Legislation already provides for certain reporting requirements for large companies. For example, the Law of Ukraine ‘On Accounting and Financial Reporting in Ukraine’ requires large enterprises to prepare and publish a management report. It must contain both financial and non-financial information about the business.

State-owned companies also have to report on their environmental impact, social issues and corruption risks in accordance with international OECD standards. And starting in 2025, Ukraine is planning to introduce sustainability standards similar to those in Europe. Therefore, large companies, and later medium-sized ones, will be required to publish non-financial reports. They will help investors and partners assess the sustainability and responsibility of the business.

Conclusions

Implementing ESG is a strategic necessity for modern business. Companies that operate according to these principles increase their own competitiveness, as well as create a positive impact on society and improve the environment. This is a situation where the need to achieve business goals at the same time helps to improve reputation and the world around us. So it’s time to adapt to the new standards, reduce risks and build a sustainable business.

Author: Uliana Luchkevych, lawyer at F&P

The import of goods containing refrigerants requires strict compliance with customs and environmental legislation. Failure to comply with these requirements may result in the drafting of customs violation protocols, the imposition of fines, and the detention of cargo at customs. This article examines the requirements for the importation of refrigerants, the relevant legislative norms, the legal consequences of violations, as well as the successful experience of FEDORYSHYN&PARTNERS in closing cases related to the importation of goods with refrigerants.

According to the Law of Ukraine dated December 12, 2019, No. 376-IX “On the Regulation of Economic Activities Related to Ozone-Depleting Substances and Fluorinated Greenhouse Gases” – fluorinated greenhouse gases are any substances listed in Appendix 2 to this Law, which exist independently or in mixtures, primary, recovered, regenerated, or processed for recycling, or their isomers, and have a global warming potential above zero.

Annually, the Cabinet of Ministers of Ukraine approves a list of goods whose export and import are subject to licensing in the following year, which includes refrigerants—fluorinated greenhouse gases used for cooling in a range of equipment such as air conditioners, refrigerators, machines, etc.

Thus, if the imported product contains refrigerants, it is subject to special control, and its importation is possible only with the appropriate license. Import licenses are issued by the Ministry of Economy of Ukraine based on the relevant application from the recipient of the product.

In practice, our client faced a situation where the supplier did not inform them about the presence of refrigerants in the goods, and the latter were discovered by the customs authority during the customs clearance of the goods. Based on this, the customs authority drew up a protocol on customs violations under Article 472 of the Customs Code of Ukraine and temporarily seized the goods worth over 10 million UAH.

According to Article 472 of the Customs Code of Ukraine, failure to declare information about refrigerants in the customs declaration or their importation without a license may be considered as non-declaration of goods, which entails:

• • a fine of 100% of the value of the goods with the possibility of their confiscation;
• detention of the cargo by customs authorities until all circumstances are clarified.

Judicial practice shows that in cases where the declarant and importer acted in good faith but were not informed about the presence of refrigerants in the product (for example, due to a manufacturer’s error), there are legal grounds for closing the case and returning the product to the importer.

Our lawyers managed to prove the absence of intent in the actions of the declarant, specifically the fact that the declarant acted in good faith, relying on accompanying documents that did not contain information about the presence of refrigerants. Based on our own experience in defending similar cases, we proposed a model to prove the declarant’s ignorance about the presence of refrigerants, which became the basis for closing the case.

In particular, the court took into account the following arguments:

1. absence of intent in the actions of the declarant;
2. absence of actual concealment of information;
3. prompt appeal by the importer for obtaining a license after the detection of the presence of refrigerants;
4. The manufacturer’s error for not disclosing the presence of refrigerants in the documentation.

Contact the lawyers at FEDORYSHYN&PARTNERS, who have positive experience in cases involving the import of goods with refrigerants, to protect your interests with customs authorities and in court.

FEDORYSHYN&PARTNERS are ready to provide legal assistance to businesses in matters of customs clearance and appealing decisions of customs authorities. If your company has encountered a similar problem, we are ready to provide effective protection. It seems like you haven’t provided any text to translate. Please share the text you’d like translated, and I’ll be happy to help!