Russian banks in Ukraine waited for the arrest

"Daughter" of Sberbank, VTB and VEB arrested on the suit of the structures of the oligarch Igor Kolomoisky.
The Kiev Court of Appeal arrested shares of Ukrainian Prominvestbank (VEB's daughter), Sberbank and VTB at the suit of a number of companies of Igor Kolomoysky within the framework of execution of the decision of the Court of Arbitration of The Hague to recover from the Russian Federation compensation for property in the Crimea. The court banned banks whose shares are arrested, liquidated or reorganized, but they can continue economic activities. Russia the decision of the Arbitration Court of the Hague has not recognized and appeals, lawyers are sure: the arrest of shares of their Ukrainian "daughters" is illegal.

As follows from the decision published in the Unified Register of Judgments, the Kyiv Court of Appeal granted the claim for recognition of the decision of the Court of Arbitration of The Hague of May 2, 2018. It is a question of recovering from Russia, represented by the Ministry of Justice, compensation for immovable property lost by Ukrainian companies in Crimea in 2014. The suit was filed by 19 enterprises, which, according to unofficial data, is owned by the former owner of Privatbank Igor Kolomoysky. May 2, the Hague Arbitration awarded the plaintiffs about $ 130.5 million compensation for real estate in the Crimea, plus legal costs and interest. The court in Kiev arrested the shares of Prominvestbank ("daughter" of VEB) and Ukrainian Sberbank and VTB. Banks whose shares are arrested are prohibited from liquidating or reorganizing a legal entity.

According to our preliminary estimates, this decision will limit the economic activities of these banks, including the clearance of balances from non-core and distressed assets, "the press service of the National Bank told Kommersant.

Now the Ukrainian Sberbank, VTB and Prominvestbank are actively cutting down business (see "Kommersant" on August 9). Sberbank until recently kept the hope to sell the Ukrainian "daughter", while VTB and VEB were preparing to liquidate their own (see "Kommersant" on August 13). "Arrest entails a number of extremely unpleasant consequences, such as a restriction on free disposal of assets," says Stanislav Doboshevich, head of the Commercial Disputes division of Rustam Kurmaev and Partners. "This should not affect the work of the credit institutions themselves."

VTB and VEB did not respond to a request from Kommersant. Sberbank was informed that they intend to appeal the decision of the court in the near future. "The bank operates on the territory of Ukraine in full compliance with the current legislation and regulatory standards in the country," the press service noted. "The arrest of shares does not affect the bank's customer service. The financial condition of the bank remains stable. "

Chances of Russian banks to cancel arrest in Ukrainian courts are small. "Political issues concerning the status of the Crimea play a big role here," says Alexei Panich, partner of the law firm Herbert Smith Freehills. "But Russian banks, whose property was arrested, can turn to investment arbitration, for example, in the same Hague in connection with Ukraine's violation of their rights as foreign investors. "

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Lawyers are sure that the arrest of shares of "daughters" of Russian state-owned banks in Ukraine is illegal. "If the decision of the Kiev court is made in connection with the decision of the Hague Arbitration against the Russian Federation, the arrest of shares of companies that belong not to the state but to banks (even with the participation of the state) is illegal," says Alexei Panich. "This is confirmed by international practice." This issue arose even when the arbitration decision against Yukos was being carried out against Russia in a number of jurisdictions, including France, where the state courts pointed out the groundlessness of this approach, in which claims against the state were sought or fulfilled at the expense of property not of the state itself, but of the state controlled by it companies. "Despite the participation of the state in the capital of Russian banks, from the point of view of the right their property is not state property, therefore, the foreclosure of a claim against the Russian Federation on the property of commercial banks can be challenged," Irina Mostovaya, a partner of NAFCO-Consultants, adds. "It is possible to transfer the recovery of the debt of the state to the property of another person only if the person is an emanation of the state, that is, a certain entity that does not have its own filling, behind which the state is," concludes Mr. Panich.

The Ministry of Justice, which was the defendant for the "Crimean" lawsuit, did not comment on the seizure of Russian banks' property on Russian debt. They clarified to Kommersant that Russia does not recognize the decision of the Hague Arbitration rendered on this suit, "due to the lack of jurisdiction" before the court for its consideration. "This decision was appealed against by the Russian Federation in the Court of Appeal of The Hague," the ministry said.