Danylov: No reason for ‘particular concern’ over $4.5 billion lawsuit by Chinese investors in Motor Sich
Oleksiy Danylov, the secretary of Ukraine’s National Security and Defense Council, has said Ukraine has a good legal position in a $4.5 billion arbitration law suit initiated by Chinese investors in Ukrainian engine and turbine manufacturing company Motor Sich.
Oleksiy Danylov, the secretary of Ukraine’s National Security and Defense Council, has said Ukraine has a good legal position in a $4.5 billion arbitration law suit initiated by Chinese investors in Ukrainian engine and turbine manufacturing company Motor Sich.
Danylov made his comments during a briefing following a meeting of the National Security and Defense Council, news agency Interfax-Ukraine reported.
“I emphasize once again that we’re not particularly worried about this here,” Danylov said.
Danilov explained his position by saying there was an understanding of "what sort of investments that (the buyers) are referring to," and what China has to do with this.
“Who are these people who bought shares (in Motor Sich)?” Danylov said. “We will start from this point... How did it happen, where did they get the money, when they paid via offshore (companies) to buy these shares?”
He added that Ukraine believes that one of the objectives of the purchase of Motor Sich shares was an attempt by neighboring countries to “get hold of technologies.”
“There are traces (of the activities) of some of our neighboring countries, who had a great desire to possess technologies that out government has for the production of the engines … produced at (Ukraine’s) Motor Sich,’’ Danylov said.
Chinese investors in Motor Sich on Dec. 5 informed the Ukrainian government that they were taking their case against Ukraine to international arbitration.
Their case concerns an investment dispute in which they seek to recover $3.5 billion in damages from Ukraine. The Ukrainian state will be represented in the case by international law firms WilmerHale, DLA Piper and Bird & Bird.
In November of this year China’s Beijing Skyrizon Aviation Industry Investment announced it was filing a claim against Ukraine with the Permanent Court of Arbitration in The Hague, in which it claims damages of $4.5 billion.
It was announced on Aug. 5, 2020 that DCH of Yaroslavskyi would develop Motor Sich together with China’s Skyrizon Aircraft Holdings Limited.
Danylov said on March 11, 2021 that Motor Sich would be renationalized.
Then on March 20, Ukraine’s SBU security service reported that Shevchenkivskyi District Court of Kyiv had arrested the company’s property and decided to transfer it, and 100 percent of the company’s shares, to the management of the Asset Recovery and Management Agency (ARMA) for subsequent transfer to an official receiver. The State Concern Ukroboronprom nominated itself as receiver.
Zhao Lijian, spokesperson of the Chinese Ministry of Foreign Affairs, in turn stated that China requires Ukraine to protect the legitimate interests of Chinese investors in connection with the decision to nationalize Motor Sich, which is more than 50 percent owned by Chinese companies.
The SBU considers the privatization of Motor Sich illegal, in particular, due to the value of its property being appraised without taking into account indexation, as required under the regulations of the Cabinet of Ministers of Ukraine.
Motor Sich is one of the world's largest manufacturers of engines for aviation technology, as well as industrial gas turbine units. It supplies products to more than 100 countries around the world. In 2020, Motor Sich made UAH 906.65 million in net profit, compared to a UAH 703.18 million net loss in 2019.
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