Appealing to common sense

The Ukrainian court system continues to work against itself by constantly issuing rulings that undermine citizens’ trust in courts and judges, since the latter obviously do not follow the law so much as the government’s instructions. Today the crisis of trust involves not just individuals or institutions but the entire system. This time such “high” exemplars of justice have been displayed by none other than the Supreme Court of Ukraine, which recently refused to satisfy a complaint lodged by the Nikopol Ferroalloys Plant (NFP), an open joint-stock company that has found itself in the middle of a much publicized ownership conflict. According to the court’s official formulation, the plant is not an interested party in the conflict over the privatization of 50 percent plus one share of this enterprise.

Is this court aware of the story of a citizen named Nazarova whose lawsuit eventually led the Ukrainian court system to revise its decision to allow the privatization of the steel giant Kryvorizhstal? It appears that her rights, interests, and obligations were violated by the sale of Kryvorizhstal. Meanwhile, haven’t the rights of the NFP and its employees, who picketed in the streets of Kyiv during the Supreme Court hearings, been affected?

Now, these are all rhetorical questions based on common sense, which is something our independent courts never use, instead substituting the opinions of the top leadership of an adjoining branch of government. It is precisely this leadership that decides everything without listening to outside opinions.

Meanwhile, such opinions exist. Many people who are well known in the country believe that if the deal by which the consortium Prydniprovya bought the Nikopol Ferroalloys Plant is terminated, the government must pay damages to the buyer. “The real value of the enterprise has to be determined and damages paid to the owner,” Volodymyr Matveyev of the Communist Party told one information agency. Parliamentarian Serhiy Slabenko of the Our Ukraine faction is also convinced that Prydniprovya can file a lawsuit as a party that suffered losses as a result of violations of contractual terms, and demand damages from the government. “To some extent the government is responsible for the violation of the contract. The party that has suffered damages from such a contract may file a lawsuit demanding payment of damages,” he pointed out. Slabenko also sees another way out of this situation: an amicable settlement between the government and the owner of the NFP whereby the latter would make an additional payment for the stake it bought previously as part of its privatization bid. “By all accounts, the government is interested in securing an amount that corresponds to the real value of this enterprise,” he said. At the same time, Slabenko points out that an amicable settlement might result in harsh criticism of the government, since the situation around the NFP is very politicized.

Mykhailo Dobkin of the Regions of Ukraine faction also believes that the government would show a constructive approach by agreeing to accept an additional payment for the NFP. “If this is really not about depriving Pinchuk of some of his property, but about doing what’s good for the country, then it would make sense to determine a certain amount satisfactory to all the parties involved, which would then be channeled into the state budget,” he said. Dobkin believes that a change of ownership would put a strain on the enterprise, inevitably causing it to operate at a loss.

One of the most acclaimed experts in the country, Oleksandr Paskhaver, who advises the Ukrainian president and directs the Economic Development Center, considers the court ruling in the NFP case that has placed liability on an honorable buyer and not the State Property Fund, which violated the rules of the privatization tender in the first place, a special case. “The State Property Fund was not found liable, even though this very institution violated the rules of privatization tenders and sold the plant in the wrong way. The SPF admitted as much during the court hearings. Nonetheless, the Fund has not been found liable; instead, an honorable buyer has suffered as a result of this court ruling,” he said. “I can accept that this may be quite correct from the legal standpoint, but from the standpoint of common sense it is absolutely incomprehensible,” Paskhaver said, explaining that the presence of two hostile minority shareholders, who control 23 and 26 percent of the plant’s stock, respectively, makes it problematic to establish state ownership of a controlling stake in the enterprise and then resell it in the future. In view of this and the possible monopolization of the market Paskhaver said in an interview with Interfax-Ukraine that an amicable settlement is one of the best ways out of this situation.

However, the government tends not to heed the advice of its advisors.