[120610.EN.SEA] Euro Rights Court Notes Ukraine CR Appeal Against Asset Seizure

THE European Court of Human Rights in Strasbourg has acknowledged an appeal from Ukrtranscontainer (UTC) against the state of Ukraine for what it claims is an illegal seizure and use of its property and stoppage of its business at its 850,000-TEU annual capacity container terminal at Illichivsk port, south of Odessa on the Black Sea.

A possible problem in the case is that while the European Union seeks closer ties with Ukraine, the country, a former part of the Soviet Union, wants to be an EU member, it remains outside the European Union.

But the plaintiffs argue that the jurisdiction of the court applies on member states of the Council of Europe, which includes the Ukraine.

Indeed, Ukraine is scheduled to hold the presidency of the Council of Europe committee of ministers from June 30, 2011.

If the court decides to take the case, proceedings in "Ukrtranscontainer vs Ukraine" are expected to be conducted in writing based of documents provided by the parties.

The company, whose parent is Moscow-based National Container Company (NCC), the leading terminal operator in Russia, says the Constitutional Court of Ukraine has declared that the Supreme Court of Ukraine ruling was unconstitutional and that its ruling also contravened the European Convention for the Protection of Human Rights and Fundamental Freedoms.

The constitutional court, according to the plaintiffs, further upheld the judgment of the lower arbitration tribunal that confirmed the legitimacy of UTC's business arrangements. But the Supreme Court ruling trumps all, and because all national legal remedies have been exhausted, the company has appealed to the Strasbourg court.

The case hinges on a 2005 - 2035 deal UTC made in becoming past of a Joint Operation Agreement also signed the defendant Sea Commercial Port of Illichivsk (SCPI).

"In spite of this, since 2008 the port authority and an ex-minister of transport of Ukraine has been pursuing a plan to discredit the company and terminate the Joint Operation Agreement on the pretence of its 'inefficiency for Ukraine'," said a UTC statement.

"These efforts resulted in the verdict of the Supreme Court of Ukraine on March 11 to terminate the agreement. The SCPI seized the terminal's equipment and accepted it for secure storage," said the statement.

The plaintiff company also alleges that the seized equipment had been purchased by the investors as their contribution to the joint operation, but that the port had since been using it for their own cargo handling operations.

UTC now seeks a "fair and public hearing within a reasonable time by an independent and impartial tribunal established by law, an effective remedy before a national authority (Article 13 of the Convention), to the peaceful enjoyment of his possessions (Article 1 of Protocol 1 of the Convention).

The 28-hectare terminal with its 656.5-metre quay and a 12-metre minimum depth alongside, has a yard of 17,112-TEU capacity, 606 reefer plugs and a total annual capacity of 850,000 TEU.

Customers have included Maersk MSC, CMA CGM, "K" Line, Zim, China Shipping, Economou-CSAV Norasia, Wan Hai, PIL among others.

UTC, owned by National Container Company (NCC), is the leading container terminal operator in Russia and CIS. UTC company was founded in 2002. The group of companies First Quantum and the Transport Group Fesco own NCC on parity basis.

NCC operates First Container Terminal in St Petersburg Container Terminal NUTEP (Novorossiysk), Container Terminal Ukrtranscontainer (UTC, Illichivsk, Ukraine and Logistika-Terminal Shushary, St Petersburg off-dock container terminal and logistics centre.

Source : HKSG, 11.06.10.