Supreme Court Assists in Raider Attack on Victoria Gardens

The Supreme Court of Ukraine, in contravention of law, has upheld a complaint filed by raiders and remitted back to a lower court a case in which the ruling had already taken full effect.

In June 2017, a group of fraudsters forged documents on transferring title to a 100% stake in LLC Phoenix Capital (owner of shopping center Victoria Gardens with 104 sq. m of space) at a ridiculously low price of UAH 100,000. The illegality of these actions was confirmed in the course of numerous criminal proceedings and court hearings. In November of the same year, the Commercial Court of Lviv Oblast declared the fake purchase-and-sale agreement void. This ruling was not appealed in due course and took full effect on November 14, 2017.

Despite that, more than five months later, on April 27, 2018, an appeal was still filed. The complainant’s arguments for missing the deadline for appealing were that his representative was absent at prior hearings, that the court sent a copy of its ruling to a wrong address, and that he was undergoing medical treatment between November 6, 2017, and December 10, 2017. In reality, the complainant’s representative did attend the hearings, which is confirmed by his being duly notified about the consideration of the case; relevant documents show the complainant used exactly the address to which the court sent its ruling; and the fact that he had medical treatment during a month cannot sufficiently explain why he did not appeal the ruling of the first-instance court within five months.

The Lviv Commercial Appeal Court refused to open appeal proceedings.

However, on June 25, 2018, the complainant filed a cassation appeal with the Supreme Court, asking to cancel the appeal court’s verdict. Surprising as it was, the Supreme Court, ignoring the norms of Ukrainian legislation, its previous practice in similar cases, and the practice of the European Court of Human Rights, satisfied the appeal. Moreover, the Supreme Court considered the appeal even without relevant court fees having been paid, which is a very unusual phenomenon in Ukrainian judicial practice and raises questions about impartiality of the judges.

"We are very surprised at this ruling of the Supreme Court, which accepted the fraudsters’ arguments and remitted the case," said Volodymyr Tymochko, Managing Director of Dragon Capital. “For us, as one of the largest foreign investors in Ukraine, this is not the first time that we have to deal with unpredictable and unlawful actions by the Ukrainian judicial system. This case once again shows how insecure business in Ukraine is and illustrates why foreign investment in Ukraine is at historical lows. We very much hope that the Lviv Commercial Appeal Court and the Supreme Court will be guided exclusively by law in further consideration, and the raiders, who are already facing several criminal proceedings, will nevertheless receive their just punishment and we will ultimately defend our rights to Victoria Gardens."