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The Court rules on a multi-million dispute between the Ministry of Industrial Policy of Ukraine, the State Innovation Fund and ASTC Antonov

News date: 19 February 2010

On 13 January, Kyiv Appellate Commercial Court made a decision on the dispute between the State Finance Institution for Innovations (SFII), ASTC Antonov and the Ministry of Industrial Policy. The Court upheld the decision made by the Commercial Court of Kyiv, which dismissed the claim of SFII to ASTC and the Ministry to recover from them, jointly and severelly 24 million UAH.

In 1998, the State Innovation Fund, of which SFII is the assignee, made a financing agreement on а priority state program for development and certification of An-140 passenger airplane. The Ministry of Industrial Policy of Ukraine acted as the guarantor under the said agreement. Out of 20 million UAH stipulated by the State Budget, the State Innovation Fund transferred to O.K. Antonov ASTC as little as 16 million UAH.

In 2001, the State Innovation Fund filed with the court a statement of claim to recover from ASTC more than 24 million UAH (payment made under the agreement taking into account inflation processes).

The Court agreed with the arguments presented by lawyers Ilyashev & Partners Law Firm, which represents ASTC, that the State Program remained incomplete through the fault of the innovation fund and, accordingly, the funds shall not be subject to recovery.

The Court resolved the situation in a judicially perfect manner having confirmed that in breach of the executed agreement, SFII failed to provide due finance of the priority State Program. At the moment, the losses suffered by ASTC due to untimely financing of the project, which shall be recovered from SFII, are being determined by expert examination, Ilyashev & Partners comment.

In turn, on 10 December the Supreme Court of Ukraine denied SFII’s attempt at appealing against the court decision on recovery from SFII the outstanding 4 million UAH. The relevant claim of ASTC was satisfied by the decision made by the Commercial Court of Kyiv, which was upheld by Kyiv Appellate Commercial Court and High Commercial Court.

Accordingly, ASTC was granted the right of compulsory (through the authorities of the state enforcement service) collection of debt from the innovation company. In addition, we cannot rule out steps to arrest accounts and property of SFII, Ilyashev & Partners comment.