The District Court of Nicosia on June 6 ruled in favor of the Ukrainian tycoon Rinat Akhmetov's System Capital Management (SCM) financial and industrial group, discharging the previous order to restrict the alienation of certain SCM assets and thus 'unfreezing' them now.
"We are delighted by today's judgement. The District Court of Nicosia has ruled that the freezing order obtained by Raga Establishment Limited on 27 December 2017 against, among others, several SCM Group companies and Mr Rinat Akhmetov has now been discharged. All restrictions imposed by that freezing order in dealing with their respective assets have been removed. The Court also issued an order awarding the legal costs in favor of the SCM Group and against Raga," SCM's Director of International and Investor Relations Jock Mendoza-Wilson said on June 6.
"The court stated in its judgement that the December 2017 Cypriot freezing order was obtained by Raga inappropriately and unjustifiably. This is illustrative of Raga's behavior in this dispute and a reflection of the true nature of its claim filed against SCM Group and Mr Akhmetov in Cyprus. We maintain that such claim is baseless, just as the now discharged freezing order had been baseless. We will continue to defend vigorously against Raga Establishment claims in Cyprus and other jurisdictions," he added.
As was earlier reported, the District Court of Nicosia in 2017 issued a temporary order to freeze SCM's Cyprus-based assets up to US$820 million, following a dispute with Raga Establishment over the privatization of Ukraine's telecoms giant Ukrtelecom.
The reason for the legal proceedings was the contract terms of Ukrtelecom sale to the SCM group in 2013. According to Ukrtelecom's lawyers, Raga Establishment Ltd, as the seller, claimed in the agreement that it adhered to a 2011 privatization agreement with the State Property Fund of Ukraine (SPF). This refers to the commitment of Raga Establishment Ltd to invest in the development of Ukrtelecom's infrastructure in the country.
The SCM states that this obligation was not fulfilled. Moreover, upon discovering Raga's failure, it tried to terminate the deal and demanded the return of its $100 million prepayment. This sparked a lawsuit on the part of Raga Establishment, demanding that SCM pay them the full US$760.
In September 2016, SCM filed a counterclaim with the London Court of International Arbitration (LCIA) to rescind the sale of Ukrtelecom, which would have returned shares in Ukrtelecom to Raga and the prepayment sum to SCM. While the arbitration was still pending, in April 2017, the State Property Fund of Ukraine filed a lawsuit for the dissolution of the privatization agreement and the return of Ukrtelecom shares to state ownership, which indicates that Raga Establishment has not fulfilled its obligations under the privatization agreement.