The State Property Fund of Ukraine has announced the upcoming privatization of a number of landmark properties, including the Ocean Plaza Shopping Center, Rye Market, Hotel Ukraina and Hotel Kozatskyi. Isame with the privatization of the latter there are a number of problems that are accompanied by lawsuits and conflicts.
Auctions are scheduled for July 18, 2024.
To understand the situation surrounding Hotel Kozatskyi, a simple search in open sources shows that there is a long-standing dispute between private investors and the State Enterprise Hotel Kozatskyi. The dispute concerns the contract of joint investment activity, according to which SE "Hotel Kozatskyi" transferred the hotel building to joint activity, and investors, including foreign ones, invested money.
The first court decisions regarding this contract date back to April 2007. Since 2011, the conflict reached its climax: the investors appealed to the Stockholm Arbitration, which recognized the contract as valid and confirmed the investors' share in the joint property. At the same time, the state-owned enterprise declared the contract invalid, thus creating mutually exclusive solutions: the investors have the decision of the Stockholm Arbitration, and the state-owned enterprise - the national court.
Vadym Vayspapir, the manager and co-owner of one of the investors, said that his company "Carlton Trading Ukraine" LLC, together with the foreign investor Carlton Trading LTD, concluded a joint venture agreement with the "Kozatskyi Hotel" SE in 2000.
At first, everything was fine: investors invested money in the renovation of the hotel, the purchase of materials and equipment, marketing and staff training. The hotel began to generate profits, which the members distributed and reinvested. A complete reconstruction of the hotel was planned, for which millions of dollars were allocated.
However, in 2010, when Viktor Yanukovych's team came to power, the state-owned enterprise Kozatskyi Hotel unilaterally refused to fulfill the terms of the contract, transferred the hotel to its balance sheet and began to appropriate all the profits. The investors turned to the International Auditing Company BDO, which confirmed the contributions of all participants. The share of investors in the hotel is 39.28%.
After that, the investors turned to the Stockholm Arbitration, which recognized the contract as valid and binding. However, despite this, SE "Hotel Kozatskyi" appealed the decision in the national court, which declared the contract invalid. The investors appealed to the European Court of Human Rights (ECtHR), where the case has been pending for more than 10 years.
Investors claim that the privatization of the state share of the hotel should take place in a civilized manner, and not in the context of legal conflicts. They are ready to buy out the state share, but the State Property Fund refused. Investors warn that the results of the auction may be declared invalid in court, which will complicate the situation for a potential buyer.
Therefore, the situation with the privatization of the Kozatskyi Hotel is not transparent. Although the price of the hotel may seem attractive, the prospect of legal battles with investors who have gone through a long road of litigation is obvious.
