International Transit S.A.L. "Offshore" (ITO) Reaches Agreement in Ukrainian Court for the Return of 48 Million USD to a Foreign Investor

- The contract for the supply on which the conflict arose, was signed in September 2014. In March 2017, DMK did not fulfill its obligations vis-a vis ITO and did not supply steel products, for which advance payment was received at the beginning of 2017 in the amount of 37.991 million USD. The Supply Contract provided that all disputes concerning its implementation would be settled by the Arbitration Institute of the Stockholm Chamber of Commerce (SCC). In September 2018, an arbitral award was made in Stockholm, which found DMK and its guarantor – the Industrial Union of Donbass Corporation (IUD) – severally and jointly liable to pay ITO's debt under the Contract at a rate of approximately 48 million USD, which also includes interest and penalties sanctions. However, even before the ITO's filed a claim to the Arbitration Court in Stockholm in August 2017, DMK has concluded an alleged agency agreement (the "Agency Agreement") with PJSC 'Donetskkoks'. According to the Agency Agreement, Donetskkoks (not even being a supplier or manufacturer of products) would supposedly perform the obligations of DMK vis-à-vis ITO by virtue of the Supply Agreement. This move allowed Donetskkoks to file a counterclaim against DMK, arguing that the main Contract is invalid. Since Donetskkoks was not the party to which this Contract was concluded, DMK and Donetskkoks ignored the arbitration clause and initiated the proceedings in the Ukrainian court. The court of the first instance in Ukraine fully satisfied the demands of DMK in their claim that the Contract is invalid disregarding a valid arbitration clause. The decision of the court of first instance ignored as well many procedural violations that were made towards the Lebanese company in the trial, such as its right of defense, which forced the Lebanese Company to initiate a complaint against the judge before the High Council of Justice. Finally after 17 months of consideration, at the hearing on April 19, 2019, the Eastern Economic Court of Appeal located in Kharkiv sustained the ITO's appeal in the case and cancelled the decision of the court of first instance declaring the Supply Contract invalid, thus rendering the binding decision in favour of ITO. The decision became effective immediately upon announcement. This statement is based on information in public domain as regards entities and persons mentioned immediately above, as well as on (i) the published court rulings and decisions in cases No. 824/239/18, 905/2247/17, and 905/2550/17; and (ii) information disclosed in the course of the court hearings in the said cases. (Photo: https://mma.prnewswire.com/media/883961/International_Transit_SAL_Offshore_ITO.jpg)