Marchenko Partners Acted for Philip Morris in Settlement of Investor-State Dispute with Ukrainian Government

On March 22, 2019, the State Fiscal Service of Ukraine revoked UAH 635 Million tax claims against Philip Morris Ukraine Private JSC in accordance with the Settlement Agreement between Philip Morris International Inc. (USA), Philip Morris Global Bands Inc. (USA), Philip Morris Brands Sarl (Switzerland), Philip Morris Ukraine Private JSC, on one side, and the Government of Ukraine, on the other side (“Settlement Agreement”).

The Settlement Agreement, which was approved by the Government of Ukraine on December 05, 2018, and signed on January 31, 2019, has been reached within the framework of the investor-state dispute and negotiations between Philip Morris and Ukraine under the US-Ukraine Bilateral Investment Treaty (BIT) and the Switzerland-Ukraine BIT.

It is the third publicly reported pre-arbitration settlement of investment disputes in Ukraine after previous settlements in Gilead Sciences Inc. (USA) v. Ukraine (in February 2017) and in Torno Global Contracting S.P.A. and Others (Italy) v. Ukraine (in May 2018).

All pre-arbitration settlements in investor-state disputes in Ukraine took place during the last 3 years, which is an evidence that Ukraine and the Government of Ukraine have become much more open to foreign investments and, in cases of grounded claims, Ukraine is willing to restore legitimate rights and expectations of foreign investors and resolve disputes with investors amicably.

Marchenko Partners acted as an external legal counsel for Philip Morris in the investor-state dispute and negotiations with Ukraine and its Government. Our Dispute Resolution team, in this case, included partner Oleh Marchenko and associates Volodymyr Nakonechnyi, Nadiya Mykiyevych, Olena Kandia, and Nick Yurlov.

Previously, Marchenko Partners acted for another U.S. company in its investor-state dispute with Ukraine concerning the infringement of valuable IP rights of the U.S. investor. We continue to act for Franklin and Lorraine McMahons, Home Group S.A. and Morgan Furniture LLC in the ongoing investor-state dispute and negotiations with Ukraine concerning unfair and expropriatory penalties for the alleged violation of Ukraine’s currency control regulations.

PHILIP MORRIS – Philip Morris International Inc. (PMI) is a leading international tobacco company engaged in the manufacturing and sales of cigarettes and other nicotine-containing products in more than 180 markets outside the USA. PMI entered the Ukrainian market in 1994 and is engaged in manufacturing through its subsidiary Philip Morris Ukraine Private JSC (PMU). PMU operates a state-of-the-art production facility in the Kharkiv Region, manufacturing a range of international brands for the Ukrainian market and export.

MARCHENKO PARTNERS – Marchenko Partners is a law firm based in Ukraine. We specialise in Antitrust & Competition, Arbitration & ADR, Investor-State Disputes, Intellectual Property, and Litigation. Our lawyers help multinational and national Clients to manage and resolve their vital regulatory and commercial issues and disputes, often involving high stake public policy issues, within the framework and at the crossing of national and international laws and government relations. Our expertise and competences are recognised by Legal 500 EMEA, Chambers Europe, Best Lawyers, International Tax Review and other rankings. Practicing law in a challenging and changing business and regulatory environment, we are committed to integrity in our dealings and the rule of law.