Court in British Virgin Islands bars Ukrainian shipping firm from hiding assets from Russian state in bank expropriation dispute

The Supreme Court of the British Virgin Islands has sided with Russia’s VEB.RF state corporation in its dispute with a firm linked to the Ukrainian government over the illegal expropriation of the Russian Prominvestbank by Kiev.

Fishing Company SA, part of the Ukrainian state fishing agency, had been working to dispose of sea vessels so that they couldn’t be seized in favor of VEB.RF in accordance with an earlier decision by the Arbitration Institute of the Stockholm Chamber of Commerce.

However, the Supreme Court of the British Virgin Islands on Wednesday introduced provisional measures that banned the Ukrainian company from dispersing its assets, including Ukrainian ships, in order to conceal them from Russia, VEB.RF’s press service said.

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The Russian state corporation has welcomed the decision by the court, which it says has “rightly prevented Ukraine from evading responsibility for [the] illegal expropriation” of VEB.RF’s subsidiary, Prominvestbank.

“Instead of fulfilling its obligations in accordance with international law, Ukraine prefers to hide its assets,” VEB.RF argued, adding it will do everything in its power to return what it had invested in the Ukrainian economy.

In 2017, Kiev placed all Russian banks working in Ukraine under sanctions, citing Russia’s reabsorption of Crimea as the reason. Their subsidiaries were banned from transferring money outside Ukrainian territory.

A later court decision saw Prominvestbank’s shares frozen, which basically amounted to impounding them. Ukrainian authorities auctioned off the bank in March 2020, with the buyer’s name still remaining undisclosed.

VEB.RF disputed the results of the auction, which was deemed illegal in the Stockholm arbitration. It ruled in April 2020 that Ukraine should reimburse the Russian company for the costs incurred in the course of the proceedings in the Prominvestbank dispute.

With Kiev refusing to voluntarily fulfil those obligations, the British Virgin Islands court moved to seize the shares of Ukraine’s Fishing Company SA in December.

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