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“Nationalization” and other “legal” developments in Crimea

26.03.14

In Crimea court cases that have been started under the Ukrainian law will be held under the Russia legislation. The Chairman of the Court of Appeal of Crimea Valeriy Chernobuk advised that as of March 24 Crimea courts are accepting only those applications that are based on the Russian law. Crimean courts are working now on the Constitution of Russia and Russian procedural laws and norms. As for the cases that have been started before under the Ukrainian norms, they will be finished, but under Russian laws. It is another interesting legal maneuver, hard to comment on.

 

The first one relates to the fact Crimea decided to “nationalize” Ukrainian energy firms and ports operating within its borders. The very decision states that all Ukrainian state property would be transferred into Crimean ownership. “All establishments, businesses and other organizations of Ukraine or with Ukrainian participation on the territory of Crimea will belong to Crimea”. First of all, it concerns the state-owned oil company Chornomornaftogaz as well as the oil and natural gas rich “continental shelf and exclusive economic zone” off the Crimea’s Black Sea coast. Also the energy companies Ukrtransgaz and the Feodosiya terminal were nationalized. Chornomornaftogaz is the principal energy company in Crimea and has operations in the Black Sea and the Sea of Azov. The company extracted 1.2 billion cubic meters of natural gas in 2012.

 
The mass media reported that the State council of the Crimea “nationalized” also the integral property complexes of enterprises being previously under the control of the Ministry of Infrastructure of Ukraine and the Ministry of Agrarian Policy and Food of Ukraine, located on the peninsula. This decision was accepted on March 17, 2014.
There are the following objects in the list:

·         Kerch ferry terminal,
·         Kerch commercial seaport,
·         Kerch fishery seaport,
·         Feodosia commercial seaport,
·         Yalta commercial seaport,
·         Sevastopol commercial seaport,
·         Sevastopol fishery seaport,
·         Yevpatoria commercial seaport.

 
Besides, Crimea also nationalized the property of the State Enterprise “Administration of Maritime ports of Ukraine” and the state institution «Gosgydrographya». This at least means that also control over pilotage in the Kerch Strait is taken.
The Ministry of Justice of Ukraine declared “nationalization” by the Crimean Government of Ukrainian state facilities in Crimea is illegal.
Under nationalization it is usually understood the process of taking a private industry or private assets into public ownership by a national government or state. All above assets are not private. All of them belonged to the State of Ukraine.

 

Among main private companies in Crimea there are:

Crimea Titan (Joint-Stock Company which is the biggest Eastern European titanium dioxide producer),
Crimean Soda Plant (Public Joint-Stock Company which is the a sole soda ash dense grade “A” and light grade “B” producer and exporter in Ukraine)
Stevedoring company “Avlita” (which is the biggest grain terminal in Crimea based in Seavstopol)
Shipping company Yugreftransflot  (which is based in Sevastopol and owns and operates a fleet of about 10 small to medium size reefer vessels)
Sevastopol Marine Plant (which was founded in 1783 as main repair base fleet on the Black Sea and is engaged in all kinds of repair, docking and conversion of vessel of any class and purpose)
Zaliv Shipyard (which is based in Kerch and is specialized in commercial shipbuilding, building of vessels for oil and gas branch, manufacturing of offshore structures and products of ship machine building)
More Shipyard (which is based in Feodosia and is focused in production of high-speed dynamically supported vessels , planing boats and pleasure yachts, etc.)

To what extent property and other interests of private companies are going to be affected by the decisions of Crimean government are not clear.

Author: Arthur Nitsevych