September 07, 2020 | Cbonds
The Chinese company Skyrizon has sent a notice of investment dispute to the Ukrainian government, Unian news agency reported on Sept. 5. In this notice, the Chinese firm urges the government to initiate negotiations and “stop illegal activity” regarding Motor Sich (MSICH UK) and its shareholders. Skyrizon alleges that the Ukrainian government is breaching an agreement on the encouragement and mutual protection of investments concluded between Ukraine and China in 1992. It threatens to sue Ukraine, demanding compensation of total losses of up to USD 3.5 bln, Unian reported.
Recall, Ukraine is refusing to recognize Skyrison as a holder of a controlling stake in Motor Sich since 2017. In 2016, Skyrison reportedly accumulated an over 56% stake in Motor Sich by buying the shares from the company’s president Vyacheslav Boguslayev and his entourage. The U.S. officials are among the fiercest opponents of the deal.
Alexander Paraschiy: The stakes are rising for Ukraine in the Motor Sich story. If this case shifts to a geopolitical battle between China and the U.S., Ukraine will have to choose between the two sides, which could lead to significant losses for the country. But what it can lose for sure is Motor Sich itself.