China's Skyrizon sues Ukraine for USD 4.5 bln over Motor Sich

Skyrizon, a Chinese holding company that tried to take
control of Ukraine’s aircraft engine producer Motor Sich (MSICH UK), announced
on Nov. 28 that it had initiated a lawsuit at the Permanent Court of
Arbitration in The Hague demanding USD 4.5 bln in compensation from the
Ukrainian government, globaltimes.cn news site reported the next day. The
claimant insists that Ukraine has violated the bilateral agreement on the
encouragement and mutual protection of investments with China. Skyrizon stated
that it has “experienced significant losses in Ukraine and in China due to a
five-year period of unfair treatment and the continued implementation of illegal
measures in Ukraine,” the media reported.

Recall, Skyrizon and related companies accumulated a
control stake in Motor Sich in 2016-2017 but failed to obtain a permit from
Ukraine’s antimonopoly body to take de facto control of the company. The State
Security Service (SBU) initiated in September 2017
an investigation into possible sabotage related to the Motor Sich shares sale
to Chinese companies and later froze the company’s shares from trading. The
activities of the Ukrainian side to block the Chinese company’s entering Motor
Sich had been actively supported by U.S. officials
who didn’t want ”military and sensitive technologies” to be acquired by China.
In January 2021, the Ukrainian president introduced sanctions against Skyrizon
and related parties, and he ruled in March “to return Motor Sich to the state,”
 which later led to the arrest of all of the company’s shares, according to the SBU report.

In September 2020, Skyrizon estimated its related
losses  at USD 3.5 bln.

Alexander Paraschiy: A lawsuit is a logical event, and so is the risk of Ukraine being
charged multi-million losses related to the nationalization of Motor Sich.
Meanwhile, the size of the Chinese claim looks too high – in its best times,
Motor Sich’s market capitalization was USD 1 bln.