Head of legal | Sanofi Ukraine
Leonid Cherniavskyi
Head of legal | Sanofi Ukraine
The previous two years appeared to be extremely active in terms of protecting the company’s rights and assets as a foreign investor in Ukraine against fraudulent claims by third parties coupled with unlawful actions of state authorities. The simultaneous and interrelated nature of these cases required a proper response with involvement of various instruments. Aside from local legal actions these included the need to coordinate a public relations campaign, support external communication with stakeholders and initiate the procedure of an international investment dispute.
Considered one of the top-five cases of pressure against business in 2017, the ongoing financial raidership attack constitutes an attempt to cease financial assets of Sanofi Ukraine by a former fraudulent supplier using falsified documents. It became possible due to ungrounded and unlawful actions of state bodies, including courts and State Execution Service of Ukraine, and resulted in total of UAH180m withdrawn from or arrested on the bank accounts of the company during various episodes of the case. Through a number of parallel litigations in economic courts, criminal investigations, complaints to the Service of State Financial Monitoring, High Council of Justice and Business Ombudsman, as of today the company managed to unfreeze and return all the funds, except the UAH46m seized back in July 2017, which are still kept on the accounts of the State Treasury of Ukraine. The court case is currently undergoing second round of review with the next hearing appointed in the Supreme Court of Ukraine.
In November 2017, AMCU fined Sanofi Ukraine and two of its largest distributors for total amount of UAH140m accusing them of alleged vertical anticompetitive concerted actions. All three companies initiated parallel litigations against AMCU challenging its unreasonable and ungrounded decision and successfully overturned it winning in all the court instances with a final verdict of the Supreme Court of Ukraine in May 2019.
The aforementioned cases accompanied with simultaneous numerous procedural actions within groundless criminal investigations by law enforcement authorities involving Sanofi Ukraine created significant interruptions for normal business activities, and became the ground for bringing a notice of investment dispute under the France-Ukraine Investment Treaty. The notice was followed with pre-arbitration negotiations between the parties in attempts to search for an amicable resolution. As of today, Sanofi Ukraine has also brought a lawsuit to the Economic court of Kyiv on recovery of damages and financial losses caused by unlawful actions of the State Execution Service of Ukraine, which collected twice the amount of claimed funds from Sanofi Ukraine within the financial raidership case.
Routine legal matters take too much time without any additional value. The Ukrainian legal tech market is not, however, very developed and probably only now starting to emerge. Nevertheless, we do automation of work with agreements of low and medium risk by using an IT-solution built on the out-of-the-box software available on the market. It allows creation of templates, which may be used for automatic generation of agreements by users using master data of counterparties from the system. In addition, we use cloud-based solutions which automatise and simplify due diligence of third parties, as well as databases of laws and court decisions with the possibility to track developments of selected litigations.
The implementation of e-signatures and integration of external cloud-based databases with internal company systems aimed at simplification and acceleration of processes are priorities in the near future.
Be prepared to handle a crisis at any point of time, develop personal and collective stress resistance; do not underestimate the importance of integrity and compliance as well as the need of proper due diligence checks on potential counterparties. Find several external advisors specialising in relevant areas of law who you can trust in terms of both business and legal knowledge, as well as maintaining highest ethical and compliance standards.
The old-school approach when a law firm aims to provide an ideally polished memo with excess of billed hours by each level of associate and many pages of legal analysis and elaborated discussion is outdated. Today fast-paced, highly competitive, innovative, digital and quickly changing business environment requires that law firms perfectly know the industry specifics, give proactive
FOCUS ON… PHARMA IN UKRAINE
Better investment climate and long-term strategic policy-making are crucial for development of pharmaceutical industry in Ukraine.
Pharmaceuticals and healthcare is probably one of the most volatile and unstable areas in Ukraine, in terms of complicated regulatory landscape with hardly predictable changes and unbalanced decisions by authorities. Unfortunately, this unpredictability is often connected to changes in leadership of the state in general, and even more frequently – of the healthcare authorities. Politicised topics, such as prices on medicines, IP rights’ protection and state funding of medical treatment, regularly make legal matters more intricate and complex. All of these factors make the work of an in-house counsel challenging in terms of proper risks assessment and provision of well-balanced risk guidance to business.
The business community and pharmaceutical companies expect the new Ukrainian government to take a more stable, predictable and long-term strategic policy-making approach. It will promote foreign direct investment and ensure law making is done in-line with such a long-term strategy, which should be drafted and approved with involvement of all the stakeholders and in strict adherence to the declared progression towards harmonisation with EU laws and regulations.