Mykola Pashynskyy: “There are laws. But they need to be observed”

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Ukrainian legal specialist Mykola Pashynskyy

Fortis advocates association has been providing legal support for a large transnational company for more than 11 years. The managing partner of the association, Mykola Pashynskyy, about legal services for foreign investors in Ukraine.

What is the legal image of Ukraine in the world today?

Compared with 2013, Ukraine's image has improved significantly not only in legal terms, but in general too. The formation of the nation does not pass painlessly, but, nevertheless, international partners see that Ukraine is striving for a modern rule-of-law state with the proper division of power and respect for democratic values. It is a different matter that it is not happening as quickly as we would like it to be. Structural changes, judicial reform, economic reforms, gradually we are forming a positive image of the country in the world.

Do international partners see the events of 2013 and the current military conflict as inevitable for young democracies or as undesirable risks?

Both. If we talk about politics, it is certainly positive that society protects and defends such democratic values as human rights and freedoms. As far as doing business is concerned, these are risks. But, as in other cases, the higher the risks, the more opportunities there are to earn.

Despite the launch of reforms and the development of the Ukrainian economy, there is still a shortage of foreign investment. Why, in your opinion, are foreign investors not in a hurry to invest in Ukrainian business?

Several effective laws which can improve the investment climate in the country have already taken force. The only persisting problem is that for these laws to work, they must be observed by all without exception. Only when foreign investors are confident that everyone is equal before the law, that officials get punished for illegal actions and abuses are nipped in the bud, will they invest in the economy of this country. And this rule is applicable all over the world.

Does this mean we still lack transparency and openness?

Now that many registers have been made accessible, we are more transparent indeed. Partners' status can be constantly monitored. It is a different matter that there are still preferences for some but not the others. So, which legal changes can help Ukraine improve its investment climate? First and foremost, this is the recently adopted Law of Ukraine "On limited and addition-al liability companies". Earlier, in 2016, parliament passed the laws to improve measures on the protection of investors' rights and abolish state registration of foreign investment (Law of Ukraine "On amendments to certain legal acts of Ukraine on the cancellation of mandatory state registration of foreign investment").

As a rule, a foreign investor, which invests money or opens a company here, appoints local managers, which offers a field for abuse. Since the end of 2016, officials and directors have been made liable for dam-age but the concept of damage remained ambiguous and it was not specified what actions would entail punishment. Now the legislator introduced the concept of a conflict of interest – when managers act in bad faith with regard to company owners. Therefore, I can describe these laws as the most successful and effective legal tools for protecting the interests of foreign investors in Ukraine.

Have there been any precedents for applying these laws in judicial practice?

To date, just one case has reached the Supreme Court and it has been sent for new trial. Therefore, there is no established practice of case consideration, it is only being formed now. I think it should be positive. If the legislator introduced these regulations, they must be observed.

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Is it possible to effectively protect the interests of a foreign investor in court in the current legal framework?

Today the chances are definitely higher than they were five years ago. Judicial reform is still in progress. But for foreign investors and every citizen of Ukraine it is important how fast courts can review their cases, whether their resolutions are going to be legal and fair and how they are going to be taken by society.

Much will depend on judges, on whether they can properly justify and formulate their rulings to pre-vent others from challenging them as incomprehensible or perhaps even biased. Because court fees are now higher, not all disputes make it to court, which accelerates the processing of cases. Certainly, foreign investors or large companies can easily pay court fees but for ordinary people access to justice is limited, which is a problem.

Ukrainian laws are different from those in other countries. If a conflict of interest goes to court, are foreigners prepared to trust our lawyers?

Large international corporations usually cooperate with the top five leading law firms with office in different countries. But if there is a difficult case and the specifics of national law are important, these firms involve local lawyers focusing on a particular field of law to ensure timely and effective legal aid.

Would you say that trust in Ukrainian lawyers is growing?

Many Ukrainian lawyers became partners in international legal firms. This attests to their professional level, honesty and good reputation because such companies have a very thorough vetting procedure.

Tell us about your experience with foreign investors.

We are proud that for 11 years now Fortis Advocates Association has been providing legal advice in court proceedings for one of the largest multinational beer companies. For us, this is the best reward and indicator: if a customer in Ukraine stays for more than 10 years, this speaks volumes.

This means we have already built the necessary experience, professionalism and stable partnership. Clients come to us for help in court cases concerning the tax, competition and labor legislation or when they need to collect outstanding debts from counterparties.

What professional values should the lawyer have, in your opinion?

I think they are the same for all times. Lawyers must be honest with themselves and their clients, professional, they must guarantee legal professional privilege and do their best to achieve results.

What steps can be taken to improve the legal framework and Ukraine's image in the legal community in the short term?

Not only the experience of lawyers, but also history itself show that even very good laws do not work if they are not observed. First of all, everyone must understand that they are equal before the law, and the need for additional legislative acts will simply disappear.

For example, France still uses the Civil Code from the Napoleonic times. European countries use laws that are 200-300 years old and that get amended once in 50 years, perhaps. And this does not mean that their laws are so perfect. This means the legal awareness of citizens and society as a whole is high. And we need to develop this too.

In your opinion, how long will it take to form a law-abiding society in Ukraine?

If we are talking about a revolutionary path, 10-15 years may be enough. But this is a "stick" method, which requires strict laws, high fines and serious responsibility. If we are talking about an evolutionary path, I think the transformation of public consciousness will affect our generation and the generation of our children, provided that we set an example of how it should be. Then we will have a rule-of-law state in which laws are effective and people respect each other and themselves!

Interview by Natalia Kyrylenko.

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