The district administrative court in the Ukrainian capital of Kiev declared on Thursday the 2016 nationalization of the country's PrivatBank illegal, ruling to invalidate the contract for the bank's shares sales
KIEV (Pakistan Point News / Sputnik - 18th April, 2019) The district administrative court in the Ukrainian capital of Kiev declared on Thursday the 2016 nationalization of the country's PrivatBank illegal, ruling to invalidate the contract for the bank's shares sales.The bank, founded in 1992, was nationalized by the Ukrainian government in December 2016, with the authorities referring to the need to protect its customers and preserve the country's financial stability. The central bank of Ukraine said back then that nationalizing PrivatBank, which held around one-third of all deposits in Ukraine, was necessary to avert a meltdown of the Ukrainian economy.
"After studying at a court hearing Ihor Kolomoyskyi [one of PrivatBank founders]'s claim against the National Bank of Ukraine [NBU], the Ukrainian cabinet of ministers, the Deposit Guarantee Fund and the National Securities and Stock Market Commission, Kiev's District Administrative Court deemed illegal the decisions of the defendants, which resulted in the nationalization of the JSC CB PrivatBank, and it also deemed illegal the state's contract for the bank's shares sales, from the moment of its conclusion," the court ruling read.
The court has been studying this case since June 2017. The ruling was based on the defendants' failure to provide legal grounds for identifying PrivatBank as insolvent, which triggered the nationalization procedure, and also on the violations of the nationalization procedure.
The court added that the Ukrainian government had violated the right of PrivatBank shareholders, including Kolomoyskyi, to own their property. The court said that the government's actions had been non-compliant with the Ukrainian constitution and with international regulations.
The NBU said in a statement that it disagreed with the ruling and would appeal it.
"The court ruling has yet to come into effect and will be appealed by the NBU. We will continue to prove to the court of appeal that the regulator's decisions and actions were lawful. We have reiterated on multiple occasions that the legal uncertainty driven by court rulings undermines financial stability," Viktor Hryhorchuk, the head of litigation at the NBU Legal Department, said as quoted in the NBU statement.
NBU pledged to propose to the Financial Stability board to appeal to the National Security and Defense Council of Ukraine and the cabinet over the lawsuit, citing its "irreversible damage to Ukraine's international image."
