State Enterprises

Since its establishment in 2006, the ADER HABER law firm has been actively engaged in the state sector of the Ukrainian economy. One of the most intricate cases currently being handled by the firm involves a dispute over a special permit for the subsoil use of PJSC VK Ukrnaftoburinnia.

I. Who is PJSC VC Ukrnaftoburinnia?

PJSC VC Ukrnaftoburinnia stands as a prominent figure among Ukraine’s oil and gas production enterprises. In 2021, the company secured a position among the top three companies in the industry based on gas production volume.

A crucial aspect of the company’s economic endeavours revolves around special permits for subsoil use.

II. A Brief Journey into the Past

The case pursued by ADER HABER centers on a longstanding dispute regarding the obligation of Derzhgeonadra (Ukrainian Geological Survey) to issue a permit to PJSC VK Ukrnaftoburinnia, originating from 2009.

In June 2009, Derzhgeonadra returned an application along with a set of documents to PJSC VK Ukrnaftoburinnia for acquiring a special permit to utilize subsoil for oil, gas, and condensate extraction in the Sakhalin Field.

In response to the initial refusal, PJSC VC Uknaftoburinnia took legal action against Derzhgeonadra, seeking an obligation to issue the special permit.

In 2010, following a decision by the court of first instance, PJSC VC Ukrnaftoburinnia was granted a special permit for subsoil use. However, this permit was later voluntarily revoked by PJSC VC Ukrnaftoburinnia outside the scope of court proceedings.

In 2019, instead of reinstating the previous permit from 2010, PJSC VC Ukrnaftoburinnia obtained a new permit for a different territory within the corresponding deposit, based on a new application.

Subsequently, the decision of the court of first instance, which led to the issuance of the special permit in 2010, was overturned by the Supreme Court of Ukraine. It ruled that the lower court had prematurely obligated Derzhgeonadra to issue the special permit. Instead, the Supreme Court mandated Derzhgeonadra to reassess PJSC VC Ukrnaftoburinnia’s application for the special permit.

It might seem logical for the case to be closed after the annulment of the special permit in 2010, as the subject matter of the case ceased to exist. However, the situation took an unexpected turn.

Indeed, the significant value attached to the special permit, estimated in billions of dollars, was the driving force behind the continuation of the case.

As PJSC VK Ukrnaftoburinnia approached the transition to management under PJSC UKRNAFTA, remarkable transformations occurred.

ІІІ. Judicial “Impartiality” 

In June 2023, Derzhgeonadra filed a petition with the court seeking the reversal of execution. This petition requested the cancellation of the order that served as the basis for issuing a special permit to PJSC VK Ukrnaftoburinnia and 16 other enterprises in 2019, as well as the special permit issued to PJSC VK Ukrnaftoburinnia in 2019. Derzhgeonadra asked the court, within the framework of the execution reversal procedure and with a significant delay, to annul the order and the special permit, despite the lack of relevance to the ongoing court case.

By 2023, the appellate court took the unprecedented step of “reversing execution” and nullifying: 1) the 2019 permit, which was unrelated to the legal relationship under investigation, executive actions, or contested actions of Derzhgeonadra; and 2) effectively resolving another “dispute” that had not even been initiated at that point.

Furthermore, the decision appealed by the appellate court also invalidated the order of Derzhgeonadra, which served as the basis for issuing a permit not only to the claimant but also to a substantial number of third parties (including 16 enterprises) who were not involved in the case. The court did not assess the legality of issuing special permits to these enterprises as part of the case in which the claimant requested the execution of the court decision.

The primary challenge arose from the fact that the decision of the appellate court was not open to further appeal, as explicitly noted by the Supreme Court in response to the cassation appeal filed by PJSC VK Ukrnaftoburinnia.

It was at this juncture that ADER HABER’s legal team became involved in the case. 

ІV. What has Been Done? 

Legal battles are ongoing at present, and the operations of PJSC VK Ukrnaftoburinnia are suspended until the special permit is renewed.

ADER HABER lawyers have devised a strategy to counteract Derzhgeonadra’s action, which has deprived a crucial state-managed enterprise of the ability to operate normally, contribute taxes, and pay dividends for the benefit of the state.

In particular, given that Derzhgeonadra has not implemented the Supreme Court’s decision from 2019, PJSC VK Ukrnaftoburinnia obtained a writ of execution and is demanding compliance from Derzhgeonadra to execute the court’s ruling.

PJSC VK Ukrnaftoburinnia persisted in their pursuit of justice. An appeal was lodged on alternative grounds against the decision of the initial court, which was issued as a part of the execution reversal. Although the appellate court initially declined to consider the appeal, the Supreme Court overturned this decision and referred the case back to the appellate court. We are currently awaiting the outcome.

Despite the complexity of the legal proceedings, the case remains transparent and clear in its pursuit of justice. We remain hopeful that justice will prevail.

As the legal battle continues, the firm`s lawyers remain vigilant in upholding the law and are continuously generating new, innovative ideas to safeguard the interests of their client.

  • Oleksandra Fedotova

    Partner, Attorney, PhD in Law, Head of Direction of work with state enterprises, ADER HABER

    Oleksandra Fedotova graduated from Taras Shevchenko National University in Kyiv.

    In 2006, Oleksandra received a license to practice law. In the same year, she co-founded ADER HABER law firm and headed the construction and real estate, land and agrarian law practice.

    In 2014, Oleksandra defended her PhD thesis on the field of land use regulation in Ukraine.

    Oleksandra’s focus is on natural resources law (oil, gas, renewable energy, energy efficiency), as well as construction, real estate, land and agrarian law.

    In May 2022, Oleksandra Fedotova joined the subgroup «Spatial planning and construction» of the working group “Construction, urban planning, modernization of cities and regions” of the National Council for the Recovery of Ukraine from the War.

    She is recognized as one of the best Ukrainian lawyers in Ukraine by numerous national and international legal directories.

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We have 18 years of successful work with foreign and local corporations, governments, state-owned companies, and public sector organizations, investors, banking institutions and private clients.

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In addition to the services covered by our practices and specialization, we provide advice on issues that have become relevant due to the armed aggression of the Russian Federation: business relocation, protection and return of assets, restructuring of credit obligations, taxation and insurance during martial law, issues of labor law, mobilization, migration.

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