Chinese Company Sues Europe’s Second-Largest Country – OpEd
A Chinese company is taking the Ukrainian government to The Hague-based Permanent Court of Arbitration. Skyrizon is seeking $4.5 billion in compensation over its failed attempt to take over Motor Sich, one of the world’s advanced military aircraft engine manufacturers.
Skyrizon bought 41 per cent of Motor Sich and continued to seek a controlling stake. While Skyrizon said it planned to invest a further US$250 million in Ukrainian factories, the deal was frozen by a Ukrainian court. The Ukrainian government announced that it would nationalize Motor Sich for national security reasons. The Ukrainian President Volodymyr Zelensky imposed sanctions on Skyrizon, preventing it from moving its capital outside the country.
Usually, Chinese companies seek arbitrations under bilateral agreements or international arbitration institutions such as the International Center for Settlement of Investment Disputes. An application to Hague is rather unique for Chinese companies and it demonstrates the seriousness of their intentions.
The position of the Ukrainian government seems illogical. On the one hand, president Zelensky assured Xi Jinping that his country could become a “bridge to Europe” for Chinese businesses. On the other hand, Ukraine violated a reciprocal investment protection agreement between Beijing and Kyiv.
Chinese political experts believe that Ukraine followed the instructions from the White House. Economically, the decision of the Ukrainian side does not seem well-considered, as China is Ukraine’s largest trading partner. Such irresponsibility of the Ukrainian government may scare off other Ukrainian trade partners, for instance, Turkey which is also the concurrent of the US in arms trade. Showing blind loyalty to the United States, Ukraine may lose profitable contracts and credibility of its current and potential partners.
*Neil Karpenko, Ukraine history and politics researcher residing in Toronto, Canada. Contributing author to Haaretz, The Hill Times and Morning Star.
