28 January 2012

This is Ukraine.......law is not applicable

I recently attended a dinner with a large group of people working on the UEFA Euro 2012 Football championships in Ukraine. Most of them working on contracts for ticket sales, corporate hospitality and hotel deals.

One man (an EU national) told me how he had made over hundreds of agreements with various hotels in Ukraine.
His company had made agreements with these hotels where they had agreed to purchase reserved rooms. Moreover, the company had agreed to pay for these rooms 60 days before the expected day of usage. But now he is surprised that almost each one of these hotels wants to change the terms and conditions and of course the agreed prices for rooms. One famous hotel in Kyiv had informed him that they will just ignore the agreement they signed as they know they can command a bigger price for their hotel rooms.

I had to smile when he asked me "Do they not respect agreements in Ukraine?"
I proceeded to explain how things really work in Ukraine. Obviously it came as no surprise to me that these hotels had no intention of honouring any agreements. Its not the Ukrainian way.

Ukrainian 'business people' are heavy on 'making an agreement'. Probably more so than any other country in Europe. They like to see everything agreed in written form and signatures applied to each and every page of the agreement and duly 'stamped' using a corporate seal, to avoid any changes being made to the agreement at a later date.

But, when they realise that the terms of any agreement could now be better for them, they will simple ignore what has been agreed and act as if nothing had been in place. The more polite Ukrainians will simply inform you that they intend to change the terms and conditions to suit what they now want.

I also informed my dinner colleague that he and his company would probably be wasting their time if they decided to pursue these hotels through the normal legal process. It would be unfruitful to do this in Ukraine as the rule of law as we know it in Western Europe does not apply in Ukraine.

Sadly this is another case that demonstrates why its not easy for foreign companies even those associated with Euro 2012 to do business in Ukraine.

1 comment:

Anonymous said...

I understand this Ukrainian behaviour, even if I disapprove. What I do NOT understand is why western legal systems continue to pretend there is a rule of law in Ukraine, continue to enforce Ukrainian legal judgments, and continue to regard people called to the Bar in Ukraine as real lawyers. The real blame here rests with the West, and especially with the passivity of the Law Society of England and Wales, the cornerstone law society in the West. If Brits showed backbone and de-listed Ukrainian courts and lawyers for five years pending "reform", things in Ukraine would change pretty darn quickly.