Swissport Loses Out In Ukraine … For Now

Court rules in favor of Ukraine International Airlines over a $30 million joint venture gone very wrong.


When it came to dollars, according to Swissport, both organizations were committed to investing in the subsidiary under the participant’s agreement of the joint venture. When UIA balked at further investment, Swissport offered to provide all of the investment instead.

 

BAD BLOOD

While the March 6, 2012, shareholder’s meeting undoubtedly triggered the legal action, according to a press release posted on UIA’s own Web site, the bad blood between the two companies started on Day One of the JV:

  • Swissport acquired its UIA share at a fraction of the cost in 2006.
  • Swissport imposed a three-year ground handling services contract containing disadvantageous conditions upon UIA.
  • The contract forced UIA to pay for ground handling services at charges significantly exceeding market prices.

UIA says only after it became a privately-owned airline with Mayberg in charge did it get a voice in running the business.

“UIA entered into the deal aiming to acquire a reliable, decent and professional partner and to further share the profits,” the press release states. Only after numerous negotiations went nowhere, UIA says it offered its partner a “civilized divorce.”

Exactly what this divorce meant remains another mystery, although UIA says all its proposals were rejected.

As the case went through litigation, UIA says “Swissport strongly delayed the proceedings, deviated from providing documents and information on the actual circumstances of the conflict, and thus tried to mislead the court.”

Swissport, however, gave its own examples at its press conference of the erratic nature of the Ukrainian legal proceedings:

  • The company did not receive proper notification from the court in one case.
  • Court hearings were postponed several times and two judges were replaced at the last minute.
  • In several cases, the company heard from its lawyers hours before the court hearing that the court had already decided against Swissport.
  • As Swissport appealed a lower court decision, the company says the court refused to deliver written court rulings, hindering its lawyers’ preparations.

In the end, the Kiev City Economic Court of Appeal commenced on March 27 and discussed the case for 90 minutes, apparently, without Swissport’s lawyers even present, and ruled against the company – a verdict Swissport says it did not even know about until the company received a written court ruling on April 5.

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