Doing business in the Crimea has changed dramatically as events
in the peninsular have been rapidly unfolding in the past few
weeks. The normal course of business in the Crimea was disrupted by
the recent referendum on seceding from Ukraine. Although the Venice
Commission and the Constitutional Court of Ukraine called the
referendum unconstitutional, the Crimean representatives declared
the peninsular independent. The Russian Federation formally
recognised the Crimea as an independent state and signed the
agreement on its accession to the Russian Federation on 18 March.
On 21 March, the day after the agreement was ratified, Russia
passed the law extending the effect of Russian laws and state
authorities to the territory of the peninsular. The law provides
for a transitional period until 1 January 2015 for purposes of
fully integrating the Crimea into Russia. The Ukrainian Parliament
is also currently working on a special law to regulate activities
in the Crimea.
At this time, both Ukrainian and Russian laws apply in the
Crimea. This results in serious conflicts of laws, and increases
the vulnerability of business assets and the complexity of doing
business there. The peninsular is effectively controlled by Russia:
the Ukrainian institutions are being used as building material for
the new system of courts and local government based on Russian
laws, measures are taken to integrate databases and registries into
the Russian systems, and local public servants are being retrained
to do their jobs under Russian law. At the same time, Ukraine and
most of the other countries do not recognise the results of the
referendum and the Crimean accession to Russia and, consequently,
the legal effect of the transactions in the Crimea if governed by
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The «Public-private partnership» (hereinafter – the «PPP») is normally understood as forms of interaction and cooperation between a state and business to solve social problems on mutually beneficial terms.
The facts of the case are relatively unremarkable, but the decision to grant the remedy of ineffectiveness is significant, particularly if it foreshadows more judgments where the remedy is granted.
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