It's funny how things change. Just a few years ago, foreign companies flooded into Ukraine, driving up the prices of everything – buildings, factories and land. Now, just a few years later, Ukraine is considered to be a high-risk country with a notoriously difficult business environment. Unfortunately, this is a fair assessment, and it's largely due to systematic government corruption and bureaucracy.

As a result, potential foreign investors are staying away, in part, because they have their own financial problems at home. Nevertheless, Ukraine is scaring potential foreign investors away. Meanwhile, foreign companies that are currently doing business in Ukraine are encountering more and more problems with corporate raiders.

In the United States, raiding is known as hostile takeover. In Ukraine, this takes on a whole new dimension. It is like Chicago in the 1930s and works basically like this: your competitor (the raider) pays the judge a bribe to issue a wrong legal decision. Then the raider hires a team of people (with or without weapons), who will come to your office to enforce the illegal court decision. By the time you hire your own defense team (lawyers) to reverse the erroneous court decision, your company no longer belongs to you; it has a new owner.

For example, in May of 2011, at least four entities in the Ukrainian food and beverages market were raided. They are "Khlibzavod", Nemiroff Holdings, "Lesnoy Kiev" and Kirsanovskiy Sugar Factory. In just one month, four large enterprises were raided. In all of these cases, the only available remedy for foreign companies is to hire a lawyer to file a claim in a Ukrainian court of law... and pray for the best. Unfortunately, the Ukrainian judicial system is notorious for its unpredictable and illogical decisions. When the first court hands down the wrong decision, you need to appeal to the second court. More time passes. If the second court hands down the wrong decision, you go to the third court. More time passes. By this time, you surely will have lost all control over your company.

So the question is how does a foreign company defend its interests in Ukrainian courts? As a starting point, whenever you go to Ukrainian courts, a foreign client has three basic options. The first is to go before the court and argue the case on its merits without using any connections or influence. This means no bribes, no calling high-level contacts at the Cabinet of Ministers or the President's Administration. The second approach is to use the services of experienced professionals to present your best legal arguments before the judge. Again, this option involves no bribery. The third option is simply to bribe the judge. These are the only realistic three options you have when you go to a Ukrainian court to defend your interests.

To some companies, the last option involving bribery sounds like the easiest and fastest alternative for a good reason – because it used to be quite efficient. In reality, however, this is the worst option for several reasons. First, it is illegal, which implies criminal liability and potential for blackmail. Second, it is just not fair. Third, it is unreliable because while the bribe will be accepted, the verdict may not be granted in your favor. Fourth, once you are known to give bribes, you will be forever on the hook and you will always need to give bribes. Finally, exposure of your activities could lead to a scandal for you and your company, as well as loss of your company's reputation. For many reasons, bribery is the single worst option.

Next option of arguing the case on its merits means going into court naked, without local knowledge, bribes, or any influence. This approach works well in civilized countries like the U.S., but in Ukraine it could take a lot of money and years of time because you can continue losing and paying lawyers' hourly rates without getting any fair results in the end. There are several well-known cases – for example, Gala Radio, which didn't get any justice for a number of years before its issue went before a European court. There was also a case with Telenor, which could not win at several court levels in Ukraine. And, last but not least, there is the case of Vanco, a U.S. Company that specializes in deep oil drilling. It had a large project in Ukraine until Yulia Tymoshenko stepped in. After that, no matter what Vanco tried to do in Ukrainian courts, nothing seemed to work (until Yulia was imprisoned and her influence faded).

Option number two is the middle ground, which usually involves retaining lawyers with necessary background and experience. In Ukraine, the best lawyers one can hope to retain should either be former prosecutors or, at very least, have 20-25 years of law enforcement background as lawyers and advocates. When you hire professionals with this type of background, they will minimize the risks of unnecessary court delays or even blatant corruption. Of course, as the Vanco case exemplifies, nobody can provide any guarantees about the fairness of Ukrainian courts because it often depends upon who you are up against. For that reason, it is often useful to run a background check since you don't really know who actually stands behind most companies or litigations. This information is part of due diligence that helps you assess your risks and decide whether the case is worth trying at all and, if so, to select the most advantageous venue. In any case, you should know who you are up against in any kind of confrontation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.