19 March 2025
Ferrexpo
plc
("Ferrexpo" or the "Group")
Notification to Ukraine under international investment
agreements
Ferrexpo plc (LSE: FXPO)
announces that the Company and its subsidiary,
Ferrexpo AG, have provided a formal written notification to Ukraine
under international investment agreements in place between Ukraine
and the United Kingdom and Ukraine and Switzerland (the "UK-Ukraine
BIT" and "Swiss-Ukraine BIT", respectively).
Background
As previously announced on 5 March
2025, a statement was made by the State Bureau of Investigation in
Ukraine (SBI) stating that the Pecherskyi District Court of Kyiv
had granted a request of the Prosecutor General's Office of Ukraine
to transfer to Ukraine's Asset Recovery and Management Agency
(ARMA) an unspecified percentage of corporate rights of 16 legal
entities in Ukraine, including 49.5% of the corporate rights of
Ferrexpo Poltava Mining. Ferrexpo Plc, Ferrexpo AG and Ferrexpo
Poltava Mining (FPM) have still not received any official
documentation or requests from the Ukrainian authorities with
regards to the Court decision.
The SBI statement followed a
separate press release made by the SBI twelve days earlier, in
which the SBI said it was preparing to lodge a claim together with
Ukraine's Ministry of Justice to the High Anti-Corruption Court of
Ukraine, requesting the nationalisation of certain assets and
corporate rights of FPM.
These are the latest steps in a
series of actions and decisions taken by Ukrainian State bodies and
the Ukrainian courts adverse to the Ferrexpo Group. There are
currently more than ten significant civil and criminal cases open
against the Ferrexpo Group that have resulted, at different points
in time, in the freezing of shares in all of Ferrexpo's Ukrainian
subsidiaries, the arrest of FPM's railway wagon fleet, the freezing
of FPM's bank accounts and the detention of senior management
personnel (including FPM's General Director) with the Ferrexpo
Group having to pay in excess of US$16 million in bails to secure
their release.
Legal status
These actions and decisions are
wholly without merit. They are contrary to Ukrainian law, and the
underlying legal proceedings in Ukraine have been riddled with
procedural defects and due process violations. Further, there is no
reasonable nexus whatsoever between these actions and decisions
against the Ferrexpo Group and the supposed aim of prosecuting
cases against Mr Konstantin Zhevago. Ferrexpo's subsidiaries in
Ukraine are wholly owned by Ferrexpo AG; Mr Zhevago does not own
any shares in those entities. Ferrexpo AG is run by its directors
(which do not include Mr Zhevago), while Ferrexpo Plc is run by its
directors (which do not include Mr Zhevago), for the benefit of its
shareholders as a whole (which include many institutional
investors, pension funds and private individuals).
UK-Ukraine BIT and Swiss-Ukraine
BIT
The actions and conduct of Ukraine
in relation to these cases constitute breaches of its obligations
under the UK-Ukraine BIT and the Swiss-Ukraine BIT, including to
accord Ferrexpo's investment fair and equitable treatment and not
to impair by unreasonable or discriminatory measures the
management, maintenance, use, enjoyment or disposal of Ferrexpo's
investment.
In the circumstances, Ferrexpo Plc
and Ferrexpo AG have been left with no option but to send to the
Government of Ukraine a formal written notification of potential
claims under the UK-Ukraine BIT and the Swiss-Ukraine BIT. The
purpose of this notification is to explain how Ukraine's actions
constitute breaches of Ukraine's obligations under the UK-Ukraine
BIT and the Swiss-Ukraine BIT, to request that Ukraine procure the
lifting and/or cessation of the unlawful actions, and to request
the Government of Ukraine to enter into negotiations.
Further updates will be provided as
and when appropriate.
For further information please
contact:
About Ferrexpo
Ferrexpo is a Swiss headquartered
iron ore company with assets in Ukraine and a listing in the equity
shares commercial companies category on the London Stock Exchange
(ticker FXPO) and a constituent of the FTSE 250 and FTSE4Good
indices. The Group produces high grade iron ore pellets, which are
a premium product for the global steel industry and enable reduced
carbon emissions and increased productivity for steelmakers when
converted into steel, compared to more commonly traded forms of
iron ore. Ferrexpo's operations have been supplying the global
steel industry for over 50 years. Before Russia's full-scale
invasion of Ukraine in February 2022, the Group was the world's
third largest exporter of pellets. The Group has a global customer
base comprising of premium steel mills around the world. For
further information, please visit www.ferrexpo.com.
Notes to Editors:
About international
investment agreements
An international investment
agreement is an agreement between two or more States (countries)
which seeks to promote and protect private investments made by
nationals of those States in each other's territories. Some of
these may be bilateral (between two States) and are called
bilateral investment treaties or BITs, and others are multilateral
(between a number of States). Protections guaranteed in
international investment agreements commonly include (among
others): fair and equitable treatment, non-impairment by
unreasonable or discriminatory measures, full protection and
security, national treatment and protection from unlawful
expropriation. While these are State-to-State agreements, they
usually contain provisions allowing an investor from one State to
directly enforce the guarantees as to the treatment of their
investment against the host State through international arbitration
before an independent tribunal.
About the UK-Ukraine BIT and
the Swiss-Ukraine BIT
Ukraine has entered into a number of
international investment agreements, including with the UK (the
1993 Agreement between the Government of the United Kingdom of
Great Britain and Northern Ireland and the Government of Ukraine
for the Promotion and Reciprocal Protection of Investments or the
UK-Ukraine BIT) and Switzerland (the 1995 Agreement between the
Swiss Confederation and Ukraine on the Promotion and Reciprocal
Protection of Investments or the Swiss-Ukraine BIT). The UK-Ukraine
BIT and the Swiss-Ukraine BIT impose a number of obligations on
Ukraine as to the standard of treatment to be afforded to protected
investments made by UK and Swiss investors respectively in Ukraine.
These include (among others): (i) the obligation to accord fair and
equitable treatment to investments (Article 2(2) of the UK-Ukraine
BIT and Article 4(2) of the Swiss-Ukraine BIT, (ii) the obligation
not to impair by unreasonable or discriminatory measures the
management, maintenance, use, enjoyment or disposal of investments
(Article 2(2) of the UK-Ukraine BIT and Article 4(1) of the
Swiss-Ukraine BIT, and (iii) the obligation not to nationalise or
expropriate investments except in certain limited circumstances
(which include payment of prompt, adequate and effective
compensation) (Article 6(1) of the UK-Ukraine BIT and Article 6(1)
of the Swiss-Ukraine BIT).
About written notifications
under the BITs
The UK-Ukraine BIT and the
Swiss-Ukraine BIT also provide UK and Swiss investors respectively
with the right to enforce the guarantees directly against Ukraine
through international arbitration before an independent tribunal
(Article 8 of the UK-Ukraine BIT and Article 9 of the Swiss-Ukraine
BIT). Before commencing international arbitration, the
UK-Ukraine BIT and the Swiss-Ukraine BIT require the investor to
send a written notification of a potential claim. The purpose of
such a written notification is to: (i) explain the breach(es) of
the obligation(s) under the BIT, and (ii) request negotiations with
the State and/or a resolution or a settlement. The action taken by
Ferrexpo today is to give such a formal written notification to
Ukraine under the UK-Ukraine BIT and the Swiss-Ukraine
BIT.
