Igor Boyko’s claims against the State of Ukraine for USD 100 million were dismissed in full. Igor Boyko failed to prove the legality of the acquisition of the investments.
Today, the Zhytomyr confectionery factory is managed by its lawful owners.
Igor Boyko, who unlawfully created ZL ALC by merging the Zhytomyr Lasoshchi confectionery factory with Budstyle-XXI LLC, a company under his control that conducted no business activity, lost his case before an international arbitration tribunal. The proceedings were administered by the Permanent Court of Arbitration in The Hague, Kingdom of the Netherlands (Igor Boyko v. State of Ukraine, Case No. 2017-23). The arbitral tribunal found that Igor Boyko had failed to prove either the legality of the acquisition of the investments or any breach by Ukraine of the Agreement between the Cabinet of Ministers of Ukraine and the Government of the Russian Federation on the Promotion and Mutual Protection of Investments. As a result, claims totaling USD 100 million were dismissed in full.
Background to the dispute.
Until 2010, Closed Joint-Stock Company Zhytomyr Lasoshchi was among Ukraine’s five largest confectionery manufacturers, enjoyed high product-quality ratings, and offered a broad assortment known in more than 30 countries. Problems began in the 2010s, when the factory, which had long been managed by Igor Boyko, became the center of a corporate dispute. Ukrainian courts found that Boyko had no lawful right to own the factory and had seized the company’s assets through a raider-style takeover. As a result, the assets were returned to the shareholders of CJSC Zhytomyr Lasoshchi, whom Boyko had unlawfully deprived of their corporate rights by creating a new enterprise, ZL ALC, and transferring the property of CJSC Zhytomyr Lasoshchi to it. Disagreeing with the decisions of the Ukrainian courts, Igor Boyko accused the state of unlawful expropriation and violations of international law.
Ukraine’s position.
The Ministry of Justice of Ukraine provided evidence that the actions of the authorities remained within the framework of national law and international agreements. State representatives emphasized that the court decisions concerning the Zhytomyr Lasoshchi confectionery factory had a lawful basis and that Boyko’s losses resulted from his own unlawful business conduct.
Court decisions.
Between 2011 and 2015, CJSC Zhytomyr Lasoshchi ceased to exist as a result of Igor Boyko’s unlawful actions. During this period, the shareholders defended their rights before courts and law-enforcement authorities. This led to the restoration of the company’s operations from late 2015, the full restoration of shareholders’ rights, and a return to the traditions the factory had followed since its foundation. Chairman of the Supervisory Board Serhii Tyshchenko played an important role in restoring the company’s operations and protecting it against corporate raiding. In 2022, Ukrainian courts confirmed the lawfulness of the state’s actions, and the international arbitration tribunal has now agreed with those conclusions. It was decided that no compensation is payable to Igor Boyko because his rights were not violated.
International significance.
This decision is important for Ukraine in the context of protecting its interests internationally. It demonstrates that the state can effectively defend itself in complex disputes while creating mutually beneficial conditions for investors.
Further consequences.
This case is an important precedent in the protection of state interests before international tribunals. The decision finally concludes the long-running legal dispute surrounding the Zhytomyr Lasoshchi confectionery factory. The ownership structure is transparent and is based on genuine investment and employee participation. Today, the business continues to operate under wartime conditions, preserve jobs and support the country’s economy in a tangible way.