Ukraine drops case against ArcelorMittal

Ukraine's state prosecutor on Tuesday dropped a legal action against steelmaker ArcelorMittal which the company had feared could threaten a plant which it bought in a $4.8bn re-privatisation.

"The commercial court has taken the decision to end the case because of the withdrawal of the suit," said commercial court judge Oleh Khripun, reading out his decision.

Rinat Starkov, chief executive of the Kryvy Rih steel mill, greeted the court's decision, saying it would help restore the ex-Soviet republic's image as a place to invest in.

"At first, one can say, its image suffered. But today's decision, the speed of the hearing and the speed with which the decision was taken suggest that (Ukraine's) image has been restored," he told reporters.
The state prosecutor's representative declined to comment.

The prosecutor had alleged that the company violated terms of its 2005 purchase of the eastern Ukrainian plant by subsequently delaying investment in it without valid permission.

ArcelorMittal said it reached a legal agreement with Ukraine's State Property Fund to put off investment commitments after declaring force majeure in the global downturn of 2008-9.

Some commentators had linked the prosecutor's move to the political change of guard in Ukraine, in which President Viktor Yanukovich took over last February from Viktor Yushchenko, and speculated that the plant could be renationalised and put up for sale again.

But Yanukovich, speaking last Friday on an official visit to Paris, appeared to rule out any drastic action against ArcelorMittal. He said there was no question of "any rupture in the privatisation agreement of this factory."

The company had warned that if the court case went against it foreign investor confidence could be shaken in Ukraine which is striving to get its economy back on its feet after being hit hard by the global crisis.

Follow Emirates 24|7 on Google News.