Things are "fairly busy" in Kyiv these days, according to Avellum Managing Partner Mykola Stetsenko, but he concedes that "we expected it to be busier."
The chief culprit, he reports, is the various big-ticket privatizations promised by the government for 2016 that have been put on hold. The major energy privatization — that of CenterEnergo — has been postponed so the government can complete the necessary pre-privatization processes, which can take some time.
Also delayed is the "famous privatization" of the PSC Odessa Port Plant chemical company, which was initially set for summer 2016, but the initial asking price was too high, and a new initial tender has been pushed back until December. "But I wouldn’t count on it," he says.
Turning to happier subjects, Stetsenko refers to the long-awaited kick-off of the country’s judicial reform, which took effect on September 30th and resulted in the dismissal of some 500 judges by Parliament and the initiation of the process for replacing them. The new system is expected to limit at least petty corruption at the judicial level by providing for significant salary increases — for some positions as much as 10 times — and creating more independence (including lifetime appointments) for judges. Although its success in achieving its goals remains to be seen, Mykola admits that, "yes, we’re hopeful."
When asked whether the dismissal of so many judges would be a problem, Stetsenko says no, pointing out that the nation as a whole has some 10,000 judges, and while there might be a slight and temporary effect, "we’re not known for having the fastest system anyway, so it shouldn’t be that noticeable." Stetsenko is quick to point out to his American interviewer that the country’s judicial system is, regardless, faster than that of the United States.
Stetsenko reports that the Ukrainian Parliament has also created more legislation for the country’s energy regulatory authority — a major requirement of the IMF and other Western investors — while the Pension and land market reforms are actively discussed in the Parliament. In addition, Stetsenko reports, the National Bank is continuing to decrease the discount rate — the benchmark rate at which the National Bank lends to commercial banks in the country. It’s now down to 15% — still high, Stetsenko concedes, but a marked improvement from the 30% it was at several years ago. It’s still continuing to drop, he says, which is a very good sign, and the National Bank is slowly opening the market and increasing capital flows. He expects to see more commercial acquisitions as a result sometime in the spring of next year.
The legal market is fairly stable, Stetsenko reports, and he points to AstapovLawyers’ transformation into Eterna Law and the recent defection from CMS to DLA of dispute resolution Partner Olga Vorozhbyt as the only recent developments of note.
In "The Buzz" we interview experts on the legal industry living and working in Central and Eastern Europe to find out what’s happening in the region and what legislative/professional/cultural trends and developments they’re following closely.