Ukrainian AN-124 detained by Canada awaits court action (08/10/03)

Ukrainian AN-124 detained by Canada awaits court action

by Roman Woronowycz
Kyiv Press Bureau

KYIV - Nearly two months after Canadian authorities detained one of the world's largest planes, the Antonov-124 Ruslan, owned by a Ukrainian government corporation, Ukraine and Canada have agreed that a Canadian court should resolve the diplomatic dispute that has arisen from the controversial detention.

The Federal Court of Canada will hear the case on August 26 to decide whether Canada lawfully took control of the plane in response to a request from the Stockholm Arbitration Court of Sweden. Canada's Foreign Ministry has stated that the incident has "no political context" and "was solely a civil case," according to Interfax-Ukraine.

Ukrainian Foreign Affairs Ministry spokesman Oleksander Horkov said on August 5 that Canada's Foreign Ministry and its National Defense Department have not excluded that a diplomatic resolution to the issue is still available.

"Canadian officials have indicated a preparedness to help reach an objective solution in the question of the release of the AN-124," explained Mr. Horkov during a regular briefing at the Ministry of Foreign Affairs.

On May 30, 2002, a Swedish court decided that Ukraine must repay a Cyprus-registered firm, TMR Energy Ltd., just over $42 million for violations of provisions in the statutory agreement between the Cypriot company and Ukraine's State Property Fund (SPF), both of which held a 50 percent stake in the Lysychansk Oil Refinery in Luhansk. The Swedish court sided with TMR Energy which stated that the company should recoup modernization costs after the SPF failed to include TMR Energy in incorporation documents.

The civil suit was resolved in a Swedish court because TMR had purchased its interest in the Lysychansk refinery from a Swedish firm in 1993.

Canadian authorities detained the plane, capable of carrying 120 tons of cargo and also known as the Condor, on June 26, of this year a week after it had landed at a military airbase in Goose Bay, Newfoundland, on a scheduled flight to deliver a shipment of goods to an Italian Air Force unit training there. The aircraft was being utilized by a British transport concern.

The Canadian government claims that it acted after the Federal Court of Canada acknowledged and upheld the Swedish court decision, which then gave the Canadian government the right to confiscate Ukrainian property on Canadian territory. After the Swedish court decision, TMR Energy had initiated proceedings in the courts of several countries, among them Canada the United States, Belgium and France, to support the ruling.

Meanwhile, Ukraine has appealed the decision of the Stockholm Arbitration Court. In the appeal the SPF is protesting the large award given to the Cypriot firm and claiming that TMR Energy had the right to no more than $500,000 in losses.

The owner and builder of the AN-1274 Ruslan, the Antonov Design Bureau of Dnipropetrovsk, has challenged the Canadian decision, arguing that, while wholly owned by the Ukrainian government, it is a separate entity and cannot be linked to liabilities of the government in general or the SPF in particular.

The seizure of the plane immediately provoked a diplomatic tussle, with Ukraine's Ministry of Foreign Affairs calling on July 15 for Ukrainian airlines not to fly to any points in the four countries that had accepted the Swedish court decision.

On July 23 Ukraine's Foreign Affairs Minister Anatolii Zlenko went so far as to send a diplomatic note to the Swedish Embassy in Kyiv requesting diplomatic resolution of the issue, He also wrote a personal letter to Canadian Ambassador in Ukraine William Graham. In addition, Mr. Zlenko ordered his ambassadors in the four countries that have accepted the Swedish court ruling to watch that no property owned by the Ukrainian state on these territories was confiscated.

The Ukrainian press has reported that Canada will soon sell the large Ukrainian aircraft. While not refuting that it may eventually put the aircraft up for auction, the Canadian Embassy in Kyiv stated on July 31 that such an action could only take place on the basis of a Federal Court decision and after all appeals had been exhausted.

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