ARZINGER successfully defended a national grain trader in the Supreme Court in a landmark case concerning the return of foreign currency proceeds

ARZINGER successfully defended a national grain trader in the Supreme Court in a landmark case concerning the return of foreign currency proceeds.

ARZINGER associates successfully represented MANAD LLC, one of the largest national grain traders, in a precedent-setting dispute with tax authorities regarding the accrual of penalties for allegedly untimely repatriation of foreign currency proceeds in the amount of over UAH 15 million.

The essence of the dispute was the legality of offsetting similar claims between the Client and its non-resident counterparty under grain supply and loan agreements executed after the start of the full-scale invasion. The tax authorities argued that paragraph 14-6 of NBU Resolution No. 18 prohibits the termination of monetary obligations by offsetting counterclaims during martial law. In addition, the tax authorities pointed to the "heterogeneity" of the claims due to different currencies (euro and hryvnia).

Thanks to a well-developed and effectively implemented defence strategy, the ARZINGER team proved that these conclusions were unfounded. The Supreme Court overturned the penalties and, for the first time, formed a legal opinion on the application of paragraph 14-6 of NBU Resolution No. 18, noting that:

▪️ Ukrainian companies have the right to apply set-off of similar monetary claims as a form of settlement in foreign economic transactions;

▪️ this right cannot be revoked by subordinate legislation;

▪️ the restrictions provided for in NBU Resolution No. 18 are addressed exclusively to authorised banks and do not prohibit businesses from settling their obligations through set-off.

This decision sets an important precedent for the market and provides additional protection to Ukrainian exporters under martial law.

The case was handled by a team of ARZINGER associates consisting of partners Kateryna Gupalo and Nikita Larionov, as well as associate Iryna Rokishchuk.