Failure in the Crimea

Estonian businessman and former mayor of Tallinn and former Minister tõnis Palts suing in the Crimea with the Russian Ministry of defense. Ten years ago he bought a Balaclava the former Soviet missile base “the Rock” to build on the ruins of the resort. After the annexation of Crimea Pants rebook the property of the Ukrainian jurisdiction in the Russian. And the following year the Governor of Sevastopol secret decree gave the station the Russian Ministry of defense. The businessman sued the Ministry of defense too. In March, the Sevastopol arbitration was denied to both parties. And in Estonia almost noticed that the citizen of its country is going to develop a commercial project in the occupied Ukrainian territory.

In 2007, the Sevastopol city Council sold a land area of 17.5 thousand hectares near the village of the Defense firm, “Cascade investment” for the construction and maintenance of the resort. We are talking about anti-coastal underground missile complex “Utes” or, as it is popularly called, “Weaving”. More precisely, one of its two parts.

The construction of secret “Object 100” began in 1954 in the mountains near Balaklava. It consisted of two identical underground complexes and launch pads, which are located at a distance of 6 km from each other in villages Defense and Backup. It was the world’s first underground missile complex based onshore with an initial radius of action in the Black sea up to 100 km In 1996, the complex was handed over to the Ukrainian Navy. In the beginning of the last decade, the division about the Defense was plundered, all the metal were taken from there.

In August 2006, according to the newspaper ForPost Sevastopol, the Ukrainian defense Ministry signed a contract with the company “Cascade investments” on joint construction of housing area of approximately 45.4 thousand square meters on the territory of the military town B-42, on two plots with a total area of about 20 ha. Then, the Ukrainian military gave the company the right to use land, for which he received from her 10 million hryvnias (at the exchange rate of nearly 1.65 million euros), and sold to the investor nearly three dozen buildings and structures. The military Prosecutor of the Navy of Ukraine disputed the deal in the Economic court of Sevastopol, but in 2007 was rejected. In October 2007, the Sevastopol city Council sold to “Cascade” the land for the construction and maintenance of the resort complex, backed by a deal with the decision of the administrative court. The construction works, the investor has not started.


The limited liability company “Cascade investments” is registered in Sevastopol in 2006, its founder is also Sevastopol company “Kaskad holding”, which, in turn, owns Estonian company Jubek Investments. Its owners are the former mayor of Tallinn, the former Minister of Finance of Estonia and former member of Parliament tõnis Palts and his former assistant Julian Transfiguration, which for ten years manages the Crimean company of the chef.

The transaction amount was not mentioned anywhere, writes ForPost, including court decisions related to the object. Main Department of state Committee for land resources of Ukraine in Sevastopol in 2011 assessed land without buildings almost 74 million. With the amount of Pallets had to pay land tax. The Tallinn newspaper Postimees reports that the purchase of land for future resort Palts spent 10 million dollars, and a year ago he estimated his property in the Crimea together produced for the project detailed plan of 17 million dollars.

In 2009, former Telecom magnate, former member of the Board of port of Tallinn and Estonian Railways tõnis Palts with the state of 15 million euros topped the rating of the richest civil servants in Estonia. The publication Eesti Ekspress wrote that Parts bought “Weave” during the real estate boom, without attracting loans, and intended to develop the project at their own expense, however, the crisis broke out, and the businessman who lost in 2011, 8 million euros, with his Crimean property was in a very difficult position. Draft design of complex Balaklava Blue Resort for 89 thousand square meters was approved in 2011. Since 2013, under the project worth 170 million Euro Pallets began to actively seek investors. However, from October 2015 “Weaving” back on the market for 891 million rubles, or 147 million euros, and the reason for that, according to Palts — a “historic failure”.

In March 2014, Crimea was annexed by Russia. “Cascade investments” and “Kaskad holding” was re-registered in the legal field of the Russian Federation and in 2015 received a Russian cadastral passport of the property because all rights of the Ukrainian property in the Crimea are automatically recognized as valid in Russia. However, in the same year the Governor of Sevastopol Sergey Menyailo unexpectedly secret decree № 195-RP sends “a Hundred,” together with a whole list of other private lands of the Russian Ministry of defense. Palts firm filed a lawsuit in the Sevastopol arbitration court, demanding to remove its site from the list. The court drew the defense Ministry as a Respondent. The military filed a counterclaim, demanding to recognize the acquisition of a “Weave” Palitsa with the Ukrainian authorities invalid. In March the court made an unexpected decision — the claim was denied to both parties.

Tõnis palts a Board member of the conservative nationalist government of the party “Union of Fatherland and Res Publica”. He was at the forefront of its creation. In April 2014, the main theme of the election campaign to the European Parliament his party has made the fight against Putin’s corruption in Europe, promising to carefully monitor the economic relations of Russia with the countries-members of the European Union affect the decision-making on the Ukrainian crisis. “In the interests of Estonia to protect fundamental values, not to hold on to the economic benefits,” said Palts is the same party allegedly Niles the Cross.

He tõnis Palts trying to hush up the political context of the case. At the beginning of last year, the press service of the Crimean company it circulated interview in which he stressed that he did not intend to leave the Peninsula, despite the change of jurisdiction, unlike most other foreign investors, and will continue to develop the project. He says the following: “This is not a conflict with the government of Sevastopol, with the Governor or with the defense Ministry of Russia. It is the result of the actions of individual officials, who confused their own interests with the state. I believe that in Russian courts decisions are not made in Ukraine — by “call from above” and based solely on the letter of the law”. Moreover, last year he wrote an open letter to Vladimir Putin as the owner of the Russian company “Cascade investments” with a request to protect his investment.

Pelts claims that investors have already invested in the project is approximately EUR 2 million and want their money back. He said that he could go to the end and turn to the international court. Tõnis Palts not answered the phone call of the correspondent of Radio Liberty. Press Secretary IRL Kristiina Herodes, through which we tried to contact him, he replied: “Mr. Pants said he did not want to comment on this case because this is a business issue, not a policy.”

The representative of the foreign Ministry of Estonia Sandra Kamilova in response to the request of Radio Liberty, did tõnis palts the right to re-register its property in the Crimea under Russian jurisdiction and to enter into a relationship with the authorities after the annexation of the Peninsula, said that Estonian laws do not regulate real estate transactions concluded by its citizens abroad. However, Estonia recognizes the territorial integrity of Ukraine, Crimea is part of it, on the Peninsula, according to international law, are subject to Ukrainian laws, including the law on occupied territories. “If Ukraine turns to us for help in applying its laws, says Sandra Kamilova, we provide it on the basis of existing treaties, for example, agreements on legal cooperation, basing their action on a coherent EU policy on non-recognition of the annexation of the Crimea.”

To the question whether the Estonian state to protect the property rights of its citizen in another country, if that property was in the occupied territories, Sandra Kamilova gave the following answer: “Estonia represents the interests of its citizens and protects their interests in other countries, on the basis of the law on the Consulate and the Vienna Convention on diplomatic relations, using all legal measures that can help achieve their goals.” However, the “protection of the rights of those people who are in occupied territory, we take great care to be taken when providing protection steps have not helped in any way to legitimize the actions of the occupation forces, to make it clear that we are dealing with an individual case, which is in the nature of protection of the rights or interests of a particular person”.

In Estonian media, the case has not caused a wide resonance. At least, it attracted less attention than last year’s entry in Facebook Palts, in which he insulted the residents of the predominantly Russian-speaking district of Tallinn lasnamäe: “Stupid as the average Lasnamae”. And those publications that did appear, the case serves as a victory for the Estonian businessman of the Russian Ministry of defence. Publicist Valery Saikovsky acknowledged in conversation with us: “Few people sees this as an important event that Estonian businessmen participate in courts around the world with varying degrees of success, and this is another such process. It is clear that the fact of the treatment of the businessman from Estonia, a member country of the EU, the Russian court is very similar to the actual recognition of the jurisdiction of the Russian Federation in the Crimea. But Estonian people are rational. They understand that the alternative to it — an appeal to Ukrainian or international courts that may be and render a verdict in favor of the company Estonian businessman, however, the prospects of practical implementation of these decisions, to put it mildly, vague. Now the firm Palts has certain chances for action recognition MO illegal, and therefore can receive compensation for lost property. There are nuances: in recent years in the Estonian media, there have been several publications that describe the suffering of the Estonian businessmen doing their business in Ukraine, mainly in the area of Odessa. It does not add them desire to solve their problems with the Ukrainian courts. It is of some significance that in the Crimea a lot of Estonians living in the end of XIX century and to protect its right there under all political changes is normal for them — you could say it’s even part of the mentality.”

Radio Liberty asked to comment on the situation an economic expert, entrepreneur and former Minister of transport and communications of Estonia Raivo vare.

— How is perceived the case in Estonia?

Is slipped on the news, but somehow not very exaggerated. Apparently, it is connected with the fact that he tõnis Palts also not interested in the subject to expand. As soon as it becomes official-political overtones, with the Russian side having problems. Let’s call it politely.

Entrepreneurs from the EU dealing with judicial authorities of the Russian Federation on the occupied territory of Crimea, and no one paid attention to what he actually legitimitely occupying power.

— Let’s look from his point of view. What should he do? Spit, give up? He put back all free and not only free funds. Remain without pants? No, he’s fighting to the last. He’s not thinking about legitimizing, delegitimization, it is not particularly concerned. He’s trying to save their investments. Suffered with the Ukrainian side, now you will suffer with the Russian. And of course he tries to hold your project. It will be difficult, and I think that could not happen, but I don’t want to “croak” because I know that in such cases, in reality this right is strong, and the strong there is not exactly it, although the legal right on his side. If there was a legal state, is another matter.

But, besides the fact that tõnis palts a businessman, he is also a politician, and his party…

— No, he’s not a politician, he is really involved in party politics to some extent, but is not present in an official capacity as a politician. In this sense it is not comparable with some of the French extreme right, which go to the Crimea and try to establish a connection, and pose in front of specific monuments in connection with the Crimean events. I think it just don’t apply to him, he absolutely in this plan not in the right figure. But he was in politics he was visible.

— I was told that in the Crimea and Abkhazia Estonians have deep roots.

— Yes, in the XIX century moved to the Estonians. You know the Royal policy: displacing the local population, attracted colonists who received land. And in Estonia the land is not enough. And people went to the Caucasus and to the Crimea.

— That is, the Estonians have some sentimentality to the Crimea?

Yes. In the Crimea even a school, where he taught a teacher who received a salary in Estonia. Now it’s all covered, of course. But I note that the project Palts does not associated with this, because it is on the coast near Sevastopol, and the Estonian village was in the Central part of the Crimea.

— How Estonian business is tied to Russia, whether it can influence political decisions?

— I do not see any impact because Russia has ensured that the specific weight of the Russian market for Estonian businesses is not too great. When we regained independence, 95 percent of total export potential to the CIS countries, including Russia — more than 75 percent. Today, its share declined to 5 percent exports and 8 percent imports. The case of tõnis Palts. And Estonian entrepreneurs who had invested in different projects in Russia, since 2007, there almost all gone. Just the conditions became unbearable: someone took the business raiders, none of the investors were not protected. Now the Russian import is mostly raw materials.

— What would be the chances of tõnis Palts, if he appealed to the Ukrainian or international jurisdictions?

— I can only judge by personal experience. A dozen years ago working in the same company, we won a significant lawsuit is not even in the international and Russian arbitration. Nonetheless, money penny is not received. Right here at anything. I believe that Parts must try to pass all instances, don’t even think he has another choice, or just give up and surrender.

— Now the Crimean press reports that Parts not even won and both sides lost.

— Brilliant. In General, the law is quite a rare case, I as a lawyer can say. Always someone wins. If there both sides lost, so is there a third party, I would say. Given the Russian practice and reality.