Chinese aviation company, Beijing Skyrizon Aviation Industry Investment, has taken the Ukrainian government to The Hague over its attempt to halt its takeover of advanced aerospace firm Motor Sich. Skyrizon is seeking $4.5 billion in compensation for the government's alleged deliberate disruption of the deal.
Skyrizon announced Tuesday that the company, its investors, and its founder, Wang Jing, had filed an application with the Hague-based Permanent Court of Arbitration over the botched deal to acquire Motor Sich. The company said that all of the plaintiffs in the claim had suffered "significant losses" in China and in Ukraine as a result of the "unfair treatment" of the Ukrainian government.
Motor Sich is one of the worlds' most advanced military aircraft engine manufacturers. Skyrizon claimed that the Ukrainian government implemented "illegal measures" to block the deal.
Skyrizon, which is pursuing a majority share in Motor Sich, has accused the Ukrainian government of breaking a reciprocal investment protection agreement struck in 1992 between the two countries, adding that it has not ruled out the option of seeking additional penalties.
The arbitration request comes after the Ukrainian government stated in March that it would restore Motor Sich to state control for national security concerns, following intense pressure from the U.S.
Motor Sich was once a major player in the former Soviet Union's defense sector, supplying engines to Russian military helicopters for decades until Russia's invasion of Crimea in 2014.
The planned acquisition had raised worries in the U.S., which saw it a likely part of China's efforts to obtain access to crucial defense technologies. Skyrizon was placed on a trade "black list" by the previous Trump administration for attempting to acquire foreign military technologies. Ukrainian President Volodymyr Zelensky also placed sanctions on Skyrizon, limiting the company's trading activities and prohibiting it from transferring its money outside the nation.
Skyrizon denied any wrongdoings and claimed that the Ukrainian government had used its state authority to "politicize" the economic and trade operations of Chinese companies and investors. The company said it would continue to fight and defend its lawful rights and interests using all available legal means.
Chinese investors overseas, particularly in big infrastructure projects and technology deals, are embroiled in an increasing number of legal disputes amid growing scrutiny from the West. It remains unclear if the Ukrainian government would take part in the arbitration. However, analysts said that the move could inspire more Chinese companies to follow suit.