Back
Automatically translated version. May contain inaccuracies compared to the original.
Hydroinzh-Bud LLC, which is part of the orbit of the scandal-plagued developer KSM-Group, lost the first round of a lawsuit seeking to recover 954,3 million hryvnias from the Kyiv budget.
This concerns funds the company paid about six years ago as a share contribution for constructing part of the Kryštalni Dzherela residential complex and spent on building infrastructure near it that is now used by the “energy” companies (plus penalty interest, inflation losses, etc.). Hydroinzh-Bud LLC failed to convince the court that the legislation at that time no longer required entering into share participation agreements and that it was effectively “forced” to do so. In addition, the company could not document the amount spent on arranging the networks or prove that it transferred or intends to transfer them into communal ownership. However, it is too early to close this chapter — Hydroinzh-Bud LLC has already filed an appeal against the court decision that went against it.
Soon the Northern Commercial Court of Appeal is scheduled to consider Hydroinzh-Bud LLC’s appeal in case 910/7132/25.
The company is appealing the Kyiv Commercial Court’s decision of 15 July 2026, which denied its claims to invalidate two share participation agreements for the creation and development of the city’s social and engineering-transport infrastructure that had been concluded with the Department of Economy and Investments of the Kyiv City State Administration (Kyiv City State Administration, or KCSA) in 2020, and also denied recovery from the above department of 954,3 million hryvnias.
What the dispute is about
On 27 February and 21 September 2020 Hydroinzh-Bud LLC and the Department of Economy and Investments of the KCSA entered into two share participation agreements for the creation and development of Kyiv’s social and engineering-transport infrastructure. Under those agreements, the company undertook to pay funds to the city budget for “construction of residential buildings with built-in public premises on Metrologichna Street” — referring to the Kryštalni Dzherela residential complex (developer – KSM-Group), for which Hydroinzh-Bud LLC acted as the client and which was being built on four plots totaling 31,77 ha that are in use by the National Academy of Sciences of Ukraine (which specific phases of the complex these plots relate to is not currently available in open sources). Under the first agreement, the company was to pay 14 million hryvnias to the city treasury, and under the second — 17,5 million. The metropolitan authorities were, in theory, to direct these funds to bring utilities to the complex, repair and maintain roads, etc.
It appears Hydroinzh-Bud LLC later paid these funds into the city treasury, but the company has now sought to reclaim those funds and other sums it spent. In connection with this, the above lawsuit was filed in the first half of 2025.
The company argues that neither it nor the defendants “acted freely, and entering into such share participation agreements did not reflect their will” — claiming it was only required by the legislation in force at the time. The point concerns changes in investment activity law adopted by the Verkhovna Rada in September 2019, which provided that developers would no longer be required to enter into share participation agreements with local authorities, leaving valid only agreements concluded before 1 January 2020. In other words, after that date it was unnecessary to conclude and perform new agreements. Hydroinzh-Bud LLC emphasized that it had to sign the agreement with the Department of Economy and Investments because at that time the said changes were not fully aligned with other legal acts — allegedly, without the share participation agreements it would have been impossible to commission construction objects.
Hydroinzh-Bud also stressed that when it carried out residential development on the specified territory, it had constructed thermal, water, gas and electrical networks, as well as heating and sewage engineering networks on its order, even beyond the customer’s land plot. Currently Kyivgaz PJSC, Kyivvodokanal JSC, Kyivteploenergo municipal enterprise and DTEK Kyiv Electric Grids PJSC use the facilities built at the developer’s expense for the Kryštalni Dzherela complex. Accordingly, Hydroinzh-Bud’s management argues the company should be relieved of the share contribution, and moreover — should be reimbursed for costs of building networks outside the development site.
Initially the company demanded recovery from the capital’s budget of 622,3 million hryvnias. That amount included funds to be recovered as a result of invalidating the share participation agreements, as well as funds spent on building networks (162,6 million — principal debt, 131,9 million — inflation adjustments, 27,9 million — 3% per annum and 268,1 million hryvnias in penalties). Later Hydroinzh-Bud LLC filed a motion to increase the claim to about 954,3 million hryvnias — after the company recalculated how much it had spent on infrastructure construction and how much it may have lost over recent years due to hryvnia “depreciation” and because those funds were held in the city council’s accounts (212,8 million — principal debt, 225,4 million — inflation adjustments, 44,5 million — 3% per annum, 436,7 million — penalties, and there are 31,7 million hryvnias in court rulings on this case without a breakdown provided).
However, the commercial court in Kyiv did not accept the plaintiff’s arguments. Judge Oleksii Spychak noted that the mentioned legislative changes de jure were not yet in force in 2020. Therefore, in his view, Hydroinzh-Bud LLC in any case had to pay the share contribution for the construction of the objects covered by the contested agreements — whether or not those agreements had been concluded. For this reason, the judge concluded that the existence of the said agreements in no way violated the plaintiff’s rights.
As for compensation for infrastructure built outside its plot, the court decision states that construction of engineering networks beyond the developer’s own plot does indeed allow the developer to reduce the share contribution by the estimated cost of those networks. However, such offsetting or reimbursement for “other” facilities does not occur automatically at the municipality’s discretion. For this to happen, Hydroinzh-Bud LLC had to follow the relevant legal procedure and transfer the constructed facilities into communal ownership. Specifically, it was necessary to sign an acceptance-transfer act for those infrastructure objects and to undergo an audit of the scope and cost of completed works. Only the audit-confirmed amount excluding VAT could serve as a basis for reducing the share contribution. Thus, the court emphasized that the right to compensation directly depends on the developer’s strict compliance with all legally required steps, which did not occur in this particular case.
City lawyer and rights defender Oleksandr Dyadyuk, who follows this case, said he considers the court verdict fair. Moreover, according to the specialist, Hydroinzh-Bud LLC has no chance of winning the dispute given the statutory provisions, other judicial precedents and the lack of documented calculations.
“In my opinion, the court’s decision is lawful; moreover, there are relevant conclusions by the Supreme Court, which [in another similar case] found that developers had an obligation to pay share contributions under agreements concluded in 2020. [Regarding compensation for constructed networks] the court pointed out that the law clearly provides that a developer may receive funds only for those objects located outside their plot and if they are transferred into communal ownership. Hydroinzh-Bud did not provide any evidence that they are transferring or intend to transfer those networks into communal ownership. They also did not provide the corresponding calculation showing that, for example, 500 meters of pipe were built: 200 meters on the plot and 300 meters outside it. Nor were there calculations that the estimated cost of these networks amounts to a certain number of hryvnias. In other words, they simply stated that their networks cost a certain sum,” emphasized Oleksandr Dyadyuk.
Context
The Kryštalni Dzherela residential complex is one of the capital’s largest residential complexes, if not the largest — both in number of buildings and in area occupied. Construction began about a decade and a half ago; the first buildings were commissioned in 2013, the most recent buildings were commissioned in 2022, and several buildings are at various stages of completion (from design to finishing works). In total the complex will consist of more than forty buildings (according to various sources — 43 or 45).
The complex occupies an area of more than 38,7 ha. The users of the relevant land plots are the National Academy of Sciences of Ukraine and the Shmalhausen Institute of Zoology subordinated to it (one plot of 1,1 ha). Three companies act as clients for the construction — the aforementioned Hydroinzh-Bud LLC, Interbud-TM LLC and Yug-Proekt LLC (these companies are clients on different plots, but in practice buildings have so far been erected only on orders from the first two LLCs). They were involved in the works on various bases, including by concluding agreements with the NASU under which developers were to transfer certain percentages of residential space to the academy.
This development has repeatedly stirred various scandals. For example, several years ago the KCSA tried in court to cancel the right to use one of the plots under this complex (cadastral number – 8000000000:79:122:0005, area 14,17 ha) held by Hydroinzh-Bud LLC and Interbud-TM LLC. The city administration argued to the court that only the KCSA can dispose of plots of state ownership on Kyiv territory, not the National Academy. However, officials were unsuccessful, and in 2021 they were denied that claim.
What is known about the developer
According to the analytical system YouControl, Kyiv-based Hydroinzh-Bud LLC was registered in June 2007. Its director is Svitlana Burkovska, and its founder and ultimate beneficiary is Kostiantyn Stadnichenko, who is registered in the city of Vasylkiv in Kyiv region.
YouControl attributes this company to the corporate group KSM-Group (developer of Kryštalni Dzherela), which unites about sixty companies engaged in planning and construction of residential estates, infrastructure facilities, bridges, roads, etc. Key persons in this group are Arsenii and Serhii Kopystyria, Nataliia Vozna, and the aforementioned Olha and Tetiana Chernenko.
Open sources report that Arsenii Kopystyria is the son-in-law of Mykhailo Verbenskyi — colonel-general of police, incumbent head of the State Research Institute of the Ministry of Internal Affairs (MIA) of Ukraine, former head of the MIA Main Staff (in 2005-2007 and 2014-2015) and former member of the Central Election Commission (2018). It is also known that Arsenii Kopystyria taught at the Kyiv National Institute named after T. H. Shevchenko at least until 2020.
No less notable is the personality of his brother Serhii. The latter is one of the accused in a case involving an offer of an illicit benefit to former Minister of Infrastructure Oleksandr Kubrakov (also former Deputy Prime Minister for Ukraine’s Recovery) in exchange for “help” in developing land on Tyraspilska Street, 43 in Kyiv.
The National Anti-Corruption Bureau (NABU) has already established that Serhii Kopystyria, who called himself the actual owner of Citygazservice LLC (the potential developer of that land), asked the mentioned official for not only non-termination of the agreement for construction of the residential complex at that address in exchange for apartments, but also for some other “services.” In particular, Kopystyria allegedly hoped the minister would assist him in allocating adjacent land plots for development, in securing state budget funds to modernize electrical networks there, in obtaining design permits for construction that the relevant KCSA department refused to provide, and so on. Kubrakov was allegedly promised an increased bribe — in addition to 15 apartments that had already been “re-registered” to his “trusted person.”
Developers in the KSM-Group orbit are actively building on Kyiv land plots used by the National Academy of Sciences of Ukraine and its subordinate structures. In particular, this concerns the area around Feofaniia (Holosiivskyi district of the capital) — where 4 of the 5 residential complexes that KSM-Group declares as developer are currently under construction.
The implementation of these projects by the developers is accompanied by scandals, court proceedings and public protests. Among the most high-profile incidents — in January 2022 companies close to KSM-Group demolished an NASU dormitory on Metrologichna Street (Holosiivskyi district) to build high-rise buildings, while people still lived there. During one of the protests against this development there was violent confrontation between local residents and some people activists called “titushky.”
But the most controversies recently surround the planned development of a plot of 5,68 ha on Akademika Hlushkov Avenue, 65 in the Holosiivskyi district. The user of this land is the Shmalhausen Institute of Zoology of the NASU, which in 2018 handed this territory to Yug-Proekt LLC (a company in the KSM-Group orbit) under a corresponding agreement. The capital’s public opposes erecting a mixed-use complex there (in fact, likely standard multi-storey residential buildings) — local residents and activists demand the land be given protected status because it is effectively a forest area of the Teremky tract. Law enforcement is also involved and has initiated a number of lawsuits aimed at preserving the territory.
Moreover, law enforcement continues to examine possible violations in the “attempts” to build housing on a 4,94 ha plot on Vasylia Stepanchenka Street, 5 (Akademmistechko), which is used by one of NASU’s structures and is planned to be developed by a company in the KSM-Group orbit. Recently the State Bureau of Investigations (SBI) reported suspicions of abuse of office against two academy officials (at least one a former official), as well as the former director of Navium-2008 LLC, which obtained the right to “develop” this territory and a neighboring plot of 1,97 ha. According to the investigation, these figures caused the state damage of 2,3 million hryvnias. Detectives believe this happened through misuse of the land — in fact the territory is an industrial zone. Previously that developer managed in court to obtain permission to erect buildings up to 100 meters high on that land, although the KCSA initially “allowed” no more than 45 meters.
It also appears KSM-Group has interests in a potential residential development of six plots totaling more than 6 ha on Antonovycha Street, around which court disputes are ongoing. Invest-Proekt Budivnytstvo LLC is seeking cancellation of a number of points of the urban planning terms and restrictions (MOU) for the design of that development — the company insists it does not need to coordinate anything with heritage protection authorities (despite the presence of a historic house where the prominent scientist Yevhen Paton lived) and that it can erect buildings up to 100 meters high.
The Prosecutor General’s Office, for its part, is asking the court to cancel the “urban planning” permissions, return the land to the state and terminate the development agreement between Invest-Proekt Budivnytstvo and the Electric Welding Institute of the NASU (apparently the agreement was supposed to be approved by the Cabinet). Recently law enforcement achieved an interim success — the court prohibited construction works on those plots during the dispute. As for KSM-Group, a company in that developer’s orbit is listed as the general contractor for works on that territory.
Kyiv has previously seen multimillion-dollar court disputes arising from dubious claims by various companies against the municipal authorities. For example, in May 2025 a nearly seven-year lawsuit seeking to recover 24,46 million US dollars (671,5 million hryvnias) from Kyiv’s budget in favor of Kyiv Terminal LLC was concluded. Kyiv Terminal had in 2007 received the opportunity to reconstruct Kharkivska Square under an investment agreement with the KCSA. The company demanded compensation for losses it allegedly suffered when the agreement was terminated in 2013. The ex-investor justified such sums partly by saying it had to take a loan to carry out works and spend on land surveying, which became “wasted.”
However, although the KCSA initially supported the ex-investor, the courts sided with the community. This was chiefly because Kyiv Terminal’s owner, businessman Tamaz Somkhishvili, holds Russian citizenship, and, considering potential claims by Ukraine to recover funds from the aggressor state, it was decided that this company could be “let go.” It is also noteworthy that Somkhishvili was previously accused of working for Russia’s defense industry.
The Department of Economy and Investments of the KCSA has been headed by Nataliia Melnyk since 16 February 2018. Its activities are currently personally overseen by Vitalii Klitschko.
The National Academy of Sciences of Ukraine has been headed by Anatolii Zagorodnyi since October 2020. Previously, from 1962, the academy’s president was Yevhen Paton, who died in August 2020.
Author: Oleksandr Hlazunov
Source: KyivVlada
Document: PDF proof of the original version of the news item "Суд не задовольнив вимогу структури «КСМ-Груп» щодо повернення 954 мільйонів гривень пайового внеску, сплаченого за житловий комплекс «Кришталеві джер...". It records the publication content at the moment of the first scan, the preservation date and the source: Rozsliduvach.
