Establishment of the US-Ukraine Reconstruction Investment Fund: Impact on the Business

On 30 April 2025, Ukraine and the United States signed an agreement in Washington DC to establish the United States-Ukraine Reconstruction Investment Fund (hereinafter referred to as the "Agreement"). The Verkhovna Rada of Ukraine ratified the document on 8 May 2025. The signing of the relevant law by the president of Ukraine and the subsequent completion of the procedure for its entry into force are expected.

We analysed the text of the Agreement, focusing on how it will affect doing business in the areas it covers.  

Subject of the Agreement

The Agreement outlines the future creation and operation of the United States-Ukraine Reconstruction Investment Fund in the form of a limited partnership (hereinafter referred to as the "Partnership"), including contributions, tariffs, and taxation matters. It is important to note that the Agreement itself does not establish the Partnership but rather records the key understandings between the parties regarding its future activities.

The Partnership will be formally established by partners defined in the Agreement: from Ukraine, the State Organization Agency for Public-Private Partnership Support, and from the USA, the United States International Development Finance Corporation. These two entities are expected to conclude a separate Limited Partnership Agreement, which will detail all aspects of cooperation, many of which remain currently unspecified.

Scope of the fund's activities

The Agreement indicates that the fund's activities will concentrate on two primary areas:

1. Natural Resources: The Agreement covers subsoil use for a wide range of minerals, including aluminium, antimony, arsenic, barite, beryllium, bismuth, cerium, caesium, chromium, cobalt, copper, dysprosium, erbium, europium, fluorine, fluorspar, gadolinium, gallium, germanium, gold, graphite, hafnium, holmium, indium, iridium, lanthanum, lithium, lutetium, magnesium, manganese, neodymium, nickel, niobium, palladium, platinum, potassium, praseodymium, rhodium, rubidium, ruthenium, samarium, scandium, tantalum, tellurium, terbium, thulium, tin, titanium, tungsten, uranium, vanadium, ytterbium, yttrium, zinc, zirconium, oil and natural gas (including liquefied natural gas). This list may be expanded.
2. Public-Private Partnerships (PPP): The Agreement pertains to PPP projects for the construction or operation of "significant" infrastructure facilities, without further detailing the criteria for "significance" (this is expected in the limited partnership agreement).

Key Rights of the Partnership

The Agreement grants the Partnership two important rights:

1. Investment Opportunity Right (Right of First Refusal): If there is an intention to attract capital for any project falling within the Partnership's areas of interest (use of sites with specified resources or significant infrastructure projects), initiators are always obliged to inform the Partnership first. If the Partnership expresses interest, good faith negotiations must be conducted with it. Offering substantially more favourable terms to third parties for a similar investment opportunity is prohibited.
2. Offtake Right: The Partnership obtains a preferential right to purchase, on commercial terms and for the duration of the relevant license or special permit, the products extracted during the use of the aforementioned natural resources. The subsoil user will be restricted from offering significantly more favourable sales terms to third parties.

These rights, along with the procedure and method for their implementation, are to be regulated in the limited partnership agreement; therefore, the ability to exercise these rights will be absent until its conclusion. Importantly, as currently understood from the Agreement, such rights of the Partnership will not apply to projects that commenced before its entry into force. That is, projects that already have subsoil use licenses and those whose corresponding products are not the subject of the agreement, and accordingly, subsoil users will not be obliged to offer such products to the Partnership.

Implementation of the Agreement

As the signed Agreement is a framework document, its full implementation depends on the conclusion of a detailed limited partnership agreement between the Ukrainian and American limited partners. This document is intended to define the procedures for exercising the Partnership's rights, its interaction with third parties, and internal operational matters.

The extent of amendments to domestic regulatory legal acts remains an open question. Currently, the Cabinet of Ministers of Ukraine has only registered a draft amendment to the Budget Code concerning the mechanism for transferring Ukraine's contributions to the Partnership (implementation of Article VI of the Agreement). Further legislative changes are to be expected in any case, as without them, even with the limited partnership agreement in place, it is difficult to imagine the proper execution of the Agreement by both the state and businesses.

Moreover, the Partnership's rights are linked to the limited partnership agreement, which will outline "detailed procedures". However, Articles VII and VIII of the Agreement, which establish these rights, also state that its provisions are to be implemented in accordance with Ukrainian legislation and Ukraine's obligations in connection with its accession to the European Union.

The main Agreement also mentions a "general partner," but its legal status and role are not disclosed. It remains unclear whether its involvement necessitates the conclusion of yet another, third agreement.

Conclusions

At this stage, it can be confirmed that an agreement has been reached between Ukraine and the USA to create an investment fund in the form of a partnership, whose activities will focus on investments in the extraction of strategic natural resources and the implementation of large infrastructure projects. The Partnership will have significant preferential rights in these areas. However, the real impact of the Agreement on the business environment in Ukraine will only become clear after the conclusion and publication of the limited partnership agreement, as well as the introduction of relevant amendments to national legislation, without which its proper implementation is difficult to imagine.

The INTEGRITES team is closely monitoring the process of concluding and implementing the Agreement and will promptly provide information about further developments.

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The update was prepared by:

• Dr Oleksiy Feliv, Managing Partner
• Tetyana Storozhuk, Counsel
• Serhii Datsiv, Senior Associate
• Maksym Mykoliuk, Associate