Positions of courts
Positions of courts related to the military aggression of the russian federation
The Administrative Cassation Court as part of the Supreme Court (hereinafter – the Supreme Court) considered the case based on a claim of a serviceman against the military base for recognition of illegal inaction and obligation to act.
At the request of the military base, the appellate court suspended the proceedings in the case until the end of martial law in Ukraine. The plaintiff, in turn, claimed that the appellate court unjustifiably suspended the proceedings based on clause 5 of part 1 of article 236 of the Code of Administrative Proceedings of Ukraine, since the specified norm can be applied only to individuals who are part of the Armed Forces of Ukraine, which were transferred to martial law.
The Supreme Court satisfied the plaintiff’s cassation appeal and came to the following conclusions regarding the issue of suspension of the proceedings in the case until the end of martial law.
Clause 5 of part 1 of Article 236 of the Code of Administrative Proceedings of Ukraine stipulates that the court suspends the proceedings if the party or a third party, who makes independent claims regarding the subject matter of the dispute (hereinafter – the third party), is a part of the Armed Forces of Ukraine or other military formations formed in accordance with the law, transferred to martial law or involved in an anti-terrorist operation.
This norm is temporary in nature, i.e. it is limited to the period of stay of the party or a third party as part of the Armed Forces of Ukraine or other military formations formed in accordance with the law, transferred to martial law, or involved in an anti-terrorist operation.
The Supreme Court emphasized that for military administration bodies, units, military bases, higher military educational institutions, military educational units of higher education institutions, institutions, and organizations that are part of the organizational structure of the Armed Forces of Ukraine, the norm of clause 5 of part 1 of article 236 of the Code of Administrative Proceedings of Ukraine does not apply.
Thus, the proceedings in the case can be suspended based on clause 5 of part 1 of article 236 of the Code of Administrative Proceedings of Ukraine only if the party or a third party in the case is a part of the Armed Forces of Ukraine or other military formations formed in accordance with the law, transferred to martial law or involved in an anti-terrorist operation.
Resolution of the Supreme Court dated February 27, 2023, in case No. 380/7845/21
The Claimant applied to the administrative court while missing the deadline set by law.
Relying on the introduction of martial law, as well as his status as a participant in hostilities, which collectively caused the delay in finding a lawyer to prepare a lawsuit, the Claimant asked the court to recognize the reasons for missing the deadline for applying to the court as valid, as well as to renew the missed procedural deadline.
The court of first instance, with which the appellate court agreed, denied the Claimant an extension of time.
The Supreme Court (hereinafter referred to as the Supreme Court) satisfied the cassation appeal and referred the case to the court of first instance for further consideration, making important conclusions.
In particular, the Supreme Court indicated that the reason for missing the deadline can be considered valid if it simultaneously meets the following conditions: 1) it is a circumstance or several circumstances that make it impossible or difficult to take procedural actions within the deadline specified by law; 2) it is a circumstance that arose objectively, regardless of the will of the person who missed the deadline; 3) this reason arose during the missed period; 4) this circumstance is confirmed by appropriate and admissible evidence.
Moreover, the Supreme Court indicated that the mere fact of the introduction of martial law in Ukraine, without substantiating the impossibility of the Claimant’s application within the established time limits, cannot be considered a valid reason for renewing these terms. In the disputed case, the courts of previous instances did not take into account that the Claimant had the status of a participant in hostilities and, due to his status, was subject to mobilization immediately upon the introduction of martial law, which objectively could deprive the Claimant of the opportunity to file a lawsuit on time.
The court also reached an important conclusion that when applying procedural norms, one should avoid both excessive formalism and excessive flexibility, which may lead to the leveling of procedural requirements established by law.
The ruling of the Administrative Court of Cassation as part of the Supreme Court dated 29 September 2022, in case No. 500/1912/22
Previously we mentioned the position of the Supreme Court on the lack of judicial immunity of russia. Thus, the Supreme Court noted that after the start of the war in Ukraine in 2014, the Ukrainian court while considering a case where the respondent is the russian federation, has the right to ignore the immunity of this country and consider case on compensation for damages to individuals, who suffered in a result of the armed aggression of russia, when the claim is filed against this foreign country.
Currently, the Supreme Court upheld this legal position in case No. 760/17232/20-ts regarding the compensation for damage due to the military aggression. The Court has supplemented the position with the following arguments:
- Maintenance of the russian jurisdictional immunity will deprive the claimant of the effective access to the court for the protection of one`s rights
The Supreme Court pointed out that the claimant’s application to the Ukrainian court was the only reasonably available remedy. The deprivation of such a remedy would mean the deprivation of such right in general, in other words, it would deny the very essence of such right. In turn, such deprivation of the claimant of effective access to the court for the protection of one`s rights will contradict the provisions of paragraph 1 of Art. 6 of the 1950 Convention for the Protection of Human Rights and Fundamental Freedoms.
- Judicial immunity of the russian federation is not applicable in accordance with customary international law
According to Art. 12 of the UN Convention on Jurisdictional Immunities of States and their Property (2004), which reflects customary international law, the state cannot invoke immunity from jurisdiction in a proceeding that relates to compensation for damages for death or injury to the person, or damage to or loss of property, if the damage occurred in whole or in part in the territory of the state of the court and if the author of the damage was present in that territory at the time of damage.
- Maintenance of the immunity of the russian federation is incompatible with Ukraine’s international legal obligations on the struggle against terrorism
Exercising russia’s judicial immunity and refusing to consider the merits of the claim would mean that Ukraine has violated its international legal obligations under the Council of Europe Convention on the Prevention of Terrorism and the International Convention for the Suppression of the Financing of Terrorism.
- Judicial immunity of the russian federation is not applicable, as Russia does not exercise its sovereign rights protected by judicial immunity
The concept of judicial immunity of the state is based on the international legal principle of sovereign equality of states. Russia’s actions went beyond its sovereign rights, as any foreign state has no right to carry out armed aggression against another country. The commission of acts of armed aggression by a foreign state is not an exercise of its sovereign rights but demonstrates a violation of the obligation to respect the sovereignty and territorial integrity of another state, namely Ukraine, which is enshrined in the UN Charter.
Thus, having committed an unprovoked and full-scale act of armed aggression against Ukraine, numerous acts of genocide of the Ukrainian people, russia is no longer entitled to invoke its judicial immunity, thus denying the jurisdiction of Ukrainian courts to consider and resolve cases on compensation for damages for such acts of aggression to a citizen of Ukraine. Ukrainian courts have every right to ignore russia’s immunity in this category of cases.
More details on the content of the Supreme Court’s position can be found here.
In the case № 308/9708/19 the plaintiff filed a lawsuit to the russian federation for moral damage compensation caused to her and her children in connection with the death of her husband and the father of her children as a result of the armed aggression of the russian federation in Ukraine.
The Law of Ukraine “On Private International Law” provides judicial immunity to a foreign state in the absence of the consent of the competent authorities of the respective state to involve it in the case in the national court of another state.
However, there are certain limits to a right of a foreign state to claim immunity in civil proceedings.
Since 2014, it is a well-known fact that the russian federation is carrying out armed aggression against Ukraine and continues to do so as of the time the Supreme Court has ruled a decision in this case.
According to the Resolution of the Verkhovna Rada of Ukraine as of April 14, 2022, the actions of the russian armed forces, political and military leadership during the armed aggression against Ukraine, which began on February 24, 2022, were recognized as genocide of the Ukrainian people.
In determining whether the russian federation was subject to judicial immunity in this case, the Supreme Court took into account the following:
- the subject of the claim is the compensation of non-pecuniary damage caused to individuals, citizens of Ukraine, as a result of the death of another citizen of Ukraine;
- the place of infliction of damage is the territory of the sovereign state – Ukraine;
- it is assumed that the damage is caused by russian agents who violated the principles and objectives stipulated by the UN Charter, on prohibiting military aggression against another state – Ukraine;
- the commission of armed aggression by a foreign state is not the exercise of its sovereign rights, but indicates a violation of the obligation to respect the sovereignty and territorial integrity of another state –Ukraine, stipulated by the UN Charter;
- the national legislation of Ukraine is guided by the fact that, as a general rule, damage caused in Ukraine to an individual as a result of illegal actions of any other person (entity) may be compensated by a court of Ukraine (based on general principles of tort law).
Therefore, the Supreme Court deduces that in the case of a tort exception, any dispute arising in the territory of Ukraine with involvement of Ukrainian national, even with a foreign country, including russia, can be considered and resolved by the court of Ukraine as a proper and competent court.
In addition, due to the full-scale invasion of Ukraine on February 24, 2022, Ukraine broke off diplomatic relations with russia, which makes it impossible to send various inquiries and letters to the russian embassy in Ukraine due to the termination of its work in Ukraine.
Thus, after the start of the war in Ukraine in 2014, the court of Ukraine, considering the case where the defendant is russia, has the right to ignore the immunity of this country and consider cases of compensation for damage caused to individuals as a result of armed aggression in a lawsuit filed against this foreign country.
Resolution of the Civil Court of Сassation of the Supreme Court as of April 14, 2022, in the case № 308/9708/19
Banks, loans, mortgages
Until 2018, the Law of Ukraine “On Mortgage” provided that upon the foreclosure on the mortgaged property, any further claims of the mortgagee to fulfil the debtor’s principal obligations are invalid.
In July 2018, significant amendments were made to this Law. In particular, the legislator provided that after the foreclosure on the mortgaged property, the following requirements of the mortgagee to fulfill the principal obligations of the debtor-legal entity are valid, unless otherwise is specified in the agreement.
The Grand Chamber of the Supreme Court was hearing a case in which the creditor bank recovered the mortgaged property of the debtors in its favor, and then filed a lawsuit to claim the part of the debt under the loan agreements, which was not covered by the mortgaged property.
The courts of the first and appellate instances have satisfied the creditor’s claim, and the Grand Chamber of the Supreme Court upheld the decision of the courts of the previous instances. The court stated, that in the case of ensuring the fulfillment of the principal obligations in several ways, the principal obligations are not terminated if the value of the mortgage is not enough to fully meet the requirements of the creditor. This conclusion applies to agreements that arose prior to the amendments to Article 36 of the Law “On Mortgage” in 2018.
The court position applies the following: for legal relations that arose before July 2018, the recovery of the mortgaged property by the creditor does not mean a full repayment of the debtor’s debt if the amount of debt exceeds the value of the mortgaged property.
The decision of the Grand Chamber of the Supreme Court as of January 18, 2022, in the case No. 910/17048/17
If the original creditor was deprived of a license or was in the liquidation proceedings, the loan and security agreement may be assigned to a non-financial institution.
Resolution of the Grand Chamber of the Supreme Court dated 16/03/2021 in case No. 906/1174/18
Invalidation of a mortgage agreement is an inappropriate way to protect the rights of an individual in case of appeal against the right of another mortgage holder. An appropriate way of protection, in such case, would be to apply to the court with concurrent claims to consider mortgage right of a mortgage holder non-existent under the disputed agreement, and to recognize their mortgage right.
Resolution of the Grand Chamber of the Supreme Court dated 19/01/2021 in case No. 916/1415/19
Supreme Court has concluded that the quorum of the General Meetings of Limited Liability or Additional Liability Companies (hereinafter referred to as “LLC” and “ALC” accordingly) cannot be established in the charters of the companies, because such an instrument contradicts the Ukrainian legislation.
In the case, considered by the Supreme Court, the shareholder of the Company has submitted a lawsuit to invalidate the decision of the Company’s General Meeting. The lawsuit was based on the fact that the general meeting of the LLC violated the requirements of the Company’s charter and made relevant decisions in the absence of the plaintiff, who owns 35% of the authorized capital of the LLC. The plaintiff stated that this decision violated the requirements of the charter regarding the quorum of shareholders.
The Supreme Court noted that from 17 June 2019, the priority of LLC and ALC charters over the requirements of the Law of Ukraine “On Limited and Additional Liability Companies” is automatically terminated. Provisions of the charters inconsistent with this Law are null and void.
Article 34 of the Law clearly regulates the procedure for voting and decision-making by General Meetings of companies. However, the Law does not regulate quorum procedure and does not provide a rule, allowing companies to determine a percentage of votes needed to deem General Meeting authorized. That is why the provision of the Defendant’s charter on the quorum of the General Meeting contradicts the Law and cannot be applied when determining the authority of the General Meeting.
The Supreme Court upheld the decision of the appellate court, which refused to satisfy the claim to annul the decision of the General Meeting due to the lack of a quorum.
Resolution of the Commercial Court of Cassation dated 16 February 2022 in case No. 922/1122/21
The right of a company member (shareholder) to request an audit of the company’s annual financial statements is mandatory for this company. The company’s obligation is to provide an auditor with the opportunity to conduct an audit arises by virtue of direct reference by the law.
Resolution of the Commercial Cassation Court of the Supreme Court dated 28/04/2021 in case No. 908/522/20
Dispute over the claim filed by the financial director of the company dismissed due to the termination of the powers, regarding reinstatement and recovery of wages for the period of the forced absence, is subject to commercial, not civil proceedings. The Supreme Court indicated that such form of defense is specific to corporate legal relations, and therefore can not be considered in terms of the labor law.
Resolution of the Grand Chamber of the Supreme Court dated 23/02/2021 in case No. 753/17776/19
Invalidation of the LLC member’s decision by which another member was illegally excluded from the company, is a prerequisite for the satisfaction of derivative claims. Charter capital increase, change of the organizational and legal form, other actions taken without participation and consent of the illegally excluded member can be cancelled in the court.
Resolution of the Commercial Cassation Court of the Supreme Court dated 21/07/2021 in case No. 904/562/19
Protection of property rights
The Civil Code of Ukraine provides that if the ownership right in immovable property is subject to state registration in accordance with the law, the ownership right arises from the moment of state registration. Therefore, after the construction completion and commissioning of real estate, the buyer needs to obtain the documents necessary for the ownership registration.
Thus, in the case considered by the Grand Chamber of the Supreme Court, the parties entered the Purchase and Sale Agreement of immovable (apartment) property rights. However, upon commissioning the property, the seller did not provide the buyer with all the necessary documents for ownership registration. Consequently, the buyer appealed to the court to recognize the apartment ownership.
The Grand Chamber of the Supreme Court concluded that in cases when the real estate object has already been built and commissioned, however, the seller neither transfers the title documents to the buyer nor recognizes his right to real estate, the buyer can apply to the court to recognize his ownership rights.
This decision, therefore, provides an important recommendation: in case of challenging or non-recognition of the ownership of real estate, an effective way of protection is to apply to the court to recognize the ownership rights.
The Decision of the Grand Chamber of the Supreme Court as of December 14, 2021 in case № 344/16879/15-ц
The absence of the plaintiff’s registered rights to the disputed land parcel cannot serve as a basis for refusing to claim it from a bona fide purchaser, as state registration is not a way to acquire property rights, but only a means to confirm the acquisition or termination of property rights.
Resolution of the Civil Cassation Court of the Supreme Court dated 16/06/2021 in case No. 686/25728/19
Allocation of a share in the disputed property owned in common by two co-owners only to one of them is not allowed. In this case, only the division of the disputed property in kind between its co-owners is possible, resulting in termination of the right of joint ownership.
Resolution of the Civil Cassation Court of the Supreme Court dated 28/07/2021 in case No. 310/7011/17
The state registrar, and in particular the private notary, is not a proper defendant in the case of cancellation of the decision on state registration of the right to immovable property.
He/she is obliged to comply the court ruling and cancel the registration, regardless of whether he/she was involved in the case.
Resolution of the Civil Cassation Court of the Supreme Court dated 07/07/2021 in case No. 369/14294/17
Remedies for the judicial protection of the infringed real rights and interests of a person may include cancellation of a decision of the state registrar; invalidation or cancellation of the documents on the basis of which the state registration of rights has been conducted; cancellation of the state registration of rights etc.
Herewith for purposes of effective defense of the infringed rights, such legal claims shall be filed along with claims for recognition, change, or termination of the real rights and their encumbrances.
Resolution of the Commercial Cassation Court of the Supreme Court dated 03/03/2021 in case No. 913/175/20
The Grand Chamber of the Supreme Court (hereinafter referred to as the Supreme Court) within the scope of the bankruptcy case, considered the employee’s claim for recovery from the defendant-employer (whose production facilities are located on the territory of the ATO) unpaid wages on the day of dismissal.
The employer claimed that the plaintiff’s dismissal was since in March 2017 the company was seized by unknown armed persons. In confirmation of such circumstances, the employer provided the court with the conclusion of the Ukrainian Chamber of Commerce and Industry. The defendant noted that he is unable to pay salary to the employee due to the above-mentioned force majeure circumstances.
The Supreme Court left unchanged the court’s decision on satisfying the claims for the recovery of wages and expressed the following position.
Paying a salary to an employee is the employer’s duty. In accordance with the requirements of the law, the employer must make a full settlement with the dismissed employee and pay all amounts due to him. In the event of non-fulfillment of such an obligation, the liability established by Article 117 of the Labor Code of Ukraine shall arise.
At the same time, the employer’s obligation to pay the employee’s salary is not a responsibility in the sense of Article 617 of the Civil Code of Ukraine, from which the employer can be released due to an accident or force majeure.
It is important that the Supreme Court in this case deviated from the conclusion of the Supreme Court expressed in the resolution of October 10, 2019, in case No. 243/2071/18 regarding the application of Article 617 of the Civil Code of Ukraine in similar legal relations.
The court concluded that the norms of labour legislation do not provide for the release of the employer from the obligation to pay salary to the employee in the case of force majeure.
Resolution of the Supreme Court dated October 26, 2022, in case No. 905/857/19
Under the circumstances of the case which was considered by the Grand Chamber of the Supreme Court, the person was reinstated by the National Bank of Ukraine, and the order of dismissal was declared illegal and revoked.
After the court decision to reinstate the plaintiff, the latter filed a separate lawsuit to recover the average earnings during the forced absence and the average earnings during the delay in payment upon dismissal. Reviewing the case in cassation, the Grand Chamber of the Supreme Court made the following conclusions.
The legal nature of the average earnings during forced absence differs from the legal nature of the average earnings during the delay in payment upon dismissal. The average earnings during forced absence is a salary, and the average earnings during the delay in payment upon dismissal is a special type of responsibility of the employer, which is aimed at protecting the rights of dismissed workers.
At the same time, taking into account the provisions of the Labor Code of Ukraine, in case of violation of the legislation on the remuneration of labour, the employee shall have the right to apply to the court for the recovery of the salary due to him/her without any limitation in time. Therefore, the employee is not deprived of the right after the court decision to reinstate him to subsequently apply to the court to recover in his favor the average earnings during the forced absence.
It is important that the Grand Chamber of the Supreme Court in this case withdrew from the opinion of the Joint Chamber of the Civil Cassation Court (decision of 10 October 2019 in case № 369/10046/18), according to which the claim for recovery of average earnings during forced absence is limited to three months from the date when employee learned or should have learned about the violation of his right.
At the same time, the Grand Chamber of the Supreme Court noted that since the average earnings during the delay in payment upon dismissal is not a salary, then when collecting such an amount, a three-month period of appeal to the court is applied. However, given the circumstances of the case considered by the court, the person was reinstated and does not have the status of a dismissed employee, and therefore there are no grounds for recovery of average earnings during the delay in payment upon dismissal.
Therefore, the Grand Chamber of the Supreme Court partially satisfied the claims and decided to recover from the defendant the average earnings during the forced absence, given that this amount is a salary, and appeal to the court with this claim is not limited in time.
Resolution of the Grand Chamber of the Supreme Court of February 8, 2022, in the case №755/12623/19
According to the circumstances of the case that was under consideration of the Supreme Court, the director filed a lawsuit against the LLC to declare the labour relations between him and the defendant terminated due to his resignation.
The courts of first and appellate instances denied the claims in full. Leaving the decisions of the courts of previous instances unchanged, the Supreme Court focused on the following.
After analyzing the charter of the company, the courts found that the issue of resignation of the director is decided only by the decision of the general meeting, and the plaintiff as director of the company is not empowered to decide independently on his resignation.
Therefore, taking into account the requirements of the company’s charter, for the proper exercise of his right to resignation, the head (director) of the company must not only write a letter of resignation and send it to all members of the company, but also on his initiative, as the executive body of the company, convene a general meeting and ask questions about his resignation. The convening of the general meeting of members of the company should be carried out in compliance with the requirements for proper notification of the company and all its members.
In the absence of a decision of the general meeting of members of the company on the dismissal of the head, the latter aiming to protect his rights can apply to the court to declare the labour relations terminated.
Thus, even though the right to work is definitely a right and not an obligation, the head (director) of the company must follow the procedure provided by law and the company’s charter. Dismissing the cassation appeal, the Supreme Court stated that in this dispute the plaintiff had not proved a violation of his rights precisely because he had not complied with the statutory procedure for dismissal of the director of the company.
The current Labor Code of Ukraine (hereinafter – the Labor Code of Ukraine) sets out a number of requirements the employer must comply with when dismissing an employee, even when a dismissal is based on the mutual agreement of the parties or on the initiative of the employee.
Thus, the DirectorGeneral submitted a resignation letter by the mutual agreement of the parties (paragraph 1, Part 1, Article 36 of the Labor Code of Ukraine). The general meeting of the members accepted the letter in question and dismissed the DirectorGeneral, believing that there is a mutual agreement of the parties on this issue. However, the dismissed director soon filed a claim for reinstatement.
The Supreme Court invalidated the decision of the courts of previous instances on dismissing the claim and emphasized actionability for declaring the dismissal illegal. The Supreme Court concluded that if an employee submits a written letter for termination of the labour contract, it must include the request for dismissal by the mutual agreement of the parties, as well as the date of dismissal.
However, the Director General’s letter did not specify a date of his dismissal. According to the Supreme Court, this indicates a lack of will of the employee to terminate the labour contract by the mutual agreement of the parties.
This decision of the Supreme Court therefore provides an important recommendation for the business: a resignation letter by the mutual agreement of the parties must contain a request from the employee to dismiss him based on paragraph 1, Part 1, Article 36 of the Labor Code of Ukraine as well as the date of the dismissal.
The Supreme Court decision as of 1 December 2021 in case № 591/1375/19
The grounds for the dismissal of an employee under the contract are independent grounds for termination of employment. Despite the fact that the initiative to apply these in each case belongs to the employer, the procedure itself does not fall under the general procedure for the dismissal of an employee at the employer’s initiative.
Resolution of the Civil Cassation Court of the Supreme Court dated 21/07/2021 in case No. 552/2581/20
Improper issuance of the sick leave certificate cannot itself indicate the invalidity of the reasons for the employee’s absence from work and is not a ground for his/her further dismissal for abseteeism.
Resolution of the Civil Cassation Court of the Supreme Court dated 10/02/ 2021 in case No. 758/2641/17
The official information of the Pension Fund on the amount of salary in the OK-5 form regarding the employee confirms only his/her pension insurance record and is not provided as appropriate evidence of the amount of salary and the arrears on it.
Resolution of the Civil Cassation Court of the Supreme Court dated 31/05/ 2021 in case No. 242/3051/18
The decision of the trade union to refuse to consent to the dismissal of an employee must be justified, namely it must contain references to the provisions of labor law, the factual circumstances and grounds for dismissal of the employee, his/her business and professional competencies. In the absence of such justification, the employer has the right to dismiss an employee without the consent of the trade union.
Resolution of the Civil Cassation Court of the Supreme Court dated 09/06/2021 in case No. 444/372/20
The average salary for the delay in the execution of a court ruling on the reinstatement of an illegally dismissed employee is not either basic or additional salary, nor is it an incentive or a compensation, so the term for filing claims in court to recover such wages is limited to three months from the effective date of an order of reinstatement.
Resolution of the Civil Cassation Court of the Supreme Court dated 21/04/2021 in case No. 461/1303/19
A fixed-term employment contract is concluded in cases where the employment relationship cannot be established for an indefinite period, taking into account the nature of subsequent work, conditions of its performance, or the employee’s interests as well as in other cases established by law.
The absence of the above conditions is the basis for recognizing the contract as invalid in respect to the determining term. This means that such contracts will be considered concluded for an indefinite period.
Resolution of the Civil Cassation Court of the Supreme Court dated 26/05/2021 in case No. 457/295/20
Deterioration of health, transport restrictions during the quarantine period, the lack of real provision of remote (home) work indicate the validity of reasons for the voluntary resignation of an employee within the period specified by an employee.
Resolution of the Civil Cassation Court of the Supreme Court dated 21/04/2021 in case No. 569/9738/20
The duration of a fixed-term employment contract may be determined not only by a specific period but also by the occurrence of a certain event (for example, the return of an employee from a childcare leave).
Resolution of the Civil Cassation Court of the Supreme Court dated 29/04/2021 in case No. 266/3163/16-ц
As a general rule, dismissal of an employee for absenteeism without good reason under the labor law is possible in case of a single absence (absence of an employee at work throughout the working day, or more than three hours continuously or in total during the working day without good reasons). Herewith, for one absenteeism without good reason during the year, only a reprimand can be applied to a civil servant. An exceptional condition for dismissal of a civil servant for absenteeism is a repeated absenteeism without good reason during the year.
If a civil servant commits several disciplinary offenses, he/she may be
prosecuted. However, such liability may not be stricter than provided by law for each individual type of misdemeanor. For example, if a civil servant has committed several disciplinary offenses for which the law provides for a maximum penalty of reprimand, such civil servant may not be subject to dismissal. That is, the sanction for a particular type of misdemeanor does not increase, despite the set of such misdemeanors.
The Civil Court of Cassation of the Supreme Court (hereinafter – the Supreme Court) considered a case brought by the Czech company owner of the disputed apartment against the purchasers to invalidate the apartment sale and purchase agreement and repeal the decision on state registration of ownership as well as reclaim the respective property.
The plaintiff claimed that his apartment was not taken from his possession by his will but as a result of the illegal actions of another person who was not authorized to conclude the apartment sale and purchase agreement and acted based on a forged power of attorney. In evaluating this case, the Supreme Court found that the decision of the court of Kutná Hora in the Czech Republic, which entered into force, established the fact of forgery and fictitiousness of the power of attorney used to alienate the apartment.
Meanwhile, the person who concluded the transaction on behalf of the Czech company stated that the plaintiff had taken actions indicating the approval of the apartment sale and purchase agreement, namely, subsequently accepted its execution (the funds under the mentioned agreement were credited to the plaintiff’s account). In this regard, this person noted that a provision of Article 241 of the Civil Code of Ukraine (hereinafter – the Civil Code) regarding the subsequent transaction approval applies to the disputed legal relations.
Upholding the court decisions of the previous instances on the satisfaction of the claim, the Supreme Court came to the following conclusions.
Article 241 of the Civil Code stipulates that a transaction concluded by an attorney over his/her authority creates, modifies, or terminates a principal’s civil rights and obligations only if the principal subsequently approves the respective transaction.
The transaction is deemed approved, particularly if the principal took the actions indicating acceptance of this transaction for execution. This rule presumes that the attorney has a specified amount of powers duly and under the established procedure the principal granted to him/her.
Thus, the Supreme Court emphasized that the provision of Article 241 of the Civil Code as to the subsequent approval of a transaction cannot be applied to legal relations when the transaction is concluded on behalf of a person by another person who was not authorized to act as his/her principal’s attorney at all and therefore could not exceed any authority.
Resolution of the Supreme Court of January 18, 2023, in case No. 752/22077/19
The Civil Code of Ukraine defines the requirements for the validity of the transaction, one of which is the need to comply with the form, defined by the law. Thus, the lease agreement for three years or more is subject to notarization. In the absence of a notarized certificate, such an agreement is considered to be void.
According to the factual circumstances of the case considered by the Supreme Court, the plaintiff appealed to the court to repay the debt under the non-residential property lease agreement. At the same time, the defendant, in support of his objections insisted on the invalidity of the agreement concluded between the parties, due to the lack of its notarization.
The Supreme Court changed the court decisions of the previous instances, which satisfied the claims, making the following conclusions:
Non-residential property within the meaning of The Civil Code of Ukraine is a separate part of the building, and therefore the lease agreement for non-residential property for three years or more is subject to notarization. According to the case in question, the lease agreement was not notarized and was, therefore, considered to be void. Under these circumstances, the conclusion of the courts of previous instances on the recovery of debt based on the void lease agreement is incorrect. However, the Supreme Court recognized the plaintiff’s right to recover funds for the defendant’s use of the unjustifiably acquired property.
Therefore, based on the analysis of the decision of the Supreme Court, we draw the attention of business to the need for proper compliance with the law on the notarial form of the transaction.
The Supreme Court Decision as of December 8, 2021 in case № 759/9443/17
To recognize a transaction as fictitious, it is necessary to establish the intent of all parties to the transaction. If the property was transferred for the execution of the legal transaction, such a transaction cannot be considered fictitious.
Resolution of the Civil Cassation Court of the Supreme Court dated 31/03/ 2021 in case No. 201/2832/19
Any contract provided by the Civil and Commercial Codes of Ukraine may have an electronic form and does not have to be executed in the form of a separate electronic document, a simplified form is allowed as well. It is important that the electronic contract contains all the essential conditions for the relevant type of contract.
Resolution of the Civil Cassation Court of the Supreme Court dated 12/01/2021 in case No. 524/5556/19
The existence of grounds for invalidation of the contract should be established by the court as of the effective date of such contract, but not as a result of non-performance or improper performance of obligations arising from the contract.
Resolution of the Civil Cassation Court of the Supreme Court dated 10/03/ 2021 in case No. 201/8412/18
The requirement to invalidate a power of attorney to enter into a transaction committed to the detriment of the creditor is an ineffective way to protect the infringed rights of the creditor, as it is impossible to recover debtor’s property.
Resolution of the Civil Cassation Court of the Supreme Court dated 24/02/2021 in case No. 757/33392/16
Violations committed by public authorities in determining terms and procedure of the the privatization cannot be an unconditional basis for invalidating privatization agreements and returning privatized property to the state if such violations were not committed as a result of culpable illegal behavior of the buyer.
Resolution of the Joint Chamber of the Commercial Cassation Court of the Supreme Court dated 22/01/2021 in case No. 922/623/20
The absence of consent of mortgagee for legal transaction on the alienation of the mortgaged property is еis the basis for recognizing such a transaction invalid.
Resolution of the Joint Chamber of the Commercial Cassation Court of the Supreme Court dated 21/05/2021 in case No. 910/3425/20
The current legislation of Ukraine does not provide for any special conditions to confirm the existence of a force-majeure circumstance caused by the COVID-19 pandemic. To prove the force majeure, one should apply for a certificate to the relevant Chamber of Commerce and Industry.
Resolution of the Commercial Cassation Court of the Supreme Court dated 01/06/2021 in case No. 910/9258/20
The Supreme Court was considering a non-standard case for the Ukrainian judiciary. A person (Client) contacted a well-known blogger for services to increase the number of subscribers.
The parties entered into a contract, under the terms of which the blogger took an obligation to hold a giveaway, which was supposed to result in 50,000 new subscribers on each of the Client’s accounts.
Fees for blogger’s services amounted to UAH 500,000. The contract also provided for the liability of the blogger in case of improper provision of services in the form of a fine in the amount of half of the value of the services (250,000 hryvnias).
However, according to the results of the advertising campaign, the Client’s accounts did not gain the required number of subscribers – it was possible to collect less than 23 thousand people. A dispute arose between the parties and the Client appealed to the commercial court to protect her rights.
The court of the first instance partially satisfied the claim, levying a fine of 250,000 hryvnias in favor of the Client. The Court of Appeal overturned this decision.
The Supreme Court, reviewing the decisions of the courts of the lower instances, agreed with the conclusion of the court of first instance and the arguments of the Client’s lawyers, making notable conclusions.
Namely, the Supreme Court stated that the legal relations that arose between the blogger and the Client are complex and combine several types of services at once: advertising services, organizational services, and video content creation.
The court concluded that the failure to collect the required number of subscribers constitutes an obvious violation of the terms of the contract, and therefore, the Client rightfully demands the amount of the fine in court. At the same time, the court did not find grounds to satisfy the claim in another part, in particular, regarding missed profit, recovery of material and moral damages.
This case demonstrates one of the foundations on which civil law is based – the obligation of the contract, which still must be applied even if the place of the contract’s execution is social networks.
The Commercial cassation court of the Supreme Court ruling as of 07 July 2022 in the case No. 910/1801/21
The Joint Chamber of the Commercial Cassation Court of the Supreme Court (hereinafter referred to as the Supreme Court) considered the case based on the claim of the JSC “NAC Naftogaz of Ukraine” regarding the collection of debt from JSC “Zaporizhgaz” (hereinafter also the Defendant), as well as interest accrued on it, three percent annual and inflationary losses, in connection with the Defendant’s violation of payment terms for purchased natural gas.
The defendant referred to the occurrence of force majeure circumstances, namely, he noted that the actions of third parties – state bodies led to the partial impossibility of paying him for natural gas.
The Supreme Court left unchanged the decision of the appellate court on the full satisfaction of the claim and expressed the following position regarding the certificate of the Ukrainian Chamber of Commerce and Industry (hereinafter – the UCCI) as evidence in the legal process to confirm the existence of force majeure circumstances.
The Supreme Court indicated that the certificate is issued by the UCCI at the request of one of the parties to the legal relations, which pays for the services of the UCCI. At the same time, the other side of the legal relations is deprived of the opportunity to present its arguments and influence the conclusions of the UCCI.
Such certification of force majeure circumstances may be considered sufficient proof of their existence for the parties to the contract if they have agreed on it. However, in the event of a dispute between the parties, the certificate itself does not bind the court regarding the legal qualification of certain circumstances as force majeure.
Therefore, the Supreme Court concluded that the certificate of UCCI, which confirms the force majeure circumstances, cannot be considered as indisputable proof of their existence. Due to the principle of adversarial litigation, the certificate must be evaluated by the court taking into account the established circumstances of the case and in combination with other evidence submitted by the participants in the case.
Resolution of the Supreme Court of August 19, 2022, in case No. 908/2287/17
Within the scope of a bankruptcy case, the plaintiff filed a lawsuit to declare invalid the auction for the sale of property of the State Enterprise “National Kinematics of Ukraine” (hereinafter – SE “National Kinematics of Ukraine”). The plaintiff justified his demands by the fact that he, as a potential participant, was prevented from submitting an application and participating in the auction.
The courts of first and appellate instances invalidated the results of the auction for the sale of the debtor’s property and the sales contract concluded based on its results.
The Supreme Court left the contested court decisions unchanged and expressed a position on the conditions under which a person who was not registered as an auction participant can appeal its results.
It should be noted that taking into account the fact that the sale of the property of the State Enterprise “National Kinematics of Ukraine” took place in accordance with the procedure established by the Law of Ukraine “On Restoring a Debtor’s Solvency or Recognizing It Bankrupt” (hereinafter – the Law), the legal conclusions, in this case, were made based on the provisions of this law. Thus, the stated legal position of the Supreme Court is not automatically relevant to legal relations regulated by the Bankruptcy Code of Ukraine.
The Supreme Court indicated that appeal to the court by a person who is not a registered participant of the auction and in respect of which the auction organizer has not made any of the decisions provided for in Art. 61 of the Law (in particular, on the refusal to allow the applicant to participate in the auction) with a statement that the results of the auction are invalid can be recognized as an effective way of protecting the violated right of such a person only under certain conditions.
Such conditions include, in particular, the establishment in a court order of the circumstances of such a person’s performance of all actions defined by law regarding the acquisition of the status of a registered auction participant and the creation by the auction organizer of obstacles to such a person’s participation in the auction.
The Supreme Court noted that the real intention of a person to participate in the auction is evidenced by the preparation and submission of an application for participation in the auction, payment of guarantee and registration fees, correspondence with the auction organizer, etc.
Analyzing the issue of the organizer preventing a person from participating in the auction, the court noted that in this case, the specified fact consisted in the shortcomings of the announcement in terms of identifying the required office (premises) for submitting an application for participation in the auction, as well as in the actual absence of authorized persons of the organizer in the specified building.
Thus, the right of a person who was not registered as a participant in the auction to appeal its results arises only under certain conditions, in particular, if such a person proves in court the fact of a real desire to participate in the contested auction and the performance of all necessary actions for this, as well as the fact that the auction organizer violated its competition rules.
The decision of the Commercial Cassation Court as of November 30, 2021, in the case № 910/21182/15 (910/16832/19)
Provisions of Art. 42 of the Code of Ukraine on Bankruptcy Procedures on the recognition of debtor’s transactions are not applicable to the transactions made by the debtor before the date of entry into force of the Code, i.e., until 21/10/2019. The courts should apply Art. 20 of the Bankruptcy Law to such transactions.
Resolution of the Commercial Cassation Court of the Supreme Court dated 02/06/2021 in case No. 904/7905/16
The liquidator is obliged to take all possible measures to identify the debtor’s assets. Persons who object against the liquidator’s report must prove that the liquidator failed to follow the liquidation procedure, which led to a decrease in the liquidation estate and the inability to satisfy the creditor’s claims.
Resolution of the Commercial Cassation Court of the Supreme Court dated 12/08/2021 in case No. 5019/960/11
Litigation against government agencies
In this case the National Police of Ukraine did not respond to the citizen’s request. The court concluded that if the authority did not act or did not make a decision on the matters within its competence, such inaction can be appealed. The mere fact of improper and/or untimely execution of obligatory actions is not sufficient to declare such action illegal. Also important are specific reasons, conditions, and circumstances due to which the actions were not actually performed or performed untimely. In addition, it is necessary to clarify the legal content, significance, duration and limits of illegal inaction, the actual grounds for its termination, as well as the harmfulness/illegality of inaction for the rights and interests of the person concerned.
Refund of erroneously paid and/or overpaid customs payments from the State Budget of Ukraine is the exclusive authority of customs and state treasury agencies. In this case, the court may oblige the customs and the treasury to take action, make decisions, etc., i.e., to fulfill the obligation that these agencies evade. The obligation of the regulatory agency to prepare a conclusion regarding the refundof overpaid customs payments is an effective and appropriate way to restore the infringed right of a taxpayer, which excludes further illegal decisions, actions, or omissions of the relevant authority.
The main method of determining the customs value of goods is the contract price method. The customs authorities do not use this method in exceptional cases: when the information used by the customs applicant is not documented or quantified and reliable or there is no even one component of the customs value, which is mandatory in its calculation.In this case, if there are all the necessary documents confirming the customs value of the goods, their quantitative and qualitative characteristics, the customs authority has no right to use other than the main method to determine the customs value of goods.
Сonducting control of business entities on the basis of an anonymous application by the State Labor Service is illegal. Moreover, the applicant’s request for control the compliance of the business entity with the labor legislation may be submitted not by any individual, but only by a person in respect of whom the labor legislation has been breached. Otherwise, an inspection on the basis of such a request is inadmissible.
If a business entity has not been issued a business permit or a decision denying such issuance within the statutory period, the business entity has the right to conduct business activities in ten business days after the expiration of such a period. In this case, the principle of tacit consent applies. In this case business entity acquires the right to conduct business activities without obtaining a permit, provided if it has correctly submitted the documents, but the permit or decision to deny such issuance has not been issued.
The conclusion of the Ministry of Economic Development on the extension of the deadlines for settlement terms for foreign economic transactions is an individual legal act issued in excess of the terms for settlements established by the legislation. This conclusion eliminates liability for past offense and therefore has a retroactive effect and releases the taxpayer from liability in the form of fines.
Measures taken by the company to return foreign currency revenues do not indicate the absense of violation of foreign currency legislation. The sanction (individual foreign economic activity licensing procedure) shall not apply only if at the time of the decision to apply iteliminates violations of currency legaslation or provides evidence of the impossibility to enforce a court ruling or arbitration to recover revenues.
Land and real estate
The Civil Cassation Court was considering a case regarding removing obstacles in using a land plot, and its reclamation from another person’s illegal possession.
In this case, the plaintiff asked the court to reclaim a land plot for agricultural production from the city council, arguing that according to the state land ownership certificate, she was the owner of the respective land plot.
An appellate court dismissed the claim and argued that the plaintiff had renounced her ownership of the respective land plot. Instead, she received another land plot from the farm’s land in the amount of a land share. In this regard, the court stated that the plaintiff’s claims showed her unfair behaviour.
The Civil Cassation Court agreed with the appellate court’s conclusions to dismiss the claim and emphasized the doctrine of venire contra factum proprium (to come against one’s own fact (is not allowed)), which is based on the principle of good faith.
The court noted that behaviour contrary to good faith and fair business practice is, in particular, behaviour inconsistent with a party’s previous statements or behaviour, provided that the other party, acting to its own detriment, reasonably relies on them.
And if a person who has a subjective right, in particular the right of ownership, either directly or by their behaviour, has made it clear that they renounce the respective right, such a person cannot change this decision. An attempt by the person to subsequently exercise such a right will contradict their previous behaviour and should lead to the termination of the said right.
In this case, the court found that the plaintiff, who had the right of ownership, both directly and by her behaviour expressed that she would not exercise this right.
Thus, the Civil Cassation Court concluded that the plaintiff’s behaviour was contrary to good faith, as it did not correspond to the previous statements and behaviour of the party, and others parties reasonably relied on them.
Resolution of the Civil Court of Cassation as part of the Supreme Court dated 14 December 2022, in case No. 126/2200/20 (proceedings No. 61-10017св22)
The following facts are required for the court to decide on the demolition of unauthorized construction of real property: the impossibility of reconstruction of the object or refusal of the person who carried out the unauthorized construction; in case of significant deviation from the project, contrary to public interests or infringing the rights of others, significant violation of building codes and regulations, demolition of unauthorized construction is preceded by a court decision obliging the person to carry out the appropriate reconstruction; all the measures envisaged to respond and bring the perpetrator to justice were used.
Resolution of the Civil Cassation Court of the Supreme Court dated 31/05/2021 in case No. 320/1889/17-ц
The legislation provides for the possibility of terminating the land lease agreement unilaterally if it is provided by the terms of such an agreement. The parties should clearly specify in the agreement the possibility of unilateral termination of the agreement, as well as the mechanism (procedure) of such termination (by signing a relevant agreement, etc.).
Resolution of the Civil Cassation Court of the Supreme Court dated 03/03/2021 in case No. 198/631/19
The validity of the decision on the transfer of land ownership excludes the invalidation of the state act on the right of ownership of the land parcel, as the state act itself was only a document certifying the right of ownership of a land parcel.
Resolution of the Civil Cassation Court of the Supreme Court dated 09/06/2021 in case No. 509/4216/16-ц
If the parties have come to the mutual agreement to change the head of the landholder’s company in the land lease agreement as the basis for termination of the agreement, it will serve as a ground for the satisfaction of the claim for termination of the agreement. In this case, there is no need to establish any other preconditions, in particular a material breach of the lease agreement.
Resolution of the Civil Cassation Court of the Supreme Court dated 16/06/2021 in case No. 375/278/20
The failure to align the boundaries of a land parcel in the privatization procedure with the adjacent owner (land user) cannot serve as a ground for refusing to approve the technical documentation subject to the legitimate actions of the parties.
A person’s failure to consent to the alignment of an adjacent land parcel may not be an obstacle for the local council to consider the land transfer issue.
An adjacent owner’s (land user’s) failure to sign the land parcel boundaries alignment certificate is not a ground for invalidating the state act on the right of ownership of the land parcel.
Resolution of the Civil Cassation Court dated 04/03/2021 in case No. 709/809/17
The landlord’s desire to cultivate his/her land parcel independently ios not a separate ground for early termination of the land lease agreement unilaterally. Therefore, the agreement cannot be terminated on this basis without the landholder’s consent, unless expressly provided by the terms of the agreement.
Resolution of the Civil Cassation Court of the Supreme Court dated 19/03/2021, case No. 198/1022/19
Positions of courts on procedural law issues
The Grand Chamber of the Supreme Court considered the case based on the company’s claim for recovery of advance payment under the supply contract from another company. The plaintiff in this case referred to the fact that the defendant did not deliver the goods according to the contract and refused to voluntarily return the funds received.
Objecting to the claim, the defendant indicated that he delivered all the goods paid for by the plaintiff, and the plaintiff accepted the goods. In support of his position, the defendant provided the court with a printout of electronic correspondence between the director of the plaintiff and the witness who unloaded the goods at the addresses indicated by the plaintiff. At the same time, the witness confirmed the mentioned circumstance during the consideration of the case.
Analyzing the issue of the conditions under which electronic correspondence can be recognized as evidence in a court case, the Grand Chamber of the Supreme Court expressed the following position.
The Grand Chamber of the Supreme Court indicated that the court can consider electronic correspondence between persons in the messenger (like any other correspondence) as evidence in the case if it enables the court to establish the authors of this correspondence and its content.
At the same time, the Grand Chamber of the Supreme Court noted that the Supreme Court consistently adheres to the legal position that printouts of electronic correspondence are neither written evidence nor electronic documents (copies of electronic documents).
However, if, taking into account the specific circumstances of the case, the court concludes that the correspondence makes it possible to identify its participants and can confirm certain arguments of the parties, for example, regarding the existence of relevant relations between them, negotiations, etc., the court may accept such correspondence as evidence and give it an assessment together with other evidence in the case.
Therefore, since in this case the director of the plaintiff did not deny the fact of conducting electronic correspondence, printouts of which were provided to the court by the defendant, and did not question the printouts submitted by the defendant, the Supreme Court recognized that there are legal grounds for assessing this evidence along with other evidence in the case. Given this, the Grand Chamber of the Supreme Court upheld the decision of the court of first instance, which refused to satisfy the claims for recovery of advance payment under the supply contract.
In a case, the Supreme Court (SC) heard, the complainant referred to a violation of procedural law by the court of appeal for allegedly failing to send him a copy of the appeal and the decision to open the appeal proceedings.
As the SC determined, the documents were sent to the complainant via an e-mail address, which the latter previously indicated in procedural documents.
The SC stated that the party provided the court with its mail voluntarily and was not obliged to do so. The Supreme Court concluded that a court that communicates with a party through the means provided by the party acts lawfully and in good faith. Therefore, one should proceed from the “presumption of knowledge”: the person to whom the court’s notice is addressed through such means of communication knows or at least should have known about the notice.
The Supreme Court also pointed out that a party to a court case has both rights and specific obligations. The case law of the European Court of Human Rights stipulates that a party involved in a court case must take an interest in the proceedings within a reasonable timeframe, exercise its procedural rights in good faith, and strictly fulfill its procedural obligations.
Thus, when notifying the Court of their e-mail address, the parties to the case should consider that the Court has the right to send notifications by mail or e-mail at its own discretion. It is presumed that a party to the case is aware of the content of such a notice if it is sent to his/her e-mail.
It should also be noted that following the provisions of part 6 of Article 14 of the Code of Civil Procedure of Ukraine, lawyers, notaries, private enforcement officers, insolvency officers, forensic experts, state authorities, local self-government bodies and business entities of the state and municipal sectors of the economy shall register official e-mail addresses in the Unified Judicial Information and Communication System on a mandatory basis. Other persons register official e-mail addresses in the Unified Judicial Information and Communication System on a voluntary basis.