Law of Ukraine No. 2453-VI “On the Judiciary and Status of Judges” dated July 7, 2010 introduced significant amendments to the Commercial and Procedural Code of Ukraine, making a considerable impact on commercial litigation. Although unsystematic and piecemeal in nature, such amendments are, nevertheless, generally appreciated. They are designed to address different procedural problems and are not linked by a single idea. Therefore, they create an impression that amendments to different provisions were drafted at different times by different people who had no opportunity to meet and to agree upon their ideas. The most significant amendments to the Commercial and Procedural Code are described below.
The implementation of an automated court workflow system. The objectives and major operational characteristics of this system are laid down in Article 21 of the Commercial and Procedural Code. This Article is process-oriented and designed to ensure the documentation of both court case flow process and case-related information. Its provisions are associated with one of the basic principles of the judiciary as enshrined in Article 8 of the Law of Ukraine “On the Judiciary and Status of Judges” saying that a judge shall hear cases assigned to him/her according to the case assignment procedure established by the law.
Two aspects should be considered here. First, the introduction of the automated case assignment system is aimed to enhance transparency of court proceedings. The lawmakers actually pursued a noble goal – to achieve an unbiased and unprejudiced distribution of cases among judges keeping the right order of priority and equal number of cases for each judge. Such quantitative equality will, however, unavoidably result in qualitative inequality if no concern is given to the peculiar features of different categories of cases. Second, no automated system at this stage of scientific and technical development can operate without human interference. Such system will hardly succeed in correctly categorizing cases with due regard to judges’ specialization.
Change of authority of the Supreme Court of Ukraine. Section ХІІ2 of the Commercial and Procedural Code of Ukraine providing for the revision by the Supreme Court of Ukraine of the judgments rendered by the Superior Commercial Court of Ukraine was fully revised. The revision procedure reflects the legal views contained in the March 11, 2010 decision of the Constitutional Court of Ukraine in the case based upon the constitutional submission of 46 Ukrainian MPs regarding the official interpretation of terms such as “highest judicial body”, “superior judicial body”, and “cassation appeal” which are set forth in Articles 125, 129 of the Constitution of Ukraine.
The grounds for filing a revision application were reduced to two, namely lack of unified application of substantive law in similar legal relations and violation of international obligations of Ukraine when deciding cases in court. The grounds for reversal of judgments are identical to those for filing the revision application.
When analyzing the rules of this authority, particular attention should be given to the following two important aspects. First, examination of an application for revision of a judgment in terms of its compliance with formal requirements is performed by the Superior Commercial Court. Meanwhile, for the first time in the context of commercial litigation, the procedure of “leaving the application motionless” has been implemented (although there is no such expression in the rules, the respective procedural actions can be so defined in view of their nature): the applicant is given an opportunity to correct the revealed formal drawbacks. Second, the decision on the acceptance of a case for consideration by the Supreme Court is made by the Superior Commercial Court. Therefore, the Superior Commercial Court of Ukraine must, to a certain extent, evaluate its own judgment in terms of the availability of grounds for its revision.
Important positive novelties include the binding effect of judgments, issued by the Supreme Court of Ukraine based on the results of revision on the grounds of misapplication of the rules of substantive law, on judges and public authorities; therefore, it is possible to say that there has been an increase in the role of court practice in the regulation of public relations. Unfortunately, the lawmakers have deprived the Supreme Court of the authority to generalize court practices and issue Plenum resolutions regarding court practices in the context of consideration of certain categories of cases and the application of the procedural law.
There has been a curtailment of opportunities for abuse of procedural rights. Positive changes also undoubtedly include a significant curtailment of opportunities for abuse of procedural rights. First of all, these developments are observed in the context of the procedure for challenging a judge which does not anymore involve the transfer of the case to the court chairman (or the deputy court chairman). According to Article 20 of the Commercial and Procedural Code of Ukraine, an application challenging the judge is considered by the panel of judges hearing the respective case. Second, significant amendments have been made to the procedure for challenging court rulings. Article 106 of the Commercial and Procedural Code of Ukraine contains a list of rulings that can be challenged separately from the judgment. Importantly, if a challenge is made against a ruling not included in this list, the first instance court does not hand the case over to a court of appeals but returns the statement of appeal to the applicant and issues the respective ruling which is not subject to appeal. When a challenge is made against certain types of rulings, the first instance court sends copies of the case papers to a court of appeals. Meanwhile, the case continues to be considered on its merits.
Therefore, it is no longer possible to resort to abuse of the right of appeal resulting in the case bouncing through courts of various instances and the case dragging on for years. These changes are expected to enhance the efficiency of the judicial process.
Confirming the attorney’s powers. Article 28 of the Commercial Procedure Code has been complemented by a new item, part five, dealing with attorney’s representative functions. The attorney is not required to obtain a power of attorney to confirm his or her powers and authorities. Where the attorney and the client enter into the legal assistance agreement, a copy of such agreement may be submitted to the court. If the attorney functions as a member of an attorney’s association, the attorney’s powers and authorities may be confirmed by an order issued by such association and an excerpt from the agreement entered into between the association and the client bearing upon the scope or limitations of the attorney’s powers.
Shortened procedural timelines. The new period for the court to decide whether to accept the statement of claim is three days (instead of earlier five day period). The period for case consideration at first instance courts is limited to two months and may be extended by 15 days only upon the parties’ motion. Some periods for lodging appeals have been changed as well: an appeal against a ruling is to be filed within 5 days and a cassation appeal may be filed within 20 days.
We presume that these changes will expedite the proceedings in commercial cases. However, it would be wise to keep the possibility of a greater extension of procedural time limits upon the motion of the parties.
Novelties regarding appeals and cassations. An appeal may now be filed by a person who was not joined in the proceedings if an appropriate decision determining such person’s rights or obligations has been issued. Before, such person could only file a cassation appeal. According to the new version of Article 93 of the Commercial and Procedural Code, a change has been brought to the rules of instituting proceedings in respect of a statement of appeal filed after the appeal period has elapsed. It should be noted that Article 93 of the Commercial and Procedural Code has been stripped of the provision stipulating that the possibility to renew such elapsed period is limited to three months starting from the day when the local court issues the decision.
An important change regarding the cassation review is that a cassation appeal may be filed only after the appellate review of the case which excludes the so-called “jump-like cassation”.
Case review pursuant to the newly established facts. Some positive changes have been brought to the legislative provisions regulating this matter. In particular, the grounds for review have been described in detail; the period for filing application has been reduced from 2 months to 1 month; and third parties are now entitled to apply (before, solely the parties to the proceedings and the prosecutor could do so).
Establishing the procedure for holding a person administratively liable for violating the order of court proceedings. Article 74 of the Commercial and Procedural Code has been complemented with part 4 introducing a possibility to hold liable the persons who violate the established order of proceedings or disrespect the court. The case regarding the administrative offence is to be considered by the same court handling the commercial case pursuant to Article 2211 of the Code on Administrative Offences according to the procedure set forth in the Code. The resolution issued by the court in this respect is definitive and may not be appealed.
A more detailed examination of these amendments may be found in the new version of my Scientific and Practical Commentary to the Commercial and Procedural Code of Ukraine which I am planning to complete soon.
The implementation of an automated court workflow system. The objectives and major operational characteristics of this system are laid down in Article 21 of the Commercial and Procedural Code. This Article is process-oriented and designed to ensure the documentation of both court case flow process and case-related information. Its provisions are associated with one of the basic principles of the judiciary as enshrined in Article 8 of the Law of Ukraine “On the Judiciary and Status of Judges” saying that a judge shall hear cases assigned to him/her according to the case assignment procedure established by the law.
Two aspects should be considered here. First, the introduction of the automated case assignment system is aimed to enhance transparency of court proceedings. The lawmakers actually pursued a noble goal – to achieve an unbiased and unprejudiced distribution of cases among judges keeping the right order of priority and equal number of cases for each judge. Such quantitative equality will, however, unavoidably result in qualitative inequality if no concern is given to the peculiar features of different categories of cases. Second, no automated system at this stage of scientific and technical development can operate without human interference. Such system will hardly succeed in correctly categorizing cases with due regard to judges’ specialization.
Change of authority of the Supreme Court of Ukraine. Section ХІІ2 of the Commercial and Procedural Code of Ukraine providing for the revision by the Supreme Court of Ukraine of the judgments rendered by the Superior Commercial Court of Ukraine was fully revised. The revision procedure reflects the legal views contained in the March 11, 2010 decision of the Constitutional Court of Ukraine in the case based upon the constitutional submission of 46 Ukrainian MPs regarding the official interpretation of terms such as “highest judicial body”, “superior judicial body”, and “cassation appeal” which are set forth in Articles 125, 129 of the Constitution of Ukraine.
The grounds for filing a revision application were reduced to two, namely lack of unified application of substantive law in similar legal relations and violation of international obligations of Ukraine when deciding cases in court. The grounds for reversal of judgments are identical to those for filing the revision application.
When analyzing the rules of this authority, particular attention should be given to the following two important aspects. First, examination of an application for revision of a judgment in terms of its compliance with formal requirements is performed by the Superior Commercial Court. Meanwhile, for the first time in the context of commercial litigation, the procedure of “leaving the application motionless” has been implemented (although there is no such expression in the rules, the respective procedural actions can be so defined in view of their nature): the applicant is given an opportunity to correct the revealed formal drawbacks. Second, the decision on the acceptance of a case for consideration by the Supreme Court is made by the Superior Commercial Court. Therefore, the Superior Commercial Court of Ukraine must, to a certain extent, evaluate its own judgment in terms of the availability of grounds for its revision.
Important positive novelties include the binding effect of judgments, issued by the Supreme Court of Ukraine based on the results of revision on the grounds of misapplication of the rules of substantive law, on judges and public authorities; therefore, it is possible to say that there has been an increase in the role of court practice in the regulation of public relations. Unfortunately, the lawmakers have deprived the Supreme Court of the authority to generalize court practices and issue Plenum resolutions regarding court practices in the context of consideration of certain categories of cases and the application of the procedural law.
There has been a curtailment of opportunities for abuse of procedural rights. Positive changes also undoubtedly include a significant curtailment of opportunities for abuse of procedural rights. First of all, these developments are observed in the context of the procedure for challenging a judge which does not anymore involve the transfer of the case to the court chairman (or the deputy court chairman). According to Article 20 of the Commercial and Procedural Code of Ukraine, an application challenging the judge is considered by the panel of judges hearing the respective case. Second, significant amendments have been made to the procedure for challenging court rulings. Article 106 of the Commercial and Procedural Code of Ukraine contains a list of rulings that can be challenged separately from the judgment. Importantly, if a challenge is made against a ruling not included in this list, the first instance court does not hand the case over to a court of appeals but returns the statement of appeal to the applicant and issues the respective ruling which is not subject to appeal. When a challenge is made against certain types of rulings, the first instance court sends copies of the case papers to a court of appeals. Meanwhile, the case continues to be considered on its merits.
Therefore, it is no longer possible to resort to abuse of the right of appeal resulting in the case bouncing through courts of various instances and the case dragging on for years. These changes are expected to enhance the efficiency of the judicial process.
Confirming the attorney’s powers. Article 28 of the Commercial Procedure Code has been complemented by a new item, part five, dealing with attorney’s representative functions. The attorney is not required to obtain a power of attorney to confirm his or her powers and authorities. Where the attorney and the client enter into the legal assistance agreement, a copy of such agreement may be submitted to the court. If the attorney functions as a member of an attorney’s association, the attorney’s powers and authorities may be confirmed by an order issued by such association and an excerpt from the agreement entered into between the association and the client bearing upon the scope or limitations of the attorney’s powers.
Shortened procedural timelines. The new period for the court to decide whether to accept the statement of claim is three days (instead of earlier five day period). The period for case consideration at first instance courts is limited to two months and may be extended by 15 days only upon the parties’ motion. Some periods for lodging appeals have been changed as well: an appeal against a ruling is to be filed within 5 days and a cassation appeal may be filed within 20 days.
We presume that these changes will expedite the proceedings in commercial cases. However, it would be wise to keep the possibility of a greater extension of procedural time limits upon the motion of the parties.
Novelties regarding appeals and cassations. An appeal may now be filed by a person who was not joined in the proceedings if an appropriate decision determining such person’s rights or obligations has been issued. Before, such person could only file a cassation appeal. According to the new version of Article 93 of the Commercial and Procedural Code, a change has been brought to the rules of instituting proceedings in respect of a statement of appeal filed after the appeal period has elapsed. It should be noted that Article 93 of the Commercial and Procedural Code has been stripped of the provision stipulating that the possibility to renew such elapsed period is limited to three months starting from the day when the local court issues the decision.
An important change regarding the cassation review is that a cassation appeal may be filed only after the appellate review of the case which excludes the so-called “jump-like cassation”.
Case review pursuant to the newly established facts. Some positive changes have been brought to the legislative provisions regulating this matter. In particular, the grounds for review have been described in detail; the period for filing application has been reduced from 2 months to 1 month; and third parties are now entitled to apply (before, solely the parties to the proceedings and the prosecutor could do so).
Establishing the procedure for holding a person administratively liable for violating the order of court proceedings. Article 74 of the Commercial and Procedural Code has been complemented with part 4 introducing a possibility to hold liable the persons who violate the established order of proceedings or disrespect the court. The case regarding the administrative offence is to be considered by the same court handling the commercial case pursuant to Article 2211 of the Code on Administrative Offences according to the procedure set forth in the Code. The resolution issued by the court in this respect is definitive and may not be appealed.
A more detailed examination of these amendments may be found in the new version of my Scientific and Practical Commentary to the Commercial and Procedural Code of Ukraine which I am planning to complete soon.
Ukrainskiy Yuryst (Украинский юрист), №3 (99), March 2011