On 02 June 2016, the Parliament of Ukraine adopted a number of laws giving start to the judicial reform, namely:
(1) On Judicial System and the Status of Judges, No. 4734 (“The Law on Judicial System”);
(2) On amendments to Constitution of Ukraine (regarding justice), No. 3524 (“The Law on Amendments to Constitution”), and
(3) On bodies and individuals that carry out enforcements of judgements and decisions of other bodies, No. 2506a (“The Law on Enforcement of Judgements”).
These laws have started a large-scale transformation of the Ukrainian judicial system and administration of justice generally and this article is aimed at addressing the most crucial changes which will affect litigation in Ukraine.
(1) The Law on Judicial System
The Law on Judicial System is aimed at the improvement of the administration of justice in Ukraine. Not only it significantly transforms the structure of judicial system but also contains provisions aimed at the increase of professional standards for judges and their compensation, introduction of effective responsibility of judges, improvement of the judicial self-government, etc.
Transformation of Ukrainian judicial system
Ukrainian judiciary consists of the courts of general jurisdiction and the court of constitutional jurisdiction (the Constitutional Court of Ukraine).
At a glance, the courts of general jurisdiction were previously composed of such a 4-pillar structure:
- Courts of the first instance, consisting of local general courts, local commercial courts, and circuit administrative courts;
- Courts of appeals, consisting of appellate courts, commercial appellate courts and administrative appellate courts;
- Courts of cassation, consisting of the Superior Specialized Court on Civil and Criminal Cases, the Superior Commercial Court of Ukraine, the Superior Administrative Court of Ukraine;
- the Supreme Court of Ukraine.
The Law on Judicial System provides that the newly-formed system of the courts of general jurisdiction in Ukraine will have the following 3-pillar structure:
- Courts of the first instance, consisting of circuit courts (criminal and civil jurisdiction), circuit administrative courts, and circuit commercial courts;
- Courts of appeals, consisting of appellate courts (criminal and civil jurisdiction), appellate administrative courts, and commercial appellate courts;
- The Supreme Court.
Courts of the first instance and courts of appeals
Previously, local general courts and commercial courts as well as circuit administrative courts, subject to a number of exceptions, acted as the courts of the first instance. Now, these courts will be substituted by respective circuit courts. The decisions of the latter will be further appealed to the appellate courts, which will accordingly be established on a circuit base only.
One of the most unexpected changes to the judiciary structure is the establishment of two unique specialized courts: the Superior Court on Intellectual Property and the Superior Anti-Corruption Court. It should be noted that the jurisdiction of these courts itself has not been defined in the Law yet, but is subject to amendments to Ukrainian procedural laws.
Supreme Court
The new Supreme Court remains the highest judicial body in the country and will primarily carry out justice as the court of cassation and continue on sharpening court practice. It will consist of 5 internal bodies: the Great Chambers of Supreme Court, the Administrative Court of Cassation, the Commercial Court of Cassation, the Criminal Court of Cassation, the Civil Court of Cassation. Such bodies will deal with the cases which fall within the scope of the respective court’s specialization.
The Law on Judicial System stipulates that the Administrative Court of Cassation shall have the separate chambers for the following cases:
- tax,
- social rights protection, and
- political rights protection.
As to the Commercial Court of Cassation, it shall have separate chambers for:
- bankruptcy,
- intellectual property and antitrust, and
- corporate disputes.
(2) The Law on Amendments to Constitution
The Law on Amendments to Constitution, among other things, changes the status of judges, amends their responsibility and limits immunity, establishes the attorneys’ “monopoly” on representation in courts, introduces the mechanism of a constitutional complaint, and limits the functions of prosecutor’s office.
Establishment of the attorneys’ “monopoly”
Ukrainian lawyers who are not attorneys (did not pass the exam and obtain a respective license), were previously not allowed to practice criminal law, i.e. defend clients within the rules of criminal procedure both during pre-trial investigations and court hearings. On the other hand, being an attorney was not a requirement to represent either the plaintiff or defendant in any other litigation.
However, as soon as the Law on Amendments to Constitution comes into force, only the attorneys will be entitled to represent clients in Ukrainian courts, subject to few limitations.
Such attorneys’ “monopoly” will not be introduced immediately. Only attorneys will be entitled to represent clients in the Supreme Court starting from 01 January 2017, whereas the date for the courts of appeals and the courts of the first instance is set for 01 January 2018 and 01 January 2019 respectively.
Constitutional complaint
Additionally, the mechanism of constitutional complaint is established. If an individual or a legal entity believes that the law applied in the final judgement in the dispute contradicts the Constitution of Ukraine and no other remedies are available, they will be entitled to file a constitutional complaint to the Constitutional Court of Ukraine which will be tasked with assessment of the constitutionality of such law.
(3) The Law on Enforcement of Judgements
Effective enforcement of judgements has always been a longstanding concern for investors in Ukraine. The enforcement system currently faces substantial challenges: the percentage of actually enforced judgements is extremely low, the officials responsible for the job are unmotivated, the cooperation between authorities in this area is problematic and complicated.
The main novelty of the Law on Enforcement of Judgements provides that, apart from the State Enforcement Service of Ukraine, now the decisions of the courts and other authorities may be enforced by private individuals or so-called “private enforcers”. Such individuals have to meet certain educational, age, and other requirements as well as pass the test to be allowed to enforce the decisions above. Another essential requirement is that such individuals are obliged to insure their professional liability. The private enforcers are not allowed to enforce the judgments, the monetary value of which exceeds their insurance premium.
Private individuals and legal entities are free to choose individual enforcers from the Unified registry of private enforcers. The compensation of the private enforcers is set at a fixed amount (in case of enforcement of non-monetary decision), or percentage of the amount to be enforced, or the price of the property. Importantly, the collector with private enforcer may agree on additional advance costs payments or compensation.
Andriy Stelmashchuk, managing partner, Vasil Kisil & Partners
Maksym Maksymov, associate, Vasil Kisil & Partners