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Parties’ representatives and attorneys
Enforcement of domestic court judgments
Enforcement of foreign court judgments
LEGISLATIVE SYSTEM
The general impression that legal arbitrariness or chaos reigns in Ukraine, that the legislative system is imperfect and does not perform its function in society, does not tell the whole story. In reality, it is not as bad as it might be, but, of course, it is not as good as we, as lawyers, would like it to be.
The legal system of Ukraine is typical of those built on the principles of European law along with the legacy inherited from Soviet socialist law. The basis of the legal system in Ukraine is the Constitution, adopted on 28 June 1996, establishing a mixed parliamentary and presidential republic.
Laws and Codes
The function of the supreme legislative body of the country is performed by the Verkhovna Rada of Ukraine (the Ukrainian Parliament). It issues laws and regulations which have the ultimate authority and are binding throughout the republic. The Verkhovna Rada’s competence embraces legislative activities in all aspects of Ukrainian life.
Laws adopted by the Verkhovna Rada play the leading role in the legal system of Ukraine. Codes unify conventions which regulate whole areas of society and state life. The procedure for adopting a Code is the same as for a law. However, the role of Codes is more significant owing to their comprehensive and systematic nature, coverage etc.
Many activities are regulated by separate special laws. Examples of these are the laws on foreign economic activities, on insurance activities, on television and radio broadcasting, etc. Intended to regulate relationships in certain fields, they are affected by frequent and obscure changes, giving grounds for talk about the absence of continuity in Ukrainian legislation. However, such instability involves details, leaving the fundamental principles and legal statutes intact. The most obvious example is the regulation of foreign investments. Since independence, three laws on foreign investment in Ukraine have been adopted. Comparative analysis of these laws leads to the conclusions that:
- adoption of the 1993 Decree and the 1996 Law was dictated by political rather than economic considerations; and
- the main principles behind legal regulation of foreign investments in Ukraine, which were elaborated in the 1992 Law, remained unchanged both in the 1993 Decree and the 1996 Law.
Regulation of Foreign Investments
The Law of Ukraine "On Foreign Investments", 12 March 1992 (the 1992 Law);
The Decree of the Cabinet of Ministers of Ukraine (CMU) "On the Regime for Foreign Investment", 20 May 1993 (the 1993 Decree), suspended the 1992 Law;
The Law of Ukraine "On the Regime for Foreign Investment", 19 March 1996, (the 1996 Law), has cancelled both the 1992 Law and the 1993 Decree and is still in effect.
Presidential Decrees
Presidential Decrees must be treated separately. Under the general provisions of the Constitution of Ukraine, the President is entitled to issue Decrees on all matters referred to his jurisdiction (so called «constitutional powers»).
In ordinary circumstances, the President is not entitled to issue Decrees on "economic" matters. However, under the "Transitional Provisions" of the Constitution, the President has the right to issue Decrees on economic matters not regulated by a law for a period of 3 years from the adoption of the Constitution. A Decree is issued at the same time as a bill is submitted on the same subject to the Parliament of Ukraine. If the Parliament rejects the bill, the President's Decree takes effect 30 days after the submission of the bill and remains in force until the adoption of the relevant bill. Recently - almost throughout 1998 - the President has actively used his "transitional powers", and at the present moment more than 50 Presidential Edicts on economic matters have been issued and come into force.
Regulations, decrees and by-laws
The laws are supplemented by a very ambiguous and frequently changing part of Ukrainian legislation, the so-called normative acts. These consist of regulations, instructions, decrees and orders. They are issued by the Cabinet of Ministers of Ukraine (the highest executive authority), ministries, state bodies and committees (such as the Anti-Monopoly Committee, Supervision Committee on insurance activities, etc.) and local government bodies.
While laws formulate general legal principles, normative acts contain the mechanisms for their implementation. Therefore, it is not enough to know the provisions of relevant laws to understand and benefit from the legal regime regulating certain relationships. It is also vital to know all the provisions of the by-laws concerning the matter in question. For instance, any law on taxation is followed by an Instruction of the State Tax Administration on the procedure for application of the law. If the law is changed, so is the Instruction. When applying the law and the Instruction, the State Tax Administration may offer its comments on the treatment of certain provisions in the law on particular issues. These comments are made in the form of "letters" or "explanations". They are not imperative or obligatory, but are frequently used as precedents in making sense of similar problems.
Turning to the problem of the continuity of the legislation, normative acts are the most unstable. Their very nature and the relatively simple procedures for their adoption and/or amendment in comparison with the Laws and Codes, makes them the most changeable part of Ukrainian legislation. It is this very feature which regularly impacts on the everyday activities of entrepreneurs.
Normative acts take effect 10 days after registration at the Ministry of Justice of Ukraine. During registration, the Ministry checks for their compliance with the Constitution of Ukraine and active laws.
Local government bodies have the right to issue by-laws that are binding in certain territorial units (region, city, or district). In the main, these by-laws concern matters and problems within that particular administrative unit.
Court regulations and interpretations
The rulings of judicial bodies that have a binding force must also be mentioned. The decisions of the Constitutional Court of Ukraine on interpretation of the Constitution and the laws of Ukraine as well as on the compliance of legislation with the Constitution of Ukraine are binding throughout Ukraine.
The Plenary session of the Supreme Court of Ukraine (the highest judiciary body of the common courts) is charged with supervising the practice of litigation and can adopt resolutions binding on common courts when considering cases. Such resolutions do not have the status of precedents as in common law countries and, thus do not create new provisions. Usually, they are used by judges and practitioners as recommendations and guides for the settlement of disputes.
The same powers are held by the Plenary session of the Highest Arbitration Court of Ukraine which is competent to hear commercial disputes between Ukrainian entrepreneurs.
A schematic hierarchy of existing legal authority in Ukraine is as follows:
I. Constitution of Ukraine
II. Laws (legal acts of Parliament)
- Codes - acts consolidating areas of law;
- decisions of the Constitutional Court on the compliance of certain laws with the Constitution;
- official interpretations of the Constitution and law.
III. By-laws
- Acts of the Cabinet of Ministers of Ukraine;
- Acts of ministries, agencies and other central executive authorities;
- Acts of the Autonomous Republic of Crimea, acts of local authorities.
IV. Resolutions and Explanations of the Plenary session of the Supreme Court of Ukraine and of the Highest Arbitration Court of Ukraine
JUDICIARY SYSTEM
Since the time when Ukraine became independent in 1991 its judiciary system has not seen significant changes from that inherited from the Ukrainian Soviet Socialistic Republic.
There are now virtually two systems of state courts:
- the common courts; and
- commercial courts.
The common courts consider cases arising out of:
- civil, family, hereditary, copyright and other legal relationships;
- criminal offences;
- administrative infringements and misdemeanours. They may also consider business disputes, in cases where a physical person bis one of the parties.
The system of common courts is built in accordance with the administrative and territorial division of Ukraine and consists of three levels:
- local courts;
- appellate courts;
- the Supreme Court of Ukraine which mostly fulfils the functions of cassation.
The common courts deliver justice under:
- the Civil and Civil Procedure Codes of Ukraine for civil, family and hereditary cases;
- the Criminal and Criminal Procedure Code for criminal offences;
- the Administrative Code for administrative infringements and misdemeanours;
- the laws on intellectual property for copyright cases and other special laws.
Justice in the common courts is delivered by professional judges appointed by the Parliament of Ukraine for life. Additionally, the 1996 Constitution of Ukraine provides for the institution of the jury system. Unfortunately, this provision of the Constitution has been implemented yet, neither in relevant laws, nor in judicial practice and it has a purely declarative nature at present.
System of commercial courts
The commercial court system is fairly new to the republics of the former Soviet Union in general and, in particular, for Ukraine. The commercial courts were established in 1991 by means of the reorganization of the previously existing Institute of Departmental Arbitrage (recently reorganized into a separate institution), the jurisdiction of which covered commercial disputes between state enterprises. Departmental and state arbitrage were not courts in the full sense of the meaning, arbitrators did not have the status of judges, the cases were heard under the rules of a simplified procedure which was not stipulated in the procedure code.
Justice in the commercial courts is delivered by professional judges, appointed by the Parliament of Ukraine for life. Court proceedings are conducted under the Commercial Procedure Code of Ukraine.
The system of commercial courts in Ukraine is a system of state courts that are competent to hear commercial (economic, as it is called in Ukraine) disputes between legal entities including disputes with tax authorities; unfair practices and other infringements of the anti-monopoly legislation; bankruptcy cases; disputes with executive authorities, the National Bank of Ukraine and local government.
The system of commercial courts is comprised of:
- local commercial courts of Regions and the cities of Kiev and Sevastopol;
- appellation commercial courts;
- the Highest Commercial Court of Ukraine which acts as cassation instance.
Parties’ representatives and attorneys
There is no obligatory requirement to be represented by a professional attorney at a civil, family or hereditary case under the Civil Procedure Code of Ukraine. A natural person may be represented by himself, an attorney, a lawyer or any other person without professional skills. A legal entity may be represented by an official (usually director or his/her deputy), an attorney, a lawyer or any other person without professional skills. A party’s representative must have a proxy fixing his/her powers. The Civil Procedure Code stipulates the possibility for compensation of a winning party’s expenses only for the attorney’s costs. The attorney’s fees may be up to 5% of the claim.
The participation of an attorney at a criminal case is obligatory. In case a person has no means for an attorney, the court appoints an attorney assigned to it.
There is no obligatory requirement to be represented by a professional attorney at a commercial dispute. Where a legal entity is represented, the representative must have a proxy fixing his/her powers. The Civil Procedure Code stipulates the possibility for compensation of a winning party’s representation expenses.
Domestic ad hoc tribunals
The settlement of disputes by means of ad hoc tribunals is not as widespread in Ukraine as it was expected to be due to the rapid growth in entrepreneurship, the creation of a large number of new companies and wide liberalization of business activities. One of the reasons is the absence of a modern legislative act to regulate the procedure of settlement of commercial disputes, grounds for cancellation of an issued award, etc. Another reason is the absence of a business practice to include in a contract a clause on agreed jurisdiction. As the inclusion of a clause on agreed jurisdiction is standard for international trade contracts, one can expect the spreading of such practices in domestic relationships.
Enforcement of the judgments of domestic ad hoc tribunals in Ukraine is carried out under the Civil Procedure Code of Ukraine.
Enforcement of domestic court judgments
Notwithstanding the existence of the two systems of state courts, Ukraine has only one system of court bailiffs – the state bailiff service acting under the Law on the B ailiff Service adopted in 1999. The state bailiff service acts under the Ministry of Justice of Ukraine. The bailiffs enforce the judgments under the law “On Judgment Enforcement” and the special Instruction on enforcement.
Enforcement of foreign court judgments
Enforcement is made under bilateral treaties on assistance in civil, family and criminal cases. Ukraine has signed a number of such bilateral agreements, including those signed by the USSR and recognized by Ukraine by virtue of succession.
International commercial arbitration
International commercial arbitration started developing in Ukraine only following independence. The Law of Ukraine «On International Commercial Arbitration» was adopted in 1994 and is in force now. It was developed on the basis of the 1985 UNCITRAL Model Law on international commercial arbitration and reflects almost all the essential provisions of the Model Law.
The International Commercial Arbitration Court and the Maritime Arbitration Commission have been established at the Ukrainian Chamber of Commerce and Industry . They are competent to consider disputes arising out of foreign trade contracts.
Ukraine has ratified both the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and the 1961 European Convention on Foreign Commercial Arbitration.
Enforcement of foreign awards
Enforcement of foreign awards in the territory of Ukraine is carried out in compliance with both the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards ratified by Ukraine as a member of the UN in 1960 and the Law «On International Commercial Arbitration» of 1994.
