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Managing Partner, Head of Dispute Resolution Practice, Evris Law Firm
Property Rights in Ukraine
Property is a real right which embodies the nature of real rights to the fullest. As it follows from their name, real rights are rights associated with a real thing and mediates a certain relation of a person to that thing. It is one of the core values protected by law. It creates a particular area of legal relations which holds a unique position in the public and private life of people. Economically speaking, property is the basis of a nation’s economy and considerably ensures the existence and development of society as a whole. Private property rights and guarantees for them are among the main features of the rule of law. But today it is quite difficult to speak about domestic law-making and law-enforcement practices as perfect in terms of regulation of property rights and enforcement of real guarantees of owners rights.
General Overview of Property Rights in Ukraine
Current Ukrainian legislation does not define the meaning of “property”, but Article 41 of the Constitution of Ukraine defines this term as “everyone shall have the right to own, use, or dispose of his property and the results of their intellectual or creative property activities”. According to the International Property Rights Index for 20181 which assesses the rights and possibilities of citizens to possess and protect private property all over the world, Ukraine occupies only 110th place, receiving 4.3 points out of a possible 10.
Property rights guarantees are especially relevant both for legislation and, in the context of court protection of the owners’ rights, for execution of court decisions.
The problem points include the lack of unity of court practice on property cases and violation of “reasonable” terms of hearing cases.
It should be separately noted that the system of execution of court decisions is ineffective. The problem has a systemic nature and measures taken by the state fail to gain the desired results at this time. Significant state debts for non-enforced decisions are transferred from year to year. Guarantees as to the rights of owners are also weakened by the low level of public trust in the state judicial system.
The protection of property rights in Eastern Ukraine is significantly worsened by the ongoing armed conflict there due to increased risk of its loss and a significant reduction of possibility to protect violated legislation, including via court proceedings. The actual occupation of part of Ukraine has already led to the inability to actually secure property rights on this territory.
During the year, the most relevant topics regarding the protection of property rights in Ukraine were certainly the extension of the moratorium on the sale of agricultural land and lack of proper regulation for customs clearance of cars with foreign registration.
Court Protection of Property Rights
In Ukraine, cases on claims for the property rights protection belong to the most widespread categories of civil and economic cases in spite of the fact that guarantees of property rights and their protection are stated in legislation. Judicial practice reveals that courts do not always adhere to a unified approach towards application of legislation in this category of cases. It should be noted that with the beginning of judicial reform (from the end of 2017) the new practice of the Supreme Court is mainly aimed at establishing the aforementioned unity, legal certainty and predictability. Clear positions and approaches that already create a consistent court practice of the lower instances have been formed for many categories of cases including the realization of property rights. Protection of property rights is complicated by violation of a period of “reasonable time” for hearing cases by the courts.
Overall, we can talk about a certain improvement in the legal protection of property rights, although it is still minor at the moment. Problems of the judicial system in general, distrust of the population towards courts and the low regard in which judges in Ukraine are held, do not contribute to a quick resolution of the problem.
State Registration of Real Rights
Reforms of the state registration system of real estate property rights and its encumbrances are moving gradually towards the achievement of goals being set before it. The assessment by international experts also confirms this. The main positive factors are: simplification of registration procedures, expansion of list of the subjects authorized to receive and issue documents in the field of state registration of real rights to real estate. From now on the possibility of exercising of powers by officials of local self-government bodies, executives of administrative service centers and notaries are enshrined at legislative level.
On the upside is the fact that the State Register of Property Rights for real estate is the only state information system containing information about the rights to real estate, their encumbrances as well as the objects and subjects of these rights. Transparency of property rights registers remains at a high level, in particular due to the possibility of getting information about real estate owners through open sources.
The problem points include weak protection of procedures against unlawful interference leading to the rise in the number of illegal takeovers, inconsistency in reform of land relations at earlier stages, low level of financial support for state registration bodies, and software defects. Registration of real rights to real estate located in the territory of temporarily occupied Crimea and in the territory of the ATO also remain a problem.
Despite some attempts to improve enforcement of such resolutions, the problem remains extremely important and concerns a large number of people who are powerless to protect their property. The last major changes in execution proceedings were initiated in the reform of 2016 when a number of laws were adopted. Despite the seemingly reasonable time to change the factual situation for the better, innovations have not become tangible.
The introduction of the Institute of Private Executors (Bailiffs) became the most significant step. The ideologists behind the reform expected that the situation with enforcement of resolutions adopted by national courts should be fundamentally improved, as their success levels were extremely low. However, the results of work of Private Executors are also low today.
Another innovation is the creation of the Unified Register of Debtors. It is called to support the effectiveness of enforcement proceedings and interaction between executors and other authorities. The Unified Register of Debtors is a systemised database of debtors which is part of an automated system of enforcement proceedings. Its aim is to disclose information in real time on unrealized property liabilities of debtors and to prevent the alienation of property belonging to debtors.
Another innovation of enforcement was the cancellation of terms for independent execution of resolutions for the debtor. The procedure begins immediately from the day of opening of the proceeding. Such an approach seems rather positive, as it has financial incentives for debtors to enter resolutions in court or other bodies on time without applying for compulsory enforcement.
Rights to Peaceful Possession of Property on Temporarily Occupied Territories
The protection of property rights on temporarily occupied territories is a very acute problem. It should be noted that Ukrainian law-enforcement authorities do not extend their jurisdiction to temporarily occupied territory, thereby depriving people living there of the possibility to protect their legal rights and interests. Only evidence of infliction of harm, a cause and effect relationship and monetary evaluation of damage enable the receipt of compensation from the state for harm caused by military actions. As it is impossible to do all this it means, in fact, that no-one can succeed in the court room. Accordingly, we cannot talk of the protection of violated rights but rather about the fact that this right is violated.
Moratorium On Sale of Agricultural Land
By reaffirming the moratorium on the sale of agricultural land annually, the state aims to consolidate agricultural lands in the hands of its factual owners, in this fashion, guarantee the use of this type of land only according for the intended purpose of agriculture. Following this content, any restrictions on the land market lead to a reduction in the price of a land asset. Land owners are limited in the way they can dispose of their land through civil law transactions. In addition, the land plot user fee is negligibly low for those transactions.
Having failed to defend their rights in Ukraine, landowners began to appeal to the European Court of Human Rights. On 22 May 2018, the European Court of Human Rights ruled on the Zelenchuk and Tsytsyura vs. Ukraine case, stating that the land moratorium in Ukraine violates the rights of landowners to peaceful ownership of their property.
A strange situation has arisen: on the one hand, a statutory ban on the alienation of agricultural land is in force but, on the other hand, the practice of the European Court of Human Rights, being a source of law in Ukraine, declares that the land moratorium violates Article 1 of Protocol 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms.
It would seem that the described situation should speed up abolition of the moratorium on the sale of agricultural land. However, in December 2018, MPs of the Ukrainian Parliament voted in support (once again) of a law which prohibits the alienation of agricultural land until 1 January 2020, effectively prolonging, once again, the moratorium for one more year.