NEW CODE OF COM­MER­CIAL PRO­CE­DURE: MOVE TO­WARDS EF­FI­CIENCY

Kyiv Post Legal Quarterly - - News -

It is safe to say that the cur­rent Code of Com­mer­cial Pro­ce­dure

(“Ef­fec­tive CCP”) does not gov­ern in­terim mea­sures ef­fi­ciently. Only three ar­ti­cles of the Ef­fec­tive CCP ac­tu­ally cover in­terim mea­sures. The dra Code of Com­mer­cial Pro­ce­dure (“Dra CCP”), con­versely, de­votes the en­tire chap­ter to this mat­ter. Un­der the Dra CCP, the court can­not grant in­terim mea­sures other than upon a party’s ap­pli­ca­tion. Thus, the court will no longer be em­pow­ered to grant in­terim mea­sures based on its own dis­cre­tion. Such shi of fo­cus from the court to­wards the lit­i­gants (which is a more gen­eral trend

of the Dra CCP) fur­nishes the com­mer­cial pro­ce­dure with some fea­tures in­her­ent to ad­ver­sar­ial sys­tem. The Ef­fec­tive CCP, in its turn, is more in­quisi­to­rial in this re­gard. The ap­proach to­wards avail­able types of in­terim mea­sures is chang­ing as well. The list of avail­able in­terim mea­sures set forth by the Dra CCP is not ex­haus­tive, as op­posed to the Ef­fec­tive CCP. Among other things, the Dra CCP ex­plic­itly pro­vides for pos­si­bil­ity to ar­rest re­ceiv­ables owed to de­fen­dant. Such in­stru­ment should be­come rather use­ful for cred­i­tors pur­su­ing their debtors. At the same time, the Dra CCP is not clear enough as to the grounds for grant­ing in­terim mea­sures. Both the Ef­fec­tive CCP and the Dra CCP state that the court may grant in­terim mea­sures “if a fail­ure to do so may frus­trate or pre­vent the en­force­ment of a prospec­tive court judg­ment”. How­ever, the courts have so far ap­plied the quoted pro­vi­sion based on the guid­ance of the Res­o­lu­tion of the Plenum of the High Com­mer­cial Court of Ukraine

(“HCCU”), which es­tab­lishes a re­stric­tive ap­proach to­wards the ap­pli­ca­tion of in­terim mea­sures. The Res­o­lu­tion states that an ap­pli­cant should demon­strate that the de­fen­dant has al­ready re­sorted to cer­tain ac­tions aimed at avoid­ing per­for­mance of a judge­ment. An ar­gu­ment that it is rea­son­ably an­tic­i­pated that the de­fen­dant will be­have in bad faith, fol­low­ing the HCCU opinion, is not a suf­fi­cient ground for the court to or­der in­terim mea­sures. We do hope, though, that – once the Dra CCP be­comes ef­fec­tive – the courts will tend to de­vi­ate from such overly con­ser­va­tive ap­proach. This may well be the case given that the Dra CCP em­pow­ers the court to de­mand counter- se­cu­rity from plain­tiffs. As it fol­lows from the Dra CCP, the most com­mon type of counter-se­cu­rity is likely to be de­posit­ing funds on the court’s spe­cial ac­count. The pre­cise amount of counter-se­cu­rity is to be de­ter­mined by the court de­pend­ing on a par­tic­u­lar type of in­terim mea­sures ap­plied and po­ten­tial losses the de­fen­dant might in­cur. Hope­fully, judges will work out a rea­son­able and bal­anced ap­proach to de­ter­mine the amount of counter-se­cu­rity. In ab­sence of the es­tab­lished cri­te­ria for mea­sur­ing counter- se­cu­rity, a clear guid­ance on this mat­ter would be ex­tremely help­ful for lit­i­gants. Al­though it is usu­ally a mat­ter of ur­gency for a plain­tiff to get in­terim mea­sures in place, the Ef­fec­tive CCP is si­lent as to the tim­ing for con­sid­er­a­tion of the re­spec­tive ap­pli­ca­tion. The Dra CCP, in turn, en­vis­ages that the court must con­sider the ap­pli­ca­tion for in­terim mea­sures within two days on an ex parte ba­sis. This, how­ever, does not pre­vent the court to sum­mon the par­ties and to con­sider the ap­pli­ca­tion in the hear­ing, if it deems so needed in terms of a par­tic­u­lar case. In­terim mea­sures, if granted un­der the Dra CCP, re­main ef­fec­tive un­til the judg­ment is ac­tu­ally en­forced. If, how­ever, the plain­tiff fails to com­mence the en­force­ment pro­ceed­ings within 90 days since when the judg­ment has en­tered into force, in­terim mea­sures ter­mi­nate. Such bal­anced ap­proach en­cour­ages plain­tiffs to en­force judg­ments with­out un­due de­lay, so that the de­fen­dants would no longer be ex­posed to term­less ar­rests of their as­sets and funds.

An­driy For­tunenko As­so­ci­ate, AVELLUM

Dmytro Marchukov Part­ner, AVELLUM

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