NEW CODE OF COMMERCIAL PROCEDURE: MOVE TOWARDS EFFICIENCY
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