On 2 July 2016, two laws aimed at reforming the procedure of enforcement of court decisions in Ukraine were adopted, namely the Law of Ukraine “On Enforcement Proceedings” and the Law of Ukraine “On Authorities and Individuals Carrying Compulsory Enforcement of Court Decisions and Decisions of Other Authorities” (hereinafter collectively referred to as the “Laws”).

The Laws were officially published on 5 July 2016 and shall become effective on 6 October 2016, with the exception of certain provisions obliging the Cabinet of Ministers of Ukraine to ensure consistency of the existing legislation with the new Laws, which became immediately effective upon publishing.

In particular, the new Laws introduce the following novelties:

(1)     Establishment of the institute of private enforcement officers, who are entitled to enforce court decisions and decisions of other competent authorities, except for certain categories of decisions (e.g., decisions rendered against the state, state companies and legal entities, decisions of administrative courts and the European Court on Human Rights etc.);

(2)     Introduction of the Unified Register of Debtors, which shall be publicly accessible and shall contain information on debtors against which enforcement proceedings have been commenced (the existence of a record in the named register shall prevent the registration of a transaction on disposal of a debtor’s property by notaries and/or state registration authorities);

(3)     Introduction of the Electronic System of the Enforcement Proceedings, in which all documents in the proceedings shall be drafted, registered and stored by the enforcement officers, and which shall ensure the impartial allocation of enforcement writs among enforcement officers;

(4)     Extension of the term for initiation of enforcement proceedings under the enforcement writ for up to three years (instead of one year as set forth by the currently effective law);

(5)     Introduction of an obligatory payment to be made by the creditor in advance for commencement of the enforcement proceedings (for monetary claims – in an amount of 2% of the debt but no more that 10 minimum salaries (not more than UAH14,500.00 until 1 December 2016), and for non-monetary claims – in an amount of two minimum salaries (in case the debtor is a legal entity) and one minimum salary (in case the debtor is an individual);

(6)     Determination of specific terms within which certain actions can be taken in enforcement proceedings, namely, seizure of funds and property, transfer of payment requests to banks, removal of arrest; and

(7)     A declaration that enforcement officers shall have direct access to official state databases and registers to obtain information on debtors’ assets, income and funds (including confidential information) and shall have the right to register the imposition and removal of arrests.

The new Laws are expected to create a strong legal basis for the efficient enforcement of court decisions, timely collection of debts and protection of creditor’s rights.

Additional notes

This LEGAL ALERT is issued to inform Baker & McKenzie clients and other interested parties of legal developments that may affect or otherwise be of interest to them. The comments above do not constitute legal or other advice and should not be regarded as a substitute for specific advice in individual cases.