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Crimea: Practical Aspects of Disputes Consideration


Yan Akhramovich, Attorney at Law, Simferopol office of Ilyashev & Partners Law Firm
Source: RBK-Ukraine

1334Practical resolution of disputes in the activities of certain legal entities or individual persons has always been divided into “measures to prevent disputes” (preventive measures) and “measures to resolve existing disputes.”

Preventive measures

Let’s simulate a real-life situation. Using one of the examples which are plentiful, we may review the banking sector – namely, credit relations secured by property. Be it a mortgage or collateral kin the form of movable property such collateral has always been secured by the state at the territory where the property is located. The mentioned state guarantees involved the process of registration of such collateral at the official state register, and in the event of default the lender could take more or less immediate action to restore his rights at the expense of corresponding secured property. Under the conditions prevailing at the moment in Crimea Ukraine is unable to provide and guarantee the level of securing corresponding rights existing prior to annexation of Crimea. The Law of Ukraine “On protection of human and citizen rights at the temporarily occupied territory” defines a set of fundamental principles for regulation of relations but, unfortunately, has not created a system governing corresponding relations at the peninsula. Thus, Ukrainian courts, notarial bodies, as well as bodies responsible for enforcement of court decisions have no powers in present-day Crimea compared to the situation and procedure existing earlier. It turns out that even though Ukraine secures the rights of mortgagees (Russia by the way also recognizes such rights), Ukrainian banks are unable to exercise their rights related to the said property with achievement of real legal consequences at the territory of Crimea in the context of Ukrainian legislation. As a solution to this problem, Ilyashev and Partners Law Firm considers adoption of a series of actions intended to “duplicate” the rights of a particular mortgagee at the territory of the Russian Federation, thereby giving him a real opportunity to efficiently respond in the event of any defaults allowed by the debtor.

Resolution of pending disputed cases

An existing dispute may be resolved under the voluntary or under the enforcement procedure. Although the former is rarely met in real life, it still has the right to exist as long as “A bad peace is better than the best of wars” and sometimes fastness of dispute resolution takes precedence over the certain economic benefits. It is evident that if a legal entity does not have a possibility to conduct its activities in Crimea to the full capacity, it will not have a possibility to carry out negotiations in order to achieve the desired consensual result. In addition, amicable resolution of the problem often requires availability of full-scale data about the legal environment where disputes are resolved which is impossible when at least one of the contracting parties is located outside Crimea. For this purpose, Ilyashev and Partners Law Firm has opened its office in Simferopol with a permanent staff of lawyers and legal professionals who are knowledgeable in Russian and Ukrainian legislation and who are constantly enriching their practical experience by dealing with certain practical legal matters while representing interests of individuals before the courts of law, bodies in charge of registration of certain rights or in charge of execution of court decisions. It should be noted that resolution of certain matters may often take form uncharacteristic for general practitioners both in Ukraine and in Russia. This is due to the current transitional provisions applied in Crimea nowadays. At the same time provision of intermediary services is possible as in case with voluntary resolution of disputes as well as in the process of execution of enforcement procedure. According to the general practice (well-known even before the change of Crimean legal frame) compulsory settlement of disputes should be divided into two stages: court resolution of disputes and post-trial enforcement of decisions. The situation with the courts in Crimea at the moment has developed in such a way that disputes between the parties (that previously were under the jurisdiction of the Crimean courts) now, by virtue of the law “On protection of human and citizen rights at the temporarily occupied territory”, additionally got under the jurisdiction of courts in the city of Kyiv. In addition, and what is important, disputes that originated at the territory of Crimea are also reviewed by the newly established courts upholding their decisions in the name of the Russian Federation. What immediately strikes is non-recognition of such decisions by Ukraine and countries representing the international community. At the same time one should clearly understand which goal should be pursued. Thus, certain rights can be protected within Crimea and without going beyond its borders and often it is the way how it should be (in case of the rights related to real estate). Thus, in present-day Crimea there are courts of general jurisdiction, as well as “Arbitration courts” empowered to review corporate disputes. It should be noted that the Crimean Regional Administrative Court is still functioning now, but within the system of arbitration courts. Bankruptcy cases deserve particular attention. Not too long ago bankruptcy proceedings were suspended until 2015. Nevertheless as of lately the Crimean State Council upheld the decision ordering to resume the cases related to bankruptcy and financial rehabilitation. At the same time the bankruptcy procedure was greatly altered and adapted to the requirements of the Russian legislation. For now it is difficult to judge how the mentioned provision is going to be implemented in reality. That being said, it is now clear that the procedure has changed radically and requires an active response on the part of the companies in respect of which bankruptcy proceedings were initiated.

Execution of court decisions

For all the ambiguous nature of the structure of Crimean courts, jurisdiction of cases and recognition of court decisions outside Russia is one important fact invokes optimism: decisions of Crimean courts are executed in Crimea. Along with the court decisions upheld by Crimean courts subject for execution are the decisions upheld in the name of Ukraine prior to March 13, 2014. The procedure of execution of the court decisions, although having a number of unpredictable aspects and being characterized by constantly changing procedure, at the same time is aimed at ensuing occurrence of real consequences. However, it should be recognized that, the same way as it used to be before, the bodies in charge of execution of judicial decisions recognize similar type of violation in the form of “omission to act” and, as before, such failure can be either appealed or “secured” by actions of the claimant or his representative carried out in good faith. Notable is the fact that review of the majority of cases initiated prior to March 13, 2014 was terminated and then re-initiated on the basis of the orders issued by judicial executors. In addition, when we reviewed the majority of cases supervised by our company, it turned out that in these cases the judicial executors undertook independent actions aimed at the execution of corresponding decisions. Unfortunately, oftentimes such actions bring no consequences until backed up by active actions on the part of the claimant.

Acknowledgement of court decisions

As it was previously stated Crimea has a number of bodies responsible for execution of judicial decisions and the court decisions upheld in the name of Ukraine prior to March 13, 2014 shall be subject to execution at the territory of Crimea. Under certain circumstances the procedure of execution of such decisions may vary. It depends on the number of factors: whether or not an order of enforcement was issued, the date of issue, the deadline when it must be served, the form in which it was issued, as well as which court upheld the decision in question and whether this decision is recognized in Crimea. However, it should be noted that the procedure of acknowledgement of judicial decisions in Crimea has not remained the same in the understanding of lawyers practicing their activities in the Russian Federation. The legislative initiatives of the State Council of the Republic of Crimea also played their part in this. In August-September the Crimean State Council adopted a series of regulations introducing amendments into the procedure of acknowledgement of decisions upheld by foreign courts and defining new jurisdiction of cases related to acknowledgement of court decisions. At the same time, valid existence of such regulations, in its turn, directly confirms that decisions of foreign courts are acknowledged and accepted both in the context of legislation of the Russian Federation and in the context of the regulations in force in Crimea during the transition period. If we assess certain practical aspects of reviewing disputes in Crimea we may come to one evident conclusion: even living through hard times Crimean entrepreneurs still have many options left how to effectively exert legal influence. Moreover, in certain respects, the number of such options has become even greater.

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