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“The team was recently visible advising on a number of pharmaceutical cases. Sources agree that the team is “moving in the right direction” and are particularly impressed by its work in the pharmaceutical sector”.

 

Measured time

11.06.2014

Dmytro Shemelin, lawyer, Ilyashev & Partners Law Firm
Source: Yurydychna Praktyka

Provisional remedies in civil and administrative proceedings cause a lot of controversy today, even considering clarifications of highest judicial agencies

Provisional remedy is a procedural concept often reminding of the famous Sharapov’s words about law and flail. This is particularly so when Ukrainian courts with reference to freedom of the judicial discretion apply such safeguards that do not differ from early satisfaction of claim without considering the merits of the case.

“Prejudging” by provisional remedies of judgment on merits in commercial disputes is so well-known that the Higher Commercial Court of Ukraine (HCCU) in 2011 even specifically clarified that the claim cannot be secured by remedies that are virtually identical to satisfaction of the stated claims (clause 9 of resolution of the HCCU Plenum “On practical application of provisional remedies” of December 26, 2011, No. 16).

Unfortunately, neither the Higher Administrative Court (HAC) nor the Supreme Court of Ukraine (SCU) gave such general clarification, and so far confined themselves to separate comments on specific situations (labor and corporate disputes).

Whether a general rule about the impossibility of “prejudging” established by the HCCU Plenum in Resolution No. 6 applies in civil and administrative proceedings?

Invalidation

With regard to civil proceedings, everything is quite clear. Firstly, Art. 151(3) of the Code of Civil Procedure of Ukraine regarding grounds of securing the claim has almost identical wording with Article 66 of the Code of Commercial Procedure, which serves as a basis for the HCCU’s clarification: provisional remedy is used to avoid “impossibility or difficulty with enforcement of future judgment”. Accordingly, the findings based on Article 66 of the Code of Commercial Procedure may be used largely when applying Article 151(3) of the Code of Commercial Procedure.

Secondly, the Plenum of the Supreme Court of Ukraine has already noted in clause 5 of Resolution No. 9 “On application by courts of civil procedural legislation when considering applications for provisional remedies” of December 22, 2006 that when protecting corporate and labor rights suspension of judgment on dismissal of the plaintiff as a provisional remedy is not permitted as then “judgment is actually approved without considering the merits of the case”.

The SCU Plenum proved to be familiar with the problem of “prejudging” and believes that during civil proceedings “prejudging” (at least in some cases) is also unacceptable. The resolution of the HCU Plenum did not mention any peculiarities of labor or corporate cases for which reason it would be possible to say that the prohibition of “prejudging” applies only to labor or corporate disputes.

Before publishing own clarification of ban on “prejudging” in 2011, the HCCU referred to resolution No. 9 of the SCU Plenum, e.g. the HCCU resolution of March 1, 2011 in case No. 63/309-10 brought by the citizen N. against Kharkiv Research and Design Institute “Energoprojekt” on invalidation of decisions. It suggests that the HCCU considered the Code of Commercial Procedure and the Code of Civil Procedure similar in this respect.

Conflict resolution

Unfortunately, everything is not clear with the administrative proceedings. Article 117(1) of the Code of Administrative Procedure of Ukraine (CAP) provides for a broader basis for provisional remedies. Along with probable impossibility or difficulty of enforcement of future judgment on merits (both in the Code of Civil Procedure and Code of Commercial Procedure) the CAP of Ukraine provides for provisional remedies in case of an obvious risk of harm to the applicant’s rights, freedoms and interests before approval of decision in the administrative case and in case of manifestly illegal nature of the appealed decision.

The second major difference is the main form of provisional remedy referred to in Article 117(3) of the CAP of Ukraine (suspension of the appealed administrative act or part thereof) just comprises a partial “prejudging” of the case. The appealed act is suspended as a part of provisional remedy and finally terminated if the case is resolved in favor of the claimant. Thus, the law-maker shows that a kind of “prejudging” is admissible during administrative proceedings.

Unfortunately, clarification of the HACU Plenum in this regard is confusing rather than clarifying. Clause 17 of the resolution of the HACU Plenum “On application by administrative courts of some provisions of the Code of Administrative Procedure of Ukraine during consideration of administrative cases” of March 6, 2008, No. 2, clarifies that during administrative dispute on reinstatement the court cannot secure the claim by suspension of a single legal act on dismissal, as thereby the court actually decides the case without its consideration on merits that is “contrary to the intended purpose of applying the concept of provisional remedy”.

Incorporation of the above provision in resolution No. 2 in 2008 may be explained by the desire of the HACU Plenum to comply with the said resolution of the Plenum of the Supreme Court No. 9 of 2006 (clarification of the HCCU Plenum has not yet been published). Nevertheless, in practice, administrative courts prohibited “prejudging” not only in reinstatement disputes.

Thus, in case No. 826/3846/13-a the plaintiff demanded invalidation of decision of the Interdepartmental Commission on International Trade of April 28, 2012 and requested to prohibit the commission and other public agencies to enforce the appealed decision in any way.

In this regard the Kyiv Administrative Court of Appeal noted in its ruling of June 12, 2013 that provisional remedy for the period of case consideration, as requested by the plaintiff, will prejudge the dispute in favor of the latter. By satisfying such motion, the court would actually make decision in favor of the plaintiff without consideration of the merits of the case contrary to Article 117(1) of CAP and “inconsistent with the intended purpose of applying provisional remedy as a legal concept” (in administrative proceedings ruling of appellate court with regard to securing a claim during cassation is not appealed separately, because it does not preclude further consideration of the case).

This reasoning the Court of Appeal seems somewhat far-fetched. Legal effect of prohibition of enforcement is a little different from suspension of a legal act (a provisional remedy permitted by Article 117(3) of the CAP of Ukraine), especially given that, in accordance with Article 19(2) of the Constitution of Ukraine, public agencies still cannot act otherwise than on the ground, within the authority and in the manner provided by law.

Apparently, this conflict shall be resolved reasoning that, on the one hand, pursuant to Article 117(1) of the CAP provisional remedy is a right rather that an obligation of the court, and on the other – the prohibition of “prejudging” in cases of appeals against administrative acts will be contrary to Article 117(3) of the CAP.

Therefore, “prejudging” in administrative cases on appeal against administrative acts is permitted, but the court shall exercise its right to dismiss provisional remedies by suspension of the appealed act, if negative effects of such provisional remedy prevail over the potential positive effect. Inadmissible provisional remedy may affect the rights of third parties or result in significant irreparable damage if a lawsuit is dismissed.

 
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