укр eng рус est


Concurrent Reality


Source: The Ukrainskyi Yuryst

Experience has proven that to protect the client’s interests in the occupied Crimea and not to make him feel uneasy with regard to Ukrainian legislation, the best way is to duplicate all procedures and proceedings in two legal systems – Ukrainian and Russian.

Doing business, protection of property and generally implementation of any legal relations in the Crimea is and will for a long time be a difficult issue for Ukrainian companies and individuals. Six months ago, immediately after the occupation, there were many speculations as to how to proceed, but reality turned to be even more interesting.

Law firms that have a lot of clients in one way or another connected with the Crimea have found some solutions to problem issues. On 9 October, Ilyashev & Partners Law Firm invited the representatives of banks, the Ministry of Justice and the judiciary to discuss the simplest and most reliable ways to protect property and business in the Crimea, to solve problems with the Crimean contractors, to obtain compensation for nationalized property, to recover debts, etc.

In his welcome speech Managing Partner Mikhail Ilyashev outlined a challenging situation with the Crimean jurisdiction, paying special attention to the attempts of the so-called nationalization of the Ukrainian owners’ assets. In his opinion, it was rather confiscation or expropriation, mainly not of the industries, but nationalization of property of specific enterprises. The question arises how the owner who lost the property can protect his interests and obtain compensation. In this case, Ilyashev & Partners Law Firm follows and advises to follow two concurrent procedures – in Ukrainian and Russian jurisdictions. International arbitration is also a separate option, but this practice has not actually been tested.

Canna Onyschenko, Chairman of the State Registration Service, noted that more questions than answers have actually been accumulated for the last six months. However, at present the problem issues are more or less clear while there are no single-valued solutions. Ms. Onyschenko believes if she were a lawyer, she would use all possible means to protect her client’s rights. However, the state has its official position, according to which the State Registration Service and the Ministry of Justice do not recognize the documents issued by the illegal authorities of the Crimea, and at the same time offer to re-register the business and the right to property in the mainland Ukraine – in Khersonska and Zaporizhska regions. In fact, as of today these regions have registered over two thousand transactions with the Crimean real estate.

Currently, the State Registration Service is also exploring international experience on recognition or non-recognition of documents published in unrecognized or occupied territories. “If we take the theory of public international law, the Crimea is closer to unrecognized territories, although according to the law of Ukraine it is an annexed territory”, noted Ganna Onyschenko. The most similar to the Ukrainian-Crimean situation are the examples of Georgia, Moldova and Cyprus.

Valentyna Symonenko, Chairman of the Council of Judges of Ukraine and judge of the Supreme Court of Ukraine, treated the problem as more complex, because she came from the Crimea, and also expressed opinion that for better protection of business it is expedient to apply to both Ukrainian and Russian courts. Thereto, official position is different. Currently, according to the law on the occupied territories, the cases, which had to be settled in the Crimean courts, must be referred to the Kyiv courts. However, execution of decisions approved by the Kyiv courts in the territory of the Autonomous Republic of Crimea is problematic. If the defendant claims not to recognize the jurisdiction of the Ukrainian court, the plaintiff will not have access to the adjudged property. Further, Ms. Symonenko pointed to the potential fraud in connection with concurrent transactions. For example, a person may sell the property twice: according to the Russian legislation – in the Crimea and according to the Ukrainian – in Kherson.

Leonid Gilevich, attorney at law at Ilyashev & Partners, told about major options for re-registration of real estate – only according to the Ukrainian legislation, only according to the Russian legislation and in two jurisdictions concurrently. From the viewpoint of rights protection, the third option is the best. However, it creates a number of problems, namely legal inconsistencies, expenses for fees, preparation of documents and taxation. However, Mr. Gilevich believes that for a foreign investor it is really the best option.

Judges shared with the audience their experience in dispute resolution with the Crimean defendants. Thus, Oleksiy Yevsikov, deputy secretary of the First Trial Chamber of the Supreme Economic Court of Ukraine, noted that the Law on occupied territories settled some procedural issues on consideration of commercial disputes, and such cases are now pending, though there are a few of them. At the same time they reveal many problems, e.g. if a defendant is a Crimean resident, how to notify him of consideration of a commercial case. In this case, you can either send an e-mail message, or apply the international conventions. The second option is very time consuming. Execution of decisions in the ARC is also challenging. Therefore, Mr. Yevsikov insists on the importance of double proceedings, “no matter how sad it sounds”.

Olena Sytnyk, judge of the High Specialized Court of Ukraine for Civil and Criminal Cases, noted that the official position of the High Specialized Court of Ukraine has not been published yet, but the issue is still actively discussed at the meetings. The main problem here is jurisdiction.

Speaking about protection of interests of property owners in the international courts, Dmytro Shemelin, attorney at law at Ilyashev & Partners, suggested two main ways – through the European Court of Human Rights and through the International Investment Arbitration. Appeal to the European Court of Human Rights is possible in two ways: by joining to any case between Ukraine and Russia (in which Ukraine protects interests of its citizens). Such claim was once filed by Cyprus against Turkey on behalf of 1,600 of its citizens, and all plaintiffs received compensation. The second way is to sue Russia in the European Court yourself. In any case, the process is lengthy. In case of investment arbitration, it may be difficult to substantiate the claim of a Ukrainian resident to the Russian Federation as originally it was not an investment in a foreign state.

Representatives of the banks, in turn, identified two main problems – debt recovery and double payment of deposit funds. Andriy Onistrat, Chairman of the Supervisory Committee of the Bank National Credit, complained that, taking advantage of the situation, the vast majority of borrowers have ceased to service the loans. Each of them has his motivation. Mr. Onistrat stated that the entire banking system faced the following problems: how to return money, recover impaired assets, how to work with the Crimean court enforcement officers, etc. However, some banks managed to reach agreement with local collectors and resolved this issue.

Diana Golanova, Deputy Director of Legal Department of Piraeus Bank, in turn, spoke about the problems with depositors. Since May, the Crimean Deposit Guarantee Fund assumed all payment obligations, starting the procedure for assignment of rights of depositors of the Ukrainian banks. Funds for payments are received from the Fund, also on account of the property forfeited from the Ukrainian banks, which were forced to leave the peninsula. At the same time, Ukrainian banks have their own obligations to depositors, and the procedure for payment of deposits to depositors from the Crimea in the mainland Ukraine. Therefore, some unscrupulous depositors receive money both at the Deposit Guarantee Fund and at the branches in Ukraine. The problem is still pending.

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