Date of publication: 27 August 2015
Andriy Lytvyn, Attorney at Law
Source: Yuryst & Zakon
Settlement of land disputes has currently become quite of interest as long as in the process of ongoing economic slump in Ukraine actions of the Ukrainian state authorities are not aimed at real protection of the state interests harming the economy even more.
Involvement into lengthy judicial processes and confiscation of lands from agricultural producers (who pay taxes to the state budget) is leading to liquidation of business and does not promote protection of Ukraine’s state interests. As a lawyer practicing in the Kharkiv Region I would like to point out the tendencies concerning the land disputes.
In Kharkiv Region recently were made public the cases related to claims lodged by the prosecution authorities against farmers and agricultural enterprises on invalidation of land lease agreements as well as on cancellation of decrees and orders under which lands were provided into use.
The fist “breach” referred to by the state authorities in the process of lodging the claims is an alleged breach of Article 134 of the Land Code of Ukraine (the LCU) on provision of rights for the land plots bypassing the procedure of land auctions. At the same time the state authorities totally ignore Article 134 of the LCU providing exceptions when the rights to land plots may be provided without corresponding auctioning procedures, namely for running farming enterprises.
Quite interesting is the fact that the courts of Kharkiv Region take different kinds of approach towards settlement of this matter. In some cases the courts sustain claims of the prosecution authorities on the basis that an exception stipulated by part 2 Article 134 of the LCU applies to individual persons only. Under their logical thinking farming enterprise, as a legal entity, must participate in the land auction procedure in order to lawfully acquire the rights to land plots of agricultural designation. In other instances the claims of prosecutor’s bodies are dismissed on the basis that as of the moment when the disputed land plots were provided into use the procedure of land auctions was not stipulated by current legislation.
The second substantiation for the prosecutor’s filing the mentioned stated claims are the formal mistakes or minor inaccuracies made by the bodies of state or local self-governing authorities in the process of provision of land plots. It happens with consideration for the fact that mistakes or inaccuracies do not constitute the ground for cancellation of corresponding decrees and orders or invalidation of land lease agreements. Moreover, the person at whose expense the budget increases should not bear responsibility for mistakes allowed by the public authorities.
In this respect the Supreme Court of Ukraine has already presented its position in the case No. 6-94цс13 subject of which was a dispute on invalidation of land lease agreements. The court stated that among one of the necessary requirements of invalidation of an agreement is a breach of rights and protected interests of the claimant. If, as a result of review of the case, the fact of such breach was not established and the claimant refers to a formal breach of law the court does not have any lawful grounds to sustain the claim.
The court practice related to settlement of land disputes considerably differs in Kharkiv Region. A lot depends both on the circumstances of certain judicial case and choice of the defendant representing the interests of the interested person.
In the situation when the state lodges a claim on cancellation or invalidation of decrees, orders, auctions and agreements under which a person received a land plot under the grounds of alleged breach of legislation by its bodies in the process of provision of rights for use of the land plots effective is the practice of the European Court of Human Rights. In particular – a judgment of the ECHR as of June 24, 2003 Stretch v The United Kingdom and Northern Ireland in which the court stated that “available breaches committed by the public authority body in the process of execution of the agreement related to property cannot constitute the ground for deprivation of another person of such property who did not commit any breach”.
In this case the ECHR came to conclusion that as soon as the person is deprived of the right for the property solely on the basis of breach committed by the state body, but not the person himself, there was “disproportional interference into the claimant’s right for respect towards his property and, correspondingly, there was a breach of Article 1 of the Protocol to the European Convention on Human Rights and Fundamental Freedoms. Thus, invalidation of the agreement under which a person received property from the State, and his further deprivation of such property based on breach committed by the state body, is unacceptable.
Nowadays application of the said practice of the ECHR in Kharkiv Regions is becoming increasingly widespread. The first- and second-instance courts (both of general and economic jurisdiction) applied the mentioned conclusion of the ECHR as a result of which protected were the interests of a number of persons from unlawful claims lodged by state authorities in relation to rights to the land plots. In all cases the courts came to conclusion that unacceptable is invalidation of the agreement according to which a person received property from the state and further was deprived of such property on the basis of breach of the law which a certain state authority had committed.
In one of the cases the interdistrict prosecutor’s office in Kharkiv Region filed a claim against the town council and person “A” on invalidation of the agreement on provision of services for carrying our land auctions and of the minutes of the land auctions. A person “B” was also engaged into the case the person who won in the auction. Both respondents in the case supported the claim in full except for the person “B” because by filing a claim the town council tried to deprive the person “B” of the rights for the lands he acquired through the auction procedure. In the process of re-consideration of the decision upheld by first-instance court Kharkiv Commercial Court of Appeal (among others, having applied the ECHR practice) dismissed the stated claims of the prosecutor’s authorities of Kharkiv Region and came to conclusion that “the winner of the auction is lawfully expecting acquisition of the rights for the land plots and cannot be deprived of such rights because of the breach of the procedure for conducting land auctions committed by the town council and by the person authorized to conduct such auction”.
Such conclusions are fair: prior to gaining the rights for a land plot a person has to go through complex and lengthy bureaucratic procedure and has the substantiated right to rely on its full lawfulness. In this connection in its judgment as of October 20, 2011 in the case “Rysovskyi v Ukraine” the ECHR came to conclusion that “the risk of any mistake made by a state body must be born by the state itself and the mistakes must not be corrected at the expense of the persons whom they concern”.
Application of the ECHR’s conclusion in the case of Stretch requires advancement at the country-wide level in order to eliminate uncertainty and ambiguity in such matters as keeping a fair balance between interests of the society and the owner’s rights.