EU Project Pravo-Justice Continues Discussion of Procedural Changes to Simplified Proceedings in Minor Disputes in Ukraine

On June 10, the discussion about “How the improvement of writ and simplified proceedings under the Civil and Commercial Procedural Codes will affect the financial sector and the relationship between creditors and debtors?” took place. National and international experts from the EU Law-Justice Project, judges, representatives of the Regional Councils for Justice Reform (RJRCs), banks and other participants discussed how improving proceedings affects the financial sector and the creditor-debtor relations.

When opening the event, Oksana Tsymbrivska, Key National Expert of the EU Project Pravo-Justice, reminded that with that discussion, the Project continued the one which had been launched this May and had been dedicated to simplification of civil and commercial proceedings in Ukraine: “This time we want to shift the focus and discuss the need for simplification of proceedings not only in terms of law and judicial practice, but also from the economic standpoint. Namely, how it affects the financial sector, business, and national economy in general.”

Dovydas Vitkauskas, Team Leader of the EU Project Pravo-Justice, stressed the importance of monitoring of the implementation of legislation by the Ministry of Justice of Ukraine, which allows a systematic study of the opinions of the legal community establishing what needs to be changed to make procedural regulation in Ukraine more effective and guaranteeing access to justice within a reasonable term.

“We hope that to prepare, together with the Ministry of Justice, a new legal framework, which will make procedural regulation more simple and clear, with less of unnecessary formal rights and more of real rights for the parties, depending on the context, circumstances and behavior of the parties,” said Dovydas Vitkauskas.

Semen Kravtsov, National Expert of the EU Project Pravo-Justice, presented the draft Report on the Peculiarities of Consideration of “Minor Cases” in the Civil and Commercial Courts of First and Appellate Instances in Ukraine, prepared under the guidance of the Project’s International expert Bert Maan.

Ruslan Tarasenko, Head of the Department of Litigation and Enforcement in PrivatBank, outlined the key factors which matter for businesses when collecting debts: time and cost of debt collection, the latter sometimes reaching 30 to 40 kopecks per hryvnia.

“Business, like no other, would want to simplify this process in terms of cost and time. [...] If writ proceedings become available together with lower court fee, banks will be in the position to better defend their rights, become profitable, and their services would become more financially attractive for the population. In addition, it will increase payment discipline among the population,” Ruslan Tarasenko said.

Serhii Boiko, Head of the Unit of Litigation and Enforcement of Problem Assets of the Legal Department of the National Bank of Ukraine, pointed out that the recommendations set out in the draft Report are fully consistent with the Strategy of Ukrainian Financial Sector Development until 2025: “Its goals include, among others, ADR development, improvement of court procedures, and enforcement of court decisions. [...] We absolutely share the proposals presented in the Report and are ready to assist in their implementation.” He also added that due to the pandemic, the implementation of those measures of the Strategy had been postponed until the end of 2022.

Andrii Potapenko, judge-speaker of Rzhyshchev City Court of Kyiv Region and member of the Council of Judges of Ukraine, also commented on the draft law’s proposal to apply a court order in small disputes: “I support the need to develop writ proceedings, and possibly one should start with obligatory writ proceedings for a certain category of small disputes. And then, if the court establishes dispute, the order shall be revoked and the case shall automatically become a dispute of law. That is, one does not need to go to court twice.”

For his part, Yurii Chumak, judge of the Cassation Commercial Court under the Supreme Court, proposed procedural changes in the cassation proceedings, in particular, to reduce the number of cases to be heard in courtrooms, as the cassation instance does not examine the evidence: “In fact, in most cases, the parties would simply repeat what they have written in the cassation statement. Given the number of cases and the workload, it is very time-consuming.”

Besides, Yuri Chumak suggested to:

• provide for the possibility of the cassation appeal for cases up to 500 subsistence minimums;
• eliminate legal uncertainty regarding the repeated cassation appeal after the closure of cassation proceedings;
• get rid of self-representation in courts;
• introduce a standard form of cassation appeal;
• continue improving the development of e-justice.

Bert Maan, International Expert on the EU Project Pravo-Justice, demonstrated the application of a court order in small disputes in some European countries: “Small disputes do not mean unimportant disputes. When they accumulate, they man have a significant financial impact. Therefore, the existence of a court order instrument that can be initiated by a creditor and challenged by a debtor is an effective mechanism for resolving the existing problem with indebtedness.”

When asked how simplified proceedings can be made more effective, Andrii Butyrskyi, judge of Chernivtsi Regional Commercial Court and representative of Chernivtsi RJRC, recalled situations where similar cases from one plaintiff are heard in different courts under the simplified and the general contentious procedures: “Simplified proceedings need to be unified; it should also be clear defined how to proceed with various categories of cases”.

The judge also noted that there was no significant difference between simplified and general proceedings: “In order to make simplified proceedings more attractive, court fee need to be reduced, case consideration need to be speeded up, and trials need to be conducted without summoning parties. Then it will be real simplified proceedings, and people will have an opportunity to obtain a decision and have their rights protected quickly and at no extra cost."

In turn, Yevhen Riyako, lawyer, managing partner of RIYAKO & PARTNERS and representative of Kharkiv RJRC, suggested increasing the amount of debt to be recovered under writ proceedings: “If there is no dispute of law, what is the difference whether we recover 200 000 or 1 000 000? Why not allow only the right to demand for the order revocation?”

To conclude, Oksana Tsymbrivska, Key National Expert of the EU Law-Justice Project,said that after the presented draft Report was finalised, the Project would distribute it to the stakeholders and would help developing legislative amendments to simplify proceedings in minor cases.

Background:

Regional Justice Reform Councils (RJRCs) have been established with support of the EU Project Pravo-Justice and function in Chernivtsi, Dnipro, Kharkiv, Lviv, Odesa regions and Donbas. To date, Councils members have been actively participating in drafting a bill on mediation, amendments to the Bankruptcy Code, proposals to improve legislation on enforcement proceedings, introducing e-court and discussing the concept of transitional justice.

RJRCs act as permanent working groups to promote bottom-up reforms: bringing region-specific challenges and potential solutions thereof to the level of central government.