EU Project Pravo-Justice calls on the Ministry of Justice not to deviate from pro-European path of reforming enforcement system

May 08, 2020 | Judiciary, Justice, Property rights protection
On May 6 at the meeting of the Regional Justice Reform Councils, two draft laws in the field of enforcement of court decisions were discussed – the one by Ministry of Justice of Ukraine "On Amending Certain Legislative Acts of Ukraine on Enforcement of Court Decisions and Decisions of Other Bodies" and the one developed on the platform of EU Project Pravo-Justice - "On Enforcement Proceedings”.

Representatives of EU Project Pravo-Justice, the Association of Private Enforcement Officers of Ukraine, the Business Ombudsman Council of Business Ombudsmen and the American Chamber of Commerce in Ukraine expressed their views on two legislative initiatives and directions of judicial reform in Ukraine. Oleksandr Oliinyk, Director of the Directorate of Justice and Criminal Justice voiced the vision of further reform and the mechanisms for its implementation in the country's legislative field on behalf of the Ministry of Justice of Ukraine.

According to Dovydas Vitkauskas, Team Leader of EU Pravo-Justice Project, over the past 2.5 years, private enforcement have established themselves as effective professionals who enforce court decisions much faster than their counterparts in the State Enforcement Service. Therefore, it is important to continue further privatization of the enforcement system, to make "mandates" of public and private enforcement officers equal, to give broader powers to assistants of private enforcement officers by giving them the power to perform certain enforcement actions. The Project also proposes to clearly govern supervision over the activities of private enforcement officers.

"There is almost UAH 900 billion, or EUR 30 billion, of unenforced court-ordered debt in Ukraine. This is more than 1/4 of Ukrainian annual GDP. And this number does not show ordinary / normal debt - this is unpaid debt, unacceptable debt by the defaulted debtor in any civilised society. Does the justice system of Ukraine understand that it is responsible for unfulfilled debt?”, Dovydas Vitkauskas said.

Katilin Popov, international expert of EU Project Pravo Justice called on the regulator to liberalize the profession of private enforcement officers when drafting new legislation.

The following is public address by Katilin Popov: "Currently, the government treats private enforcement officers as if they were state-owned enterprises. And it seems that the Government would like to maintain full control over these "enterprises", over the enforcement officers - to apply to them the same bureaucratic procedures and the same not quite successful management decisions that apply to state enforcement officers. This is wrong. The institution of private enforcement officers should be developed – there is no other alternative quickly solve the problem of non-enforcement of court decisions. I call on the Government to liberalize the institution of private proceedings."

Positive feedback on the draft law developed on the platform of EU Project "Pravo-Justice" was voiced by representatives of the professional community of private enforcement officers.

The draft Law by EU Pravo-Justice Project will resolve a number of challenges, in particular, estate inventory according to technical documentation and with the use of video recording instead of witnesses and many other progressive innovations. It is important that the Project also offers a clear solution as to supervision over the activities of private enforcement officers. On the contrary, the draft law by the Ministry of Justice solves only some petty issues. It does not contain any revolutionary norms that will give impetus to the effective enforcement of court decisions", said Andrii Avtorhov, private enforcement officer and member of the APEO.

At the meeting of Regional Justice Reform Councils it was proposed to go beyond communication in the telegram channel "MOJ_Draft law in the field of enforcement" and to create a working group consisting of representatives of the regulator, APEO, business community, judges for working in open, public and democratic discussion on the new version of the law "On Enforcement Proceedings" which would include the best legislative developments from the Ministry of Justice and the professional community.

The advanced jurisdictions in EU are trying to focus on new electronic solutions as a way to improve justice. The domestic courts in many EU countries have usually served as a facilitator of technological progress. PLAIS, the Lithuanian version of ABABS, is now considered as one of the best practices in the World, cementing Lithuania’s standing as no.1 among EU countries in enforcing contracts, and no. 3 overall among EU states (only behind Denmark and Sweden) in the World Bank Doing Business Ranking 2020. Merely 118 Lithuanian private enforcement officers (PEOs) collect more than EUR 200 million annually in monetary debt, which can be compared with about EUR 600 million collected by more than 5,000 enforcement officers in Ukraine (including DVS and PEOs).

One of the reasons for that productivity is the Lithuanian ABABS solution, which makes even the smallest claim easy to enforce. Moreover, hundreds of million EUR per year are collected instantly in seconds in Lithuania in VAT, customs duties, social charges of companies and other contributions in various type of debt. Neither the banks and the Central Bank - nor most importantly, major political and business players - can manipulate this process, effectively making the timely payment of debt an inevitability and a given, which also acts as a huge disciplining factor in the society as a whole. This practice shows that, without bank account blocking, there can be no proper enforcement. And without automation, there is no effective and efficient enforcement.