On 2 July 2020, the Council of Europe Project “Further support for the execution by Ukraine of judgments in respect of Article 6 of the European Court on Human Rights” (the Project) and the Supreme Court jointly organised and held the public discussion on the implementation of the effective bankruptcy procedure in the context of the execution of judgments of the European Court of Human Rights (the ECtHR) in the group of cases “Yuriy Mykolayovych Ivanov v. Ukraine” and “Burmych and Others v. Ukraine”.

This event was attended by judges and representatives of the Supreme Court, the representatives of the Ministry of Justice of Ukraine, the Ministry of Finance of Ukraine, the State Treasury Service of Ukraine, the Ministry of Economic Development, Trade and Agriculture of Ukraine, representatives of the Verkhovna Rada of Ukraine, representatives of civil society and international organisations, and representatives and experts of the Council of Europe.

The purpose of the event was to present and discuss the expert analysis of practical problems related to bankruptcy in the context of the execution of ECtHR judgements in the Ivanov/Burmych group of cases, discuss conclusions with regard to proceedings in the cases of bankruptcy of state-owned or state-controlled enterprises, and, in particular, the problems of moratoria which protect such enterprises in certain sectors of the economy from liability and enforcement. This event was also aimed at proposing possible avenues of enhancing the national legislation and judicial practices regulating bankruptcy procedures for such enterprises.

Valentyna Danishevska, the President of the Supreme Court, in her opening remarks, stressed that, as of today, the effectiveness of bankruptcy proceedings for state-owned enterprises leaves much to be desired. It is related, in particular, to the fact that state-owned enterprises are to a certain extent, privileged with regard to bankruptcy proceedings, which leads to various abuses. The President of the Supreme Court also emphasised that political obstacles, which include all existing moratoria on the enforcement of court decisions, are much more challenging to overcome.

Pavlo Pushkar, Head of Division of the Department for the Execution of Judgments of the ECtHR of the Council of Europe, in his contribution, called into question the appropriateness of the existence of the “rather outsized” state liability for commercial activities of enterprises, even if established with the state ownership. Pavlo Pushkar cited the ECtHR judgement in the Romashov v. Ukraine case where the state, being the minority shareholder in a coal mining enterprise, bore, however, liability for the non-execution of a court judgement by the debtor. In summary, Pavlo Pushkar called for establishing, within the national legislation, of a certain fair “limit of liability” of the state for the activities of legal persons partly owned by the state.

Volodymyr Pohrebniak, judge of the Commercial Cassation Court within the Supreme Court, dedicated his presentation to problematic issues of judicial practice arising from the consideration of bankruptcy cases related to state-owned or state-controlled enterprises. He proposed several recommendations, in particular, to introduce the Unified Court Information and Telecommunication System and insert there information on the amount of debt accumulated by state-owned enterprises following court decisions; to develop more effective mechanisms for pre-trial rehabilitation of state-owned enterprises; to protect creditors of state enterprises with regard to wages.

Ruslan Melnychenko, the national expert of the Council of Europe, presented the analytical report on the bankruptcy of state-owned enterprises in the context of the execution of the ECtHR judgements in the Ivanov/Burmych group of cases. He also presented recommendations regarding solving the identified problems and, in particular, proposed to introduce obligatory subsidiary liability of the state for state-owned enterprises, to establish an exclusive list of enterprises which are not subject to privatisation, etc.

Andriy Avtorhov, the national expert of the Council of Europe Project, pointed out the need to amend the laws on enforcement proceedings (draft law No. 3726 of 23 June 2020) to enable private agents to enforce court decisions with regard to state enterprises.

general, the participants also agreed to submit the formulated recommendations relating to legislation and judicial practice to relevant officials of state authorities to supplement and finalise the draft National Strategy on implementation of general measures necessary to execute the ECtHR pilot judgement in the Yurii Nikolaevich Ivanov v. Ukraine case and the Grand Chamber judgement in the Burmych v. Ukraine case.

The Council of Europe project “Further support for the execution by Ukraine of judgments in respect of Article 6 of the European Convention on Human Rights” is funded by the Human Rights Trust Fund. The overall objective of the Project is to support Ukraine in providing accessible, full and effective justice through the execution of judgments in which violations of Article 6 of the European Convention on Human Rights are established. The Project is focused on the following areas: the resolution of problems related to non-execution of judgments of national courts; introduction of effective remedies against excessively lengthy judicial proceedings; ensuring the independence of the judiciary and enhancing the access to justice; providing support to building effective procedures for the interaction between the Supreme Court and the European Court of Human Rights.

This Council of Europe Project is implemented in Ukraine by the Justice and Legal Co-operation Department of the Council of Europe.

WEB LINK TO THE EVENT

https://supreme.court.gov.ua/supreme/pres-centr/news/965124/