Law reform on enforcement of the courts judgments in Ukraine: advantages and disadvantages.
- April 23, 2018
- news of legislation
- Teteria Ihor
Courts decisions without a real possibility to execute them are worth nothing. The decision makes sense if the winner of dispute can materialize this decision in money or property.
The government has admitted that the existing system of decisions’ execution works badly after 25 years of independence of Ukraine. It became impossible to keep up appearances and it was necessary to do the act. It is the time when legal community and business begin to see the first results of the reform.
The crucial novels of the reform are as follows: of private bailiffs that, together with state executive service can execute court decisions, distress property, distrain, seize property, sell it at auctions. An advance fee payment before the execution of court decision has become compulsory.
The appearance of private bailiffs owes to the fact that they are more initiative and motivated, and also will try to raise the level of execution of court decisions.
The necessity and progressiveness of the reform do not exclude its obvious flaws. Due to the length of the reform, the relevant laws came into force in early October 2016. The development of necessary documents, rules, and procedures took a long time, so private bailiffs have begun working much later, than the Ministry of Justice has promised.
Private bailiffs received their first certificates in June 2017 and began to work in the fall. Now they are located not all over Ukraine. Private bailiffs are not empowered to open the enforcement proceedings in a "foreign" district, so in some districts, there are no private bailiffs.
In relation to defects of the reform, it should be noted that private bailiffs are limited in amounts they are empowered to charge. During the first year of operation, private bailiffs cannot be empowered to enforce the decisions for the amounts that exceed 20 million UAH or more.
The above lead to the situation when such cases as debts recovery under utility bills, suits for alimonies and similar cases will drag on themselves a lot of costs and efforts without any financial benefit. Considering the above the main "victim" of private bailiffs shall be the middle class that already has been under tax and regulatory pressure.
The current private bailiffs will be able to enforce court decisions from autumn 2018. It should also be noted that from January 1, 2018, for all private bailiffs no limit for the amounts that exceed 6 million UAH or more.
The next point at issue is a poorly thought out and indistinctly written mechanism for the transfer of decisions that have been gathering dust for years on the shelves of state bailiffs.
Seems the good times have come and state bailiffs can rake up debris, and the creditors can remember their debtors and hand over "dead" cases to private bailiffs. But not everything is so simple in practice.
It is impossible to transfer opened enforcement proceedings from the state executive service to private bailiffs for the time being. The creditor needs to turn to the state bailiff and ask him to return the document and pay the advance fee and then submit it to the private bailiff, that will start the execution from the very beginning.
The risk of the above procedure is that with the return of the executive document from the debtor's property all seizures imposed by the state bailiff can "fly off". And when the creditor reaches private bailiff in order to open the proceedings and seize the assets there will be nothing to recover - the debtor will withdraw all assets.
In order to eliminate this deficiency, to the law on enforcement proceedings has been amended, but they will be effective if unified state register is launched. These problems still relevant.
It should be mentioned that private bailiffs have considerable powers, they can enter premises, open safes, distrain and seize property, assess and sell it, involve the police, impose and lift the seizures, apply to court the request to enter the premise, overseas travel bans, etc.
Many law and debt recovery firms dreams of gaining and controlling this "monster".
Legal acts that regulate the activities of private bailiffs contain mechanisms to prevent "acquisition" of private bailiffs by banks, creditors, and lawyers. Particularly there is a direct prohibition for private bailiffs to work in the same premises with persons who are not involved in executive activities.
There are a number of cases when employees of law firms become private bailiffs and "occasionally" open offices nearby the last employer’s office.
The reform of the court decisions’ execution system, even in existing form, is an important step forward to the implementation of a comprehensive judicial reform. Let’s hope that the gaps and shortcomings of the reform will not be systematic and will be eliminated in due course by judicial practice and the correction of legislation.
Oleksandr Rublya, advocate, senior lawyer