April 2013

Developments in Court Practice

The Supreme Court of Ukraine having heard the claim seeking invalidation of a mortgage agreement, declared illegal the cession of proprietary rights to the assets under construction under agreement concluded prior to the entry into force in 2009 of the amendments to the Law of Ukraine "On Mortgages". The version of the Law in effect from 12 May 2006 to 14 January 2009 contained no concept of "mortgage of proprietary rights" and did not contain any rules to govern such mortgages. Therefore, proprietary rights to the assets under construction could not be mortgaged (Ruling No. 6-8φρ13 of 17 April 2013).

The Supreme Court of Ukraine having heard the claim seeking enforcement of a lien concluded that sale of a property which is subject of a lien within the liquidation procedure does not in itself terminate the lien. Therefore, the lien remains effective during the transfer of title to a third party, and consequently the property may be recovered from that party under Articles 25, 26 of the Law "On the Security of Creditors' Claims and Registration of Encumbrances" (Ruling No. 6-7φρ13 of 3 April 2013).

Information Letter No. 709/0/4-13 dated 7 May 2013 of the High Specialized Court of Ukraine on Civil and Criminal Matters drew attention to the fact that upon the entry into force on 19 January 2013 of the amended Law of Ukraine "On Reestablishment of Debtor's Solvency or Declaration of Its Bankruptcy" (the "Law") the Commercial Procedure Code was amended and submitted cases concerning recovery of salary arrears from the debtors against which insolvency proceedings have been initiated to the jurisdiction of commercial courts. This rule shall be applied by commercial courts in considering insolvency cases initiated after the entry into force of the amendments. Therefore the salary recovery cases initiated prior to 19 January 2013 shall be heard under civil proceedings.

For further information please contact managing partner Oleksiy Didkovskiy
and senior associate Andriy Pozhidayev

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