Adopted in the process of reforming the enforcement system, the Law of Ukraine "On Bodies and Individuals Responsible for Enforcing Judicial Decisions and Decisions of Other Bodies" (hereinafter "Enforcement Law") and the Law of Ukraine "On Enforcement Proceedings" (hereinafter "Enforcement Proceedings Law") were published in June 2016 and would take effect from 5 October 2016.
The revolutionary changes effected by the reform lay in the introduction of private enforcement service and envisaging legal framework for regulating its activities.
Qualification requirements for private enforcement officers
A private enforcement officer will be involved in independent professional activity. A citizen of Ukraine, aged at least 25, having obtained higher legal education of not lower than second level, speaking the official state language, having experience in the sphere of law for at least two years and having passed a qualification exam can become a private enforcement officer.
The scope of powers
Private enforcement officers will be authorized to enforce all decisions, except for decisions on removal and placement of a child, arranging meeting with such child, or removing obstacles for meetings with the child, as well as decisions on which the debtor is a state, state bodies, state and communal enterprises, institutions, organizations, legal entities with a state share in the authorized capital of which exceeds 25 percent, and/or which are financed exclusively by the state or local budgets, decisions of administrative courts and decisions of the European Court of Human Rights, along with decisions which include taking actions against property owned by the state or municipality, decisions on eviction and moving of individuals, decisions on the confiscation of property and other cases expressly stipulated by the Enforcement Proceedings Law and Enforcement Law.
A private enforcement officer will be authorized to hold cash, securities or other valuables, received from the debtor as a result of carrying out enforcement actions with the purpose of their further transfer to the claimant. In order to enroll funds recovered from the debtors in national and foreign currencies and repay them to the claimants, the private enforcement officer shall open a separate account in the state bank.
For the purpose of performance of enforcement, the enforcement officers have received the right of access not only to information about the bank accounts of the debtor, but also on the movement of funds and transactions on its accounts for a specific period of time, information about the debtor's deposit agreements, or agreements on provision the debtor with individual bank safe deposit box. The contractor will have direct access to public databases and registries containing information, including confidential, about debtors, their assets, income and funds.
Payment for services, guarantees and responsibility of private actors
The private enforcement officer is entitled to receive remuneration for performed enforcement, which consists of (i) basic remuneration (a fixed amount (for execution of decisions of non-property character) or the percentage of the amount to be recovered, or the value of the property subject to transfer under the writ of execution) and (ii) additional remuneration (determined by the agreement between the private contractor and the claimant). The amount of the basic remuneration of the private enforcement officer shall be determined by the Cabinet of Ministers of Ukraine. The basic remuneration of a private contractor, expressed as percentage, is charged to the debtor along with the amount to be recovered under the writ of execution.
The law provides for equal protection of private and public enforcement officers in case of resistance by infliction of body injuries, violence or threats of violence against them in connection with the enforcement of its decisions. Private enforcement officers may ensure proper performance of their duties by filing a reasonable request to involve the police to assist in the implementation of the enforcement actions.
The Ministry of Justice will monitor the activities of private enforcement officers by means of scheduled (held once in two years) and unplanned inspections (carried out, for example, on the basis of written applications of participants in proceedings in respect of decisions, acts or omissions of the private enforcement officer). In addition, the Ministry of Justice shall establish the Disciplinary Commission for private enforcement officers. Disciplinary penalties may lead to suspension of activities of a private enforcement officer for up to six months or termination of his/her activities.
Consequences of non-performance
Failure by the debtor to perform the demands of an enforcement officer without valid reasons within the stipulated timeframes shall lead to the penalties, which were introduced in the amount of 100 minimum wages for individuals (UAH 145,000), 200 minimum wages for officers (UAH 290,000), 300 minimum wages for legal entities (UAH 435,000) in conjunction with establishment of a new deadline. In case of repeated failure to perform the decision, the imposed fine shall be doubled and such event shall be reported to the preliminary investigation bodies in criminal affairs.
Other novels of the enforcement procedure
The Enforcement Law also provides the following improvements:
Introduction of a Unified register of debtors - a database on debtors, which shall be maintained with the purpose of publication of real-time information on unfulfilled financial obligations of debtors and to prevent disposal of the debtor's property. Information on debtors, contained in the Unified register of debtors, shall be open to public and disclosed on the official web-site of the Ministry of Justice. The clause related to the stage of voluntary compliance was withdrawn, so enforcement proceedings will be commenced exclusively for non-voluntary enforcement. The timeframes for submission of enforcement documents were increased from one year to three years, except for certificates of commissions on labor disputes and enforcement documents, where the claimant is a state or state authority, which may be submitted for enforcement within three months. The possibility to transfer the enforcement documents at request of the claimant from one private contractor to another, or to the relevant authority of state enforcement service, or from the state enforcement service to the private enforcement officers.
For further information please contact Asters' Managing Partner Oleksiy Didkovskiy
and Counsel Yaroslav Petrov.