Access to Justice in Commercial Disputes Through the Lens of Recent Legislative Innovations
Author: Roman Gerasymenko
Source: Ukrainian Journal of Business Law, May-June 2020

It is already safe to assume that 2020 has been marked by several unique events in Ukraine: coronavirus, land reform, and other circumstances associated with the intensive legislative activity. It is worth noting that the laws regulating commercial trials were amended as well and such amendments may be divided into two groups: (1) amendments related to quarantine, (2) amendments not related to quarantine. Both groups of changes should be analyzed through the lens of its impact on the right to access to justice.


Non-quarantine amendments

On 15 January 2020 Ukrainian parliament adopted the Law No. 460-IX modifying commercial trials procedure, in particular:

-        the consideration procedure of judge rejection motions filed less than 3 days before the court hearing was changed;

-        the law reduced the list of cases requiring the obligatory provision of all case files to appeal court or Supreme Court in case of challenging the procedural rulings;

-        the law implements additional “cassation filters”, i.e. new conditions and requirements for the claim of cassation.

The first two groups of novelties may be deemed as positive legislative changes aimed at the reduction of procedural abuses, which is more than can be said of the newly adopted “cassation filters”.

In particular, before the adoption of the Law No. 460-IX, the grounds for a cassation appeal included incorrect application by the court of substantive law or violation of procedural law.

However, after the adoption of the Law No. 460-IX, the legislator clarifies that the violation of substantive or procedural law is the appropriate grounds for filing a claim of cassation solely if:

(1)   the lower courts ignored the conclusion of the Supreme Court made in a similar dispute;

(2)   the appellant provides reasonable grounds for the Supreme Court to derogate from the conclusion of the Supreme Court made in a similar dispute;

(3)   the Supreme Court has not made any conclusions legally binding in similar disputes;

(4)   violations of procedural law, listed in the Commercial procedural code of Ukraine.

The main purpose of the new “cassation filters” implementation is to relieve the Supreme Court and to enhance the Supreme Court as an institution solving only fundamental legal problems, as well as to establish the unified court practice.

Meanwhile, the desire to unify the court practice should not restrict the rights of the case parties, i.e. right to access to justice declared in article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms.

It is noted that the European Court of Human Rights provides an unambiguous answer on the matter of whether the establishment of different requirements to the cassation appeal violates the right to access to justice.

In particular, in the decision of the European Court of Human Rights in “Osman vs The United Kingdom” as of 28 October 1998 and “Kreuz vs Poland” as of 19 June 2001, the court stated that the right to access to justice is not absolute. It may be restricted, because the right of access to justice, by its nature, requires regulation by the state.

If the law defines the procedure for committing certain actions, such a procedure should discipline the applicants and prevent the process from entering a chaotic movement, as the right to a court is not absolute.

The domestic courts have repeatedly referred to the decisions of the European Court of Human Rights in “Osman vs The United Kingdom” and “Kreuz v. Poland” cases.

Thus, considering the conclusions of the European Court of Human Rights and the national courts, the establishment of additional “cassation filters” does not violate the right of persons to access to justice.

At the same time, it is important to note that these novelties increase the number and scope of actions to be taken by the Supreme Court at the stage of cassation proceedings commencement. After all, the Supreme Court must find out:

(1)  what are the grounds mentioned by the claimant as a ground to challenge the lower court decision?

(2)  whether the lower court decision applied the Supreme Court's conclusions made in similar disputes, or not?

(3)  whether the Supreme Court’s conclusions mentioned by the claimant are deemed to be considered by the lower court, or not?

(4)  and analyze all of the grounds reflected by the claimant in the claim of cassation

Anyway, the adoption of the Law No. 460-IX entails a significant increase of the issues to be found out by the Supreme Court before the cassation proceeding is commenced.

For instance, in the case No. 910/12727/16 the claimant referred to 16 conclusions of the Supreme Court and necessity to take such conclusions into account. The Supreme Court should decide whether all or each of these conclusions separately are sufficient to commence the cassation proceedings. That is after the adoption of the Law No. 460-IX the Supreme Court has much more activity on the stage of the cassation proceedings commencement.


Quarantine amendments

On 30 March 2020, the Ukrainian parliament adopted the Law of Ukraine No. 540‑IX "On Amendments to Certain Legislative Acts Aimed at Providing Additional Social and Economic Guarantees Due to Spreading of Coronavirus disease (COVID-2019)".

The Law No. 540‑IX, among other things, made amendments to the commercial procedural code of Ukraine, designed to regulate the procedure for holding court hearings during the quarantine period.

In particular, the key changes related to commercial disputes are as follows:

-        the courts are allowed to restrict the access to the courtroom for persons who are not parties of the trial, but if there is a threat to the life or health of persons;

-        the parties may participate in a court hearing via videoconference outside the courtroom;

-        procedural terms (deadlines) are extended until the quarantine expires.

All these novelties are implemented solely for the quarantine period established by the Cabinet of Ministers of Ukraine and will not be applied after its completion.

From one side, the Law No. 540‑IX provides the range of measures to support the sustainable functioning of the Ukrainian court system and to avoid suspension of the court proceedings during the quarantine period.

On the flip side of the coin, it provides more possibilities for procedural abuses by the parties to postpone the time for procedural actions and to delay the proceeding.

In fact, the judges have postponed the main part of court hearings in commercial disputes which had been scheduled from 11 March 2020 (the commencement date of the quarantine period).  Other judges have scheduled the court hearings so far after the quarantine period end date. And the only small number of court hearings went successfully with the personal involvement of the parties or their participation via videoconference.

Certainly, this state of affairs has had significant negative implications, especially from the point of the right to access to justice and fair hearing within a reasonable time.


Encouraging signs and hopes

As a result of the quarantine period, the court system is increasingly loading up with the number of unresolved cases.

Nevertheless, as of 12 May 2020, the Government of Ukraine commenced the stage of quarantine weakening, so we assume that in the near future the Ukrainian court system will follow the usual pattern.

As for the non-quarantine amendments, the parties should take into account new requirements to claims of cassation and process it according to current rules, since such newly adopted approach unlikely will change.


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