"Dawn Raids Stop" Laws: Where are We Now on Countering Pressure Exerted on Business?
The shortcomings and discrepancies that can be found in Ukrainian laws as well as the proper operation of the Ukrainian judiciary and other law-enforcement agencies have been and continue to be viewed as factors affecting the level of the business climate and investment coming into Ukraine.
At the beginning of 2016 the Business-Ombudsman Council summed up the most pressing issues in this area in its systemic report, referring, inter alia, to the unlimited terms of pre-trial investigation, uncivilized searches, impossibility for companies, subject to criminal proceedings, to effectively protect their rights as well as the lack of venue to hold law-enforcement officials personally liable in the event of unlawful actions.
These recommendations were widely discussed and in majority implemented into legislation in one way or another. The amendments were made to several iterations and were advertised by the government as easing the burden on business within criminal proceeding, inter alia, by introducing additional rights and safeguards.
Rights and safeguards important for business include:
— the right to an attorney at any stage of the search and right to its video recording;
— inadmissibility of evidence collected during a search conducted with certain violations;
— possibility to challenge a failure to act (e.g. failure to return property that was temporarily seized in the course of a search);
— right to challenge the reasonability of terms within a criminal proceeding or to request to conduct an investigation within a shorter period;
— possibility to request closure of proceeding if no-one was served with a notice of suspicion within the established term;
— right to challenge the notice of suspicion (only for new cases registered after 15 March 2018);
— right to request closure of "duplicate" proceedings (if another proceeding regarding the same actions was closed earlier on certain grounds);
The list seems impressive, but the question remains whether the above changes were sufficient to counter systemic issues regarded as obstacles to conducting normal business activity. We will try to answer this question below.
Searches
Brutal and often aimless searches, which regularly hit news feed, disturbed the business activities of companies and reduced the investment and business climate in Ukraine. Thus, the majority of the above changes were devoted to their civilization. New provisions, introducing, among others, mandatory video recording and the requirement to allow an attorney to participate in the search at any stage received high praise.
The conducting of searches became in many instances more aligned with the law and the number of barbaric searches fell. However, well-written provisions could not stop an investigator in charge of a search from switching off his camera or closing a door in front of an attorney.
Although the new changes didn't eliminate the problem completely, they have brought one rather unexpected result. Now, based on the course of a search and nature of violations, one can to a great extent predict the true aim of an investigation — gathering admissible evidence or arranging "tough times" for a company.
Further changes attempted to motivate law-enforcement officials to take the high road by introducing a new "stick" — the right of recourse to such officials if damages caused by them were recovered from by the state. Nevertheless, such a right can only be enforced if officials are brought to disciplinary or criminal responsibility — which in practice is lengthy and burdensome. This provision has many pitfalls and limitations, so we don't expect it to be effective.
Terms of investigation
Everlasting criminal investigations targeting business are a widespread practice for Ukraine. Companies which were very busy responding to investigative actions over the years, had no right to request closure of a case due to the unlimited terms of a pre-trial investigation, and it was impossible to get certainty when and whether this would end.
The problem was addressed by establishing precise limits of pre-trial investigation from initiation of a criminal proceeding and to serving a notice of suspicion (i.e. 12 or 18 months depending on the gravity of the criminal offence).
Further new ground to close criminal proceedings (and the rights to request closure) was introduced (i.e. due to expiry of the term of pre-trial investigation). Finally, the procedure for prolonging the above term involving an investigative judge was set out.
The above changes apply only to proceedings initiated after 15 March 2018, so their implementation remains to be seen in practice, as the irst proceedings will hit their limits in March 2019.
In general, the effect of new changes shall be positive, as they could cut the number of groundless criminal investigations. Although the above prolongation can be granted repeatedly, defense obtained the venue to regularly challenge the terms and actions of investigators. But once again, implementation is the key here. In practice investigators are trying to avoid precise terms by registering new episodes within proceedings initiated before 15 March 2018.
Furthermore, in some cases new changes may backfire. For example, in criminal proceedings initiated in the interest of a company (e.g. a company was defrauded), an investigator may fail to apply for prolongation and then close a criminal proceeding due to expiry of pre-trial investigation terms.
The changes also provided for an alternative response to the issue of long-lasting criminal proceedings. Namely, legislators envisaged the opportunity to challenge the reasonability of terms within a criminal proceeding (i.e. terms of investigative actions as well as term of pre-trial investigation) to the investigative judge. The insignificant practice available so far shows that there's no unified approach to such claims. Some judges only set a term for an investigator to perform procedural actions (e.g. to render final decision within a case), while others also determine the nature of the action (e.g., to close proceedings).
New status in criminal proceedings
To address the issue regarding lack of rights available to a business within criminal proceeding, the companies subject to investigative and other procedural actions received new status within such proceedings (i.e. person whose rights or interests are being restricted).
This new status enables the inactivity of an investigator to be challenged, request closure of a criminal proceeding (on limited grounds) and for their conduct within reasonable terms.
Even such limited scope of rights is a step forward in ensuring the rights of businesses. At the same time, the right to review case materials, which is crucial for enjoyment of other rights within a criminal proceeding, was not granted. Furthermore, legislation does not provide for the definition of "restriction of rights", thus investigators/ prosecutors as well as judges may question such status and accept motions on a case-by-case basis.
Challenging notice of suspicion
A less obvious but still relevant problem concerned issuing groundless notices of suspicion, which allowed an investigation to take more aggressive steps regarding a certain person. Recent changes envisaged the right of a suspect to challenge such notice, but only if proceeding was initiated after 15 March 2018. The above limitation was heavily criticized and in practice remains unresolved.
Furthermore, enjoyment of the above right is restricted by the fact that the majority of judges are not likely to look at the substance of the case. Practice suggests that in majority of cases the scope of examination by judges is limited to procedural matters of issuance and serving of notices.
What next?
Most of the above changes are positive but they are, to a large extent, limited by exceptions, time constraints and practice. Some pitfalls in previous amendments can be cured by making more changes to legislation. Examples include: more detailed regulation of the seizure of computer equipment during searches, right of a defense party to receive an official video recording of the search; introduction of adequate personal responsibility of law-enforcement officials and elimination of discriminatory time restrictions.
The limited effectiveness of numerous attempts to improve the situation — internal law-enforcement instructions, resolutions of meetings of senior government officials with business, recommendations, three laws — shows that the root cause of problems is not actually in legal norms but in the attitude and intentions of investigative authorities.
Thus, in our opinion, the first thing to do to get a breakthrough is not only new amendments, but rather work with the staff of law-enforcement agencies to create a new philosophy leading to a totally new approach to pre-trial investigations and performance of investigative actions.
