Ukraine: Members Of Parliament Traditionally Postponed Cancelation Moratorium, But The Supreme Court Has Not Stated Its Position Yet

Last Updated: 26 February 2019
Article by Yulya Stusova and Yulia Shyshka

On December 20, 2018 the Ukrainian Parliament repeatedly prolonged so-called land moratorium for the next year. At the same time, the Constitutional Court de facto abstracted from assessment thereof for compliance with the Constitution; in its turn, Strasbourg recognized such ambiguity as a violation of the right to property. However, the Supreme Court has not declared its position yet.

Formal postponement

By voting for draft law No. 9355-5, Members of Parliament (MPs) prolonged prohibition in respect of alienation of land plots and agricultural land plots (units) until 01/01/2020. Like before, it is only allowed to pass over the land as inheritance, seize it for public needs or in exchange for other land plots.

After the voting, some MPs requested to cancel respective decision, which suspended transfer of the document to the President for signing. However, the initiative was not supported and on 04/02/2019 the law was signed by the President, officially published and became effective as of 07/02/2019.

At the same time, it does not mean that the moratorium was not in effect in the period from 01/01/2019 till 07/02/2019 in Ukraine and during this period it was possible to alienate agricultural lands. Provisions of the Land Code (clauses 14 and 15, section X “Transitional Provisions”) stipulate that moratorium will cease to have effect once the law on agricultural land turnover becomes effective; the latter has not been thus far, although relevant draft laws have repeatedly been registered with the parliament. For example, two recent draft laws with respect to the foregoing issue were registered in 2016 and 2017, but did not pass even the first reading. Thus, in absence of the respective law, there are no grounds to discuss cancelation of the moratorium.

What is crucial for the land turnover?

Law No. 9355-5 provides that by 01/03/2019 the Cabinet of Ministers shall prepare a draft law on the turnover of agricultural lands and submit it to the Ukrainian Parliament for consideration. However, we consider it to be quite unrealistic that a proper document will be ready in 2 months. Until now, issues to be regulated by a special law are actively discussed.

Considering successful experience of other countries, domestic regulatory framework and national public demand, we may note that the national land market may be launched as soon as following issues are resolved by law:

  • stages of launching the agricultural land market;
  • preventive mechanisms, which would facilitate acquisition of a title to land by citizens of Ukraine in the first place, by territorial communities, state and Ukrainian enterprises;
  • procedure for calculation of fair price for land plots to be alienated, as well as for competitive terms of sale and purchase of land plots;
  • limited possibilities to change designated purpose of agricultural lands (at least for a certain period).

In addition, considering the public sentiment, the amount of agricultural lands (in hectares) to be owned by one person and minimum area of such a plot may be set. Relevant provisions of the draft law would serve as arguments against pessimistic expectations of opponents to cancelation of the moratorium. Since the latter expect that lands will be mostly owned by large oligarch landowners or foreigners and anticipate a drastic increase of number of hostile land takeover.

However, Ukraine has all the prerequisites for gradual opening of the land market given that the “campaign” for cancelation of the moratorium has been lasting for several years by now. A group of MPs has already twice initiated proceedings for recognizing Land Code provisions related to moratorium as incompliant with the Constitution. However, the Constitutional Court two times rejected commencement of proceedings under formal grounds, hence failed to resolve whether the moratorium was constitutional.

ECHR Guidelines

Last year the European Court of Human Rights expressed its opinion on whether the moratorium was lawful. On May 22, 2018 it delivered a judgment in the case of Zelenchuk and Tsytsyura v. Ukraine, where the European Court held that there had been a violation of Article 1 of Protocol No. 1 to the Convention for the Protection of Human Rights and Fundamental Freedoms, namely of a right to peaceful enjoyment of one’s possessions.

On 22/08/2018 this judgment became final. In this judgment the ECHR obliged Ukraine to take necessary legislative or other measures to ensure a fair balance between the rights of agricultural land owners and public interests. Despite the fact that the ECHR did not set any particular deadlines for taking such measures, it was expected that a relevant judgment would enhance legislative changes.

Unfortunately, the ECHR judgment did not prevent prolongation of the moratorium until 01/01/2020 by MPs. However, it became an incentive for active actions of landowners who believed such a prohibition was illegal.

Property — through judicial procedure

Immediately after the ECHR judgment became final, a number of applications were lodged; thereby agricultural land owners defend their right to alienate the land with reference to the European Court’s conclusion on unlawfulness of the moratorium. Case-law of the European Court of Human Rights must be applied by national courts as a source of law. Judgments on some of such cases became effective, although the Supreme Court has not expressed its position thereon yet.

Thus, case No. 237/3292/18 is of particular interest; it this case Mariinskyi District Court of Donetsk Region considered claims for recognition of title to agricultural land plot under a debt obligation recovery. Given that the debtor in the case failed to return funds lent by the creditor within the agreed deadline, the latter filed a complaint to the court. In terms of case consideration, parties entered into a settlement agreement, under which the debtor transferred a land plot to the creditor instead of funds.

First-instance court in this case here referred to ECHR judgment in the case of Zelenchuk and Tsytsyura v. Ukraine and conclusions set forth therein on the unlawfulness of the moratorium as a source of law to support its decision whereby it approved the settlement agreement. Ruling to approve settlement agreement was not challenged in courts of other instances, therefore we are not aware of the Supreme Court’s opinion.

Case No. 442/6324/18 considered by Drohobychi City District Court of Lviv Oblast is to become a benchmark case in terms of applying ECHR judgment by courts. Notary’s refusal to certify agricultural land plot sale and purchase agreement was challenged in this case here.

By its decision dated 13/12/2018, first-instance court rejected the claim on based on the fact that the issue of moratorium lawfulness cannot be resolved in a particular civil case, and must be regulated by law. The decision is currently challenged in the court of appeals, but it is most likely that the final decision in this case will be made by the cassation court.

Moreover, by a ruling dated 23/01/2019, Cassation Civil Court of the Supreme Court referred case No. 227/1506/18, related to invalidation of an agreement of exchange in respect of agricultural land plot, to the Grand Chamber for consideration. In a respective ruling the court stated that “in order to ensure law development and building up a uniform approach, the Grand Chamber of the Supreme Court could express its position, based on which persons interested in sale of their land were to prove that their case was similar to Zelenchuk and Tsytsyura case and could obtain a court approval to sell it.”

Thus, we hope that the supreme judicial authority will shortly express its position on the issue of applying ECHR judgment in the case of Zelenchuk and Tsytsyura v. Ukraine by Ukrainian courts, which will play a key role for agricultural land market in our country.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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