Dispute Resolution

L.I.GROUP law firm partner

Born in 1985 in Kryvyi Rih. Graduated from the National Technical University of Ukraine “Kyiv Polytechnic Institute” (NTUU “KPI”) in 2008 with a degree in Law. Currently studying on an MBA programme at the Edinburgh Business School of Heriot-Watt University. 

Began his legal career in 2006 by participating in the “Students for the Parliament of Ukraine” programme as a legal intern in one of the Committees of the Ukrainian Parliament. President of the All-Ukrainian Non-Governmental Organisation Association “Legal Initiatives”. Has been successfully providing legal support for a number of large projects in banking and other business spheres for several years.

Practice areas: Litigation, bankruptcy, international arbitration

Priority fields

┬źDispute resolution and, in particular, debt collection in a bankruptcy are currently the most important legal practice trends in Ukraine┬╗, notes Artur Megeria, partner at L.I. GROUP law firm

— What kinds of legal services are most frequently requested by your clients?

— Most requests from clients deal with dispute resolution, namely debt collection services, property disputes, corporate disputes as well as bankruptcy procedure disputes. Besides, a considerable amount of work relates to support for registration of title to real property, including mortgage clause, and judgment execution support within execution proceedings.

— Why are dispute resolutions the most in-demand services provided by law firms in Ukraine?

— These services have become popular from the time that the first courts appeared and they always will be. But in Ukraine this particular service is especially of vital importance due to the political and legal instability which gives law breakers (e.g. unscrupulous debtors, raiders) opportunities, those resorting to abuse of legal “gaps” and corruption at all levels and individuals who violate the rights and property of subjects present in the business environment. 

And it is quite a natural result as nowadays in Ukraine corporate disputes, property disputes, banking disputes, debt collection services are still front and centre and, perhaps things will always be this way. Thus, it makes clients give their preference to experienced legal experts who have already proved to be successful in judicial practice, especially when it comes to large and international companies which deal with big financial flows.

— What legal views are now forming the grounds for judicial practice in loan disputes?

— As to disputes resulting from legal relations tied to credit, courts of different resorts have come to a single practice in making decisions on credit agreement invalidation upon foreign currency credit extension, bond termination, credit agreement invalidation upon other grounds, etc.

Foreign currency credit extension, provided that the banking institution has a general license for foreign currency operations, is absolutely legal, and courts deny a claim of credit agreement invalidation upon this ground.

According to the view of the Supreme Court of Ukraine, which is reflected in the Resolution of the Plenum of the Supreme Economic Court of Ukraine, the guarantee shall cease if the creditor fails to submit the surety requirement for the return of the amount owed over the course of six months from the date for performance of the obligation in its entirety, rather than a particular part of it (next payment).

Furthermore, current judicial practice holds the view that invalidation of a credit agreement cannot be grounded on the absence of a decision by a legal entity’s authorized body (general meeting) on granting consent to close the credit agreement.

Thus, it follows from the above that, as for credit legal relations, judicial practice acts in the main on a creditors rights protection basis, standing up against illegal demands made by borrowers aimed at abusing and evading the repayment of loans.

— How often does a credit dispute turn into bankruptcy proceedings?

— Very often. As a rule, when a debtor, with the help of certain legal avenues, tries to evade fulfilling credit obligations, sooner or later they start a bankruptcy proceeding as it gives an opportunity to freeze debt collection due to the moratorium provided by the Law of Ukraine “On Restoring Debtor Solvency or Declaring a Debtor Bankrupt”. And then, by abusing procedural opportunities, they delay a trial and/or try to alienate property at a low price for their “own” buyer. There are many such ways, and currently in Ukraine only the lazy will not litigate.

— What should a foreign investor keep in mind when taking part in court proceedings on the territory of Ukraine?

— First of all, an investor should consult a Ukrainian law firm which specializes and, proves to be successful, in a particular sphere of activity and knows all practical aspects and “hidden” dangers. For example, if it is bankruptcy proceedings, address a law firm working successfully in this field that is being recommended by other investors. The main criterion for making a choice is the capability of a firm to solve the client’s problem (i.e. its record, a list of projects undertaken). At least for us it is a matter of principle, as we are result-oriented.