LAW FIRM DIRECTORY

Dispute Resolution

SERGEY BOYARCHUKOV,

He was born in Vinnytsia in 1976. He graduated from the Department of Law of Taras Shevchenko National University of Kyiv in 1997. From 1995 he was employed by Kyivenergo JSC, where he rose through the ranks from Senior Associate to Head of the Legal Department. Then he held the position of Head of the Legal Department at Energorynok SE. In 2003 Sergey Boyarchukov established the XXI Century Attorneys Association with Sergey Alekseev, which specialized in litigation. In 2005 the partners established Alekseev, Boyarchukov and Partners Law Firm. He is an attorney-at-law, insolvency practitioner of the 5th category, member of the Ukrainian Bar Association, the Ukrainian National Bar Association and the International Bar Association and a member of the Association of Crisis Management, the All-Ukrainian Self-Regulating Association of Arbitration Managers. Sergey Boyarchukov specializes in: bankruptcy, banking law, corporate law, and litigation.

 

Spectacular Presentation

"Choosing and developing a legal position is an art, which consists of the ability to present information and interpret the law from the correct angle"
— Sergey Boyarchukov, Managing Partner at Alekseev, Boyarchukov and Partners Law Firm, believes

— What is the latest news in judicial practice?

— From my perspective, among the most significant events that have taken place over the last year we can mention a tendency for the Supreme Court of Ukraine to hand down rulings, which fundamentally change practical application of certain rules. First of all in my work, I was faced with issues arising in cases of foreclosure and registration of title to mortgaged property, as well as cases in which the defendant is the Deposit Insurance Fund.

Among such issues is SCU ruling No. 6-1219tss16 of September 14, 2016, which runs counter to the judicial practice in the last four years. It deals with the foreclosure of mortgaged property by means of declaring title to the property. The ruling states that declaration of title to mortgaged property in a judicial procedure is prohibited under Article 37 of the Law of Ukraine "On Mortgage". In fact, this used to be the most effective way of settling a loan, since the mortgage holder retained the right to recover from the debtor the difference between the amount due and the cost of the mortgaged property, and thus fully satisfy their claims.

— Do you mean that the position of the Supreme Court of Ukraine has been straightforward over all the years, and the vector has changed dramatically in the last year?

— No, this is not the first time that the Supreme Court of Ukraine has changed its position on such cases. For example, initially the SCU considered such way to satisfy the creditor's claim to be exclusively out-of-court. Later, based on a comprehensive analysis of statutory provisions as a whole, it came to the conclusion that if the mortgage contract provides for the transfer of title to mortgaged property to the mortgage holder, the latter shall be entitled to exercise this right, among other things, in a judicial procedure.

And in 2016 the SCU returned to the original position of applying Articles 37 and 38 of the Law (on transfer of title to mortgaged property to the mortgage holder and the right to sell the mortgaged property to a third party), and concluded about the mortgage holder’s ineligibility to recognize the title to the mortgaged property in a judicial procedure.

— Does the SCU give any reasons for this position?

— The ruling states that transfer of title to mortgaged property to the mortgage holder or the sale of a property to a third party are out-of-court settlements of creditor’s claims, thus, Article 392 of the Civil Code of Ukraine is not applicable in this context, because it protects only the interests of those owners whose ownership title arose even before the trial. The Court, I believe, has carried out an incomplete analysis of the provisions of the mortgage law and the Civil Code of Ukraine, because in this case we are dealing with execution of the mortgage contract, and not the primary emergence of title.

— Why does the SCU still allow some of its ambiguous rulings to stand?

— In one of its rulings, for example, the Supreme Court of Ukraine has pointed out that it is legal, though made with improper application of the law (Article 37 of the Law). The reasons for such a contradictory decision remain under wraps. However, this gave cause for lower courts to deny banks claims, and to overrule existing decisions in favor of creditors.

This is not the only problem faced by the parties to a mortgage contract, when exercising their rights pursuant to the Law "On Mortgage".

Let’s suppose that the mortgage holder agrees not to take legal action to claim his rights, as stated above, and decides to foreclose on the mortgaged property by registration of title (if there is such a clause in the mortgage contract). It should come as no surprise that the former property owner may have a complaint against the state registrar who has carried out the act of registration. The debtor applies to a court to claim his rights.

Previously, courts adhered to the position that appeals against actions by the state registrar regarding real estate title registration were the sole prerogative of administrative courts, which was understandable. But suddenly, like a bolt from the sky, the resolution of the Supreme Court of Ukraine of June 14, 2016, adopted by the three chambers, came thundering (that is, it must be as objective and comprehensive as possible). This resolution represented a completely different position, namely: while contentious relations arose in connection with a breach of a civil contract (mortgage contract), and the dispute is not liable to public law, therefore it is subject to review in commercial or civil proceedings. The position is quite revolutionary. Moreover, it contradicts the Code of Administrative Legal Proceedings of Ukraine, which clearly states that if one of the parties to a dispute is an authority, agency or public officer, the dispute falls within the remit of an administrative court.

According to the Supreme Court, although the defendant in the case is the state registrar, it is the lender’s decision on foreclosure on the mortgaged property that is being appealed through the prism of the state registrar’s actions. Such a position can be manipulated in the hands of unscrupulous debtors.

— How can such manipulations be avoided?

— In my opinion, the focus should be the subject of the dispute. If you appeal against the illegal actions of the registrar, then this is an absolute administrative jurisdiction. An authority, agency or public officer, taking advantage of government power, violates the actual registration procedure. Such a dispute definitely belongs to public law.

In the same case, if the subject of the appeal is the actions of lender, completed with registration of title through the state registrar, there are no public relations. So it would be reasonable to appeal to economic court.

— Are there any other pitfalls in this resolution?

— The position adopted by the SCU has been framed in a perfunctory manner, and the result of its application can have dire consequences. After all, administrative disputes have a six-month term for filing a claim, while in economic and civil matters the general statute of limitations sets a period of three years. Accordingly, unscrupulous debtors who have failed to win the suit in administrative proceedings can initiate a retrial, but in a different court, using the position of the SCU.

— How do lawyers manage to adapt to inconsistent judicial practice?

— This is the point of jurisprudence as a science for lawyers to be able to maneuver skillfully around the nuances of law-enforcement. Citing the same provisions of the law, we can arrive at different solutions, sometimes completely contradicting each other, forming ambiguous judicial practice. Choosing and developing a legal position is an art, which consists of the ability to present information and interpret the law from the correct angle, as well as convincing the court and sometimes other trial participants that your opinion is the only right one under the circumstances. After all, we studied the science of law so as to skillfully find solutions in the difficult realities of the Ukrainian legal system.