LAW FIRM DIRECTORY

Dispute Resolution

BOHDAN LVOV,
deputy President of the Supreme Court, President of the Commercial Court of Cassation as part of the Supreme Court

Indicative practice

 

We live in the third millennium and we’re not the first to try to award legal, reasonable and fair judgments. But it is difficult to invent something radically new now, and serious mistakes can be fixed. This is the very issue which we have to handle promptly.

In the past there were the Supreme Commercial Court of Ukraine (SCCU) and the Supreme Court of Ukraine (SCU). The point is not that they did not issue good judgments, but that they issued different judgments on the same issues. That is, there was no legal certainty, so no-one was confident that their rights were being protected. Therefore, now it’s not quite right to say that the new Supreme Court (SC) should develop a new practice. There can be no new judgment with every new judge. Judgments may be more or less clear, sometimes a little better or a little worse, but they cannot differ fundamentally in principle, since they are aimed at resolving a conflict in favor of the non-breaching party. The new Supreme Court should eliminate these gaps in the old practice, correcting its defects and errors. Practice cannot be generated in the space of one year. In civilized countries, it is formed over centuries, when each subsequent year fills the gaps of the previous one and after many years of work a comprehensive system begins to take shape. But this does not mean that we have to wait all these years. We need to get working now, especially since the issues of disputes also change depending on historical turning points. This can be exemplified by cases related to protection of intellectual property rights.

Until 2008, the number of cases of claims of collective management organizations (CMOs) increased, and they constitute the majority of disputes considered by the SCCU. In 2008, the Supreme Court of Ukraine indicated in the Resolution of the Plenum that the claims of such organizations in the interests of individuals shall be considered not by commercial courts, but by courts of general jurisdiction. When these organizations went to district courts, then, unfortunately, they faced misunderstanding because such courts did not understand what is intellectual property is and why compensation should be paid for violation of intellectual property rights... As a result, this category of cases practically "died", although the practice of their consideration anyway was to some extent generated. The new code attributed almost all cases on recovery of compensation for violation of intellectual property rights to so-called insignificant cases. Accordingly, the Supreme Court, in contrast to the SCCU, ceased to consider them. The courts of appeal, each of which generated its own practice within its own district rather than a single state one, became the closing stage for such cases. In February of this year we received a letter from copyright holders asking us to draw attention to the fact that the practice that the SCCU had once generated was being destroyed. The courts of appeal were not prepared to support it. We held a joint meeting with the participation of judges of all instances, copyright holders and business entities (possible offenders), where everyone had the chance to speak. We recommended that they express their arguments and objections in the statements of claim in a more qualitative way, and if a complaint is filed on a minor case, then they should expand the argument as to why the SC should agree to hear it. And if the judgment on such a case in a separate appellate district really differs from established judicial practice, then this is a good enough reason to take it to the SC, which we already have, showing directions for actual enforcement. Even if it coincided with the judgments of the SCCU, we still confirmed that the direction does not change and it’s worth following this path.

Out of less-well-known judgments, I would like to note truly new ones, not based on a formal approach to the law. For example, the judgment of the joint chamber of the Commercial Court of Cassation (CCC) as part of the Supreme Court, where a village council was a defendant in a dispute with state energy firm Naftogaz of Ukraine NJSC. Should a village council pay millions to Naftogaz of Ukraine NJSC for a constructed gas pipeline, the ownership to which it transferred to the state, though the works were actually carried out on behalf of the Cabinet of Ministers of Ukraine and under its obligations to provide funds in the future, which did not happen? The Commercial Court of Cassation, as part of the Supreme Court, went beyond the framework of a single agreement, examining the legal relations regarding construction, and awarded a fair judgment, refusing to satisfy the claim on the basis that this construction was carried out in the interests of the state and the village council under the agreement is not a beneficiary. In my opinion, this judgment corresponds to the rule of law. After all, a formal judgment could be awarded to collect money from the village council (the sum exceeds 20 years of its annual budget), but no one would carry it out. That is, Naftogaz of Ukraine NJSC would not receive its money, no-one would recognize the village council as a bankrupt either, but it would have the right to sue the Cabinet of Ministers of Ukraine. As a result, there would be several court proceedings but without the prospect that they would be properly executed.

There are already many interesting and resonant judgments adopted by the Grand Chamber of the SC (for example, on the issue of passports, payment of pensions to former employees of the Ministry of Internal Affairs, issues of jurisdictional and related disputes), which will reduce the artificially increased number of cases in the country as a whole and will, correspondingly, speed up the consideration of real cases, reduce the burden on judges, which will give an opportunity for more attention to be paid to each case and improve the quality of its consideration.

These judgments are indicative, and such separate small details will surely provide really positive results.