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A new type of contractual relations for IT-Gig-contract

On July 15, 2021 the Verkhovna Rada of Ukraine adopted the Law “On Stimulating the Development of the Digital Economy in Ukraine” (on the implementation of the Diya City). Among other things, according to the legislator, the stimulation of the digital economy will occur through the introduction of a new type of contractual relationship between the employee-gig-contract for companies that are residents of the Diya City.

Today, the IT industry operates under two types of contractual relationships – employment contracts and civil law contracts with FOPs. So, the companies choose either to pay significantly higher taxes and conclude employment contracts or risk getting fined more than UAH 100,000 by the State Labour Inspectorate for every concealed case of employment and transfer their employees to FOP (according to statistics, there are over 200 thousand of them in Ukraine, and the annual growth is about +30 thousand).

Under what conditions can a gig-contract be signed?

  • Gig-contracts are not registered. But in order for a company to have the right to enter into such contracts with employees, it must become a resident of the Diya.
  • In the period after the conclusion of the contract and before the start of the specialist’s work, the company must report the conclusion of the contract to the tax authority. 
  • In turn, all insurance information of the specialist under the contract is immediately entered into a personal account on the website of the Pension Fund of Ukraine.

Content of the gig-contract

According to the general rule of “freedom of contract”, the parties are free to form the content of the gig-contract, in particular the functions of the gig-specialist, the amount of remuneration (fixed for a certain calendar period or depending on the volume of tasks performed), the possibility to determine the currency of remuneration, methods of establishing and coordinating tasks, information exchange and other.

In addition, if the parties in the gig-contract do not establish other conditions, by default, the non-property intellectual property rights for the work of the specialist belong to the company.

Also, the specialist receives social guarantees provided by the labor law: the right to rest at least 17 working days per year, sick pay, as well as a break in work due to pregnancy and childbirth.

However, such a contract must be concluded for a clearly defined term (the parties may agree on its automatic extension), and it must also be specified that during the first 3 months of the contract any party has the right to unilaterally terminate it by informing the other party not later than 3 calendar days before the date of termination. If such party is a resident of Diya City, he has the right to terminate the contract without waiting 30 days, but in this case, he must pay monetary compensation to the specialist.

If one of the parties wishes to terminate the contract after 3 months, the contract can be terminated with at least 30 days’ notice to the other party.

And it is important: in order for a civil law contract between a City Action resident and a specialist to be considered a gig-contract, it must explicitly say so.

What about foreign specialists?

As for foreign gig-specialists, the legislator also simplified the procedure for legalizing a foreigner’s stay in Ukraine to a minimum. If previously a foreign worker had to obtain a work permit, and then to obtain a temporary residence permit, the legalization of a specialist’s stay in Ukraine is based on applying to the migration service for a temporary residence permit, and the work permit is obtained only at the request of the company itself.

Tax rates and reporting

The tax burden of the specialist consists of the personal income tax (PIT) rate of 5%, the unified social contribution (UST) at the rate of 22% of the minimum wage and the military levy at the rate of 1.5%.

Full administration of the tax burden (payment of taxes and filing of reports) is carried out by the company resident of Diya City.

The use of gig-contracts by residents will allow them to reduce the tax burden, avoid penalties from the State Labour Inspectorate for concealing employment relationships, whiten the model of building contractual relationships with employees, which as a result will increase the market capitalization of the company.

 

Patriot.Legal provides legal and auditing support for obtaining residency for Diya City, preparing reports and conducting independent audits.

Svyatoslav Lindyuk, an attorney with Patriot.Legal’s Litigation Representation and Corporate Law practice

Instructions on how to become a Diyа resident

Last week, the Verkhovna Rada of Ukraine adopted a law that amends the Tax Code of Ukraine regarding the tax burden on future Diy residents. The changes will take effect on January 1, 2022.

According to the adopted amendments, the following tax burden is set for Diya City residents:

For employees:

– 1.5% military levy;

– 5% tax on income of an individual (including for employees under an employment contract);

– 22% of the single social tax on the minimum wage.

On company:

Residents may be subject to income tax (18%) or withholding tax (9%).

If the resident makes distributions no more than once every two years, the dividends are not taxable.

At the beginning of 2022 Cabinet of Ministers and the Ministry of Finance are expected to complete the formation of by-laws, to form a Register of residents, as well as approve the Commission, which will carry out the examination of applications for residency.

The Diya City should be fully operational in late January – early February. Here are the basic requirements for acquiring and maintaining the status of a resident of Diya.

Who can become a resident of Diya City?

  • Registered legal entity in accordance with the legislation of Ukraine;
  • Average monthly salary of employees – not less than 1200 euros;
  • The implementation of one or more activities defined by part 4 of Art. 5 of the Act;
  • At least 90% of the income must be qualified (derived from the activities defined in part 4 of Art. 5 of the Act);
  • The applicant company must have no negative criteria (including the company is not registered in Ukraine, is unprofitable, has not disclosed the beneficiary owners, has shares owned directly or indirectly by the Russian state or its citizens).

Registration

In order to register, residents of Diya City must:

  • submit an application to the Ministry of Digital Transformation of Ukraine;
  • to indicate information about the chosen taxation system. If the applicant did not specify them, it is considered that the company has chosen income tax (18%);
  • have certification that the company meets the residency criteria and that there are no negative criteria;
  • give information about the amount of the applicant’s income for the previous year.

The Ministry considers such an application within 10 days. If on the 11th day no decision has been received on the submitted application – the company is considered to be a resident of the Diya.

…not later than in six months.

Not later than the last day of the sixth calendar month following the calendar month of acquiring residency, the company must submit to the Ministry 

– аn initial report – a report of compliance with all residency requirements at the end of the three full months following the acquisition of residency status;

– independent auditor’s report upon examination of residency statements set forth in the initial report.

Annual Reporting

Every year, no later than June 1, a resident must submit to the Ministry of Foreign Affairs an annual report on residency eligibility for the preceding year (annual report), as well as an independent audit opinion regarding the review of the assertions made in the annual report.

The first annual report is for the period from the date of residency until December 31 of the calendar year.

 

Patriot.Legal provides legal and auditing support for obtaining residency in Diya City, preparing reports and conducting an independent audit.

Svyatoslav Lindyuk, Attorney of Litigation and Corporate Law Practice at Patriot.Legal

Procedure of the penalties under Article 336 of the Code of Civil Procedure

When initiating a property dispute, the lawyer, in addition to assessing the victory of his legal position, should think about the prospective recovery of funds in case of victory. The classic scheme is to expect when the debtor will receive at least some money from the counterparties or his debtors on the arrested bank accounts.

However, there is another way.

The Commercial Procedure Code of Ukraine (hereinafter referred to as the Code of Civil Procedure of Ukraine) introduced in 2017 a new mechanism for enforcing a court decision on recovery of funds – through recovery of funds from third parties who have debts to the debtor.

Such a mechanism is provided by Article 336 of the Code of Civil Procedure, which provides for the possibility of foreclosure on funds belonging to other persons and real estate, the ownership of which is not registered in the prescribed manner.

The application of such a procedure is relevant when enforcement proceedings are opened, seizures are imposed on the accounts, but debt collection is not carried out because of zeros on the accounts.

Recovery procedure

The first thing you need is a decision that has come into force to recover money from the debtor.

The next most important step is to search for the undisputed debt or to confirm the debt by a court decision that has entered into force that third parties have before the debtor.

After such a debt has been identified, we apply to the court – submit an application for recovery of funds belonging to the person who has a debt to the debtor. Such an application is submitted as part of your case, in which a decision was made to recover the money. Such a statement must indicate the decision on the basis of which the debtor is recovered, evidence of non-enforcement of the judgment on the date of application, evidence of a valid undisputed debt of a third party to the debtor or a judgment from which such debt is seen.

In its conclusions, the Supreme Court notes that the subject of such applications is 1) non-repayment debt to the debt collector and 2) the fact that there is an actual third party debt to the debtor, as evidenced by relevant evidence (including court decisions).

We recommend you to contact a professional lawyer in such procedures as finding the debt of third parties to the debtor, compliance with all procedural aspects, obtaining evidence of the relevance of the debt, as well as the correct wording of the claim in such a statement . 

In addition, the costs of his services can also be indicated as the costs of professional legal assistance, which are reimbursable by the debtor when filing the Application.

 

Author Lindyuk Svyatoslav, lawyer of corporate law practice and court representation Patriot.Legal.

Patriot.Legal is a company that provides legal and audit services.

Patriot.Legal opens new direction of registration of companies in foreign jurisdictions

Continuing its growth and rapid development, the Patriot.Legal team announces the expansion of corporate law practice and opens a direction for registration and support of business in foreign jurisdictions.

Today Patriot.Legal carries out registration of companies in the jurisdictions of Poland, Portugal, Great Britain, Slovakia, Estonia, USA (Delaware). The list of jurisdictions is constantly expanding.

Registered companies in foreign jurisdictions will allow you to structure your business reliably, in particular, use additional mechanisms to protect assets from raider seizures and illegal activities of law enforcement agencies, attract cheap loans to expand your business, and expand the list of counterparties.

We will be glad to help you expand your business to new markets.

 

Patriot.Legal is a legal and audit services company

Stopping of execution of the contested court decision in the economic process

Any proceeding involves the possibility of going through three instances (first instance, appeal, cassation) during the resolution of the dispute.

In commercial proceedings (as in other types of legal proceedings), the decision comes into legal force from the date of its adoption by the court of appeal (if an appeal was made).

If the court of appeal has made a decision to recover from you a certain amount of penny funds, but you do not agree with such decision and there are grounds for a cassation appeal, the issue of stopping the execution of the decision during the consideration of the case in the cassation instance becomes relevant.

What is it for? After the full text of the decision of the appellate instance has been drawn up and it will be published in the Unified State Register of Court Decisions (hereinafter referred to as the USRSR), the recoverer can apply to the court of first instance with an application for the issuance of a court order to collect pennies. The court of first instance considers such an application within five days from the date of its receipt. At the same time, the court of first instance may not wait until the case is received by it, but issue an order on the basis of the existing published resolution in the USRCD.

Immediately after the claimant receives such an order, he can immediately begin to take action to enforce the collection of penny funds, to seize accounts and property. In fact, even in 5-7 days, you can collect funds.

So that your accounts and property are not arrested, and then, with a positive decision of the cassation instance, you do not have to take forced actions to return the collected funds – you must act without delay.

How to act

1. Do not delay filing a cassation appeal.

Of course, sometimes you want to thoroughly write out and deduct a cassation appeal, and therefore this process is often stretched out for all the 20 days provided for a cassation appeal, and there you can additionally restore the deadlines from the date of delivery of the decision. But if you want to stop the execution of the court decision, such a legal delay will not be in your favor, since during all this time the decision is already subject to execution.

Therefore, immediately after the announcement of the appeal ruling and patents, it is necessary to prepare the basis for a future cassation appeal, and after the publication of the complain in the USRCD, immediately within 1-3 days, prepare and file a cassation appeal (at the same time, do not forget to indicate the grounds for cassation appeal provided for by Article 287 of the Code of Civil Procedure of Ukraine) …

2. Submit an application to suspend the execution of the judgment.

Such an application can be filed separately from the statement of claim or you can ask for the stopping of the execution of the court decision in the cassation appeal. Stopping the execution of a court decision or stopping its action must be motivated and contain reasonable grounds for suspending the execution of the court decision, which is confirmed by evidence.

The court of cassation will not stop the execution of the contested decision without proper and sufficient grounds to do so. In its jurisprudence, the Supreme Court indicates that the motives for stopping the execution of a decision or stopping its action, among other things, may be the opening of enforcement proceedings on account of the compulsory execution of court decisions, the impossibility of turning the execution of a decision in case of its cancellation or the need to take additional measures to restore violated rights …

So, in our own practice in one of the proceedings, the grounds for stopping the execution of the court decision were the substantiation of the materiality of the collection amount (almost UAH 2 million), for which enforcement proceedings were opened and the debtor’s accounts and property were seized, which led to the complication of his economic activities.

In another proceeding, such grounds for stopping the execution of the decision were the justification for open enforcement proceedings, and also that the recoverer himself has an open enforcement proceeding, in which he acts as a debtor, which has not been fulfilled within 3 months. As a result, not stopping the execution of the court decision will lead to the impossibility of turning the execution of the decision, since the recoverer does not have funds, and the recovered funds will go to repay the recoverer’s debt in another obligation.

3. Communication with performers.

This action is the most subjective, since it largely depends on the will and desire of the executor not to rush to issue a decision to suspend the execution of the court decision or refusal to transfer funds to the claimant.

If, however, the court of cassation issued a decision to suspend the execution of the court decision, such a decision must be immediately provided to the executor and demand from him to cancel the arrests.

As a result of quick and reasonable actions, it is possible to prevent the execution of the court decision and continue the usual business activities during the consideration of disputes in cassation.

The author is Lindyuk Svyatoslav, the lawyer of the corporate law practice and legal representation of Patriot.Legal.

Patriot.Legal is a company that provides legal and audit services.

Protection of rights and interests in court. Is it so long and expensive?

Everyone is used to think that litigation is a) expensive and b) long, and therefore there is a little hope that through the court it is possible to restore violated rights quickly and unprofitably .
What is the current and long-term situation in commercial courts, how much will it cost to file a lawsuit and how long will it take for the court to consider the lawsuit?

Is it expensive to litigate?

The costs of the proceedings can be divided into two parts: the payment of court fees and the costs of professional legal assistance ( a lawyer).
Court fee. If the claim in your case is the recovery of funds (property claim), you must pay 1.5% of the amount of the claim. For example, if you want to collect a debt from a counterparty for unfulfilled obligations under the contract in the amount of UAH 1 million, you need to pay UAH 15,000 court fees.
If the claim is of a non-material nature (for example, invalidation of the contract, invalidation of the decision of the general meeting of the business entity, etc.), the amount of the court fee is 1 subsistence level per able-bodied person (UAH 2,189 as of the date of publication).

Lawyer. Another category of costs is the services of a lawyer. The services of a lawyer in the court of first instance, as a rule, start from UAH 10,000. This amount will include analysis of the case, formation of a legal position, writing and filing a statement of claim, participation in court hearings. The formation of the cost of a lawyer’s services depends on the complexity and circumstances of the case, as well as the amount of the dispute.
Until November 2017, the payment for the services of a lawyer was non-refundable, and unlike the court fee, you could not collect these costs from the defendant. In the adopted amendments to the procedural legislation, the legislator provided for the possibility of recovering from the losing party in the dispute the costs of professional legal assistance (lawyer). In order to exercise this right, it is necessary to submit a preliminary calculation of court costs in the filed statement of claim, and not later than 5 days after the court decides to submit to the court a calculation of court costs, which must include an act of services and a contract .

 

How long to litigate?

It must be said that the courts of commercial jurisdiction most clearly adhere to the deadlines for proceedings. Disputes can be considered by the Commercial Court in the form of general and simplified (without holding court hearings) proceedings.
The deadline for consideration of the case by the court of first instance of the general proceedings is 105 days: within 5 days from the date of filing the claim proceedings are opened, 60 days are given for preparatory proceedings (but in exceptional cases may be extended for 30 days), within 30 days the essence of the dispute, and finally within 10 days from the date of the decision is its full text.
The maximum consideration of the term of consideration of the case in the simplified procedure is 70 days: within 5 days from the date of filing the claim proceedings are opened, within 60 days the dispute is considered, and at the end within 5 days the full text of the decision.

Conclusion. There is no doubt that the best way for the parties to resolve a dispute is through mediation (dispute settlement procedure with the participation of a neutral mediator) and pre-trial settlement of the dispute. This will save time, nerves and can maintain a good relationship with the contractor. But there are cases when the other party does not want to go to conciliation, and in such cases the legal way to protect their rights is to go to court. If you dare to defend your rights in court, such protection in the commercial court of first instance will be about three months, and at the end of the trial, in case of victory, you will be reimbursed.

Author Lindyuk Svyatoslav, lawyer of corporate law practice and court representation Patriot.Legal.

Patriot.Legal is a company that provides legal and audit services.

A new type of contractual relations for IT-Gig-contract

On July 15, 2021 the Verkhovna Rada of Ukraine adopted the Law “On Stimulating the Development of the Digital Economy in Ukraine” (on the implementation of the Diya City). Among other things, according to the legislator, the stimulation of the digital economy will occur through the introduction of a new type of contractual relationship between the employee-gig-contract for companies that are residents of the Diya City.

Today, the IT industry operates under two types of contractual relationships – employment contracts and civil law contracts with FOPs. So, the companies choose either to pay significantly higher taxes and conclude employment contracts or risk getting fined more than UAH 100,000 by the State Labour Inspectorate for every concealed case of employment and transfer their employees to FOP (according to statistics, there are over 200 thousand of them in Ukraine, and the annual growth is about +30 thousand).

Under what conditions can a gig-contract be signed?

  • Gig-contracts are not registered. But in order for a company to have the right to enter into such contracts with employees, it must become a resident of the Diya.
  • In the period after the conclusion of the contract and before the start of the specialist’s work, the company must report the conclusion of the contract to the tax authority. 
  • In turn, all insurance information of the specialist under the contract is immediately entered into a personal account on the website of the Pension Fund of Ukraine.

Content of the gig-contract

According to the general rule of “freedom of contract”, the parties are free to form the content of the gig-contract, in particular the functions of the gig-specialist, the amount of remuneration (fixed for a certain calendar period or depending on the volume of tasks performed), the possibility to determine the currency of remuneration, methods of establishing and coordinating tasks, information exchange and other.

In addition, if the parties in the gig-contract do not establish other conditions, by default, the non-property intellectual property rights for the work of the specialist belong to the company.

Also, the specialist receives social guarantees provided by the labor law: the right to rest at least 17 working days per year, sick pay, as well as a break in work due to pregnancy and childbirth.

However, such a contract must be concluded for a clearly defined term (the parties may agree on its automatic extension), and it must also be specified that during the first 3 months of the contract any party has the right to unilaterally terminate it by informing the other party not later than 3 calendar days before the date of termination. If such party is a resident of Diya City, he has the right to terminate the contract without waiting 30 days, but in this case, he must pay monetary compensation to the specialist.

If one of the parties wishes to terminate the contract after 3 months, the contract can be terminated with at least 30 days’ notice to the other party.

And it is important: in order for a civil law contract between a City Action resident and a specialist to be considered a gig-contract, it must explicitly say so.

What about foreign specialists?

As for foreign gig-specialists, the legislator also simplified the procedure for legalizing a foreigner’s stay in Ukraine to a minimum. If previously a foreign worker had to obtain a work permit, and then to obtain a temporary residence permit, the legalization of a specialist’s stay in Ukraine is based on applying to the migration service for a temporary residence permit, and the work permit is obtained only at the request of the company itself.

Tax rates and reporting

The tax burden of the specialist consists of the personal income tax (PIT) rate of 5%, the unified social contribution (UST) at the rate of 22% of the minimum wage and the military levy at the rate of 1.5%.

Full administration of the tax burden (payment of taxes and filing of reports) is carried out by the company resident of Diya City.

The use of gig-contracts by residents will allow them to reduce the tax burden, avoid penalties from the State Labour Inspectorate for concealing employment relationships, whiten the model of building contractual relationships with employees, which as a result will increase the market capitalization of the company.

 

Patriot.Legal provides legal and auditing support for obtaining residency for Diya City, preparing reports and conducting independent audits.

Svyatoslav Lindyuk, an attorney with Patriot.Legal’s Litigation Representation and Corporate Law practice

Instructions on how to become a Diyа resident

Last week, the Verkhovna Rada of Ukraine adopted a law that amends the Tax Code of Ukraine regarding the tax burden on future Diy residents. The changes will take effect on January 1, 2022.

According to the adopted amendments, the following tax burden is set for Diya City residents:

For employees:

– 1.5% military levy;

– 5% tax on income of an individual (including for employees under an employment contract);

– 22% of the single social tax on the minimum wage.

On company:

Residents may be subject to income tax (18%) or withholding tax (9%).

If the resident makes distributions no more than once every two years, the dividends are not taxable.

At the beginning of 2022 Cabinet of Ministers and the Ministry of Finance are expected to complete the formation of by-laws, to form a Register of residents, as well as approve the Commission, which will carry out the examination of applications for residency.

The Diya City should be fully operational in late January – early February. Here are the basic requirements for acquiring and maintaining the status of a resident of Diya.

Who can become a resident of Diya City?

  • Registered legal entity in accordance with the legislation of Ukraine;
  • Average monthly salary of employees – not less than 1200 euros;
  • The implementation of one or more activities defined by part 4 of Art. 5 of the Act;
  • At least 90% of the income must be qualified (derived from the activities defined in part 4 of Art. 5 of the Act);
  • The applicant company must have no negative criteria (including the company is not registered in Ukraine, is unprofitable, has not disclosed the beneficiary owners, has shares owned directly or indirectly by the Russian state or its citizens).

Registration

In order to register, residents of Diya City must:

  • submit an application to the Ministry of Digital Transformation of Ukraine;
  • to indicate information about the chosen taxation system. If the applicant did not specify them, it is considered that the company has chosen income tax (18%);
  • have certification that the company meets the residency criteria and that there are no negative criteria;
  • give information about the amount of the applicant’s income for the previous year.

The Ministry considers such an application within 10 days. If on the 11th day no decision has been received on the submitted application – the company is considered to be a resident of the Diya.

…not later than in six months.

Not later than the last day of the sixth calendar month following the calendar month of acquiring residency, the company must submit to the Ministry 

– аn initial report – a report of compliance with all residency requirements at the end of the three full months following the acquisition of residency status;

– independent auditor’s report upon examination of residency statements set forth in the initial report.

Annual Reporting

Every year, no later than June 1, a resident must submit to the Ministry of Foreign Affairs an annual report on residency eligibility for the preceding year (annual report), as well as an independent audit opinion regarding the review of the assertions made in the annual report.

The first annual report is for the period from the date of residency until December 31 of the calendar year.

 

Patriot.Legal provides legal and auditing support for obtaining residency in Diya City, preparing reports and conducting an independent audit.

Svyatoslav Lindyuk, Attorney of Litigation and Corporate Law Practice at Patriot.Legal

Procedure of the penalties under Article 336 of the Code of Civil Procedure

When initiating a property dispute, the lawyer, in addition to assessing the victory of his legal position, should think about the prospective recovery of funds in case of victory. The classic scheme is to expect when the debtor will receive at least some money from the counterparties or his debtors on the arrested bank accounts.

However, there is another way.

The Commercial Procedure Code of Ukraine (hereinafter referred to as the Code of Civil Procedure of Ukraine) introduced in 2017 a new mechanism for enforcing a court decision on recovery of funds – through recovery of funds from third parties who have debts to the debtor.

Such a mechanism is provided by Article 336 of the Code of Civil Procedure, which provides for the possibility of foreclosure on funds belonging to other persons and real estate, the ownership of which is not registered in the prescribed manner.

The application of such a procedure is relevant when enforcement proceedings are opened, seizures are imposed on the accounts, but debt collection is not carried out because of zeros on the accounts.

Recovery procedure

The first thing you need is a decision that has come into force to recover money from the debtor.

The next most important step is to search for the undisputed debt or to confirm the debt by a court decision that has entered into force that third parties have before the debtor.

After such a debt has been identified, we apply to the court – submit an application for recovery of funds belonging to the person who has a debt to the debtor. Such an application is submitted as part of your case, in which a decision was made to recover the money. Such a statement must indicate the decision on the basis of which the debtor is recovered, evidence of non-enforcement of the judgment on the date of application, evidence of a valid undisputed debt of a third party to the debtor or a judgment from which such debt is seen.

In its conclusions, the Supreme Court notes that the subject of such applications is 1) non-repayment debt to the debt collector and 2) the fact that there is an actual third party debt to the debtor, as evidenced by relevant evidence (including court decisions).

We recommend you to contact a professional lawyer in such procedures as finding the debt of third parties to the debtor, compliance with all procedural aspects, obtaining evidence of the relevance of the debt, as well as the correct wording of the claim in such a statement . 

In addition, the costs of his services can also be indicated as the costs of professional legal assistance, which are reimbursable by the debtor when filing the Application.

 

Author Lindyuk Svyatoslav, lawyer of corporate law practice and court representation Patriot.Legal.

Patriot.Legal is a company that provides legal and audit services.

Patriot.Legal opens new direction of registration of companies in foreign jurisdictions

Continuing its growth and rapid development, the Patriot.Legal team announces the expansion of corporate law practice and opens a direction for registration and support of business in foreign jurisdictions.

Today Patriot.Legal carries out registration of companies in the jurisdictions of Poland, Portugal, Great Britain, Slovakia, Estonia, USA (Delaware). The list of jurisdictions is constantly expanding.

Registered companies in foreign jurisdictions will allow you to structure your business reliably, in particular, use additional mechanisms to protect assets from raider seizures and illegal activities of law enforcement agencies, attract cheap loans to expand your business, and expand the list of counterparties.

We will be glad to help you expand your business to new markets.

 

Patriot.Legal is a legal and audit services company

Stopping of execution of the contested court decision in the economic process

Any proceeding involves the possibility of going through three instances (first instance, appeal, cassation) during the resolution of the dispute.

In commercial proceedings (as in other types of legal proceedings), the decision comes into legal force from the date of its adoption by the court of appeal (if an appeal was made).

If the court of appeal has made a decision to recover from you a certain amount of penny funds, but you do not agree with such decision and there are grounds for a cassation appeal, the issue of stopping the execution of the decision during the consideration of the case in the cassation instance becomes relevant.

What is it for? After the full text of the decision of the appellate instance has been drawn up and it will be published in the Unified State Register of Court Decisions (hereinafter referred to as the USRSR), the recoverer can apply to the court of first instance with an application for the issuance of a court order to collect pennies. The court of first instance considers such an application within five days from the date of its receipt. At the same time, the court of first instance may not wait until the case is received by it, but issue an order on the basis of the existing published resolution in the USRCD.

Immediately after the claimant receives such an order, he can immediately begin to take action to enforce the collection of penny funds, to seize accounts and property. In fact, even in 5-7 days, you can collect funds.

So that your accounts and property are not arrested, and then, with a positive decision of the cassation instance, you do not have to take forced actions to return the collected funds – you must act without delay.

How to act

1. Do not delay filing a cassation appeal.

Of course, sometimes you want to thoroughly write out and deduct a cassation appeal, and therefore this process is often stretched out for all the 20 days provided for a cassation appeal, and there you can additionally restore the deadlines from the date of delivery of the decision. But if you want to stop the execution of the court decision, such a legal delay will not be in your favor, since during all this time the decision is already subject to execution.

Therefore, immediately after the announcement of the appeal ruling and patents, it is necessary to prepare the basis for a future cassation appeal, and after the publication of the complain in the USRCD, immediately within 1-3 days, prepare and file a cassation appeal (at the same time, do not forget to indicate the grounds for cassation appeal provided for by Article 287 of the Code of Civil Procedure of Ukraine) …

2. Submit an application to suspend the execution of the judgment.

Such an application can be filed separately from the statement of claim or you can ask for the stopping of the execution of the court decision in the cassation appeal. Stopping the execution of a court decision or stopping its action must be motivated and contain reasonable grounds for suspending the execution of the court decision, which is confirmed by evidence.

The court of cassation will not stop the execution of the contested decision without proper and sufficient grounds to do so. In its jurisprudence, the Supreme Court indicates that the motives for stopping the execution of a decision or stopping its action, among other things, may be the opening of enforcement proceedings on account of the compulsory execution of court decisions, the impossibility of turning the execution of a decision in case of its cancellation or the need to take additional measures to restore violated rights …

So, in our own practice in one of the proceedings, the grounds for stopping the execution of the court decision were the substantiation of the materiality of the collection amount (almost UAH 2 million), for which enforcement proceedings were opened and the debtor’s accounts and property were seized, which led to the complication of his economic activities.

In another proceeding, such grounds for stopping the execution of the decision were the justification for open enforcement proceedings, and also that the recoverer himself has an open enforcement proceeding, in which he acts as a debtor, which has not been fulfilled within 3 months. As a result, not stopping the execution of the court decision will lead to the impossibility of turning the execution of the decision, since the recoverer does not have funds, and the recovered funds will go to repay the recoverer’s debt in another obligation.

3. Communication with performers.

This action is the most subjective, since it largely depends on the will and desire of the executor not to rush to issue a decision to suspend the execution of the court decision or refusal to transfer funds to the claimant.

If, however, the court of cassation issued a decision to suspend the execution of the court decision, such a decision must be immediately provided to the executor and demand from him to cancel the arrests.

As a result of quick and reasonable actions, it is possible to prevent the execution of the court decision and continue the usual business activities during the consideration of disputes in cassation.

The author is Lindyuk Svyatoslav, the lawyer of the corporate law practice and legal representation of Patriot.Legal.

Patriot.Legal is a company that provides legal and audit services.

Protection of rights and interests in court. Is it so long and expensive?

Everyone is used to think that litigation is a) expensive and b) long, and therefore there is a little hope that through the court it is possible to restore violated rights quickly and unprofitably .
What is the current and long-term situation in commercial courts, how much will it cost to file a lawsuit and how long will it take for the court to consider the lawsuit?

Is it expensive to litigate?

The costs of the proceedings can be divided into two parts: the payment of court fees and the costs of professional legal assistance ( a lawyer).
Court fee. If the claim in your case is the recovery of funds (property claim), you must pay 1.5% of the amount of the claim. For example, if you want to collect a debt from a counterparty for unfulfilled obligations under the contract in the amount of UAH 1 million, you need to pay UAH 15,000 court fees.
If the claim is of a non-material nature (for example, invalidation of the contract, invalidation of the decision of the general meeting of the business entity, etc.), the amount of the court fee is 1 subsistence level per able-bodied person (UAH 2,189 as of the date of publication).

Lawyer. Another category of costs is the services of a lawyer. The services of a lawyer in the court of first instance, as a rule, start from UAH 10,000. This amount will include analysis of the case, formation of a legal position, writing and filing a statement of claim, participation in court hearings. The formation of the cost of a lawyer’s services depends on the complexity and circumstances of the case, as well as the amount of the dispute.
Until November 2017, the payment for the services of a lawyer was non-refundable, and unlike the court fee, you could not collect these costs from the defendant. In the adopted amendments to the procedural legislation, the legislator provided for the possibility of recovering from the losing party in the dispute the costs of professional legal assistance (lawyer). In order to exercise this right, it is necessary to submit a preliminary calculation of court costs in the filed statement of claim, and not later than 5 days after the court decides to submit to the court a calculation of court costs, which must include an act of services and a contract .

 

How long to litigate?

It must be said that the courts of commercial jurisdiction most clearly adhere to the deadlines for proceedings. Disputes can be considered by the Commercial Court in the form of general and simplified (without holding court hearings) proceedings.
The deadline for consideration of the case by the court of first instance of the general proceedings is 105 days: within 5 days from the date of filing the claim proceedings are opened, 60 days are given for preparatory proceedings (but in exceptional cases may be extended for 30 days), within 30 days the essence of the dispute, and finally within 10 days from the date of the decision is its full text.
The maximum consideration of the term of consideration of the case in the simplified procedure is 70 days: within 5 days from the date of filing the claim proceedings are opened, within 60 days the dispute is considered, and at the end within 5 days the full text of the decision.

Conclusion. There is no doubt that the best way for the parties to resolve a dispute is through mediation (dispute settlement procedure with the participation of a neutral mediator) and pre-trial settlement of the dispute. This will save time, nerves and can maintain a good relationship with the contractor. But there are cases when the other party does not want to go to conciliation, and in such cases the legal way to protect their rights is to go to court. If you dare to defend your rights in court, such protection in the commercial court of first instance will be about three months, and at the end of the trial, in case of victory, you will be reimbursed.

Author Lindyuk Svyatoslav, lawyer of corporate law practice and court representation Patriot.Legal.

Patriot.Legal is a company that provides legal and audit services.