Ukraine Judicial Reform 2016 – Quick Summary

Editorial Team Business, Law

Finally this autumn several laws came into force as implementation of long-awaited judicial reform in Ukraine, adopted by Ukrainian Government on the 2nd of June, 2016, namely, 

  • Amendments to the Constitution of Ukraine (came into force on the 30th of September, 2016);
  • Law of Ukraine “On Judicial System and Status of Judges in Ukraine” (came into force on the 30th of September, 2016);
  • Law of Ukraine “On authorities and Persons entitled to Fulfill Court Rulings and Decisions of other Authorities” (came into force on the 5th of October, 2016);
  • Law of Ukraine “On Enforcement Proceeding” (came into force on the 5th of October, 2016).

Main developments of the judicial reform were positively evaluated by the Venice Commission under Preliminary Opinion No. 803/2015 as of  24 July 2015. The key provisions of the above-mentioned laws are the following:

1. Simplification of the court system.

The reformation of court system stipulates transition from a four-tier court system to a three-tier court system which is composed of courts of first instance, courts of appeal and a newly established the Supreme Court. The Supreme court will include former Supreme Business, Administrative and Civil & Criminal Cases Specialized Courts as its respective chambers. It is expected that as a result of such simplification court disputes will be resolved within shorter period of time. Additionally, two new specialized courts will be established as follows:

  • the Supreme Court on IP Disputes; and
  • the Supreme Anti-Corruption Court

These two courts will be considered as courts of first instance for the respective disputes.

2. Change in status of judges, procedure of their appointment and dismissal.
  • Judges will be appointed for indefinite period of time (earlier judges were initially elected for 5 years with subsequent possible appointment for termless period). After the amendments judges will be appointed by President under the suggestions of the Supreme Council of Justice after proper selection of candidates. Selection of candidates will be held on competitive basis with proof the legitimate origin of their assets as one of the stage of the selection process.
  • Implementation of open competition for positions of judges, including in the new Supreme Court of Ukraine. After amendments, even lawyers without previous judicial experience can apply for positions of judges in the Supreme Court of Ukraine. It is expected that such amendments will bring new professionals in the court system. According to amendments, there is no longer requirements for judges to be resident of Ukraine (permanently live in Ukraine) for the last 10 years, however requirement to the citizenship remained in force.
  • Widened set of circumstances when powers of judge are terminated. This includes cases when a judge is unable or refuses to confirm that income of the judge and his/her family is in line with their expenses.
  • Judges may be fired under resolution of the Supreme Council of Justice exclusively on grounds, stipulated by law. Earlier decision on dismissal of judges was adopted by President or Parliament of Ukraine, depending which of them originally appointed the respective judge. It is expected that amendments will lead to elimination of political influence on the judges and ensure judges’ political independence.
  • All previously elected judges have to pass appraisal, within which to pass competency and ethics test and to prove the legitimate origin of their assets. Those who are unable or refuse to pass such apprisal will be dismissed.
  • Implementation of the Public Council of Honesty – public institute, aimed to provide advisory assistance to the Supreme Qualification Commission of Judges in the process of performing qualification appraisal of judges by the latter in terms of honesty and ethics. The Public Council of Honesty can be composed out of highly reputable and politically neutral representatives of human right defending organizations, scientist lawyers, journalist, advocates.
  • Elimination of judges’ immunity from criminal prosecution for corruption and other serious crimes. After the amendments the judge can be arrested during or just after commitment of serious crime. In other cases the judge may not be arrested and kept in detention before the court decision to indict, unless there is a consent of the Supreme Council of Justice. Before the amendments the judge could be arrested only upon respective decision of the Ukrainian Parliament, which, being often a time-consuming procedure, enabled many judges to escape.   
  • Implementation of regularly obligatory reporting for judges:
    • Declaration on any family members holding high-ranking civil service positions or employed by courts, public defenders or prosecutors’ offices.
    • Declaration of honesty (confirming that level of life of judges family corresponds official income)
    • Declaration of public official
  • Base salaries of judges were significantly increased to reduce the incentive for corruption and attract new lawyers to judicial system. After the amendments base salary of the judge will amount: 30 minimal wages in courts of first instance, 50 minimal wages in court of appeal, and 75 minimal wages in the Supreme Court of Ukraine. Before the amendments judges of courts of first instance earned 10 minimal wages, judges of courts of appeal earned the same with ratio 1,1 and in the Supreme court of Ukraine – with ratio 1,3. Assuming current minimum wage of 1450 UAH, the judge of court of first instance will earn minimum UAH 43 500, judge of court of appeal will earn UAH 72 500 and the judge of the Supreme court of Ukraine will earn UAH 108 750.
3. Implementing of Advocate Monopoly.

As as in most well-developed countries, representation in courts will be possible only by lawyers who have passed exam and obtained advocate certificate (whereas before the amendments only criminal proceedings required exclusively advocate as a representative). Such requirement will be gradually implemented: starting from 1st of January, 2017 – the rule will apply for representation in the Supreme Court of Ukraine, starting from 1st of January 2018 – in courts of appeal and starting from 1st of January 2019 – in courts of first instance.

As per recommendation of the Venice Commission, the amendments to the Constitutions stipulate that specific law may provide exceptions from such rule in relation to labor disputes, insignificant disputes, disputed related to election and referendum process, representation of children under 18 or disabled persons. However currently there are no such specific laws.

4. De-monopolization in the field of enforcement of court decisions.

According to the changes, starting from 5th of January, 2017 court rulings may be executed (with number of exceptions) by either public enforcement service or private executors. Private executors are subject to prior qualification testing and certification. Previously, execution of court rulings was exclusive competence of public enforcement service, which led to time-consuming and low-effective court execution and often was big source of corruption of state officials.

Overall Analysis

Since independence of Ukraine, Ukrainian courts were known for wide-spread corruption and time-consuming and often ineffective court and enforcement procedures. Therefore judicial reform in Ukraine has been one of the key milestone on the way to business growth as well as improvement of investment climate in Ukraine.  In 2016, under Doing Business Report, globally Ukraine was placed at 98 position in the ranking of 189 economies on the Ease of Enforcing Contracts. Ukrainians as well as Ukrainian companies has been frequent applicants to the European Court of Human Rights seeking protecting of their rights (around 13 % of all the applications).

It is worth to mention, that such rapid and wide-scope implementation of the reform has caused serious inconveniences for many businesses and individual locals.  For example, at present most in-house lawyers in Ukraine do not have advocate certificate. Under the new rules, all the lawyers who specialize in court proceedings, have to apply for advocate certification which requires prior passing the respective qualification exam. Unfortunately, such examination procedure is known for its corruption. In addition, nowadays even signing-up for the exam is a big challenge due to high demand and consequently really long waiting lists.

Similarly, reformation of court system is rather painful process. Those judges, who were appointed on temporary basis and their term of power has expired, now in order to be re-appointed have to pass respective appraisal (among others they have to prove the legitimate origin of their assets). Additionally, big number of judges after adoption of Judicial Reform filed letters of resignation, probably being dissatisfied with new rules or unable to meet new requirements. Currently many courts throughout Ukraine remained without judges in power at all or their number has significantly decreased and, as a result, locals temporary have to access to justice.

It is worth to mention, that legislation constituting the Judicial Reform is far not perfect and contains number of conflicting norms and legal gaps as well as procedures still allowing corruption.  As an example, it is widely criticized that Public Council of Honesty does not have enough power to influence the Supreme Qualification Commission of Judges decision. In general, implementation of Judicial Reform will require further adjustment with other legislative acts.

Despite the above minuses and challenges, reformation of Ukrainian judicial system is definitely a good sign and important step for Ukraine economic development and formation of Ukrainian civil society. Probably as never before Ukraine is in urgent need of new efficient and transparent courts to encourage new business formations and investment in Ukraine, which can recover and boost Ukrainian economy.