Ukraine
1. Are freezing orders (or their equivalent referred to below) available in civil legal proceedings in this jurisdiction and what is their effect?
Yes. The Court has power to make provisions to secure a claim, including the making of a freezing order which prohibits a respondent from dealing with assets (which are within the jurisdiction) such as property or funds referred to in the order, until a specified time or further order of the Court.
2. Are other interim orders commonly made in conjunction with a freezing (or equivalent) order?
Yes. The Court will typically make orders which specify the relevant measures to secure the claim. These measures can include prohibiting the respondent from performing certain actions, suspending the sale of assets or customs’ clearance of goods or items and any other measures provided for by law, including international treaties, ratified by the Ukrainian Parliament. In addition, the Court may prohibit third parties from dealing with the assets, including making payments, transferring property to the respondent or may impose other obligations on third parties, as are relevant to the dispute. The Ukraine rules of procedure do not however, provide for the making of an asset disclosure order.
3. Briefly what is the relevant legal test?
The applicant must demonstrate to the Court (with appropriate, sufficient and admissible evidence) that if such measures are not taken, it will significantly complicate or prevent the execution of a judgment, the restoration of violated or disputed rights of the applicant or of other interests of the applicant.
4. Briefly what is the process for obtaining a freezing (or equivalent) order?
The application must be submitted in writing signed by the applicant and must stipulate the subject of the claim and the orders sought, with justification of their necessity. It must also specify the cost of the claim to be secured, the applicant’s proposals for counter-security and any other information required to secure the claim. The application will be considered by the Court, no later than two days from the date of its receipt, without notice being provided to the respondent. If the order is made without notice (as it often is), there will be a return hearing at which point the respondent may challenge the order. At that hearing, the order will usually either be set aside, extended, or replaced with a Court-sanctioned undertaking (which has broadly the same effect as a freezing order) until trial.
5. Does the applicant have to provide any form of security or commit to compensation if its claim is ultimately unsuccessful and any freezing (or equivalent) order granted causes loss and damage to the respondent?
Yes. The applicant may be required to provide a cross-undertaking in damages to the respondent. The Court may also require the applicant to provide counter-security (usually by way of a payment into Court) to cover compensation for possible damages suffered by the respondent flowing from the orders to secure the claim.
6. Can it be sought against third parties?
No. It is possible to freeze assets which are in possession of a third party but a third party cannot be a party to the order itself. When deciding whether to grant measures to secure a claim (including a freezing order), the Court is obliged to consider the balance of interests, not only of the parties to the dispute, but also of third parties. This is to prevent violations of the rights and legally protected interests of persons who are not participants in the dispute. Third parties are entitled to appeal against the ruling of the first instance Court where a freezing order is issued and if they suffer any loss as a result, they can apply for compensation as part of the appellate proceedings.
7. What assets are covered by a freezing (or equivalent) order?
Any tangible or intangible assets (within the jurisdiction) provided they are not perishable. However, it is not possible to freeze property (assets) of the Deposit Guarantee Fund of Individuals, a bank classified as insolvent or a bank that is being liquidated under the Law of Ukraine “On the System of Guaranteeing Natural Person Deposits”.
8. Can a freezing (or equivalent) order be made in support of substantive proceedings abroad?
Nо.
9. Can a freezing (or equivalent) order be made in support of arbitration proceedings or awards?
Yes.
10. At what stage of proceedings can a freezing (or equivalent) order be sought?
At any stage of the substantive proceedings, including before filing a statement of claim in the substantive proceedings or on or after issue, especially if circumstances change which lead to the need for the applicant to apply to secure the claim. The application is usually made before judgment in the substantive claim, but, if after judgment there is evidence of withdrawal of assets, then it is also possible to secure the claim at the appellate or cassation stages.
11. Are there typically any exceptions to the general prohibition on the respondent’s use of assets subject to a freezing (or equivalent) order?
Yes. The order will generally provide that the respondent may deal with their assets:
(i) above a specified value;
(ii) in the ordinary and proper course of business;
(iii) for ordinary living expenses; or
(iv) for legal expenses.
12. What happens after a freezing (or equivalent) order is granted?
The applicant will typically notify third parties (such as banks/financial institutions) of the freezing order. Seizure of the respondent’s property (funds) is achieved by the enforcement officer issuing a “resolution” on the description and seizure of the property (funds). The resolution to seize the debtor's property (funds) is made during the commencement of enforcement proceedings and no later than the next working day after the discovery of the property. If necessary, the enforcement officer may restrict the right to use the property (funds), seal, or seize it from the respondent and transfer it for safekeeping to other persons.
13. Who pays the costs of the application for a freezing (or equivalent) order?
The costs of issuing the application are paid by the applicant. Costs relating to the Court’s consideration of the claim are usually borne by the respondent if the claim is sustained (successful), by the applicant if the claim is dismissed and if the claim is partially sustained (successful) by both parties in proportion to the amount of the sustained claim.
14. What protections are there typically in a freezing (or equivalent) order for third parties to such orders?
If an application for a freezing order is left without further consideration (i.e. concluded without a judgment being provided as a result of the applicant not complying with Court procedure or requirements) or dismissed in full or in part, a third party whose rights or legal interests have been violated as a result of the freezing order are entitled to be compensated for damages at the expense of the applicant. In general, it will be impossible for a third party to implement set-off rights once the freezing order is in place but if payment is permitted, a third party’s rights of set-off can be implemented. If a third party had set-off rights which arose before the freezing order is in place, that issue will be dealt with at the enforcement stage of the proceedings. If a third party is outside the jurisdiction, such matters are subject to the laws of the relevant jurisdiction and any international treaty in place between Ukraine and that jurisdiction.
15. What are the consequences of breach of a freezing (or equivalent) order?
The Court may impose a fine of up to ten times the subsistence level for an able-bodied person in the state budget revenue. If there is a case of a willful failure to comply with a judgment or ruling of the Court (including imposition of the freezing order), both a party to the order or a third party (who has received notice of the order in question) can be punished by way of a fine or by way of imprisonment for up to three years.
16. Does a third party notified of (but not a party to) a freezing (or equivalent) order owe a duty of care to the applicant (meaning it can be liable to the applicant for non-compliance)?
No.
17. Can a freezing (or equivalent) order be enforced abroad?
Yes, in principle, although this is subject to the laws of the relevant jurisdiction and any international treaties between Ukraine and the relevant jurisdiction.
18. Can freezing (or equivalent) orders from overseas jurisdictions be enforced in this jurisdiction?
Generally these cannot be enforced in Ukraine.
Contact
Gleb Bialyi Partner Asters Kiev, Ukraine gleb.bialyi@asterslaw.com www.asterslaw.com
Explore by region
This guide was updated in June 2024. Eversheds Sutherland takes all reasonable care to ensure that the materials, information and documents, including but not limited to articles, newsletters, reports and blogs, including this guide ("Materials") on the Eversheds Sutherland website are accurate and complete. However, the Materials are provided for general information purposes only, not for the purpose of providing legal advice, and do not necessarily reflect the present law or regulations. The Materials should not be construed as legal advice on any matter. The Materials may not reflect the most current legal developments. The content and interpretation of the Materials and the law addressed in the Materials are subject to revision.
No representation or warranty, express or implied, is made as to the accuracy or completeness of the Materials and therefore the Materials should not be relied upon. Eversheds Sutherland disclaims all liability in respect of actions taken or not taken based on any or all of the contents of the Materials to the fullest extent permitted by law. The Materials are not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified Lawyer/Attorney on any specific legal matter.
Any views expressed through the Materials are the views of the individual author and may not reflect the views of Eversheds Sutherland or any other individual Lawyer/Attorney.
© Eversheds Sutherland. All rights reserved. Eversheds Sutherland is a global provider of legal and other services operating through various separate and distinct legal entities. Eversheds Sutherland is the name and brand under which the members of Eversheds Sutherland Limited (Eversheds Sutherland (International) LLP and Eversheds Sutherland (US) LLP) and their respective controlled, managed and affiliated firms and the members of Eversheds Sutherland (Europe) Limited (each an "Eversheds Sutherland Entity" and together the "Eversheds Sutherland Entities") provide legal or other services to clients around the world. Eversheds Sutherland Entities are constituted and regulated in accordance with relevant local regulatory and legal requirements and operate in accordance with their locally registered names. The use of the name Eversheds Sutherland, is for description purposes only and does not imply that the Eversheds Sutherland Entities are in a partnership or are part of a global LLP. The responsibility for the provision of services to the client is defined in the terms of engagement between the instructed firm and the client.
Share this page