UPDATE: A Research Guide to Ukrainian Law
By Alexander Biryukov & Myroslava Kryvonos
Update by Nazar Chernyavsky & Marta Lozenko
Nazar Chernyavsky is a partner at Sayenko Kharenko Law Firm from Kyiv, Ukraine, specialized in banking, capital markets, secured and structured finance. Mr. Chernyavsky advises clients on a wide range of major private and public securities offerings, syndications and secured finance transactions. He has extensive experience of handling the most complex financing projects in the Ukrainian market, which include the first securitizations in Ukraine, Rule 144A share offerings, Tier II Eurobond offerings, UAH linked LPN issues, etc. Prior to joining Sayenko Kharenko, Mr. Chernyavsky worked for the leading Ukrainian law firms. Nazar has been recognized in banking and finance by Chambers Global, The Legal 500, IFLR 1000, The Best Lawyers International and ranked among leading lawyers in Banking & Finance, Capital Markets, Restructuring, Information Technologies, Telecommunications & Media by Ukrainian Law Firms 2016 compilation by Yuridicheskaya Practika, the leading legal publishing house in Ukraine. Nazar holds a Master of Laws degree from Kyiv National Taras Shevchenko University School of International Law and Intercollegiate LL.M. from Queen Mary College of the University of London.
Marta Lozenko is an associate at Sayenko Kharenko Law Firm from Kyiv, Ukraine, a leading law firm internationally recognized, specialized in complex cross-border and local matters. Marta specialises in finance and capital markets. She has advised on a number of finance and capital markets projects in Ukraine, which include project financings as well as secured financings to Ukrainian banks and corporate groups. Marta holds Master’s degree from Kyiv National Taras Shevchenko University School of International Law.
Note: In the system of the state authority, the body of the Parliament of Ukraine is named the Verkhovna Rada and the Government - the Cabinet of Ministers.
Table of Contents
- 1. Introduction
- 2. The Political System
- 3. The Autonomous Republic of Crimea and Certain Regions of Donetsk and Luhansk Regions
- 4. The Source of State Power
- 5. The Foundation and Division of State Power
- 6. President
- 7. Public Prosecution and Anti-Corruption Agencies
- 8. Law-making
- 9. Ukrainian Legislation
- 10. The Sources of Ukrainian Law and the Hierarchy of Legal Acts
- 11. The Main Areas of Ukrainian Legislation
- 12. Legal Profession
- 13. Legal Education and Science in Ukraine
- 14. Access to Legal Materials
- 15. Legal Citation
- 16. Legal Publishers
- 17. Legal Services
- 18. Other Legal Related Sources
Ukraine is one of the largest countries in Europe and in sheer size, it is comparable to France. It borders with Russia to the east, Belarus to the north, Poland, Slovakia, Hungary, Romania and Moldova to the west and the Black Sea to the south. According to the Ukrainian census of 2001, about 78 percent of the country’s population were ethnic Ukrainians and 17 percent were ethnic Russians. Other groups, including Belarusians, Moldavians, Bulgarians, Crimean Tatars, Hungarians, Romanians, Greeks and Poles, accounted for about 5 percent of the population. The official language is Ukrainian, but Russian is in wide use as well.
Ukraine is subdivided into 24 oblasts (regions). Two Ukrainian cities, Kyiv, the capital of Ukraine, and Sevastopol (currently the site of a major naval bases of the Russian Federation) are granted special status under the Ukrainian Constitution in respect of certain administrative and budgetary matters. Separate Ukrainian law adopted by the Verkhovna Rada in April 2014 defines the additional aspects of the status of the city of Sevastopol (which has become subject to annexation by the Russian Federation). Moreover, in September 2014 the Parliament passed the law on special regime of local self-government in certain parts of Donetsk and Luhansk regions (as a result of anti‑terrorist operation launched by the Ukrainian authorities in the affected regions of Eastern and Southern parts of Ukraine against the armed groups).
On 24 August 1991, the Ukrainian parliament adopted the Act of Independence in which the parliament declared Ukraine as an independent democratic state. The country experienced severe economic depression, but the situation stabilized by the end of the 1990s.
Currently Ukraine is in the process of transformation from a mixed economy with state ownership in strategic areas to a free-market economy and further development of democracy. The law and legal system are subject to deep and complex changes as well. Since its independence, Ukraine has made substantial progresses in the creation of new legislation, ensuring human rights and freedoms, and building new economic relations.
In 1996, on its way of incorporation to the international legal standards in its legislation, Ukraine adopted a new Constitution. Having become a member of the Council of Europe in 1995, Ukraine began to work toward improving its legislation in regards of human rights protection, and to implement legal and judicial reforms. Ukraine is a constituent member of the United Nations (and one of the founding states) and various other multilateral organizations, including the IMF, IBRD, IFC, MIGA, EBRD, BSTDB, EIB, OSCE, amongst others.
The development of Ukrainian legal system has been significantly influenced by the declared European integration of the country. Ukraine is currently in the process of adapting its legislation to European norms and standards with the goal to acquire full membership to the European Union.
Ukraine achieved notable progress in its relations with the EU. The Association Agreement with the EU was signed on 21 March 2014 (its political and cooperation parts entered into force in 1 November 2014). Moreover, since 1 January 2016 the Deep and Comprehensive Free Trade Agreement, the economic section of the Association Agreement, is also applied.
Ukraine is a Republic (Article 5). After Ukraine's independence, the first Constitution was adopted in 1996, and established a presidential form of government. In 2004, in the course of profound political crisis, the Verkhovna Rada (the Ukrainian Parliament), amended the Constitution and redistributed state power in favour of the President. In 2010, the Constitutional Court of Ukraine declared abovementioned amendments unconstitutional, and the initial edition of the Constitution was reinstated. Ukraine has become a presidential-parliamentary Republic again.
At the beginning of 2014, Ukraine experienced a serious political crisis, accompanied by violent clashes between protesters and police forces. In the end of February, following the Euro‑Maidan Revolution, the President of Ukraine Victor Yanukovich was toppled and left the country.
On 27 March 2014, the Parliament ratified the appointment of Arseniy Yatsenyuk as the new Prime Minister. The new Government started rapid changes in the governmental system of Ukraine: an extraordinary presidential election was assigned and the constitutional reform of 2004 was restored. Presidential elections were held on 25 May 2014. Petro Poroshenko was elected as the President of Ukraine.
On 27 August 2014, the President dissolved the Parliament. The new extraordinary elections of the Parliament were held on 26 October 2014. Petro Poroshenko Bloc (the party of President Petro Poroshenko) and Narodny Front (the party of former Prime Minister Arseniy Yatsenyuk) are the two biggest parties represented in the Parliament.
On 2 November 2014, the elections were held in some parts of Donetsk and Luhansk regions. Those elections have been declared illegitimate by the Ukrainian Government and have not been recognised by other countries.
Ukraine is a unitary state (Article 3 of the Constitution) with the Autonomous Republic of Crimea in its administrative structure. The Autonomous Republic of Crimea is an integral constituent part of Ukraine and decides on the issues ascribed to its competence within the limits of authority determined by the Constitution of Ukraine (Article 134).
On 27 February 2014, the Russian forces occupied the parliament of the Autonomous Republic of Crimea and other administrative buildings. In March 2014, the parliament of the Autonomous Republic of Crimea voted to secede from Ukraine and join the Russian Federation as a federal subject and summoned an unrecognized local referendum to approve such decision. As reported, based on the results of the referendum, on 17 March 2014 the independence from Ukraine was declared by the parliament of the Autonomous Republic of Crimea. Further, on 18 March 2014, the Russian Federation and the Autonomous Republic of Crimea signed an agreement on accession of the Autonomous Republic of Crimea to the Russian Federation. The Crimean referendum was declared unconstitutional by the Ukrainian Parliament. Moreover, its results generally have not been recognised by the international community. Currently, the Autonomous Republic of Crimea has a status of the territory under temporary occupation by the Russian Federation.
Furthermore, in February 2014, public protests by Russian-backed militants together with the Russian military forces took place in Eastern and Southern parts of Ukraine. As a result, the Ukrainian authorities were obliged to launch anti‑terrorist operations in Eastern Ukraine. In addition, on 16 September 2014, the Parliament passed the Law of Ukraine “On Special Regime of Local Self-Government in Certain Parts of Donetsk and Luhansk Regions”. The law establishes a three-year period special regime of local self-government bodies and authorities, which will be formed based on the results of special elections to be held in the future.
The people are the sole bearers of sovereignty and the sole source of power in Ukraine. The people exercise power directly and through the state authorities and local self-government bodies. The right to determine and change the constitutional order in Ukraine belongs exclusively to the people and shall not be usurped by the State, its bodies or officials (Article 5 of the Constitution).
The expression of the will of the people is exercised through elections, referenda and other political forms of democracy. Citizens of Ukraine, who reached the age of eighteen on the day of the elections and referenda, have the right to vote.
The sole body of legislative power in Ukraine is the unicameral Parliament - the Verkhovna Rada. It is compound by 450 members of Parliament, elected for a five-year term.
Last elections were held on the basis of a mixed voting system, according to which, 225 Members of Parliament were elected on the basis of a majority voting, and other 225 members of Parliament were elected through a proportional representation of the parties.
The Parliament has broad powers. For example, the Parliament has exclusive rights to:
- introduce the amendments to the Constitution;
- appoint the Prime Minister (upon the recommendation of the President);
- designate an all-Ukrainian referendum;
- adopt the laws;
- approve the state budget and control its implementation;
- declare the war and conclude the peace (upon the recommendation of the President);
- grant the consent to the binding character of international treaties and denouncing international treaties of Ukraine.
The Cabinet of Ministers of Ukraine is the highest body in the executive branch, and includes the Prime Minister, the First Vice Prime Minister, Vice Prime Ministers, and Ministers.
The Prime Minister, as well as the Minister of the Defense and the Minister of Foreign Affairs, are appointed by the Parliament of Ukraine (upon the recommendation of the President). The Parliament of Ukraine appoints the other members of the Cabinet of Ministers of Ukraine upon the recommendation of the Prime Minister.
The Cabinet of Ministers shall, among other:
- ensure the state sovereignty and economic independence of Ukraine, the implementation of legislation, domestic and foreign policy of the State;
- elaborate the draft law on the State Budget and ensure the implementation of the Budget adopted by the Verkhovna Rada; and
- take measures to ensure the defense, national security and public order.
The main ministries are the following:
- The Ministry of Economic Development and Trade;
- The Ministry of Finance;
- The Ministry of Justice;
- The Ministry of Temporarily Occupied Territories and IDPs;
- The Ministry of Foreign Affairs;
- The Ministry of Internal Affairs;
- The Ministry of Education and Science;
- The Ministry of Health;
- The Ministry of Ecology and Natural Resources.
Justice in Ukraine is carried out exclusively by courts. According to the Constitution, the courts are independent from other bodies. The jurisdiction of courts extends to all relations in the territory of the State.
The Court System
The territorial principle, the principle of specialization and instance are the main principles of Ukrainian court system. The new law on judicial system adopted by the Parliament in June 2016 replaces the current four-tier court system with a three-tier one and provides for the new structure of the Supreme Court of Ukraine. As provided for in the new law on judicial system, the court system consists of local courts, courts of appeal, high-specialized courts focused on corruption and the protection of intellectual property rights and the Supreme Court of Ukraine. The Supreme Court is now a court of cassation. At the same time, in certain cases, the Supreme Court may act as a court of first instance or court of appeal.
The current four-tier court system (courts of first instance, courts of appeal, courts of cassation and the Supreme Court of Ukraine) will act till the final creation of the new three-tier system in accordance with the new law on the judicial system.
The Constitutional Court of Ukraine
The Constitutional Court of Ukraine is an independent body in judicial system. It resolves the issues concerning the conformity of laws and other legal acts of the Verkhovna Rada, acts of the President, the Cabinet of Ministers and the Verkhovna Rada of the Autonomous Republic of Crimea with the Constitution, and provides the official interpretation of the Constitution and laws.
The Constitutional Court is comprised of eighteen judges. The President of Ukraine, the Verkhovna Rada of Ukraine and the Congress of Judges of Ukraine each appoint six judges to the Constitutional Court.
The Constitutional Court adopts decisions that are mandatory throughout the territory of the State, are final and cannot be revised. Laws and other legal acts that are deemed unconstitutional lose their legal force.
The High Council of Virtues
The High Council of Virtues has been created within the framework of the currently ongoing judicial reform. The High Council of Virtues is responsible for appointment, functioning and dismissal of judges. The High Council of Virtues is comprised of twenty-one members. The Congress of Judges, the President, the Parliament, the Congress of Lawyers, the Ukrainian Conference of Prosecutors and the Congress of Representatives of Law Educational and Scientific Institutions appoint the members of the High Council of Virtues.
According to the Constitution of Ukraine, the President of Ukraine is the head of the State and acts in its behalf. The citizens elect the President for a five-year term.
The President shall, among other:
- ensure state independence and national security;
- represent the State in international relations, administer the foreign political activity of the State, conduct negotiations and conclude international treaties;
- revoke acts of the Cabinet of Ministers and acts of the Council of Ministers of the Autonomous Republic of Crimea;
- ask the Verkhovna Rada to declare the war;
- announce a state of emergency;
- sign the laws adopted by the Verkhovna Rada. The President has the right to veto the laws adopted by the Verkhovna Rada (except for the laws amending the Constitution of Ukraine) with their subsequent return for a second consideration by the Parliament.
The Public Prosecution of Ukraine
The Public Prosecution of Ukraine constitutes a single system, which on behalf of society and in the public interest, shall ensure: (i) the support and procedural administration of public prosecution in the court; (ii) the representation of interests of the State in the courts; and (iii) the organization of pre-trial investigations.
Specialized Anti-Corruption Prosecutor’s Office
Specialized Anti-Corruption Prosecutor’s Office is a new independent structural subdivision of the Public Prosecution of Ukraine (created in September 2015). Specialized Anti-Corruption Prosecutor’s Office supervises the activity of the National Anti-corruption Bureau of Ukraine, supports the prosecution on behalf of the state or government and represents the state and Ukrainian citizens during the investigation of corruption-related crimes.
The National Anti-Corruption Bureau of Ukraine
The National Anti-corruption Bureau of Ukraine is also a new body created after the Euro‑Maidan Revolution on the request of the IMF and the European Commission (in April 2015). The National Anti-Corruption Bureau of Ukraine investigates the corruption-related crimes committed by the Ukrainian high officials that pose a threat to the national security of Ukraine. The National Anti-Corruption Bureau of Ukraine has only investigatory powers. The Bureau passes to the Public Prosecution of Ukraine all findings received during the investigation process to further their inclusion into the materials of relevant criminal case.
The State Bureau of Investigation
The State Bureau of Investigation is a central executive body established by the Cabinet of Ministers of Ukraine in February 2016. It is an aim to complete the process of the formation of the State Bureau of Investigation in the nearest months of the year 2017. The Bureau will be responsible for the investigation of war crimes and crimes committed by certain senior officials, judges, law enforcement officers, officials of the National Anti-Corruption Bureau, head or other prosecutors of the Specialized Anti-corruption Prosecutor's Office (except for the crimes within the jurisdiction of the National Anti-Corruption Bureau).
The right to adopt the laws in Ukraine belongs to the Verkhovna Rada. The laws have the highest legal force in the State. The Article 92 of the Constitution establishes the areas where the relations are governed exclusively by the laws of Ukraine.
According to the Constitution, the President, the Members of Parliament, and the Cabinet of Ministries of Ukraine have the right of the legislative initiative (Article 93).
The law adopted by the Verkhovna Rada goes to the President for signing and further official publication. The President may either sign the new law, or use the right of veto and return it to the Verkhovna Rada with propositions for additional considerations. The Verkhovna Rada may overrule the President’s veto by two-thirds of constitutional membership.
The law comes into force in ten days after the date of its official publication (unless otherwise stipulated by the law).
Ukrainian legal system belongs by its nature to the Romano-Germanic legal family (the continental law system). Ukrainian legal system is code-based and has a well-structured hierarchy of normative acts.
As a result of its relatively recent transition towards a market economy, Ukraine does not have yet a mature legal system comparable to the legal systems of most major European countries. Although new laws have been introduced and amendments have been made to company, property, bankruptcy, securities, taxation, banking and foreign investment laws, this legislation is undeveloped and contains many gaps, thereby failing to provide an adequate underpinning for complex transactions.
During 2015-2016 a significant number of legislative acts were adopted by the Verkhovna Rada of Ukraine or were initiated before it, introducing important amendments to the various spheres of Ukrainian legal system, including investment activities, state governance, corporate and labour legislation, merger control and debt restructuring etc.:
On 5 November 2015, the Verkhovna Rada of Ukraine passed in first reading the draft of a new Labor Code, which is expected to substitute the current Labour Code of Ukraine initially adopted back in 1971 (for more information please see Labor Law section in Clause XI The Main Areas of Ukrainian Legislation below).
On 25 December 2015, the Ukrainian Parliament adopted the Law of Ukraine "On Public Procurement", which entered into force for all the customers from 1 August 2016. The new law introduces requirements to conduct public procurements, which exceed established limits through an electronic procurement system called Prozorro. Public procurements are to be performed under one of three procedures: (1) an open tender, (2) a competitive dialogue or (3) negotiating procedure.
On 26 January 2016, the Parliament of Ukraine adopted the Law of Ukraine titled "On Amendments to the Law of Ukraine” and "On Protection of Economic Competition" concerning the Increase of Efficiency of Control over Economic Concentrations," which came into force on May 18, 2016. The law increases the financial thresholds (which require prior concentration approvals of the Anti-Monopoly Committee of Ukraine) and introduces a number of other improvements to the merger control regime.
On 25 June 2016 the Law of Ukraine "On Amendments to Some Legislative Acts regarding the Cancellation of Mandatory State Registration of Foreign Investments" entered into force. It canceled the burdensome requirement that foreign investments be subject to state registration, which was formerly mandatory for foreign investors to enjoy the benefits established by the Law of Ukraine “On the Regime of Foreign Investments.”
On 19 October 2016, the Law of Ukraine "On Financial Restructuring" entered into force and will remain effective until 19 October 2019 (except for certain amendments made by the law to the existing legislation) (for more information please see Bankruptcy Law section in Clause XI The Main Areas of Ukrainian Legislation below).
Since Tax Code of Ukraine is subject to regular annual review by Ukrainian legislature, the Parliament of Ukraine adopted on 21 December 2016 the Law of Ukraine titled "On Amendments to the Tax Code in Relation to Improvement of the Investment Environment in Ukraine" (for more information please see Tax Law section in Clause XI The Main Areas of Ukrainian Legislation below).
On 17 January 2017, the Ukrainian Parliament approved the Draft Law on Corporate Agreements in the first reading (for more information please see Company Law section in Clause XI The Main Areas of Ukrainian Legislation below).
The legal acts are the main sources of Ukrainian legislation. Ukrainian legislations consist of legal acts with different titles: laws, orders, decrees, instructions, decisions etc. They have different legal force depending on the law-making subject and issuing state body.
First in the hierarchy of the sources of Ukrainian legislation comes the Constitution of Ukraine. The Constitution of Ukraine is the main law and has the highest legal force. The laws and other legal acts are adopted on its basis and shall correspondent with it.
International treaties ratified by Parliament are considered an integral part of Ukraine’s domestic legislation. Duly ratified international treaties cannot conflict with the provisions of the Constitution of Ukraine. However, in case of conflict with other legal acts the provisions of international treaties will prevail.
There is a number of codified laws in the main areas of national legislation, such as the Civil Code, the Commercial Code, the Criminal Code, the Land Code, the Family Code, the Customs Code, the Tax Code, the Code of Commercial Procedure, the Code of Civil Procedure, the Code of Criminal Procedure, the Labor Code and the Air Code.
Only the Verkhovna Rada is entitled to issue the legal acts in the form of laws (zakony). The laws are adopted strictly in compliance with the Constitution of Ukraine.
The next level of Ukrainian legislation is secondary legislation. Different normative acts in the form of decrees, resolutions, orders, etc, issued by the President, the Cabinet of Ministers, the National Bank, the Ministries and other state agencies are adopted on the basis and in realization of the general provisions of laws.
The President of Ukraine issues decrees (ukaz) and directives (rozporiadzhennya).
The Cabinet of Ministers, within the limits of its competence, issues resolutions (postanova) and directives (rozporiadzhennia). All of the documents produced by the highest state bodies are mandatory for execution by every person on the territory of Ukraine.
In pursuance of the laws of Ukraine, the Ministries, state agencies and committees issue resolutions, directives, regulations, instructions and orders that concern their competence.
Local state administrations and local self-government bodies issue resolutions, orders, decisions etc to ensure the observance of laws and freedoms of citizens, and the implementation of development programs and regional budgets.
The acts of the official interpretation as well as court decisions (except for the decisions of European Court of Human Rights) are not formally the source of laws, but they are taken into consideration when a certain case is considered in courts.
The main areas of Ukrainian legislation are listed below:
Constitutional law comprises the norms devoted to the political and state systems, public order, human rights, freedoms and duties of citizens, legal status of the Verkhovna Rada, the President, the Cabinet of Ministers, other central state authorities and local self-government bodies, the Public Prosecution, the judiciary, territorial structure, state symbols etc. The main source of constitutional law is the Constitution.
Administrative law combines the legal rules that govern activities of state authorities and their relations with individuals. Administrative law consists of a number of laws and secondary legislation. The Code of Ukraine on Administrative Offenses and the Code of Administrative Procedure of Ukraine are the main legal sources of administrative law.
Criminal law includes the legal rules defining crimes, forms of guilt, punishment, discharge or mitigation. The Criminal Code of Ukraine was adopted in 2001 with the aim to support the protection of human and civil rights, property rights, public order and prevent the crimes etc.
Procedural criminal law regulates criminal investigation and court examination. The new Criminal Procedure Code entered into force in November 2012. The new Code introduced previously unknown in Ukrainian law procedures, such as the plea bargaining, the home arrest as the prevention measure for a suspect and the undercover investigation.
The provisions of Ukrainian civil law govern the ownership, intellectual property, contracts, torts, succession etc. The Civil Code is the main law of this sphere.
Civil procedure includes the legal rules governing the procedure of the court consideration and solving the civil, labor and family disputes in Ukrainian courts. This legal field is governed by the Civil Procedural Code of Ukraine.
Competition legislation of Ukraine is based on two main laws.
The Law of Ukraine “On Protection of Economic Competition” of 2001 sets forth the unified rules of competition and defines the measures against monopolization.
The Law of Ukraine “On Protection from Unfair Competition” adopted in 1996 establishes the fundamentals for the protection of business participants and consumers against unfair competition.
Financial law regulates issues of the state budget, banking, tax system etc and its object of regulation includes money, securities and other financial instruments.
Formation of the financial system of Ukraine is in a permanent progress. The Budget Code was enacted by the Verkhovna Rada in 2010.
The main laws in the sphere of banking regulation include the Laws of Ukraine “On National Bank of Ukraine” (1999) and “On Banks and Banking Activity” (2000).
Securities legislation consists of several laws and a number of secondary legislation. The main normative act is the Law of Ukraine “On Securities and Stock Market” adopted in 2006. The Law of Ukraine “On State Regulation of Securities Market in Ukraine” of 1996 determines the framework of state regulation and control over the securities trading. The Law of Ukraine “On Depositary System in Ukraine” adopted in 2012 establishes the procedure for registration of rights to securities and the depository accounting of the latter. In addition, the scope of the law covers the procedure of payments for securities’ transactions.
Insurance services are regulated by the Law of Ukraine “On Insurance” of 1996.
Family law regulates marriage, its solemnization and dissolution, personal ownership and non-property rights and duties of the spouses, relations between parents and children, adoption issues, etc. Such rules are incorporated into the Family Code adopted in 2002.
Intellectual Property Law
The intellectual property rights’ protection is guaranteed by the Laws of Ukraine “On Copyright and Related Rights” (1993), “On Distribution of Copies of Audiovisual Products, Phonograms, Computer Programs, Databases” (2000) etc. The Law of Ukraine “On Protection of Trademarks for Goods and Services” (1993) sets forth the framework for the trademarks for goods and services protection.
The criminal liability for violation of the copyright and related rights is envisaged in the Criminal Code of Ukraine.
Commercial law regulates the main principles of business transactions and other commercial issues. The Commercial Code and Commercial Procedural Code are the main laws of this sphere.
The Civil Code and the Commercial Code regulate the different forms of business in Ukraine.
The Law of Ukraine “On Business Associations” of 1991, establishes the legal forms of business associations, such as general partnership, limited partnership, added liability, limited liability companies and joint-stock companies.
The Law of Ukraine “On joint-stock companies” adopted in 2008 has become one of the most important acts, which regulate legal status of join-stock companies in Ukraine (both public and private).
The new law “On Limited Liability and Additional Liability Companies” is expected to be adopted by the Parliament of Ukraine during the year 2017. The adoption of such law will improve the corporate governance in limited liability and additional liability companies.
On 17 January 2017, the Ukrainian Parliament approved also the Draft Law on Corporate Agreements in the first reading. The draft law is intended to introduce the concept of shareholders’ agreements into Ukrainian legal framework aimed to structure efficiently the relations between participants of limited liability companies and shareholders of joint stock companies. The provisions of the draft law are rather progressive and are aimed to protect investors’ rights and interests. As the draft law is supported by the steering committee, it is anticipated to be passed in its second reading in the Ukrainian Parliament already in 2017.
The reform of bankruptcy legislation in Ukraine was finished by adoption in 1999 of the Law “On Restoration of Debtor’s Solvency or Declaring Debtor Bankrupt” (previously known as the law “On Bankruptcy”) with further profound revisions in 2011 and 2013. This new bankruptcy law is based on a new concept that is more alike to Western countries.
In addition, on 19 October 2016, the Law of Ukraine "On Financial Restructuring" entered into force and will remain effective until 19 October 2019 (except for certain amendments made by the law to the existing legislation). The new law introduces to distressed debtors having outstanding financial indebtedness to at least one Ukrainian or foreign financial institution and whose business is deemed viable the mechanism to restructure their indebtedness in an out-of-court order through negotiations with its creditors and investors, if any.
Investment activity in Ukraine is governed by two basic laws that form this specific sphere of the legislation. The Law of Ukraine “On Investment Activity”, which was adopted in 1991, sets forth the general principles of investing in Ukraine including the forms of investments. The Law of Ukraine “On Regime of Foreign Investment” (1996) provides the specifics of investing in Ukraine by foreign persons and international institutions.
Labor law includes the legal rules combined in the Labor Code of 1971 that governs the matters of the labor contracts, working hours, vacations and rest days, safety at the working place, wages, sick leave and maternity leave, social protection, labor disputes resolution, as well as basics of trade union activity. The Labor Code is the main, but not the sole, legislative act governing employment relationships in Ukraine.
On 5 November 2015, the Verkhovna Rada of Ukraine passed in first reading the draft of a new Labour Code, which is expected to substitute the current Labor Code of Ukraine of 1971. The draft law provides for certain progressive novelties, for example, establishes an obligation to conclude written employment agreements, provides for more flexibility in labor relations, introduces the concepts of divided working hours, self-scheduled working regime, capability of distant work. The text of the draft law is still in process of preparation to the second reading.
Adopted in 2010, the Tax Code codified and updated a number of laws of Ukraine. It set up the general principles of the Ukrainian tax system, as well as the taxes and duties (mandatory payments) which may be levied in Ukraine.
Since Tax Code of Ukraine is subject to regular annual review by Ukrainian legislature, the Parliament of Ukraine adopted on 21 December 2016 the Law of Ukraine titled “On Amendments to the Tax Code in Relation to Improvement of the Investment Environment in Ukraine". The law introduces several novelties with respect to transfer pricing rules such are:
- the increase of financial threshold for controlled transactions and establishment of more comprehensive criteria for defining transactions as controlled ones
- value added tax (such as tax holidays for qualified small businesses with annual income not more than UAH 3 000 000 until 31 December 2021
- cancellation of special VAT regime for agricultural products producers), corporate profit tax (including withholding tax)
- other taxes
Legal profession combines legal practitioners, scholars, members of the judiciary, prosecutors, qualified attorneys, notaries, lawyers (in law firms and in-house lawyers).
As a part of a judicial system reform launched by the Verkhovna Rada of Ukraine in 2016, the Parliament has introduced certain amendments to the Constitution regarding the attorneys' monopoly. Only the attorneys are permitted to represent clients’ interests at Ukrainian courts. However, for now this rule came into force only in relation to representation of clients’ interests at the Supreme Court of Ukraine (from 1 January 2017). Starting from 1 January 2018 the attorneys' monopoly rule will apply to the cases in the courts of appeal and from 1 January 2019 – to the cases in the courts of first instance.
The most significant legal organizations in Ukraine are listed below.
The Academy of Legal Sciences was established in 1992 as the national scientific organization. It carries out the fundamental research in legal science. The Academy participates in lawmaking process and educational activities in Ukraine, protects professional and social interests of its participants, participate in the state policy development.
The Union of Lawyers of Ukraine carries out lawmaking, scientific, methodological, educational and informative activities in Ukraine, protects professional and social interests of its participants, participate in the state policy development.
The Ukrainian Bar Association unites lawyers from all spheres of legal profession in order to protect their professional and other interests, developing the legal profession and Ukraine as a rule-of-law state.
The Association of Advocates of Ukraine is an independent and self-governed all-Ukrainian public organization of Ukrainian advocates. Its aim is to promote authority of the Bar in society, true independence and self-regulation of the Bar and promotion of democratic values in Ukraine.
The Ukrainian Association of Prosecutors has the purpose of protecting legal rights and interests of its members (who have worked in the Prosecution Service of Ukraine) and to maintain the prestige and positive image of the Public Prosecution in Ukraine and abroad.
The Ukrainian Notarial Chamber is a public organization which supports its members in their professional activities, makes efforts to improve notary system and participates in the law-making processes.
The Ukrainian branch of the European Law Students' Association – ELSA Ukraine is comprised of students and recent graduates of the Ukrainian law schools who are interested in law. ELSA promotes values of legal profession, organizes educational events, exchange study and internship programs.
The Law of Ukraine “On Higher Education” (2014) establishes a five-level system of higher education and defines qualification’s requirements for junior bachelor, bachelor, master, doctor of philosophy and doctor of science.
Legal education is organized in accordance with these principles and is provided by the state and private colleges and universities.
The legal profession is rather popular in Ukraine. For this reason, the largest Ukrainian universities have law faculties or affiliated specialized institutes/colleges, for example:
- Kyiv National Taras Shevchenko National University Law Faculty;
- National University of Kyiv-Mohyla Academy Law Faculty;
- Yaroslav Mudryi National Law University
- Lviv National University Law Faculty;
- Kyiv National Economic University Law Faculty
- Faculty of International Trade and Law of the Kyiv National University of Trade and Economics
Certain educational institutions in Ukraine are specialized on particular professions for lawyers, namely:
- Kyiv Law University of the National Academy of Sciences of Ukraine trains specialists for state and law-enforcement agencies, and for scientific and market economy spheres;
- Bar Academy of Ukraine trains barristers and improves their qualifications, and also makes researches in the sphere of bar activities;
- National State Tax Service University of Ukraine is a base educational institution of the State tax service of Ukraine;
- Institute of International Relations of Kyiv Taras Shevchenko University is the leading centre of training specialists in the field of international law;
- National Academy of Internal Affairs trains the specialists for police service;
- National Academy of Prosecutors of Ukraine trains the specialists for the prosecutor’s office.
Legal science is concentrated in educational and research institutions as well as in specialized non-profit organizations and think-tanks. As a rule, they are created with the assistance of different international organizations or governmental agencies of other states in order to assist in developing legislation and promote democracy. The most significant institutions are:
The Centre for Political and Legal Reformsis an analytical centre and non-governmental organization founded to facilitate the reforms in political and legal spheres in Ukraine through performing analytical research, drafting of bills, conducting independent legal examination of bills, holding seminars and conferences.
The public organization the Legislative Initiatives Laboratory was established under the assistance of the National University of Kyiv-Mohyla Academy. It is engaged in the development of Ukraine as a law-ruled state and promotion of its integration to the world democratic community.
The Social-Legal Foundation Chynnist’ zakonu (Rule of Law) has the following main objectives: contributing to the development of legal culture and independent mass-media, protecting citizens’ economic and cultural interests, assisting in the development of the constitutional and legal spheres of Ukraine, legal education and protection of the civil and human rights.
The Commercial Law Center is a non-profit organization working on development of legislation of Ukraine. The Center closely cooperates with the University of Kyiv-Mohyla Academy, the Yaroslav Mudryi Law University of Ukraine and the National Academy of Law Sciences of Ukraine, as well as with other institutions in Kyiv, Kharkiv, Lviv and Odesa.
According to the Constitution, laws and other normative legal acts that determine the rights and duties of citizens shall be brought to the notice of the people, otherwise they are not in force (Article 57). All acts determining the rights and duties of citizens enter into force only after their official publication.
Laws and other acts of the Verkhovna Rada, President, Cabinet of Ministers are officially published in the following print media: Vidomosti Verkhovnoi Rady Ukrainy (the Official Bulletin of the Verkhovna Rada of Ukraine), (the Voice of Ukraine), Ofitsiyny Visnyk Ukrainy (Official Reporter of Ukraine), Uryadovy Kuryer (Governmental Courier), Ofitsiyny Visnyk Presydenta Ukrainy (Official Reporter of the President of Ukraine).
Normative acts of local state administrations and decisions of local self-government bodies are promulgated in the local media.
All court decisions (except for the information considered at closed court sitting) are published in the Unified State database of court decisions. The database provides an open access through the Internet to all available court cases.
The Constitutional Court of Ukraine publishes its decisions and other information in Visnyk Konstytutsiynoho Sudu Ukrainy (the Bulletin of the Constitutional Court of Ukraine).
Decisions and decrees of courts, their interpretations, and court reports are presented in paper-based or electronic versions of the special editions of the Supreme Court of Ukraine (in Ukrainian):
- monthly journal Visnyk Verkhovnoho Sudu Ukrainy (the Bulletin of the Supreme Court of Ukraine);
- Rishennia Verkhovnoho Sudu Ukrainy (the Resolutions of the Supreme Court of Ukraine) which is published twice a year;
- The Judge’s Library provides judges with legal information and methodological guidance.
The international treaties of Ukraine are collected in Zibrannia chynnykh mizhnarodnyhk dogovoriv Ukrainy (the Collection of Current International Treaties of Ukraine) and Ofitsiyny Visnyk Ukrainy (Official Reporter of Ukraine). The Ministry of Foreign Affairs administers the system of registration of the texts of the international agreements.
The only English language specialized printed edition containing Ukrainian laws and materials on business is the monthly magazine The Ukrainian Journal of Business Law (UJBL).
The website of the Verkhovna Rada provides free access to the electronic Laws of Ukraine database, which, inter alia, includes current documents of:
- the Verkhovna Rada of Ukraine;
- the President of Ukraine; and
- the Cabinet of Ministers of Ukraine.
The fee-based computer legal systems LIGA-ZAKON and the Legal Acts of Ukraine (NAU) are reliable sources of legal and business information. In addition to the texts of normative acts, the systems contain legislation of Kyiv as a capital of Ukraine and regions, draft laws with commentaries, materials on court practice, standard business forms, legislation monitoring, glossary, reference materials etc. The built-in automatic translator in Russian and English works in the background mode.
Purpose of legal citation is to identify the source/document which the author refers to in order to allow the reader to locate it. The primary legal materials are cited by the indication of their type and title, issuer, the date of adoption or issuance and number. The bibliography of the secondary legal material must contain the name of its author, title, place of publication, publisher’s name, year of publication and some additional information, if any. These data may be used in different combinations depending on the searching tools of the database.
After Ukraine regained its independence and started the development of its national legislation and legal science, new specialized publishing houses were established, for example:
- Naukova Dumka – scientific and educational editions;
- Justinian – legal periodicals, commented codes, legal acts, monographs by Ukrainian and foreign scholars;
- Yurincom Inter – legal periodicals and books.
The legal market in Ukraine is represented by both international and local law firms. Specified below are some of the major law firms according to the Legal 500 Ukraine.
- Sayenko Kharenko Law Firm enjoys global reputation as a leading Ukrainian law firm with an internationally oriented full-service practice. Sayenko Kharenko specializes in complex cross-border and local matters and regularly handles the largest and most innovative transactions involving Ukraine in the areas of antitrust, banking and finance, capital markets, corporate and M&A, debt restructuring, government relations, IP, international arbitration, international trade, labor and employment, litigation, real estate, taxation and white-collar crime. Sayenko Kharenko is top-ranked in multiple specialised practice areas according to all international legal directories, including Chambers Global, IFLR1000 and The Legal 500. During the past two years, Sayenko Kharenko collected three of the most prestigious professional excellence country awards, more specifically, Law Firm of the Year by each of Chambers Europe Award for Excellence 2015, IFLR European Awards 2015 and Who’s Who Legal European Awards 2015. In 2016, Sayenko Kharenko was crowned Ukraine Law Firm of the Year by Who's Who Legal 2016, and shortlisted in Ukraine Law Firm of the Year category by Chambers Europe Awards 2016. Most recently, the firm has been shortlisted in Russia, Ukraine & the CIS category by The Lawyer European Awards 2017;
- Arzinger is one of the leading Ukrainian law firms headquartered in Kyiv and having its offices in Western and Southern Ukraine. For over 14 years, Arzinger has been among the legal business leaders in view of its prominent experience in a wide range of industries and legal practices;
- Asters is a full-service independent national law firm in which fourteen partners lead a 120 strong staff including 70 lawyers. Being one of the largest law firms in Ukraine, Asters focuses on diverse areas as capital markets, banking and finance, antitrust and competition, corporate, M&A, commercial law etc.
- Eterna Law is a European dynamic, client-oriented full-cycle law firm founded in 2002, which currently employs over 100 professionals and 5 offices (Kyiv, Moscow, Almaty, Riga, Dusseldorf);
- Avellum is one of the leading full-service law firms in Ukraine with key strength in finance, M&A, and dispute resolution;
- Ilyashev & Partners is one of the most authoritative full-service law firms of CEE region, which provides services in almost every practice area to well-known European and American companies, leading Ukrainian companies and financial institutions, law offices, government agencies and consulting companies in Ukraine and overseas;
- A number of international law firms conduct their activities in Ukraine, including Baker McKenzie – CIS, Limited, DLA Piper Ukraine LLC and Dentons.
Foreign Internet Resources:
- NATLEX, the database of national labour, social security and related human rights legislation maintained by the ILO's International Labour Standards Department. It contains abstracts of legislation and relevant citation information. Search by country or subject;
- Ukrainian law and legal issues (in English & Ukrainian);
- Page with information on Ukrainian legal resources at the New York University School of Law Library’s electronic portal
- Ukrainian page at the Legal Reference Libraries LawMoose published by Pritchard Law Webs;
- The Ukrainian page at the World Legal Information Institute databases;
- Cornell Law School Legal Information Institute page with the Ukrainian legal materials.
Ukrainian State Agencies and Public Organizations on the Internet:
- The Central Election Commission is a permanently operating state body, which ensures the preparation and conduct of elections of the Ukrainian President, members of Parliament as well as all-Ukrainian referendums. The CEC also provides assistance and support during elections to local councils of villages, settlements and cities and for local referendums;
- The Council of National Security and Defence of Ukraine is an advisory council which aims to coordinate and control the activity of bodies of executive power in the sphere of national security and defence;
- The Ukrainian Chamber of Commerce and Industry is a non-government non-profit self-governing organisation incorporating on a voluntary basis legal entities and Ukrainian citizens registered as entrepreneurs as well as their associations. It has the main objective is creating favourable conditions for the national business environment, representing concerns and protecting interests of the country business community at all levels including highest government bodies, supporting direct relations with foreign business partners in economy, science and trade, attracting investors and preparing investment projects or business plans.
- Official information server, State Property Fund of Ukraine the main state authority which is engaged in governing of state property and its privatization;
- The Databases of the industrial property objects (IPOs - inventions, utility models, industrial designs, etc.); information on activities of State Company “Ukrainian Institute of Industrial Property” (Ukrpatent); explanations concerning filing of applications for documents of title for IPOs, etc;
- The Ukrainian Agency of Copyright and Related Rights (UACRR) is a state enterprise established with the aim of collective administration of authors’ rights and subjects of related rights or their successors;
- The High Council of Justice is an advising judicial and control-revisionary government body in Ukraine whose main objectives are to advise on the appointment or release of judges, examine the cases of infringements, and execute disciplinary proceedings involving the judges.
Business Information Resources On-line:
- The Business Directory of Ukraine;
- Database about enterprises under bankruptcy procedure;
- Comprehensive information about the stock market of Ukraine and its participants from the National Commission on Securities and Stock Market;
- The official web-site of the Ukrainian Stock Exchange.
Law Clinics in Ukraine:
- The site of the Ukrainian Law Aid Foundation .
Other Internet Resources:
- UN in Ukraine;
- The US Department of State on the human rights protection in Ukraine;
- The Ukrainian Congress Committee of America;
- The Ukrainian Weekly newspaper publishes news about Ukraine and Ukrainians around the world;
- The National News Agency of Ukraine UKRINFORM;
- English-language printed and on-line newspaper Kyiv Post offers news and reports from Kyivin areas of politics, business, and culture (updated daily).