26 December 2022

Andrii HVOZDETSKYI, partner, Head of Litigation & Dispute Resolution
Dmitrii SHAHIRMANOV, senior Associate of Litigation & Dispute Resolution  

Despite a certain pause that was inevitable in the first months of the war, Ukrainian courts have adapted to the realities of nowadays and to the need to carry out judicial proceedings even in the conditions of enemy attacks that can happen at any moment, unpredictable and long-lasting air alarms, in view of which any court hearing can be interrupted or postponed, and in the conditions of constant change of territorial jurisdiction of certain courts. According to the Unified State Register of Court Decisions, from January 1 to December 1 this year. the Supreme Court has passed almost 19,000 decisions, which is only 30% less than the last year corresponding figure.


The judicial practice developed in 2022 is not only about solving legal problems related to sovereign immunity, but also cases concerned banning political parties, the application of legislation in conditions of martial law and answering the question of whether the war has become a force majeure for everyone. Moreover, the Supreme Court eventually has developed legal positions on issues related to the application of procedural law provisions, ambiguous approaches to which courts demonstrated earlier.

That is because of time freed up thanks to the increasing of hearing duration of the cases by courts of the first and appellate instances and a certain decrease of the Supreme Court workload. Considering that a predictable and understandable court procedure is a basis for the complete establishing of all the circumstances of the case and its correct resolution, such positions of the highest court in the judicial system of Ukraine, formed in 2022, has drawn our attention.

Thus, in the decision dated August 10, 2022, in case No. 202/4233/16, the Grand Chamber of the Supreme Court pointed out the impossibility of appellate review in the order of simplified proceeding without summoning the parties of the cases to the court hearing in circumstances of a non-property claims.

The Grand Chamber of the Supreme Court in the resolution dated September 7, 2022, in case No. 910/22858/17 also mentioned the need to take into account legal conclusions regarding the application of legal provisions, regardless of whether they are set forth in court decisions that finally resolve the dispute, or in court decisions of the Supreme Court, which referred the case for a new consideration.

Clarifying the nature and purpose of the institution of injunctive relief, the joint chamber of the Civil Court of Cassation of the Supreme Court in the decision dated April 18, 2022 in case No. 705/4132/19 formed the conclusion that in the event of closing the proceedings in the case on the grounds that it has to be considered according to the rules of another judicial procedure (jurisdiction), injunctive relief should not be cancelled, since the consideration of this case has not been completed, the court decision on the merits has not been passed, and therefore the need to secure the claim in a case has not disappeared.

Considering case No. 914/1003/21, in the resolution dated July 15, 2022, the Commercial Court of Cassation of the Supreme Court noted that in commercial, business, or personal e-mail correspondence between private individuals, it is presumed that the message was sent to the person who is listed as the sender of the e-mail or who signed on its behalf the text of the message itself. Following this, the court of cassation in the decision dated on August 3, 2022 in case No. 910/5408/21, concluded that the absence of a qualified electronic signature does not cause the unreliability of certain data in electronic form, and the unreliability of electronic evidence, and because of that the non-using of an electronic signature by the persons who created the electronic evidence (letter, message, file, audio recording, other data) should not be the grounds for declaring such evidence inadmissible.

In the same decision, the Supreme Court has applied the “letter in response” doctrine and indicated: if it is proved that a letter or a message was sent to a certain person, then the message, which is a reply, should be considered authentic without additional evidence.


The Supreme Court put another point in the long-term dispute between JSC “Farmak” and PrJSC “Pharmaceutical firm “Darnytsia” regarding the mark for goods and services “Korvalol-Darnytsia”. Thus, by the decision of the Commercial Court of Cassation of the Supreme Court dated June 30, 2022, in case No. 910/13908/17, the court upheld the ruling of the first-instance court to refuse to grant the application for court decision review due to n newly discovered circumstances, leaving in force the decision of the Kyiv City Commercial Court on refusal to invalidate the certificate for the “Korvalol-Darnytsia” mark. The Supreme Court formed a legal opinion that the specifics of reviewing a court decision due to newly discovered circumstances do not involve re-evaluating all the evidence in the case, re-examining all the circumstances of the case, as well as verifying the validity of all the conclusions stated in the court decision, the review of which is submitted. Therefore, during a review due to newly discovered circumstances, the court must examine the court decision only within the limits of the discovered circumstances, checking the presence or absence of grounds for the conclusion that taking such circumstances into account would be important in resolving the dispute.


The above-mentioned legal conclusion is interesting in view of another case – the decision dated August 3, 2022 in case No. 910/11027/18, the Grand Chamber of the Supreme Court satisfied the application for review under newly discovered circumstances of its decision, which satisfied the claim of the DGF against the related parties of PJSC “SB “Ukoopspilka”, and has sent the case to the court of first instance for a new consideration. Last year, the decision in this case became the first final court decision in the category of cases on recovery by the Deposit Guarantee Fund of losses caused to the bank from related persons. Eight judges of the Great Chamber of the Supreme Court disagreed with the decision, and in a separate opinion called the application for review of the decision due to newly discovered circumstances “a veiled appeal procedure.”

This decision is not the only one among “bankfall” cases.

Thus, in the decision dated on June 29, 2022, in case No. 757/60479/19, the Civil Court of Cassation of the Supreme Court confirmed the decision of the appellate court on the refusal to collect property damage from the National Bank of Ukraine and the DGF in favor of the shareholders of Bank Veles JSC. The demands of the plaintiffs were since the decision of the regulator to revoke the banking license and the decision of the DGF to liquidate the bank were recognized as illegal by the court. According to the named the actions of the NBU and the DGF itself, according to the plaintiffs, caused the shareholders impossibility to freely dispose of their own property — the corporate rights of the liquidated banking institution. The Civil Court of Cassation of the Supreme Court came to the conclusion that the plaintiffs continue to be shareholders of the bank during its liquidation procedure and indicated the absence of a cause-and-effect link between the recognition of the decisions of the NBU and the DGF, which became the basis for the bank removal from the market, and the losses substantiated by the plaintiffs.

Another attempt to lay the foundation for the nationalization of JSC PrivatBank appeal was rejected by the Administrative Court of Cassation of the Supreme Court, which by its decision dated on July 26, 2022 in case No. 826/6664/17 has satisfied the cassation of JSC PrivatBank and refused to recognize the invalidation and to cancel the National Bank of Ukraine order that established the existence of formal grounds for declaring the bank insolvent.


The trend set last year to find mechanisms to achieve a real possibility of recovery at least at the expenses of joint and subsidiary debtors continued in the Supreme Court legal provisions in 2022.

Despite this, in our opinion, the Supreme Court failed to form a unified approach to the application and implementation of judicial practice for the effective operation of such a mechanism.

In particular, the Supreme Court adopted a decision dated June 9, 2022 in case No. 904/76/21, in which the Commercial Court of Cassation of the Supreme Court actually laid out a textbook on bringing liquidating legal entity managers to joint liability and referred the case for a new trial to the court of first instance.

The court stated the reasons, the subject of proof, the criteria for establishing the fact of the threat of insolvency, the conditions necessary for establishing joint liability.

It is also decisive within the mentioned decision that the Supreme Court stated the following: “In order to maintain the balance of interests of creditors and the debtor, the court must take an active procedural position while checking the presence of signs of the threat of the debtor insolvency as a necessary condition for bringing the debtor manager to the responsibility specified in part 6 of the article 34 of the Liquidation Procedure Code of Ukraine.

The Supreme Court entrusts the lower courts with the duty of establishing the presence or absence of conditions for the bringing the debtor managers to the joint liability and steps back from the court “passivity” in this matter. In addition, the court emphasized that consideration of the issue of imposing joint liability on the manager of the debtor can be carried out at any stage of the bankruptcy proceeding.

Although the Supreme Court did not make any revolutionary conclusions in the above decision, it follows from the content of the court decision that currently the Commercial Court of Cassation of the Supreme Court is really trying to explain to the courts of lower instances how exactly the specified mechanism should be applied, settling a road map concerned bringing debtor managers to the joint liability. We’ll see how it works.


Also, the quite interesting decision was adopted by the Supreme Court on June 15, 2022 in case No. 905/671/21, by which the dispute on the minority shareholder claim against private joint-stock company (issuer) on appealing the squeeze-out procedure had been resolved.

The reason for filing the lawsuit was the minority’s disagreement with the share price, according to which the squeeze-out has been carried out.

What is significant in this case that the Supreme Court did not step back from its own legal position that the price of shares, at which the squeeze-out procedure is carried out, should be not only market but also fair.

Although the Supreme Court drew attention to this in its decisions in 2021, however the court decision dated June 15, 2022 provided clear criteria for determining this fairness.

The concept of “fairness” when determining the price of a share that is compulsorily purchasing from a minority shareholder does not constitute a specific size or amount, but implies compliance by the issuer (supervisory board) with the procedure for determining the market value of shares provided by law, which is determined as the highest price according to the established methods assessment (determination), regulated by prescriptions of Part 5 of Art. 65-2 of the Law of Ukraine “On Joint-Stock Companies”.

Applying the property method of stipulating the price of a share, which means the determining of such a price in view of the value of the issuer’s assets, the Supreme Court concludes that the market of shares in Ukraine exists, rather, formally, due to which the stock exchange price cannot serve as an indicator of its real value.

The Supreme Court drew attention to the fact that the approval of the valuation of the shares by the supervisory board cannot be only a formal process in the squeeze-out procedure because the validation of the procedure depends on the determination of the fair value of the shares.

In addition, the Supreme Court critically accepted the determination of the price of a share included in a minority stake (with reference to the fact of being in a minority stake), because the latter is not attractive to potential buyers (due to the lack of decisive influence on the activities of the company), but is significant interesting exclusively for the owner of the majority block of shares.

In this regard, the Supreme Court concluded that the price of a share should be determined not as one of a minority stake, but as one of 100%. In such case the minority owner can expect to receive fair compensation, which confirms the good faith of the majority owner during the squeeze-out procedure.


The Supreme Court’s application of the “piercing the corporate veil” doctrine in the above case is also quite interesting. Although this is not a brand-new attempt, we believe that the gradual implementation of such principle will significantly affect the quality of economic litigation, and therefore the investment attractiveness of the country.

Within the scope of the case, the buyer of the minority stake (the person who sent the issuer an irrevocable request to purchase shares) was a legal entity – a non-resident who does not own a majority stake, so the defendant in the case insisted that the proper person who should be sued is a buyer.

The Supreme Court, rejecting such arguments, came to the conclusion that the current legislation, allowing the compulsory buyout of shares of minority owners not only by the majority shareholder, but also by related persons or persons related to him according to the agreement, provides a wide area for abuses, as a result of which the buyout can be carried out at an unfairly low price, after which the buying company will cease to exist, avoiding any legal liability, that is is unacceptable.

On the basis of the clarified circumstances, the court of cassation concluded that the buyer is a legal entity affiliated with the majority owner and ruled that the minority owner during the appeal of the squeeze-out procedure has the right to sue both the majority owner, its affiliates, and the shares issuer.

With regard to proving in this category of cases, the Supreme Court once again noted that due to defects in the procedural legislation, which do not allow shareholders to file a collective lawsuit, each shareholder must individually prove the facts and circumstances that have already been established by the court in another case in a dispute with the company but are not prejudicial in view of the scope of the subjects of the dispute.

At the same time, the Commercial Court of Cassation of the Supreme Court drew attention to the fact that if the Supreme Court concluded that the market price of shares was significantly undervalued in the process of the same squeeze-out, regarding the same issuer and the same decisions of its bodies, but based on the claims of different shareholders, then the commercial court in another case cannot make the opposite conclusion that the market price established by the same decision of the body is fair for another minority shareholder, because this would contradict the principle of legal certainty and the rule of law, and would violate the principle of equal treatment of the company’s shareholders.

Therefore, the red lines of the regulation of the squeeze-out procedure in the way of good business practice are getting clearer every time.


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