This is a new legal profession, introduced following the adoption on 2 June 2016 of the Law of Ukraine “On the Bodies and Persons Carrying Out Enforced Execution of Court Decisions and Decisions of Other Bodies” and of the new version of the Law of Ukraine “On Enforcement Proceedings”.
On 5 October 2016, the new version of the Law of Ukraine “On Enforcement Proceedings” came into force, together with the Law of Ukraine “On the Bodies and Persons Carrying Out Enforced Execution of Court Decisions and Decisions of Other Bodies”, which in turn replaced the outdated Law of Ukraine “On the State Enforcement Service”. These laws were intended to reform the system of enforced execution of decisions and to introduce a mixed system for the execution of court decisions, modelled on that of many modern foreign countries. Today, the enforcement system in Ukraine consists of the State Enforcement Service and private enforcement officers of Ukraine.
Private enforcement officers — requirements and powers
In order to understand who private enforcement officers are, what the purpose of establishing the institution of private enforcement officers in Ukraine is, and how they will operate in practice, it is first of all necessary to recall that the successful conclusion of court proceedings does not guarantee the creditor immediate and prompt execution of the claims upheld by the court. In many cases, recovery under a court decision cannot be enforced at all, or only over a long period of time. The problem of enforcing court decisions in our country is very acute. Against the backdrop of the unsatisfactory state of execution of court decisions, the need to reform enforcement proceedings can hardly be doubted.
Private enforcement officers cannot be regarded as something entirely new, since a similar institution has long been operating successfully in the countries of the European Union, as well as in many post-Soviet states. Moreover, in a number of national legal systems private enforcement officers have entirely replaced the state enforcement service.
The laws “On the Bodies and Persons Carrying Out Enforced Execution of Court Decisions and Decisions of Other Bodies” and “On Enforcement Proceedings”, adopted by the Verkhovna Rada on 2 June 2016, launched a comprehensive reform of the enforced execution of decisions of courts and other bodies. The principal innovation of the adopted laws, and the cornerstone of the reform concept embodied in them, is the introduction of the institution of private enforcement officers, who will operate alongside the State Enforcement Service and perform the functions of enforced execution of decisions of courts and other bodies.
It is the institution of private enforcement officers that became the central novelty of the legislation. After all, the Law of Ukraine “On the Bodies and Persons Carrying Out Enforced Execution of Court Decisions and Decisions of Other Bodies”, adopted on 2 June 2016, is intended to become, so to speak, a “panacea” for the many problems that have accumulated in recent years. I will not dwell on these problems, as they are well known; instead, I will focus on certain advantages.
What advantages does turning specifically to a private enforcement officer offer claimants?
Competence? Yes! Competence! Under the law, the requirements for a state enforcement officer include Ukrainian citizenship, a higher legal education of at least the second level, command of the state language, and the ability, by virtue of one’s personal and professional qualities, to exercise the powers of a state enforcement officer. The requirements for a private enforcement officer, however, are more substantial and specific! In addition to those listed above, the Law establishes an age qualification — having reached the age of 25; work experience in the field of law of no less than two years after obtaining the relevant diploma; and passing a qualifying examination, which is conducted in the form of automated anonymous testing. Furthermore, before commencing activity, a private enforcement officer is obliged to insure their civil liability towards third parties. The minimum sum insured under such an insurance contract must amount to 10 per cent of the total amount of recovery under enforcement documents, but no less than 1,000 minimum wages as at the beginning of the relevant calendar year.
High requirements are imposed on candidates for private enforcement officers; one must spend a certain amount of time and considerable effort to obtain the right to engage in this activity, and then to find one’s client. This is a new and interesting profession that offers professional growth and financial motivation.
Second — oversight. Oversight of private enforcement officers, unlike that of state ones, is established and regulated more clearly. Thus, oversight of a private enforcement officer’s activity is exercised through scheduled and unscheduled inspections conducted by the Ministry of Justice of Ukraine. Oversight functions are also vested in a new body within the enforcement proceedings system — the Council of Private Enforcement Officers of Ukraine. The consideration of matters concerning bringing private enforcement officers to disciplinary liability for disciplinary offences, the list of which is exhaustive, is entrusted to the disciplinary commission of private enforcement officers. Until the disciplinary commission of private enforcement officers is formed, its powers are exercised by the Temporary Disciplinary Commission.
Third — the private enforcement officer’s personal interest in executing the decision. Whereas the salary of a state enforcement officer consists of an official salary, a bonus, a supplement for rank, and a supplement for length of service, the remuneration of a private enforcement officer looks more attractive. In particular, the remuneration of a private enforcement officer consists of basic and additional remuneration. Depending on the enforcement actions to be taken in the enforcement proceedings, the basic remuneration is established as: a fixed sum — in the case of executing decisions of a non-property nature; or a percentage of the amount subject to recovery, or of the value of the property subject to transfer under the enforcement document.
In paragraph 19 of the Procedure for the Payment of Remuneration of State Enforcement Officers and Its Amounts and the Amount of the Basic Remuneration of Private Enforcement Officers, the Cabinet of Ministers of Ukraine established that a private enforcement officer who has ensured full or partial execution of an enforcement document of a property nature in the manner established by the Law of Ukraine “On Enforcement Proceedings” receives a basic remuneration of 10 per cent of the amount recovered or of the value of the property subject to transfer under the enforcement document. A private enforcement officer who, in the manner established by the Law of Ukraine “On Enforcement Proceedings”, has ensured the actual execution in full of an enforcement document of a non-property nature in which the debtor is a natural person receives a basic remuneration of two minimum wages, and under an enforcement document of a non-property nature in which the debtor is a legal person — four minimum wages.
It is the claimant who has the right to decide to which enforcement officer (state or private) to submit the relevant enforcement document for execution. Under the law, the claimant has the right not only to choose between a private and a state enforcement officer, but also the ability to independently select a private enforcement officer from among those whose details have been entered into the Unified Register of Private Enforcement Officers of Ukraine. Natural or legal persons freely select a private enforcement officer by accessing information in the Unified Register of Private Enforcement Officers, which is free of charge and available on the official website of the Ministry of Justice around the clock, without restrictions, with the ability to search, view, copy and print information without the use of any special software.
In Western countries, the profession of private enforcement officer is one of the most prestigious and respected in the legal field. There is hope that it will be the same in Ukraine. With the emergence of private enforcement officers, the number of executed decisions will increase significantly, execution times will be shortened, additional jobs will be created, claimants will receive higher-quality services thanks to competition, and debtors will receive an optimal, conflict-free resolution of issues relating to their obligations.
The introduction of the institution of private enforcement officers in Ukraine is a necessary and positive step, as it will relieve the burden on the bodies of the State Enforcement Service, optimise the process of executing court decisions, and resolve the problem of corruption in this sphere. The state, as in many other types of professional activity, must exercise strict oversight of the qualification level of the persons who will directly engage in such activity, as well as act as a regulator of relations in this sphere, ensuring constant oversight of compliance with the conditions for carrying out the above-mentioned activity.
What is important to know when submitting an enforcement document for execution:
Which decisions are subject to enforced execution?
In accordance with Article 3 of the Law of Ukraine “On Enforcement Proceedings”, the following enforcement documents are subject to enforced execution:
- writs of execution and orders;
- rulings and resolutions of courts;
- executory inscriptions of notaries;
- certificates of labour dispute commissions;
- resolutions of state enforcement officers on the recovery of the enforcement fee
resolutions of state enforcement officers or private enforcement officers on the recovery of the costs of enforcement proceedings,
on the imposition of a fine,
resolutions of private enforcement officers on the recovery of basic remuneration; - resolutions of bodies (officials) authorised to consider cases concerning administrative offences;
- decisions of other state bodies and decisions of the National Bank of Ukraine which are recognised by law as enforcement documents;
- judgments of the European Court of Human Rights;
- decisions (resolutions) of entities of state financial monitoring (their authorised officials).
Which decisions are subject to enforced execution by private enforcement officers?
Private enforcement officers carry out the enforced execution of all the decisions defined above, EXCEPT:
- decisions on the removal and transfer of a child, the establishment of visits with the child, or the removal of obstacles to visiting the child;
- decisions in which the debtor is the state, state bodies, the National Bank of Ukraine, local self-government bodies, their officials, state and municipal enterprises, institutions and organisations, legal persons in which the state’s share in the authorised capital exceeds 25 per cent, and/or which are financed exclusively from the state or local budget;
- decisions in which the debtor is a legal person whose property is prohibited from enforced sale in accordance with the law;
- decisions in which the claimants are the state or state bodies;
- decisions of administrative courts and judgments of the European Court of Human Rights;
- decisions providing for actions with respect to property in state or municipal ownership;
- decisions on the eviction and resettlement of natural persons;
- decisions in which the debtors are children or natural persons who have been declared legally incapable or whose civil capacity is limited;
- decisions on the confiscation of property;
- decisions the execution of which is assigned by the Law of Ukraine “On Enforcement Proceedings” directly to other bodies that are not enforcement bodies.
What requirements does the law establish for an enforcement document?
An enforcement document must specify:
- the title and date of issue of the document, the name of the body, and the surname, first name, patronymic and position of the official who issued it;
- the date of adoption and the number of the decision pursuant to which the document was issued;
- the full name (for legal persons) or the surname, first name and, where available, patronymic (for natural persons) of the claimant and the debtor, their location (for legal persons) or place of residence or stay (for natural persons), and the date of birth of the debtor who is a natural person;
- the identification code of the legal person in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations of the claimant and the debtor (for legal persons — where available);
- the registration number of the taxpayer’s record card or the series and number of the passport (for natural persons who, on account of their religious beliefs, have refused in the established manner to accept a taxpayer’s record card registration number and have notified the relevant supervisory body accordingly and have a corresponding mark in their passport) of the debtor (for natural persons who are taxpayers);
- the operative part of the decision, providing for measures of enforced execution of decisions;
- the date on which the decision entered into legal force (except for decisions subject to immediate execution);
- the time limit for submitting the decision for execution.
If the decision is adopted in favour of several plaintiffs or against several defendants, as well as if property located in several places is to be transferred, or if the operative part of the decision provides for the performance of several actions, the enforcement document shall specify one debtor and one claimant, and shall also determine in what part such decision is to be executed, or state that the obligation or right of recovery is joint and several.
The enforcement document is signed by an authorised official indicating their surname and initials and is sealed with a stamp.
Affixing the enforcement document with a stamp bearing the State Emblem of Ukraine is mandatory if the body (official) that issued the enforcement document is required by law to have such a stamp.
In what case is an enforcement document returned to the claimant by a private enforcement officer without being accepted for execution?
An enforcement document is returned to the claimant without being accepted for execution within three working days from the day it is submitted if:
- the decision on the basis of which the enforcement document was issued has not entered into legal force (except in cases where the decision has been allowed for immediate execution in the manner established by law);
- the statutory time limit for submitting the enforcement document for execution has been missed;
- the debtor has been declared bankrupt;
- the National Bank of Ukraine has taken a decision to revoke the banking licence and liquidate the debtor bank;
- the legal person — the debtor has been terminated;
- the enforcement document does not meet the requirements provided for in Article 4 of the Law, or if the claimant has not submitted an application for the enforced execution of the decision in accordance with Article 26 of the Law;
- the execution of the decision does not provide for the application of measures of enforced execution of decisions;
- the claimant has not provided confirmation of payment of the advance payment, where such advance payment is mandatory;
- the enforcement document is not subject to execution by a private enforcement officer;
- the enforcement document has been submitted other than at the place of execution or other than according to jurisdiction.
If the enforcement document fails to meet the requirements provided for in this Article, the claimant has the right to apply to the court or other body (official) that issued the enforcement document to bring it into conformity with the said requirements.
When an enforcement document is returned to the claimant without being accepted for execution, the advance payment paid by the claimant is refunded.
May a private enforcement officer accept enforcement documents for enforced execution without any limit on the amount of recovery (for example, if the amount of the debt is UAH 30 million)?
During the first year of engaging in the activity of a private enforcement officer, a private enforcement officer may not carry out the enforced execution of decisions in which the amount of recovery is twenty million hryvnias or more or an equivalent amount in foreign currency.
And until 1 January 2018, a private enforcement officer carries out the enforced execution of enforcement documents in which the amount of recovery is no more than six million hryvnias or an equivalent amount in foreign currency.
May an enforcement document that is already being executed by the bodies of the State Enforcement Service be transferred to a private enforcement officer?
Yes, at the claimant’s request an enforcement document may be transferred from one private enforcement officer to another, or to the relevant body of the State Enforcement Service, or from a body of the State Enforcement Service to a private enforcement officer, with a corresponding resolution being issued in this regard.
Does the current legislation define jurisdiction with respect to the acceptance of enforcement documents for execution?
A private enforcement officer accepts enforcement documents for execution at the place of residence or stay of the debtor who is a natural person, at the location of the debtor who is a legal person, or at the location of the debtor’s property.
Enforcement actions in enforcement proceedings opened by a private enforcement officer within an enforcement district may be performed by them throughout the entire territory of Ukraine.
The execution of a decision obliging the debtor to perform certain actions is carried out by the enforcement officer at the place where such actions are performed.
The enforcement officer has the right to perform enforcement actions to levy recovery against the debtor’s income, to identify and levy recovery against funds held in the debtor’s accounts at banks or other financial institutions, and against securities accounts at depository institutions within the territory over which the jurisdiction of Ukraine extends.
What is required for a private enforcement officer to open enforcement proceedings?
What must be submitted together with the enforcement document?
The enforcement officer commences the enforced execution of a decision on the basis of an enforcement document upon the claimant’s application for the enforced execution of the decision.
In the application for the enforced execution of a decision, the claimant has the right to indicate information that identifies the debtor or that may facilitate the enforced execution of the decision (the debtor’s account, place of work or where they receive other income, specific property of the debtor and its location, etc.), accounts at banking institutions for receiving the funds recovered from the debtor, and also indicates the amount partially paid by the debtor under the enforcement document, where partial payment has been made.
To the application for the enforced execution of a decision, the claimant attaches a receipt confirming payment of the advance payment (in the amount of 2 per cent of the amount subject to recovery, but no more than 10 minimum wages, and for a decision of a non-property nature and decisions on securing a claim — in the amount of one minimum wage from a debtor who is a natural person and two minimum wages from a debtor who is a legal person).
Must a private enforcement officer additionally recover the enforcement fee from the debtor for the benefit of the state?
The enforcement fee is not recovered where the decision is executed by a private enforcement officer;
When an enforcement document is transferred from a body of the State Enforcement Service to a private enforcement officer, the enforcement fee is likewise not recovered if it had not been recovered at the time of transfer.
Where part of the enforcement fee has been recovered at the time the enforcement document is transferred to the private enforcement officer, the recovered part of the enforcement fee is not subject to refund.