News (#5-6 May-June 2020)


Draft law on banning import of energy, coal and potatoes from Russia initiated

MP Andrii Herus, chairman of the parliamentary committee on energy, housing and utilities services, initiated a Draft Law to introduce a total ban on the import of electric energy, hard coal and anthracite, as well as potatoes from the Russian Federation. Related alternative Draft Law No. 3262-1 was registered in Parliament on 10 April. “The sale and/or supply of electric energy imported from the Russian Federation under bilateral agreements is prohibited on the day-ahead market, on the intraday market and on the balancing market,” the document states. The current Draft Law prohibits the purchase of electric energy from Russia only under bilateral agreements and on the intraday market. Moreover, in the Draft it is proposed to introduce a ban on the import of goods originating from Russia into the customs territory of Ukraine. In particular, it includes fresh potatoes, as well as hard coal, anthracite and other types of solid fuel derived from coal.


Draft law on exercising public financial control in Ukraine

On 17 April 2020, the Draft Law  On Amendments to the Law of Ukraine on the Basic Principles of Exercising Public Financial Control in Ukraine was registered with Parliament for consideration (No. 3357).

The function of control over compliance with the legislation on public procurements is assigned to the Office of Financial Control. Prior to reorganization, which began on 12 February 2020, this function was performed by the State Audit Service of Ukraine.

In 2019, the State Audit Service of Ukraine, in unison with its territorial subdivisions, conducted 8,816 actions on procurement monitoring and found violations in 4,884 procurements, which were not eliminated. At the same time, fines in courts were imposed in less than 1% of all found and non-eliminated violations, which is due to the inability of officials of the State Audit Service of Ukraine to obtain personal data about chairpersons, secretaries, and members of the tender committees from the heads of public procurement authorities (or otherwise) to include this data in the decisions on holding them liable for violations of legislation on procurement and their further filing to courts.

The objective of the Draft Law is to provide the Office of Financial Control with access to personal databases, whose owners and administrators are state authorities and bodies of local self-government, to perform its tasks effectively.


Parliament adopted draft law to impose moratorium on initiation of bankruptcy proceedings against Energorynok

The Ukrainian Parliament has adopted a draft law in its first reading that amends the Bankruptcy Procedures Code of Ukraine, which provides for the protection of State Enterprise Energorynok from bankruptcy and the creation of conditions for repayment of debts formed on the wholesale electricity market before 1 July 2019.

According to the draft, the Economic Court refuses to open bankruptcy proceedings against SE Energorynok and will close such proceedings if the SE acts as a debtor.

Moreover, the moratorium on satisfaction of creditors’ claims in bankruptcy proceedings, according to the Draft Law, does not apply to the period of settlements of electricity market participants under the law on measures to repay debts incurred on the wholesale electricity market (if adopted, Draft Law No. 2386 - ІФ).

According to the explanatory note to the Draft Law, its purpose is to create appropriate conditions at state level for the transition to a new competitive model of the Ukrainian electricity market, by ensuring timely implementation of all debt repayment mechanisms on the wholesale electricity market.


Parliament adopts draft on return of assets from abroad with help of Litigation Funds

The Verkhovna Rada of Ukraine has adopted in the first reading Draft Law No. 3304 on improving legal regulation of relations arising in the context of representation and protection of the rights and interests of Ukraine in foreign jurisdiction bodies in disputes and cases related to assets.

There is a widespread mechanism in the world, which provides for involvement by the state to funding the process of so-called Litigation Funds, which develop strategies and tactics of the necessary legal mechanisms, independently involve law firms in necessary foreign jurisdictions, and invest their own funds in cases with good prospects on the return of criminally obtained assets, and the profit is received as a share of the funds actually returned to the victim (in this case – the state). Therefore, the state does not spend budget funds on legal support of the outlined claim work, and does not bear material risks in the event of loss. On the contrary, winning such a case in civil proceedings ensures the return of funds to the state, which is virtually impossible within criminal proceedings.

In order to implement this international practice in Ukraine, it is necessary to empower one of the state authorities to initiate and organize representation of the interests of the state in civil proceedings in foreign jurisdictions in cases related to the return of illegal assets to Ukraine.

Therefore, it is assumed that the Asset Recovery and Management Agency will ensure representation and protection of the rights and interests of Ukraine in foreign jurisdiction bodies in disputes and cases related to assets that directly or indirectly come from the territorial jurisdiction of Ukraine.

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