Possible Legal Remedies if a State of Emergency will be Introduced in Ukraine
As the number of coronavirus cases reported in Ukraine increases, state authorities keep actively debating the necessity of introducing a State of Emergency in Ukraine to cope with the COVID-19 outbreak.
Because of the global pandemic, a State of Emergency has already been declared by the United States, Portugal, Senegal, New Zealand, Papua New Guinea, Indonesia, as well as by many federal provinces or regions of different countries. 
- Implications of Declaring a State of Emergency in Ukraine
- Emergency Situation
- State of Emergency
- Legal Remedies Available During the State of Emergency
- Compensation of damages
- Appeal to responsible authorities for protection
- Suspension of contractual obligations as a result of force majeure
1. IMPLICATIONS OF DECLARING A STATE OF EMERGENCY IN UKRAINE
According to Article 1 of the Law of Ukraine “On Legal Regime of Emergency State” dated 25 April 2000 No. 1550-III (the “Law of Ukraine No. 1550-III”), the State of Emergency is a special legal regime that may be temporarily introduced in Ukraine or some of its territories in case of an situation, which is of national significance and that has caused or may cause human and material losses, threaten citizens’ lives and health, etc. This legal regime provides for vesting state bodies, military command and municipal authorities with powers necessary to:
- eliminate existing threats and ensure citizens’ safety;
- ensure normal functioning of the national economy, state and municipal authorities;
- protect the constitutional order of Ukraine.
It is important to differentiate between two legal definitions: “Emergency Situation” and “State of Emergency“.
(i) Emergency Situation
An Emergency Situation may be declared on national or regional levels either by the Cabinet of Ministers of Ukraine (the “CMU“) based on a proposal of the State Commission on Technogenic and Ecological Safety and Emergency Situations or by the Commission’s equivalent structure under individual state administrations. An emergency situation can be declared in case of disasters, natural disasters or epidemics. After declaring an emergency:
- situation operational headquarters must be created;
- responsible persons appointed;
- the affected population must be promptly informed;
- economic facilities should stop working.
Last year an emergency situation was declared in different parts of Ukraine 199 times. On 24 March 2020 a nation-wide emergency situation was declared by the CMU for 30 days.
The State of Emergency is a special legal regime that may be temporarily introduced in Ukraine or some of its territories in case of an situation, which is of national significance and that has caused or may cause human and material losses, threaten citizens’ lives and health, etc.
(ii) State of Emergency
According to Article 5 of the Law of Ukraine No. No. 1550-III, a State of Emergency may be declared by Presidential decree and with the prior consent of the Ukrainian Parliament within two days. This is a special legal regime, which provides for expansion of powers of state bodies and restriction of constitutional rights of citizens (restriction of movement, re-profiling of private enterprises to work for the needs of the state, production of necessary products).
It is worth noting that a State of Emergency can be temporarily introduced in a particular region, as well as across the whole country. Such a legal regime shall last not more than 30 days and not more than 60 days in certain localities. If necessary, the state of emergency may be extended by the President of Ukraine, but for no more than 30 days. Meanwhile, there are no clear terms for this emergency regime.
The Decree on declaring a State of Emergency envisages the following:
- justification for introducing the State of Emergency;
- boundaries of the territory where the state of emergency is imposed;
- start date and timeframe for which such a legal regime is entered;
- list of emergency measures along with their limits;
- an exhaustive list of constitutional rights and freedoms of which a person and a citizen are
temporarily deprived due to the introduction of the emergency state;
- list of temporary restrictions that apply to rights and interests of legal entities, indicating the period of such restrictions validity;
- state bodies, military command and municipal authorities charged with implementing emergency measures and limits of their additional powers, etc.
The list of possible emergency measures is extensive and provides for measures that could significantly influence the way of doing business in Ukraine for the period of the State Emergency. In particular, legal entities operating their business in Ukraine may encounter the following impediments:
- compulsory alienation or seizure of property;
- mobilization and utilization of resources of enterprises, institutions, organizations, regardless of ownership, for the prevention of danger and elimination of emergencies with the obligatory compensation of the expenses incurred;
- housing provision for the temporary placement of evacuated or temporarily displaced people, emergency units and military units involved in emergency management;
- changes in the operational activity of enterprises, institutions, organizations of all forms of ownership, reorienting them to the production required for the state of emergency, as well as other changes in production activities required for emergency rescue and restoration works, etc.
The State of Emergency can be temporarily introduced in a particular region, as well as across the whole country. Such a legal regime shall last not more than 30 days and not more than 60 days in certain localities. If necessary, the state of emergency may be extended by the President of Ukraine, but for no more than 30 days.
2. LEGAL REMEDIES AVAILABLE DURING THE STATE OF EMERGENCY
Even though there is no prior practice on introducing a State of Emergency in Ukraine, Ukrainian legislation provides for several possible remedies in cases of restriction of rights and freedoms during the state of emergency.
(i) Compensation of damages
If legal entities and natural persons would be partially or fully deprived of their property and resources, such entities will have the right to be fully compensated. If property, which was forcibly alienated from legal entities and natural persons, has been preserved after the abolition of the emergency state regime, former owners will be authorized to vindicate lost property in court or to request its replacement if possible.
The Cabinet of Ministers of Ukraine adopted Procedure on Applications Consideration and Subsequent Full Compensation Repayment for Forcibly Expropriated Property During Military State or Emergency State, approved by the Resolution dated 31 October 2012 No. 998. In accordance with the Procedure, the injured party will have to submit (1) Application, (2) Compulsory Property Alienation Act and (3) Property Assessment Report indicating the price to the state authorities indicated in the President’s Decree on introduction of a State of Emergency.
(ii) Appeal to responsible authorities for protection
In accordance with the Law of Ukraine No. 1550-III, persons involved in maintaining the State of Emergency will be responsible for any abuse of authority, as well as improper use of force while exercising their duties. Ukrainian Parliament Commissioner for Human Rights carries out control over the observance of human constitutional rights and freedoms during the State Emergency and he/she has to promptly react to any unjustifiable violations of human rights. The Cabinet of Ministers of Ukraine and the National Security and Defence Counsel will control the performance of state executive bodies.
Moreover, according to Article No. 31 of the Law of Ukraine No. 1550-III, the courts of Ukraine will continue hearing cases even if a State of Emergency is declared (excluding abridged and expedited litigations).
As of now, however, the Council of Judges of Ukraine with its letter dated 16 March 2020 Out. No. 9pc-186/20 has recommended all Ukrainian courts, in particular, to decrease the number of hearings per day and to explain citizens that trials could be conducted via video conference.
Therefore, all applicable judicial remedies will have to be available (in particular, interim measures).
Ukrainian legislation provides for several possible remedies in cases of restriction of rights and freedoms during the state of emergency.
(iii) Suspension of contractual obligations as a result of force majeure
The introduction of a State of Emergency in Ukraine could be considered a force majeure event due to its extraordinary nature. The Chamber of Commerce and Industry of Ukraine is entitled to issue certificates confirming force majeure circumstances in each particular case. Pursuant to the Procedure on Certifications of Force Majeure Circumstances by the Chamber of Commerce and Industry of Ukraine and Regional Chambers of Commerce and Industry dated 18 December 2014, force majeure circumstances must be confirmed under each separate contract, individual tax and/or other obligations/duties, which have occurred in accordance with the terms of the contract, agreement, legislative or other normative acts whose enforcement has become impossible due to such circumstances. Therefore, if a State of Emergency is introduced in Ukraine, it would not be considered as a force majeure event by default in relation to all contracts. The parties to a specific contract will have to obtain and provide sufficient evidence (Certificate of the CCI) to prove that the introduction of the state of emergency makes it impossible to fulfil the obligations under such a contract.
For additional information on applicability of force majeure due to coronavirus outbreak, please follow this link.
Ukraine is currently operating under an Emergency Situation regime declared by the CMU, which has a number of consequences for Ukrainian citizens and businesses, though this regime is not uncommon in Ukraine. Moreover, it is still possible that the State of Emergency will be announced by Presidential Decree. Such a regime would be unprecedented and will expand the state’s power beyond those existing under the Emergency Situation and will have further consequences for businesses. However, these regimes do not eliminate legal remedies for businesses, and it is vital that the legal implications of these regimes on relations both with public bodies and private counterparties are well understood and steps are taken to mitigate risks.
Please contact Andrii Chornous if you have any questions about planning for the potential consequences of Ukraine’s emergency regimes.