Among the reforms Ukraine has undertaken in exchange for EU macro-financial assistance is allowing private contractors to enforce small claims of up to UAH 100,000 against state bodies and state-owned enterprises.
For the first time in the history of Ukraine, a representative of an independent private profession will be able to act against the state, using the power delegated to him by the state itself, forcing the government to fulfill its contractual and other financial obligations to any individual or legal entity.
The Ukrainian authorities will also be obliged to automate the processes of blocking and debiting funds from bank accounts, creating a real opportunity for private contractors to perform their work effectively.
What will this mean in practice? And how has the implementation of these norms proved itself in the EU?
Five times more effective
Today, non-enforcement of court decisions remains the most common complaint against Ukraine to the European Court of Human Rights.
According to the Ministry of Justice, currently the total amount of arrears according to court decisions is almost 800 billion hryvnias, and a significant part of it has not been paid for at least 10 years.
To understand the scale of the problem, it is necessary to clarify: this amount is about 1/4 of the country's annual GDP.
About 2.7% of the mentioned UAH 800 billion is collected annually. At the same time, most of the 800 billion is owed by the state and - especially - state-owned enterprises, of which there are about 17,000 in Ukraine.
Can a private performer change this situation?
It is quite possible, because since the creation of this profession in Ukraine three years ago, 240 private performers have earned, which is five times more effective than competitors subordinated to the Ministry of Justice.
In 2019, 230 private performers collected about 4.2 billion hryvnias, compared to 16.5 billion hryvnias collected during the same period by about 5,000 state performers.
The EU experience is also in favor of private performers. A total of 23 EU countries have either a completely private or a mixed enforcement system.
Instead, the Ukrainian model today lacks some key components to qualify it as mixed in line with European practice.
Private enforcement agents in Ukraine cannot enforce decisions against or in favor of the state or a state-owned enterprise, while the Ministry of Justice, courts and law enforcement agencies have too broad regulatory powers and capacity to control private enforcement agents.
Given this context, "control" by other authorities often allows an unscrupulous debtor to use the system to his advantage without complying with court decisions.
Another strengthening of the tools of private performers is the possibility of attracting them to the state budget for penalties.
This practice is widely used in the EU and has also proven its effectiveness.
In particular, the French Ministry of Finance has signed an agreement with the National Chamber of Executors to ensure the collection of taxes and fines. And in Bulgaria, private executors enforce court fees.
In automatic mode
Another major reason why state-owned enterprises do not pay their debts is a moratorium.
For example, to recover a court decision, no property of a state-owned enterprise — including its real estate, shares, and means of production — can be seized other than the funds remaining in its current bank account.
State-owned enterprises are not even obliged to appear in the Unified Register of Debtors, questioning the very purpose of its existence.
In fact, it is not only moratoriums that create obstacles to the fulfillment of financial and court obligations in Ukraine.
Legislation and practice in Ukraine still do not provide a clear answer to the question of whether a debt obligation imposed by a court is a priority or secondary to any other external (debt to business partners) or internal (employee salaries) corporate obligations. unlike many developed countries.
Automating the blocking of bank accounts of debtors - individuals can help solve this situation. In Ukraine, it is already used in cases of recovery of alimony, reducing the period from the official decision to block to the actual blocking of the debtor's bank account from 1 month to 1-2 days.
What can such automation give Ukraine?
Take, for example, PLAIS, the Lithuanian version of the automated system for blocking and debiting funds from bank accounts. It automatically helps hundreds of millions of euros to be collected automatically by Lithuanian private contractors, social security services and tax authorities.
With PLAIS, even the smallest requirements, such as administrative fines, are very easy to collect.
So it is no coincidence that thanks to the mentioned PLAIS, the level of collection of administrative fines in Lithuania is over 70%, while in Ukraine - only 26%.
The first steps in reforming the enforcement system are already emerging.
These include the so-called "joint" package of enforcement bills (registered in the Verkhovna Rada under numbers 3726-3729), which was developed by a wide range of partners from the legal community, other national (business representatives, banks, NGOs, scientists) and international partners. .
This initiative is already in line with the EU experience and proposes to create a single operating environment for all participants in the enforcement system.
As the EU experience shows, such a reform can put an end to the problem of non-enforcement of court decisions.
Ліонель Декотт, приватний виконавець (Франція)
Катілін Попов, приватний виконавець (Болгарія)
Довідас Віткаускас, керівник проєкту ЄС "Право-Justice"
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