Whose land: lawyers figured out what to do with the «inheritance» of the CAE

The activities of enterprises using CAE land are currently fraught with risks due to imperfect legislation and its interpretation. The UNBA discussed whether the right to land should be retained by the successors of the CAEs or whether these lands should be transferred to communal ownership.

A roundtable discussion on the topic «Land of Collective Agricultural Enterprises» was held on 12 September at the initiative of the UNBA Committee on Agricultural, Land and Environmental Law.

The speakers at the event were Viktor Kobylianskyi, Chair of the Committee, Dmytro Navrotskyi, Deputy Chairman, Jan Biloholovyi, Committee members, Vladyslav Kononov, scientist, and Vitalii Urkevych, Supreme Court judge.

V. Kobylianskyi drew attention to the fact that the vast majority of CAEs (about 12,000) from the moment the Land Code came into force (01 January 2002) and until the entry into force of Law No. 2498-VIII «On Amendments to Certain Legislative Acts of Ukraine on Resolving the Issue of Collective Land Ownership, Improving the Rules of Land Use in Agricultural Land Massifs, Preventing Raiding and Stimulating Irrigation in Ukraine» (01 January 2019) were not liquidated but reorganised. This was a change of legal form (transformation), which did not result in the termination of the legal entity. Accordingly, such legal entities (business entities, cooperatives, private enterprises) retained all rights to land.

He noted that Ukrainian legislation explicitly provided for the possibility of reforming CAEs into any business entity based on private property, including private enterprises and farms. Therefore, the discrepancy between the number of members of a legal entity and the number of members of the CAE is not a ground for denying the succession of such a legal entity to the CAE.

The successors of the CAEs did not renounce their ownership of the land, and no agreements on the transfer of ownership were concluded or notarised. Accordingly, there are no grounds to believe that the unallocated land has become communal property.

At the same time, the provisions of paragraph 21 of the Transitional Provisions of the Land Code of Ukraine do not apply to the vast majority of the successors to the CAE, since there was no termination of the CAE, and the ownership of the relevant land arose before this paragraph came into force.

Y. Biloholovyi spoke about the practice of the Supreme Court regarding the status of collective land during its transformation. He proposed to hold a joint event with the Supreme Court judges to study collective ownership issues in more depth.

Dmytro Navrotskyi focused on the issues of the right of permanent use of land, which was held by the CAE and passed to its successors. The lawyer revealed the historical aspects of the reform of the collective farms, the preservation of the right of permanent use of land by the successors and identified the signs of succession. He also analysed the existing case law and focused on the position of the Supreme Court's Grand Chamber, which is most often used by courts when considering this category of cases. In conclusion, the speaker noted the need to clarify all the signs of succession in each particular case, taking into account the legislation in force at the time and the evidence provided in the case.

The documents defining the scope of legal succession are not important in reorganisation by way of transformation of a CAE, Kononov believes. After all, this type of reorganisation transfers all property rights and obligations of the SPE. This primarily concerns the transfer (distribution) balance sheets, which are often required by the courts to confirm the succession. At the same time, at the time of the adoption and implementation of the agrarian reform (Presidential Decree No. 1529/99 of 03.12.99 «On urgent measures to accelerate the reform of the agrarian sector of the economy»), the form of the balance sheet as an accounting document did not provide for the possibility of accounting for collectively owned land plots, and there was no valuation of such land plots. The above calls into question the conclusions of the courts regarding the mandatory availability of such documents in the case of the CAEs during their transformation, the scientist believes.

The speaker also added that there were no restrictions on registration actions during the transformation of a CAE or any other enterprise either at the time of the CAE reorganisation or later, including today. In other words, registration actions related to the change of the organisational and legal form, or capital, or address, do not prohibit other registration actions, including the change of participants.

The issue of preservation and registration of rights to land by the legal successors of the CAEs was also addressed by the Constitutional Court.  Thus, according to the decision No. 5-rp/2005 of 22.09.2005, the provisions of paragraph 6 of Section X «Transitional Provisions» of the Land Code of Ukraine and paragraph 6 of the Verkhovna Rada Resolution «On Land Reform» regarding the loss by citizens, enterprises, institutions and organisations of the previously granted right to use land after the expiry of the term of registration of ownership or the right to use land, are declared unconstitutional and cease to be effective from the date of the Constitutional Court's decision.

Similar in terms of the principle of property rights protection is the decision of the Constitutional Court No. 7-р(II)/2021 of 20 October 2021 in the case of the constitutional complaint of the private joint-stock company Chernihivoblbud regarding the compliance of subparagraph b of paragraph 1 of part three of Article 14 of the Law «On Ensuring the Housing Rights of Residents of Dormitories» with the Constitution of Ukraine (constitutionality).