Economic legislation needs to be improved, not decodified – forum

The adoption of the draft Law No. 6013 of 09.09.2021 «On Peculiarities of Regulation of Business Activities of Certain Types of Legal Entities and Their Associations in the Transition Period» may destabilize the legal system and create chaos in the field of economic activity.

This was discussed during the IV Forum of Public Support for Pro-European Legal Reforms, organized by the Mamutov Institute of Economic and Legal Studies of the National Academy of Sciences of Ukraine, the Ukrainian League of Industrialists and Entrepreneurs, NGO Coordinate, and the Department of Economic Law and Economic Justice of the Taras Shevchenko National University of Kyiv.

The event was attended by the Chairman of the UNBA Committee on Commercial Law and Procedure Hanna Osetynska and her deputy Oleksandr Chernykh.

The greatest attention of the forum participants was drawn to the risks of adopting Draft Law No. 6013. According to the participants, it contains a number of provisions that contradict the Constitution of Ukraine and the rule of law. For example, the termination of the activities of municipal enterprises enshrined in Articles 142 and 143 of the Constitution will deprive local governments of the opportunity to perform their functions in the interests of local communities. This approach violates the constitutional guarantees of local self-government and may lead to social tensions, especially in times of war.

The legislative initiative also poses threats to national economic security in the context of martial law and post-war recovery. The abolition of the Commercial Code deprives the state of tools for systematic regulation of economic processes. This will complicate state intervention in the economy in the interests of national security, which is especially important in times of war.

Corruption risks arising from the lifting of restrictions on the disposal of state property are also a serious threat. The draft law proposes a legal regime of usufruct that does not correspond to Ukrainian legal realities and does not take into account the specifics of state and municipal property management.

In addition, the provisions of the draft law contradict European approaches to the legal regulation of economic activity. In the EU, there is a clear distinction between civil and commercial codes, while the draft law proposes to eliminate this distinction. This may cause terminological conflicts with international agreements, including the EU-Ukraine Association Agreement.

The low quality of the draft law is also evidenced by the fact that regulatory procedures have been violated. Its implementation will require significant expenditures from the state budget, which were not taken into account.

O. Chernykh drew attention to the need to apply international experience in broadly involving lawyers and judges in the development of legislation, as well as the possibility of granting the judiciary the power of legislative initiative, following the example of the United Kingdom. He also pointed out that attempts at radical, unexamined reforms in time of war are dangerous, including those that could change control over defense companies or open up opportunities for raider seizures of defense, agricultural, and infrastructure sectors.

Thus, the draft law as a whole does not meet the requirements of legal predictability and certainty. The document does not contain a clear description of the subject matter and purpose of legal regulation, which may create confusion in commercial legislation. This will have a negative impact on the investment climate and business activity in Ukraine, in particular due to the decodification of commercial legislation. An alternative would be to improve the current Commercial Code, taking into account the needs of business and Ukraine's European integration priorities.