UNBA supported the clarification of the subject matter jurisdiction of disputes

Cases concerning a transaction, including appeals against registration actions in relation to such a transaction concluded to secure the fulfillment of a principal obligation between legal entities, will be considered by commercial courts.

The respective clarification is proposed by the Draft Law No. 12282 dated 03.12.2024 «On Amendments to Article 20 of the Commercial Procedure Code of Ukraine regarding the Jurisdiction of Commercial Courts».

Part 1 of Article 20 of the CPC provides that commercial courts shall consider cases in disputes arising in connection with the conduct of economic activity and other cases in cases determined by law. In particular, cases in disputes arising from the conclusion, amendment, termination and execution of transactions in economic activity, except for transactions to which an individual who is not an entrepreneur is a party, as well as disputes regarding transactions concluded to secure the fulfillment of an obligation to which legal entities and/or individuals - entrepreneurs are parties, etc.

The authors of the legislative initiative note that in practice there are inconsistencies in the subject matter jurisdiction of commercial and civil disputes. In particular, this concerns the cancellation of decisions of the state registrar to terminate a mortgage agreement concluded to ensure compliance with the terms of a loan agreement to which legal entities are parties (derived from credit legal relations of business entities). In case No. 201/5876/22, the Civil Court of Cassation of the Supreme Court established that cases concerning a transaction, including appeals against registration actions in respect of such a transaction concluded to secure the fulfillment of a principal obligation between legal entities, fall within the jurisdiction of a commercial court, since such a transaction is derived from credit relations between business entities.

Based on the legal analysis of the draft law, the Ukrainian National Bar Association's Committee on Commercial Law and Procedure concluded that the proposed amendments will eliminate the gap in the procedural law that allowed disputes between legal entities under the principal obligation to be considered by commercial courts and to appeal against registration actions under the same transactions in courts of general jurisdiction.

This initiative is in line with the principle of procedural economy in commercial litigation, is appropriate, and will ensure the unity of judicial practice in the category of disputes related to the enforcement of the principal obligation.