Delay in fulfilling the obligation to return unjustly acquired property (Article 1212 of the Civil Code of Ukraine) arises from the moment of unjustly acquisition of such property or from the moment when the grounds for its receipt ceased to exist - The G

The obligation to return unjustly acquired property arises directly from the provisions of Article 1212 of the Civil Code of Ukraine on the basis of the fact that the person acquired property (funds) without a sufficient legal basis or the fact that the basis for the acquisition of this property (funds) subsequently disappeared. A person must fulfil such an obligation immediately after he or she has received property without justification or when the basis for such receipt has ceased.

From that moment the debtor who is in arrears with the fulfilment of a monetary obligation is obliged, in accordance with part 2 of Article 625 of the Civil Code of Ukraine, to pay the amount of the debt, including the established inflation index for the whole period of arrears, as well as 3% per annum on the amount in arrears.

This conclusion was reached by the Grand Chamber of the Supreme Court.

In the present case, the LLC filed a claim against the JSC for compensation of inflationary losses and 3% per annum accrued under Article 625 of the Civil Code of Ukraine due to the fact that the defendant failed to return to the plaintiff in a timely manner the funds wrongfully received from it, as established by court decisions, and unlawfully used these funds from 26 February 2019 to 7 May 2021.

The court of first instance, whose conclusions were upheld by the court of appeal, granted the claim. According to the court, since the transfer of funds without a sufficient legal basis took place on 25 February 2019, the defendant was obliged to return the funds immediately upon receipt of the funds.

On the contrary, the defendant took the view that the date on which the delay in the performance of the obligation began to run was the date on which the decision of the commercial court of appeal, which established the fact that the property had been received without due cause, came into force, i.e. 7 May 2021.

The Grand Chamber of the Supreme Court agreed with the conclusions of the courts of previous instances that in the established circumstances of the defendant's unjustified acquisition of funds on 25 February 2019, the beginning of the delay period should be 26 February 2019 and the end should be 6 May 2021, as the defendant returned the funds only on 7 May 2021.

The SC Grand Chamber pointed out that the obligation of the debtor who is overdue in fulfilling a monetary obligation to pay the amount of the debt including the established inflation index for the entire period of delay, as well as 3% per annum of the overdue amount, provided for in part 2 of Article 625 of the Civil Code of Ukraine, arises in view of the existence of the fact of delay, which in this case occurs from the moment the defendant unreasonably received the plaintiff's funds.

In addition, the SC Grand Chamber rejected the defendant's argument that only the court decision established the fact of unjustified acquisition of funds and, as a result, the obligation to return them.

As noted above, the obligation to return unjustly acquired property arises directly from the provisions of Article 1212 of the Civil Code of Ukraine on the basis of the fact that the person acquired property (funds) without a sufficient legal basis or the fact that the basis for the acquisition of this property (funds) subsequently disappeared.

This obligation does not arise from a court decision. In this case, the court's decision is a mechanism to enforce the defendant's obligation to return unlawfully received funds, which it does not do voluntarily.

Otherwise (according to the defendant), without a court decision, the obligation to return unjustly received funds would not arise at all, i.e. if the plaintiff had not applied to the court, the defendant would not have been obliged to return the unjustly received funds. Such an approach would contradict the principles of good faith, reasonableness and fairness of the obligation provided for in part 3 of Article 509 of the Civil Code of Ukraine.

The Resolution of the Grand Chamber of the Supreme Court of 7 February 2024 in case no. 910/3831/22 (proceedings no. 12-45гс23) - https://reyestr.court.gov.ua/Review/117340690.

This and other legal positions of the Supreme Court can be found in the Database of Legal Positions of the Supreme Court - https://lpd.court.gov.ua.