Additional agreements to agricultural land lease contract concluded by foreigner as lessor are void - SC CivCC

An agricultural land plot inherited by a foreigner and not alienated by him within a year is subject to confiscation by a court decision. Additional agreements to the lease agreement for such a land plot concluded by a foreign citizen as a lessor are void as they violate public order and contradict the legal prohibition for foreigners to be lessors of such land plots. 

This conclusion was reached by the panel of judges of the Second Judicial Chamber of the Civil Cassation Court of the Supreme Court.

In the case under review, the prosecutor relied on the fact that the defendant, who is a citizen of the Russian Federation, acquired ownership of an agricultural land plot by way of inheritance after the death of her mother, which had been inherited by the defendant's mother after the death of her husband, who had entered into a land lease agreement with the company during his lifetime, and did not alienate this land plot within the one-year period established by law and entered into additional agreements to the land lease agreement.

The court of first instance granted the claim, stating that since the plaintiff, as a citizen of the Russian Federation, having inherited ownership of the agricultural land plot, did not alienate it within a year, her ownership of the plot should be terminated by confiscation in favour of the state, and the lease agreement should be terminated, as in this case the rights of the previous owner and the obligations of third parties to the land cannot be transferred to the new owner of the land plot.  

The court of appeal overturned the decision of the court of first instance as to the termination of the land lease agreement and the termination of the lease right, and dismissed these claims. The court of appeal substantiated its decision by stating that the additional agreements to the lease agreement violated public policy as they related to land that is a national treasure and which is prohibited by law for lease by a foreigner, and therefore these transactions are void.

The SC CivCC agreed with the conclusion of the court of appeal, pointing out that the law prohibits foreigners, stateless persons and foreign legal entities from transferring agricultural land into ownership and requires that such persons who inherited the land alienate it within a year. If they fail to do so, the ownership is terminated by confiscation by court order.

Land is the main national wealth under special protection of the state. The right to own land is guaranteed. This right is acquired and exercised by citizens, legal entities and the state solely in accordance with the law (Article 14 of the Constitution of Ukraine).

Pursuant to parts 1 and 2 of Article 228 of the Civil Code of Ukraine, a transaction is considered to violate public order if it was aimed at violating the constitutional rights and freedoms of a person and citizen, destroying or damaging property of an individual or legal entity, the state, the Autonomous Republic of Crimea, a territorial community, or unlawfully taking possession of it.

A transaction that violates public order is null and void.

Public order is a public law relationship that is imperative in nature and determines the foundations of the social order of the state.

In the case reviewed by the Supreme Court, the Russian citizen failed to alienate her land plot in time, so her ownership was terminated and the land plot was subject to confiscation. The additional agreements to the land lease agreement concluded between the defendants violate public order as they relate to agricultural land as a particularly valuable category, which is a national treasure and is under special protection of the law, the owner of the disputed land plot was a citizen of a foreign state, who is prohibited by law from leasing such land, and therefore these transactions are void. It should be borne in mind that an additional agreement is a transaction that amends an existing agreement, and it is the additional agreement that may be subject to nullity provisions, in particular.

Resolution of the Supreme Court of 12 March 2025 in case No. 568/823/23 (proceedings No. 61-13216св24) - https://reyestr.court.gov.ua/Review/125843152. 

This and other legal opinions of the Supreme Court are available in the Database of Legal Positions of the Supreme Court - https://lpd.court.gov.ua.