Non-statutory use of political party assets and activities undermining national security constitute a violation of public order - SC GC

The property belonging to a political party must be used for the purpose of implementing its statutory tasks, such property may be transferred for charitable purposes only in the event of termination of the political party's activities through reorganisation or self-dissolution.

Disposal of the property of a political party in a manner and for a purpose other than that prescribed by law and activities of a political party that harm state security are a violation of public order, and therefore a contract of donation of such property is void under the provisions of parts 1 and 2 of Article 228 of the Civil Code of Ukraine.

Such conclusions were reached by the Grand Chamber of the Supreme Court in the case on the claim of the Ministry of Justice on invalidation of the real estate donation agreement concluded between the Communist Party of Ukraine (CPU) and a charitable foundation (CF).

The Eighth Administrative Court of Appeal, in its decision of 5 July 2022 in case No. 826/9751/14, upheld the claim of the Ministry of Justice to ban the activities of the Communist Party of Ukraine due to the party's violation of Article 5 of the Law of Ukraine ‘On Political Parties in Ukraine’. The activities of the CPU were banned and the property, funds and other assets of the party were transferred to the state. In the course of the enforcement of the court decision in the administrative case, the Ministry of Justice found that after the court opened proceedings to ban the CPU, the latter alienated about 150 properties, including real estate under a disputed contract.

In bringing the claim in this case, the Ministry of Justice referred, in particular, to the circumstances of the unconstitutional activities of the Communist Party of Ukraine, as established by the judgment of the Eighth Administrative Court of Appeal dated 5 July 2022 in case No. 826/9751/14. It requested that the disputed contract be declared invalid on the grounds that the CPU had alienated the property in violation of the law in order to avoid the consequences of the party’s prohibition.

The court of appeal, having overturned the decision of the court of first instance to dismiss the claim, issued a new decision that upheld the claim.

In qualifying the disputed contract, the Grand Chamber of the Supreme Court emphasized that, in a state governed by the rule of law, the interests of the state must align with those of society and cannot be in conflict with them. Those interests of society that form its very foundation constitute public order. The possibility of proper functioning of political parties in society is one of the general principles of the constitutional order of the state, of which public order is a component.

The Grand Chamber of the Supreme Court noted that since the main purpose of political parties is to promote the formation and expression of the political will of citizens, participation in elections and other political events, the possession, use and disposal of political party property should be carried out to achieve this goal.

The law establishes restrictions and prohibitions on the disposal of political party property. The property owned by a political party must be used for the purpose of implementing the statutory objectives of the political party (Article 14 of the Law of Ukraine “On Political Parties in Ukraine”), and such property may be transferred for charitable purposes only in case of termination of the political party's activities through reorganisation or self-dissolution (part 2 of Article 23 of the Law of Ukraine “On Political Parties in Ukraine”).

Given that the head and founder of the Charitable Foundation is a person who was a member of the Communist Party of Ukraine and held one of the party's leadership positions, i.e. a person related to the donor, this indicates unfair behaviour of the parties to the disputed transaction. The conclusion of the disputed donation agreement is aimed at maintaining control over the property of the political party by a related person who is a member of the governing bodies of the political party.

In addition, the disposal of the CPU's property for purposes other than its statutory activities and contrary to the law was also due to the threat of a ban on the CPU, which existed when the disputed agreement was concluded. Public order, in particular, includes legal relations related to the proper functioning of the political system, including the use of property by political parties for purposes related to the lawful activities of political parties.

In the proceedings concerning the ban on the activities of the Communist Party of Ukraine, the court established that the party’s activities posed a real threat to the constitutional order and the fundamental rights and freedoms of Ukrainian citizens, and were also aimed at undermining state security, sovereignty, and the territorial integrity of Ukraine.

The controversial donation agreement was concluded after the opening of the proceedings on the party's prohibition and after the circumstances that gave rise to the prohibition of its activities. By entering into such an agreement, the CPU was aware of the Ministry of Justice's filing of a lawsuit to ban the CPU and was aware of the consequences of a possible satisfaction of the administrative claim (loss of control over the party's property and other assets). The transaction resulted in the alienation of property intended for the statutory activities of a political party, contrary to the law, with the intention of entering into a transaction for an illegal purpose.

In view of the above, the Grand Chamber of the Supreme Court concluded that by entering into the disputed donation agreement, the CPU acted contrary to the requirements of Article 14, part 2 of Article 23 of the Law of Ukraine ‘On Political Parties in Ukraine’. Both the activities of a political party that harm state security and the disposal of a political party's property in a manner and for a purpose other than that prescribed by law violate public order, and therefore the donation agreement is void based on the provisions of parts 1, 2 of Article 228 of the Civil Code of Ukraine.

Resolution of the Grand Chamber of the Supreme Court of 16 April 2025 in case No. 924/971/23 - https://reyestr.court.gov.ua/Review/127680295.

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