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The mere fact of the introduction of martial law and the use of the subject-matter of a pledge for the carriage of military, humanitarian or medical cargoes is not a sufficient ground for amending a pledge agreement. In order for a court to vary a contract, the party concerned must prove the simultaneous existence of all four conditions laid down in Article 652 of the Civil Code of Ukraine relating to a material change of circumstances. If even one of those conditions is absent, there are no grounds for judicial interference in contractual relations.
This conclusion was reached by the Commercial Cassation Court within the Supreme Court.
A limited liability company brought an action against a joint-stock company seeking the amendment of vehicle pledge agreements. The claimant asked for the agreements to be supplemented with a provision that would prohibit the bank from enforcing against the pledged property until the termination or lifting of martial law and until the vehicles ceased to be used for the needs of the Armed Forces of Ukraine. The company founded its claim on a material change of circumstances, referring to the fact that the vehicles were being used for the carriage of military, humanitarian and medical cargoes and that their seizure could adversely affect the state’s defence capability.
The commercial court allowed the claim. The Northern Appellate Commercial Court set that judgment aside and dismissed the claim.
On reviewing the case, the Supreme Court observed that Article 652 of the Civil Code of Ukraine permits the variation of a contract only where four conditions are present simultaneously: the parties could not have foreseen the relevant change of circumstances at the time the contract was concluded; the interested party could not have eliminated the consequences of such changes; performance of the contract substantially upsets the balance of the parties’ property interests; and it does not follow from the nature of the contract or from business customs that the risk of a change of circumstances is to be borne by that party.
The Commercial Cassation Court of the Supreme Court emphasised that the claimant had failed to prove the existence of all the stated conditions. In particular, the pledge agreements had been concluded both before the outbreak of full-scale war and already during martial law, so that military risks were known and could have been taken into account by the parties. Moreover, the claimant had not shown that it had taken all possible steps to perform its obligations, nor had it proved an actual upset of the balance of the parties’ property interests.
The Court further noted that, by voluntarily pledging property, the pledgor assumes the risk of enforcement in the event of non-performance of the secured obligation. The use of the vehicles in commercial activity, even where that activity is connected with meeting the state’s defence needs, does not in itself alter the content of the security obligation or deprive the creditor of the right to exercise the means of protecting its rights provided for by the contract.
The Supreme Court confirmed that martial law and the use of pledged property for defence needs are not automatic grounds for amending a pledge agreement. Judicial intervention is possible only where all the criteria of a material change of circumstances set out in Article 652 of the Civil Code of Ukraine have been established.
Following its consideration of the case, the Commercial Cassation Court of the Supreme Court left unchanged the appellate court’s ruling dismissing the claim.
Resolution of the Commercial Cassation Court of the Supreme Court of 18 June 2026 in case No. 910/9462/25 – https://reyestr.court.gov.ua/Review/137498715.
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.
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