Dispute between Individual and Public Authorities on Compensation of Damage Caused by Their Inactivity Shall Fall under Jurisdiction of Commercial Court – SC GC

Ahrofirma “Zolotyi Kolos” LLC applied to court with a claim against the Prosecutor’s Office of Kirivihrad oblast, the Main Department of the National Police in Kirovohrad oblast, the State Treasury Service of Ukraine, where it demanded the compensation of damage caused by the inactivity of officials of police and prosecutor’s office.

Court of first instance refused to open proceedings and remarked that pursuant to the subjective composition of the case participants and the nature of legal relations between the parties, the disputes shall be considered by a commercial court. Appeal court upheld this judgment.

In its cassation appeal the LLC noted that in disputable legal relations defendants should not be represented by business entities; thus, the dispute was civil. The claimant remarked the lack of the notification of the fact that the jurisdiction of commercial court should cover disputes on the compensation of damage caused by public bodies in Article 20 of the Commercial Procedure Code of Ukraine and other regulatory legal acts.

The Grand Chamber of the Supreme Court drew attention to the fact that pursuant to Part 5 of Article 21 of the Code of Administrative Proceedings of Ukraine the requirements on compensation of damage caused, particularly, by illegal inactivity of a subject of public authority, shall be considered by an administrative court, if they are claimed in the same proceedings with the demand to solve public and legal dispute. Otherwise, such demands shall be solved by courts within the procedure of civil or commercial judicial proceedings.

Since the claimant did not submit a demand on solving public and legal dispute, the dispute initiated by him shall be solved according to rules of civil or commercial judicial proceedings, respectively on the subjective composition of the dispute participants.

The SC GC concluded that the claimant’s arguments regarding the lack of commercial court’s jurisdiction to solve the dispute under the demand submitted by the LLC was unjustified. According to subjective criterion pursuant to part 1 of Article 4 of the Commercial Procedure Code of Ukraine, the dispute on damage compensation between a LLC and public bodies represented by legal entities shall be referred to the jurisdiction of a commercial court.

The SC GC made similar conclusion in its resolution of 15 March 2018 in the case No. 461/1930/16-ц http://www.reyestr.court.gov.ua/Review/72850802.

Follow the link http://www.reyestr.court.gov.ua/Review/80522374, to see the full text of the resolution of the Grand Chamber of the Supreme Court of 27 February 2019 in the case No. 405/4179/18 (proceedings No. 14-44цс19).