Article title ON THE ISSUE OF INVESTORS’ RIGHTS PROTECTION IN CASE A PRIVATIZED PROPERTY SALE CONTRACT IS TERMINATED
Authors
Name of magazine Legal journal «Law of Ukraine» (Ukrainian version)
Issue 1/2018
Сторінки [265-279]
DOI https://doi.org/10.33498/louu-2018-01-265
Annotation

Since 1991 and till now, the process of state property privatization is underway in Ukraine. Not infrequent are instances of infringement of the fundamental rights of investors and the State in the privatization process. Such infringements mostly occur when privatization contracts are terminated in a court of law. As a consequence, there arises an urgent question about refunding the money paid by the buyers under such contracts. However, there is no clear answer to this question. Thus, the State Property Fund of Ukraine holds the view that current law does not provide for refunding to the investor of the money paid to buy the privatized property. Among other things, it is noted that according to part 4, article 653 of the Civil Code of Ukraine, the parties are not entitled to demand a reinstatement of what was done by them under an obligation before amendment or termination of the contract, unless otherwise provided by contract or law. However, investors’ rights should be protected under any circumstances, and in case of involuntary deprivation of the property right a fair balance should be maintained between private and public interests. Therefore, the relevance of the issue under study is significant. The purpose of this article is to identify some challenging aspects of legal regulation of social relations in case privatized property sale contracts are terminated in a court of law due to improper performance by the buyer of the assumed investment obligations, and also to draw up the proposals on improving the legal regulation of respective relations. The author analyzes challenging issues of protection of investors’ property rights within the framework of relations arising in case privatized property sale contracts are terminated in a court of law. The author explores this issue from the perspective of international standards of investors’ rights protection. In particular, the article thoroughly analyzes the case law of the European Court of Human Rights on the application of article 1 of the First Protocol to the Convention for the Protection of Human Rights and Fundamental Freedoms. As a consequence, it is proposed to amend part 4, article 653 of the Civil Code of Ukraine and to formulate it as follows: “4. In case of termination of the contract, each party shall return to the other party in kind all what it has received in pursuance of this contract, and if such return is impossible, the parties shall compensate each other the costs of respective benefits, unless otherwise provided by contract or law.” Besides, the author believes that it is reasonable to change part 11, article 26 of the draft law of Ukraine “On State Property Privatization” No. 7066 with the aim of harmonizing it with international standards of property rights protection. Thus, currently there is a quite apparent and urgent need to make improvements to legal regulation of relations arising in the area under study with a view to protecting investors’rights, improving the investment climate and avoiding negative decisions against Ukraine adopted by the European Court on Human Rights and, accordingly, the State budget expenditure associated thereto, with due regard for the generally accepted international standards and the requirements of the Ukrainian Constitution. The changes to applicable national law proposed by the author will allow achieving the mentioned objectives.

 

Keywords privatization; contract termination; property right protection; “fair balance”
References

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Cases 
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