The issue of statute of limitations has already been raised several times, but the development of legislation and the practice of its legislation, even under martial law, is so dynamic that it requires additional attention and analysis.
Limitation of action as an institution of private law connects subjective substantive law with a logical chain, the possibility of its implementation with the help of jurisdictional mechanisms of a coercive nature, responsibility for violation of subjective right and interest and legitimate exemption from responsibility, with the combination in this institution of constructions of material and procedural law in an interdisciplinary section. In today’s conditions, there is a need not only to analyze the statute of limitations in the context of various types of legal relations and methods of protection, but also to monitor the further development of this institution.
Currently, the process of radical changes in civil legislation is dynamically developing, which will affect all areas of civil law regulation, including the statute of limitations. The concept of updating the Civil Code of Ukraine provides that the norms of the Central Committee regarding the statute of limitations are subject to adjustment. First of all, this concerns Art. 257 of the Civil Code, which erroneously defines the statute of limitations as a period within which a person can apply to the court with a demand for the protection of his civil right or interest. This is the direction of reforming the statute of limitations in the future, filling this concept with a different meaning, introducing changes not only to the Central Committee, but also to other laws that contain statutes of limitation. But it is still quite difficult to see the clear contours of the statute of limitations formula in the reformed Central Committee.
Legislative definition of the statute of limitations and the problem of its application
The timeliness of the protection of a person’s private right is subject, first of all, to the regularities of the development of interests in the private law sphere, and the statute of limitations only serves as its temporal background. The statute of limitations is the chain that connects the relevant private interest, subjective right with the possibility of their implementation, protection or loss due to the passage of a certain time. This civil law institution is the criterion, a kind of litmus test, by which one can judge the presence or absence of a person’s interest in protecting their subjective rights, the relationship to their loss. At the same time, one should not downplay the value of the statute of limitations, because in the absence of this period, the effectiveness of the influence of law on social relations regulated by it will be significantly reduced, and this, in turn, will lead to their loss of systematicity and orderliness, and not only temporal.
The relationship between the statute of limitations and responsibility is not a simple linear relationship, but is dialectical and multifaceted. The limitation period “binds” the liability mechanism in many parameters, first of all, regarding the grounds for exemption from liability. In the statute of limitations, the main idea of the law is to limit the claim to a certain time, the legislator knows that the claim is aimed at an offense and that with the expiration of the term it will become unpunished.
This doctrinal approach is currently supported by the practice of the ECtHR and the position of the Supreme Court , which agreed with the approach of the ECtHR that the statute of limitations is the legal right of an offender to avoid prosecution or prosecution in court after a certain period of time has elapsed since the commission of the offence. Limitation periods are intended to guarantee legal certainty and finality and to prevent the infringement of the defendants’ rights, which could be infringed if it were stipulated that the courts make decisions on the basis of evidence that could become incomplete due to the passage of time. It is characteristic that, commenting on the judicial practice and the decision of the Supreme Court, the judge of the CAS of the Supreme Court Volodymyr Kravchuk points out on the common features and differences of the terms of appeal to the court and the statute of limitations: their common features are the order of calculation, and the differences, which are much more, are determined by: the nature of the legal relationship (public/private), grounds for application (initiative of the court/application of the party), duration (6 months/3 years), imperativeness (the parties can extend the limitation period), the possibility of stopping and interrupting the limitation period, legal consequences of omission (no consideration/refusal of the claim).
For a long time, in the theory of civil law and legal practice, the statute of limitations was considered as an institution of material law, which had the corresponding consequences reflected in the legislation. But currently, there is a trend towards “proceduralization” of the statute of limitations, seeing it as a procedural term, especially in administrative proceedings. This should be taken into account in further analytical judgments and the formation of judicial practice.
The statute of limitations and the procedural term of appeal to the court
The general term of appeal to the court is established at the legislative level for administrative proceedings. Article 122 of the Code of Administrative Procedure of Ukraine establishes a general six-month period for applying to an administrative court for the protection of a person’s rights, freedoms and interests, which is calculated from the day when the person learned or should have learned about the violation of his rights, freedoms or interests, unless otherwise established. In practice, for a long time, there have been questions about the relationship between this period and other periods of court appeals (appeals), which are longer. First of all, this applies to the terms determined by the CAS and tax legislation, because according to p. Article 56.18 56 of the Tax Code of Ukraine, taking into account the statute of limitations specified in Art. 102 of this Code, the taxpayer has the right to appeal in court a tax notification-decision or other decision of the controlling body at any time after receiving such a decision. As we can see, this norm refers to the connection of the taxpayer’s right to a court appeal precisely with the limitation period, and not with the period of appeal to the court under Art. 122 KAS. This circumstance caused ambiguous approaches to interpretation in the practice of the Supreme Court.
The Judicial Chamber for Consideration of Cases Regarding Taxes, Fees and Other Mandatory Payments of the CAS of the Supreme Court indicated that specified in p. Article 102.1 102 of the Criminal Code, the term is precisely the statute of limitations, which has a material and legal nature, and therefore cannot simultaneously be a procedural term for appealing to the court. There is a fundamental difference between the legal nature of the substantive statute of limitations in tax legal relations and the procedural term of appeal to an administrative court, and therefore it is erroneous to equate their purpose when used. But in this case, several judges were dismissed separate opinion, in which they were critical of the justification of such a position, since the Supreme Court, having recognized the terms of appeal to the court as purely procedural (in contrast to the statute of limitations defined by Article 102 of the Criminal Code), recognized as possible (from the analysis of parts 1, 2, 4 of the Criminal Procedure Code) a transition to legal regulation introduced by the PC, as a special law, and, comparing the prescriptions of p. Articles 56.18 and 56.19. 56 of this Code, did not find a conflict between them, which should be eliminated with the help of established p. 56.21 of the same article on the presumption of legality of the taxpayer’s actions. In fact, this led to a situation in which the terms specified in Art. 122 CAS and p. Article 56.19 56 of the Code of Criminal Procedure, the judicial chamber recognized as procedural, and the term determined by the totality of p. Article 56.18 56 and p. Article 102.1 102 of the Criminal Code, — “which has a material and legal nature, and therefore cannot be at the same time a procedural period of appeal to the court,” — without providing the appropriate argumentation and criteria by which such a division was made. Such enforcement is considered erroneous as a result of the court ignoring the rules of rule-making (legislative technique), and the transition to the regulation of legal relations by the Tax Code of Ukraine is premature, carried out in the absence of the hypothesis necessary for this in the rule of law that was to be applied, and on the basis of an imaginary alternative.
This position was consistently repeated by judges in another case.
Clause 56.18 of Art. 56 of the PC establishes the taxpayer’s right to appeal in court a tax notice-decision or other decision of the controlling body at any time after receiving such a decision, taking into account the statute of limitations specified in Art. 102 of this Code.
According to the doctrinal definition, the time limit for filing an administrative lawsuit with an administrative court is a period of time after the emergence of a dispute in public legal relations, during which a person has the right to file a claim with an administrative court for the resolution of this dispute and the protection of his rights, freedoms, or interests.
The application of such a scientific method of knowledge as comparison shows that all the elements of the above scientifically based definition are present in the disposition of this norm, which, like any other reference norm, is applied in combination with the one to which it refers.
So, defined by p. 56.18 of the Criminal Code, the term is established by a special law regulating this type of legal relationship, the term of appeal to the court to challenge the decisions of the supervisory body, the duration of this term is determined by Art. 102.1 PC, and the date of the start of its countdown is the date of receipt of such a decision. The fact that the norm of Art. 102 of the Criminal Code (clause 102.1) provides for two different statutes of limitations (1095 and 2555 days), which only indicates the need to apply them differently, according to the type of legal relationship in which the dispute arose.
Moreover, the fact that the terms specified in Sec. II PC (and this section does not define any other terms, except those mentioned in clause 102.1), the legislator clearly defined exactly as the statute of limitations, the content of clause 164.2.7 clause 164.2 of Art. 164 pcs.
Summing up, we note that the current national legislation generally provides for an alternative in determining the legislative sources for fixing the terms of appeal to the court; KAS defines a general six-month period of appeal to the court for all types of legal relations, which, unless otherwise established, is calculated from the day when the person learned or should have learned about the violation of his rights, freedoms or interests; instead, the PC, as a special normative legal act of equal legal force, defines a longer and, accordingly, more favorable for the taxpayer, the term of appeal to the court to challenge the decisions of the tax authority and defines the procedure for its calculation in a different way – the counting of the term begins after the occurrence of the event , with which its beginning is connected — obtaining such a decision.
The opposite interpretation of the law, repeatedly demonstrated by the Judicial Chamber in the court decisions described above, recognizes as legal the parallel existence of two legally defined, significantly different in terms of duration, the beginning of the course and the possibility of renewing the terms of appeal to the court (“substantive” and “procedural”), even without recognizing and not eliminating conflicts between them; and, as a result, allows the following possibility of multiple consideration of the dispute by the court within such established terms — which is expressly prohibited by the Court of Arbitration for Sport.
We are convinced that judicial errors should be recognized and corrected by making a retreat in the order determined by the procedural law, and not “mint” with numerous repetitions, ignoring the shaky foundation of such conclusions and the justice based on them.
It seems that such a vision to a greater extent not only takes into account the legal essence of procedural terms and statute of limitations, but also corresponds to the principles of the application of legislation, in particular, the presumption of legality of the taxpayer’s decisions in the event that the norm of the law or another normative legal act issued on the basis of the law, or if the norms of different laws or different regulatory legal acts imply an ambiguous (multiple) interpretation of the rights and obligations of taxpayers or regulatory bodies, as a result of which there is an opportunity to make a decision in favor of both the taxpayer and the regulatory body (clause 4.1. 4 clause 4 of article 4 PC).
In this aspect, among the conclusions of the Court of Appeals of the Supreme Court, there is a vision regarding the need to take into account the legal nature of the limitation periods determined by the tax legislation, so that the application of a shorter period of appeal to the court than the limitation period does not lead to a violation of legal certainty.
The Judicial Chamber focused on the fact that in order to comply with the principle of legal certainty and ensure the right to a fair trial, which are elements of the principle of the rule of law, the change in consistent judicial practice, which took place in the direction of the interpretation of legal norms regarding the application of shorter periods of appeal to the court, can be considered by the courts as a valid reason when deciding the issue of renewing the terms of appeal to the court in tax legal relations that arose and acquired the nature of disputes before the change in such court practice.
The Judicial Chamber for Consideration of Cases Regarding Taxes, Fees and Other Mandatory Payments of the Administrative Court of Cassation as part of the Supreme Court in the resolution dated 01.27.2022 in case No. 160/11673/20 re-emphasized the conclusion of the Supreme Court set forth in the resolution dated 11.26.2020 in case No. 500/2486/19, that after the adoption of this resolution, the courts should avoid a formal approach when applying its conclusions, in particular, avoid cases of annulment of court decisions due to the reasons for missing the deadline for applying to the court, adopted in accordance with the judicial procedure established at that time practice, only on the grounds that at the time of the adoption of the court decision, the Supreme Court’s interpretation of the relevant rule of law on this matter had changed.
Despite the fact that the appellate court correctly determined the temporal limits of the procedural term, which is subject to application in disputed legal relations, its annulment of the decision of the court of first instance under the circumstances established in this case and with the application of new judicial practice due to missing the deadline for filing a claim with the court is a manifestation of a formal attitude to the requirements provided for by law, since at the time of the filing of the lawsuit and the opening of the proceedings in the case by the court of first instance, the legal practice regarding the duration of the period for applying to the court with a claim for annulment of decisions on determining monetary obligations was 1,095 days, taking into account that it is not without reason could expect the plaintiff and which was taken into account by the court of first instance.
Based on the above legal regulation and the circumstances of the case, the Supreme Court states that the court of appeal violated the rules of procedural law, which led to the adoption of an illegal resolution that prevents further proceedings in the case.
In another case, the KAS of the Supreme Court pointed out the need to take into account the temporal approach to the application of legal positions and conclusions of the Supreme Court regarding time limits, in particular in the case of a change in the approach of the Supreme Court, since the question of whether there are reasons to consider valid reasons for missing the deadline for filing a lawsuit, which are related to the change the legal position of the Supreme Court on this issue, was the subject of research by the Supreme Court in case No. 640/11650/21, following the cassation proceedings of which a decision was adopted on 09/23/2021. In this ruling, the court of cassation noted that during the transition period, in order to ensure the realization of a person’s right to appeal to the court under the specified conditions, he should be provided with a certain reasonable period of time, sufficient for formulating a legal position and taking actions to prepare the appropriate claim and submit it to the court. That is, the new approach of the Supreme Court in the issue of determining the time limit for filing lawsuits can be applied to new lawsuits filed after the adoption of the resolution dated 26.11.2020, however, when deciding the issue of renewing the time limit for filing a lawsuit, the following circumstances are of significant importance: the time period that elapsed after the change judicial practice and until the moment of filing a lawsuit; the reasons that hindered the filing of a lawsuit in the shortest possible time after the change in judicial practice; whether there are grounds to believe that the claimant made unreasonable delays.
A similar approach was demonstrated by the Supreme Court when considering cases No. 580/3400/20 (decision dated 07.27.2021), No. 500/1149/21 (decision dated 08.04.2022).
Summarizing what has been said, the court of cassation concludes that the courts of the previous instances did not decide on the time limit to be applied in disputed legal relations, did not establish the date from which this time limit should be calculated (in particular, the effective date of delivery of contested tax notices-decisions to the plaintiff (including number, according to the rules of clause 42.5 of article 42 of the Criminal Code)) and the moment when it disappeared (taking into account the change in judicial practice). The plaintiff’s arguments about the actual receipt of disputed tax notices-decisions on 13.05.2022 and the measures taken by him regarding the administrative appeal of these decisions remained outside the legal assessment of the courts of previous instances. The court decisions also do not contain a conclusion on the applicability in disputed legal relations when deciding the issue of compliance with the term of appeal to the court of the norms of Law No. 540-IX, which amended the calculation of the terms of both PC and KAS. These circumstances are evidence of violation by the courts of the norms of procedural law, which led to a premature conclusion that the plaintiff missed the deadline for filing a lawsuit and lack of grounds for its renewal.
At the same time, the assertions of the courts are not unique that there is a fundamental difference between the legal nature of the substantive statute of limitations in tax legal relations and the procedural term of appeal to the administrative court, and therefore it is erroneous to equate their purpose when used.
Therefore, the statute of limitations provided for in Art. 102 of this Code, and accordingly, the suspension of their course does not apply to the terms of the Company’s appeal to the court with a claim in this case, which are established by Art. 122 KAS.
Courts of the first and appellate instances, deciding on the validity of the grounds for renewing the term of appeal to the court, established the specific circumstances, chronology and sequence of actions of the Company before the appeal to the court for the protection of its right, which testify that the subject of the appeal to the court knew about the right was violated, nothing really prevented him from turning to the court within the time limits set by the law, but he did not do this.
The Supreme Court agrees with the conclusions of the courts of previous instances that there are grounds for leaving the claim without consideration on the basis of Art. 123 of the Civil Procedure Code, since the plaintiff missed the deadline for applying to the court and no valid reasons for such omission were given.
As you can see, there is a need to unify judicial practice regarding the relationship between the statute of limitations and the time limit for applying to court.
At the same time, the issue of the validity of the pass and the statute of limitations, and the terms of appeal to the court, are decided by the courts of the first and appellate instances.
The court of cassation cannot overestimate the arguments about the validity of the reasons for skipping the statute of limitations, which were evaluated by the courts of previous instances.
A similar legal position is set out in p. 34 of the resolution of the Grand Chamber of the Supreme Court dated January 30, 2019 in case No. 706/1272/14-ts and paragraph 41 of the decision of the Supreme Court dated 18.01.2022 in case No. 922/2718/20.
Application of statute of limitations in martial law conditions
By the Law of Ukraine dated 03/15/2022 (entered into force on 03/17/2022) “On Amendments to the Tax Code of Ukraine and other legislative acts of Ukraine regarding the effect of norms during the period of martial law”, the section “Final and Transitional Provisions” of the Civil Code of Ukraine was supplemented by paragraphs 18 and 19 of the following content:
“18. During the period of martial law and state of emergency in Ukraine, and within thirty days after its termination or cancellation, in the event that the borrower defaults on the fulfillment of the monetary obligation under the contract, according to which the borrower was granted a credit (loan) by a bank or other creditor (lender), the borrower is released from the liability specified in Article 625 of this Code, as well as from the obligation to pay a penalty (fine, penalty) to the creditor (lender) for such delay. Establish that the penalty (fine, interest) and other payments, the payment of which is provided for by the relevant contracts, accrued from February 24, 2022 inclusive, for late performance (non-performance, partial performance) under such contracts, are subject to write-off by the creditor (lender).
19. During the period of military, state of emergency in Ukraine, the terms specified in Articles 257 — 259, 362, 559, 681, 728, 786, 1293 of this Code shall be extended for the period of its validity.”
It is about the general statute of limitations (Article 257 of the Civil Code), special (Article 258 of the Civil Code) and changing the length of the statute of limitations (Article 259 of the Civil Code), separate special statutes of limitation (Article 786 of the Civil Code). Therefore, other norms of the Central Committee, in particular on the application of the statute of limitations by the court, the consequences of its expiration are still valid.
These norms, outwardly aimed at protecting the interests of the weaker party in contractual and other legal relations, actually gave rise to a number of problems in protecting their interests. In particular, unscrupulous creditors were given the opportunity to apply to the court, to charge a penalty (fine, interest) for the entire period, much more than the shortened statute of limitations of one year (clause 1, part 2, article 257 of the Civil Code). There is no doubt that the extension of the statute of limitations should not refer to a special (shortened) statute of limitations, which requires corresponding changes to the Civil Code.
It should be noted that this law does not introduce changes to the Economic Code of Ukraine regarding the statute of limitations, i.e., the provisions of this Code on the statute of limitations (in particular, Part 5 of Article 203, Article 223, Part 3, Part 4 of Article 322 of the Civil Code) in the period of martial law and state of emergency in Ukraine shall not be extended for the duration of its validity.
It also does not stop during a state of war or state of emergency and in the thirty-day period after its termination, the period provided for in part. 6 Art. 232 of the Civil Code, according to which the accrual of fines for late performance of an obligation, unless otherwise established by law or contract, ceases six months after the day when the obligation was to be fulfilled.
In accordance with the resolution of the Cabinet of Ministers of Ukraine dated 05.03.2022 No. 206 “Some issues of payment for housing and communal services during martial law” until the termination or cancellation of martial law in Ukraine, it is prohibited to charge and collect penalties (fines, penalties), inflation charges, annual interest, accrued for debts incurred due to untimely and/or incomplete payment by the population of fees for housing and communal services. The prohibition also applies to legal entities that own a residential and/or non-residential premises, a building, in which internally displaced persons are located and are the final consumers of communal services, in the event that such legal entities do not have the right to receive compensation for utility services consumed during the placement of internally displaced persons in buildings (premises) of state, communal and private property during martial law. At the same time, the issue of collection and assessment of fines and other sanctions against legal entities that provide services for the management of multi-apartment buildings at the expense of consumers, including housing and communal services, has not been resolved.
Although in judicial practice, the question of applying this resolution to legal entities — consumers raises questions. Yes, the court noted, that the provisions of Resolution No. 206 of the Cabinet of Ministers of Ukraine dated 05.03.2022 do not expressly prohibit the accrual of 3% of annual and inflationary losses to condominiums that are legal entities, despite the fact that these non-profit organizations were created by the residents of the building (population) to provide for such residents utility services and the payment of such utility payments is carried out at the expense of residents and at public tariffs. However, this does not meet the principles of justice, as it unjustifiably puts the association of residents who have entered into a collective agreement to receive communal services in a worse position compared to residents who have corresponding individual contracts.
References:
- The concept of updating the Civil Code of Ukraine. K.: ArtEk Publishing House, 2020. P. 13.
- Baked O. P. Modern trends in the application of the statute of limitations in judicial practice. Bulletin of the National Association of Lawyers of Ukraine. 2023. No. 5 (91). WITH. 44-53.
- Baked O. P. Grounds for applying the statute of limitations in corporate legal relations // Ukrainian commercial law. 2006. No. 7. WITH. 86-93.
- Engelman I.E. On Antiquity in Russian Civil Law (from the 1867 edition): historical and dogmatic study. M.: Statute, 2003. P. 28-29
Oleg Pechenyi
k. y. Ph.D., senior researcher of the Research Institute of State Construction and Local Self-Government of the National Academy of Sciences of Ukraine, member of the NKR of the VR