Class actions in Ukraine

  1.  Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.
  2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.
  3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.
  4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?
  5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.
  6. What types of relief are available, i.e., damages and/or injunctive relief? 
  7. On what basis are damages calculated i.e., compensatory and/or some other basis?
  8. Are punitive or exemplary damages recoverable?
  9. Will domestic law need to be changed to comply with the Representative Action Directive?
  10. Are there special rules for settlement of class actions, e.g., requirement for court approval?
  11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?
  12.  Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?
  13. Do you have specialist courts for these procedures?
  14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?
  15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?
  16. Can arbitration clauses lawfully contain class action waivers?
  17. Are contingency fee agreements permissible?
  18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?
  19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

1. Do you have a specific procedure or procedures for bringing “opt-in” class actions?  If so, please outline such procedure(s) and their key features.

Class actions lawsuits are not expressly regulated in Ukraine. The law only provides that several claimants can jointly file a lawsuit on the condition that (a) the subject-matter of the dispute concerns joint rights or obligations of several claimants, and such rights and obligations are sufficiently similar; and (b) the rights and obligations of several claimants arose out of the same grounds. Nevertheless, each claimant acts independently in such court proceedings. 1 Article 47 of the Commercial Procedural Code of Ukraine (“CoPCU”); Article 50 of the Civil Procedural Code of Ukraine (CiPCU).

Collective action can also be arranged through consolidation of different lawsuits which have been filed with the court separately. If the claims are filed separately but are interrelated because of the grounds of the case or the evidence provided, the court may consolidate these lawsuits into one proceeding following the motion of any party or at the court’s discretion. 

Consolidation of cases is allowed before the preparatory hearing in the case or, in case of the summary proceeding, prior to the commencement of the court hearing on the merits. The law prohibits consolidation of different lawsuits that shall be considered in different proceedings or are subject to the exclusive jurisdiction of different courts. 2 Article 173 of the CoPCU, Article 188 of the CiPCU, Article 172 of the Code of Administrative Procedure of Ukraine (“CAPU”)

2. Do you have a specific procedure or procedures for bringing “opt-out” class actions?  If so, please outline such procedure(s) and their key features.

There are no specific procedures for bringing “opt-out” class actions in Ukraine, but Ukrainian law provides three instances in which designated bodies can bring actions on behalf of an indefinite number of individuals. 

First, consumer associations can bring the lawsuit against unlawful actions of the seller, producer or performer on behalf of an “indefinite number of consumers”. 3 Article 25 (9) of the Consumer Law  In one of its decisions, the Supreme Court acknowledged that the consumer associations are entitled to apply to the court for protection of the rights and interests of an indefinite circle of consumers including those consumers who are not members (participants) of the civil consumer organisation. 4 Resolution of the Supreme Court in case No. 200/13835/15-ц dated 21 August 2019

The Law On Consumer Rights’ Protection (“Consumer Law”) states that in the event of granting such collective lawsuit, the court shall order the perpetrator to inform consumers about the respective court decision. The court decision shall also serve as res judicata in the subsequent civil proceeding initiated by the consumer against the wrongdoer(s). 5 Article 25 (9) of the Consumer Law

Second, trade unions are entitled to represent employees, including in courts, in order to protect their collective rights and interests. As the Supreme Court explained, the law grants the trade union a right to seek protection of violated right or interest of an unlimited number of persons without pursuing its own interest. 6 Resolution of the Grand Chamber of the Supreme Court in case No. 910/9010/17 dated 26 February 2020 The trade union shall represent and protect employees regardless of whether they are members of the respective trade union. 

Thirdly, civil environmental organisations may initiate court proceeding for protection of the collective interests of others. Under the Laws of Ukraine On Environmental Protection, the afore-mentioned organisations have the right to sue for damage caused to the health of citizens and property of civil organisations. 7 Article 21 of the Laws of Ukraine "On Environmental Protection"  The Grand Chamber of the Supreme Court also acknowledged in one of the cases that the ecological non-governmental organisation was entitled to represent “ecological interests of the society and its individual members” and pursue protection of violated environmental rights or elimination of environmental legislation violations. 8 Resolution of the Grand Chamber of the Supreme Court in case No. 910/8122/17 dated 11 December 2018

3. Are there specific rules on standing for bringing claims under these procedures (e.g., that claims can only be brought by consumer associations)?  If so, please summarise those rules.

In case of group lawsuits or consolidated proceedings, Ukrainian law provides no specific rules on standing in these proceedings (other than those general rules described in question 1 above).

At the same time, as mentioned in question 2 above, if the claim is filed on behalf of indefinite number of individuals, the law grants standing in such proceedings only to consumer associations, trade unions and the ecological non-government organisations. Ukrainian law does not elaborate on any further details regarding the standing of these bodies.

4. How frequently are class actions brought in your jurisdiction? Are there any pending changes to your class action rules that are likely to increase the number of claims filed?

“Class actions” in Ukraine are not widespread due to the lack of a clear legal framework for bringing such lawsuits.

Based on the analysis of public sources, we may conclude that collective actions are most commonly brought by small groups of claimants (fewer than five). We also identified a number of cases where collective lawsuits were initiated by the consumer associations, trade unions or the ecological non-governmental organisations. In recent years, especially, after the judicial reform in Ukraine of 2017 during which the rules of procedure were substantially changed, these types of disputes have become more popular.

On 5 October 2021, parliament registered the Draft Law On Consumer Protection (No. 6134). The Draft Law is submitted by the Cabinet of Ministers of Ukraine and aims at harmonising consumer protection law in Ukraine with EU legislation. The Draft Law, inter alia, (i) prescribes the out-of-court dispute resolution procedure for consumer disputes; (ii) entitles the State Service of Ukraine on Food Safety and Consumer Protection to file court claims for protection of an unlimited number of consumers and (iii) lifts a duty to pay court fees for collective claims filed on behalf of consumers. The Draft Law is currently pending consideration of parliament. 

5. Are the procedures for class actions restricted only to certain causes of action/types of claim, e.g., competition claims?  If so, please describe these restrictions.

Class actions in Ukraine are not clearly regulated, and there is no specific cause of action that the parties can or cannot pursue.

Certainly, in case of actions initiated by consumer organisations, trade unions and environmental organisations, they should pursue their claims within legislative limits that allow them to protect collective rights and interest of the designated subjects (consumers, employees and societal environmental interests respectively).

6. What types of relief are available, i.e., damages and/or injunctive relief? 

Under the general rule, the claimants are free to seek any type of remedy provided in law, 9 Article 16 of the Civil Code of Ukraine including damages and injunctive relief. 

However, as noted in section 2 above, class actions brought under the Consumer Law permit a judgment to be made against the defendant on liability, but to recover damages the individual consumers must bring their own claims in reliance on the judgment on liability. 

7. On what basis are damages calculated i.e., compensatory and/or some other basis?

Under Ukrainian law, damages are compensatory in nature. The law distinguishes two types of damages: real damages and lost profit.

8. Are punitive or exemplary damages recoverable?

Punitive damages are not recognised under Ukrainian law.

9. Will domestic law need to be changed to comply with the Representative Action Directive?

The Representative Action Directive covers the protection of the collective interests of consumers only within the EU and does not apply to Ukraine.

At the same time, the majority of legal experts and practitioners in Ukraine agree that Ukrainian class action regulation is not sufficient and should be revised, including, taking into consideration the EU legal framework. In particular, the Draft Law On Consumer Protection (No. 6134) referred to above aims at implementing a number of EU legal instruments for protection of consumers in Ukraine including Directive 98/6/EC, Directive 2005/29/EC, Directive 2019/771, Directive 93/13/EC, Directive 2011/83/EC, Directive 2009/22/EC, Directive 2013/11/EC and Regulation (EU) No. 2017/2394.

10. Are there special rules for settlement of class actions, e.g., requirement for court approval?

The parties of any court proceedings may settle their dispute at any stage of the proceedings. The settlement is arranged through the settlement agreement approved by the court. The court can deny settlement in a case if the terms of the settlement are contrary to the law or violate rights of other persons, or if the conclusion of a settlement agreement by a party representative is contrary to the interests of that party.

11. Beyond the existing rules for taking jurisdiction in unitary claims, are there any additional rules on jurisdiction for your class action procedures?  Are there any territorial limitations to who may be members of the class?

There are no special rules on jurisdiction or territorial limitations for class action proceedings.

12. Please describe the “certification” requirements for each of your jurisdiction’s class action procedures, e.g., how similar must the claims be?  Are there any other criteria to be met for the court to approve use of the procedure?

As we stated earlier, in answer to questions 1 and 2, neither “opt-in” class actions nor “opt-out” class actions are clearly regulated in Ukraine, and there is no formal certification stage for them.

Regarding lawsuits brought by several claimants, Ukrainian law only provides that:

  1. the subject-matter of the dispute shall be joint rights or obligations of several claimants, and such rights and obligations have to be sufficiently similar; and
  2. rights and obligations of several claimants arose out of the same grounds.

As noted in the response to question 1, the court may consolidate different lawsuits into a single proceeding if the lawsuits are filed separately but are interrelated based on their grounds or provided evidence. Similarly, the court can separate several claims in independent proceedings if this will facilitate fulfilment of the purpose of civil or commercial litigation. 10 Article 188 (6) of the CiPCU, Article 173 (6) of the CoPCU.

There are no other “certification” requirements as to whether consumer organisations, trade unions and environmental organisations can bring collective lawsuits. 

13. Do you have specialist courts for these procedures?

No.

14. Are there any special rules for discovery/disclosure for class action procedures that are different to the rules for unitary actions?

There are no special rules for disclosure for class action procedures in Ukraine. The general rules of procedure regulating evidence apply.

A party in the case must disclose the documents on which it relies. The party is free to not disclose documents that adversely affect a party's own case or support the other party's case. At the same time, parties in the case are entitled to seek a court order compelling any person possessing documents, material to the case, to disclose them to the court.

15. Are there any special rules for appeals in class action procedures that are different to the rules for unitary actions?

No, the general rules for appealing court decisions apply.

16. Can arbitration clauses lawfully contain class action waivers?

Generally, the contracting parties are free to agree on the scope of disputes to be referred to the international commercial arbitration.

At the same time, any waiver of right to apply to Ukrainian court (including class action waivers) is null and void.

17. Are contingency fee agreements permissible?

Contingency fee agreements are not explicitly prohibited in Ukraine. Generally, a client and an attorney (or law firm) are free to agree on the amount and structure of legal fees including arranging a contingency fee clause. 

Contingency fee clauses, however, became less popular in Ukraine after the Supreme Court decision of 2018 which ruled a contingency fee clause contrary to fundamental principles of litigation in Ukraine and therefore invalid. 1`1 Resolution of the Supreme Court in case No. 462/9002/14-ц dated 12 June 2018. Recently, nevertheless, the issue was finally settled by the Grand Chamber of the Supreme Court that acknowledged the lawfulness of contingency fees agreements. 12 Resolution of the Grand Chamber of the Supreme Court in case No. 904/4507/18 dated 12 May 2020.

18. What are the rules on cost shifting, i.e., does the losing party ordinarily have to pay the winning party’s costs?  Are adverse costs awards capped?  If so, at what level(s)?

Court fees are allocated between the parties pro rata to their success on the different reliefs. A successful party will be awarded its legal costs. A party that succeeded in defending some aspects of its case will be awarded a pro rata portion of its costs.

At the same time, the court has a wide discretion to decide on the on the amount of legal costs to be reimbursed by a losing party. When awarding such costs, the judge will assess whether the claimed fees were incurred in relation to a particular dispute, whether the costs are justifiable and proportionate to the value of claim etc. Usually the courts do not satisfy the full amount of the legal fees incurred and award compensation at their discretion.

19. Is litigation funding of class actions permissible?  If so, how prevalent is litigation funding?

Litigation funding is not specifically regulated in Ukrainian legislation, but there is no prohibition on third parties financing litigation in Ukraine.

At the same time, third party financing is presently uncommon in Ukraine, but this may change in the future.

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