President Volodymyr Zelensky has declared that he intends to solve the rule of law problem in Ukrainian courts that so discourages investment in Ukraine.
The British Ukrainian Chamber of Commerce is concerned, in particular, for Ukraine to address the problem of wrongful judgments in Ukrainian courts that dispossess investors without any genuine legal basis, the principal rule of law problem in Ukraine.
The Ukrainian judiciary needs to match the best European standards if Ukraine is to benefit from its potential for economic investment and development. The question is how to achieve this, as the court reforms undertaken so far in Ukraine have largely failed for a number of predictable reasons, and there are no viable judicial reform proposals being made currently (e. g. reforms based on the use of judges may, in the current situation in Ukraine, simply lead jury tampering).
Swedish model
The solution that the BUCC recommends is the creation of a Ukrainian judicial ombudsman, similar to the Swedish justice ombudsman that in the previous century successfully cured a similar rule of law problem in Swedish courts. This Swedish ombudsman continues to ensure that Swedish courts are a model for the world’s best practice. Their ombudsman solved the problem, which currently exists in Ukraine, that their judiciary had no independent outside review of its actions, so it operated as a closed shop. There is today no effective oversight of Ukrainian judges, even for criminal acts. Moreover, Ukrainian criminal law fails to impose appropriate criminal law standards for proper judicial conduct (due to the Ukrainian Constitutional Court’s poorly reasoned 2020 decision declaring as void Article 375 of the Criminal Code on judicial conduct.)
Review rulings
The proposed Ukrainian judicial ombudsman would act as a prosecutor to independently review court decisions, and prosecute the judges responsible for those judgments that are determined to be as “denials of justice,” meaning that they have no reasonable legal basis unless the judgments are suitably revised in response to the ombudsman’s opinions. Whether a Ukrainian judgment constitutes a denial of justice could be determined based on the standard in Ukraine’s bilateral investment treaties for the obligation to provide foreign investors with justice in Ukraine’s courts. However, most foreign investors, when denied justice in Ukrainian courts, simply go away, because they are unwilling to bear the large cost and the time required for such treaty proceedings, that can take five or more years from the initiation of litigation until the completion of the arbitration. The treaties also do not protect domestic investors. Furthermore, Ukraine does not often voluntarily pay bilateral investment treaty judgments. Too few potential investors want to invest in Ukraine where treaty arbitration is the only protection against abuse in Ukrainian courts.
No more immunity
Under the BUCC’s proposal, criminal law-based standards for judicial conduct would be adopted, and the judicial ombudsman would be given powers to investigate and prosecute judges who render wrongful decisions that have no genuine legal basis. Judges should not be able to function immune from effective legal recourse where they materially violate reasonable professional standards for judicial performance. Currently, because the Constitutional Court has voided Article 375, parliament’s recent attempt to create such judicial standards, judges can in practice only be prosecuted if they are actually caught taking bribes.
This ignores what should be the focus instead, which is the actual content of judicial action, i. e. the court judgments. If these judgments violate reasonable criminal law standards by constituting denials of justice, then the judges responsible should be held criminally liable for their actions. It should not be necessary to prove that bribery was the reason for a judge’s improper conduct. Instead, proof of the wrongful conduct should be enough, as it is in Ukrainian courts for criminal liability for wrongful conduct for other areas, such as medical or architectural malpractice.
Abusive judgments
Sadly, the many abusive judgments by Ukrainian courts have resulted in a breakdown of confidence by most foreign as well as Ukrainian investors. There is now a widespread belief that litigants can only protect themselves by making improper payments to judges — a belief that forces many legitimate investors from abroad to avoid Ukraine, as they cannot engage in improper payments that subject them to severe criminal legal penalties (e. g. under the US Foreign Corrupt Practices Act, the British Bribery Act, etc.).
The proposed Ukrainian judicial ombudsman should sufficiently protect investors and others to allow them to do business in Ukraine. It would not solve all issues, as the proposed ombudsman is not intended to intervene in close cases, where there are reasonable arguments on both sides and the judges take a reasoned decision. However, this is not an important rule of law problem for those who are legally well advised and comply with applicable laws. The proposed judicial ombudsman is to address situations where there is judicial abuse. In particular, it aims to prevent investors and others from being dispossessed without any genuine legal basis.
Huge benefits
The benefits to Ukraine from preventing such judicial misconduct should be rapid and substantial economic development, as well as a more just society, giving Ukrainians a reason to cherish their country rather than feel compelled to move abroad to live under proper rule of law.
The proposal for the Ukrainian judicial ombudsman could be quickly implemented. It should be successful for Ukraine just as the similar justice ombudsman has been for Sweden. The BUCC can, with other chambers of commerce and business associations, recommend to the Ukrainian parliament appropriate implementing legislation as well as reputable legal experts who could serve as the judicial ombudsman. This proposal is the “magic bullet” solution that can definitively improve the rule of law in Ukrainian courts.
Bate C. Toms is chairman of the British Ukrainian Chamber of Commerce and managing partner of B. C. Toms & Co. law offices in Kyiv and London.
