This collection of expert commentary is part of a series on the Constitutional Court crisis. For background information, see Ukraine's Constitutional Court Crisis, Explained and our primer on Ukraine's Judicial Institutions. Check back for updates as additional expert comments roll in, as well as an interview about academic research on judicial reform.
Dmytro Fedoruk: Investors May Seek Ways to Avoid Ukrainian Courts
The Constitutional Court of Ukraine recently found unconstitutional several provisions of the Law on Prevention of Corruption related to the National Anti-Corruption Bureau’s ability to investigate and prosecute persons guilty of illicit enrichment. In the judgment, the court wrote that it does not consider filing deliberately false information, or the willful non-filing of a declaration by officials who are required to do so, to be a significant violation under the law. This finding seems to be in tension with recent anti-corruption actions taken by Ukraine.
Moreover, the way in which the Constitutional Court of Ukraine has made its decision is also problematic. The court may well have exceeded its authority in having considered this case. Forty-seven MPs asked the court to find eleven provisions of the Law on Prevention of Corruption unconstitutional. However, in its judgement, the court, on its own initiative, struck down almost twice as many provisions. As a result, the National Anti-Corruption Bureau is closing approximately 100 pending cases. In addition, it is still unclear whether the Bureau will be capable of carrying out background checks on recently elected officials from the local elections on October 25.
Not only does this decision undermine anti-corruption initiatives within Ukraine, but it may also have broader effects on Ukraine’s economy and investment prospects. President Zelensky was already under a lot of pressure from certain Western donors, especially the IMF, who are not satisfied with Ukraine’s anti-corruption efforts. Furthermore, foreign investors already cite the lack of trust in the Ukrainian court system as a reason why they are hesitant to invest in Ukraine.
An alternative way to encourage investments in Ukraine may be through public-private contracts. Despite these developments, several foreign companies are still interested in various forms of public-private partnership, such as Concession Agreements, with the government of Ukraine, and local law firms, including Redcliffe Partners, are already advising foreign investors in negotiating Production Sharing Agreements with the State. In this way, investors may be able to contract around some of the issues raised by worrying court decisions—for example, by requiring that disputes be resolved through international arbitration or mediation instead of in Ukrainian courts. If the state is able to conclude such contracts, these could be a source of hundreds of millions of dollars of investment. And if the courts keep making such controversial opinions, then this preference for public-private contracts will likely continue.
Dmytro Fedoruk is one of the founding partners of Redcliffe Partners. Dmytro has more than 15 years of experience advising foreign and Ukrainian clients on a broad range of M&A, corporate and joint venture transactions. He has a Degree in Law from Taras Shevchenko National University of Kyiv and is ranked by The Legal 500 2020 as one of the Leading Individuals in Сommercial, Corporate, M&A and Energy.
Ivan Gomza: Weaponization of Judiciary Erodes Rule of Law
The October 27, 2020 ruling by the Constitutional Court of Ukraine (CCU), which declared the punishment for submitting false asset declarations unconstitutional, set the three branches of power on a collision course. However, the biggest casualty of the ensuing political struggle is likely to be civil society activists and organizations.
The stakes of the ongoing battle around the scope and authority of the National Agency on Corruption Prevention (NACP) transcends the mere question of whether NACP should supervise the income of officials. The real issue in question is not legal but rather political, for the appeal to the CCU was set in motion by 50 MPs representing the part of the political class hostile to Westernization and thus eager to halt attempts to reform Ukraine. The very same section of the political class is constantly seeking ways to undermine the post-Euromaidan consensus, which stipulates that Ukraine should resolutely align itself with Western values and principles. Since such a consensus depends on functional good governance institutions, they found themselves on the frontline of the assault. In addition to NAPC, the National Anti-Corruption Bureau (NACB) and National Agency for Higher Education Quality Assurance (NAHEQA) are being targeted: the CCU ruled that the Head of NACB’s appointment was unconstitutional, whereas NAHEQA was indicted for exposing plagiarism in the Ph.D. thesis defended by the acting Minister of Education.
The fact that good governance agencies are disempowered by the judiciary is revealing. Not only does it show that individual judges tend to ally themselves with anti-Westernization players, but it also points to a regrettable lack of congruence between newly established agencies and the existing system of law. For instance, the CCU ruling No. 9-p/2020 (August 28, 2020), which stipulates that the President acted unconstitutionally while appointing the Head of NACB, is legally unassailable. After all, Article 106 of the Constitution does not include the NACB as an agency to which the President could assign members. One could argue that this is hardly surprising, since the NACB was constituted in 2014, 18 years after the Constitution had been adopted. However, in the fall of 2014, during the deliberations regarding the NACB, the incongruence was duly noted by experts who warned that the CCU might move against the agency. A different wording or even the delegation of power to appoint the Head of the NACB to the Cabinet could have eliminated the threat. Such precautions were discarded because of political expediency and pressure from civil society. (When in October 2014, the parliament torpedoed the draft law No 5085, anti-corruption activists branded resisting MPs as self-serving criminals.) This haste backfired in 2020.
The battle around the post-Euromaidan consensus is unsettling not only because the revisionists are trying to bring the country back to 2013 or even 2003, totally ignoring the emergence of game-changing circumstances. More imminently, the weaponization of the judiciary erodes the basis for rule of law, thus strangling the foundational principle for the post-Euromaidan consensus.
To begin with, there is a tendency of mounting public hostility towards the judiciary. According to an October 2020 poll, the judiciary is totally distrusted by 42.5% of respondents. The dismal results suggest that the fragmentary judiciary reform initiated in 2018 has failed to augment public confidence in the court system. As if to further the gulf between judges and citizens, the NACP equipped its webpage with a banner stating that 560 declaration verifications were stopped by the CCU (number accurate as of time of writing). Although emotionally understandable, such a move hurts the political system in the long run. The confrontational attitude towards the CCU threatens to bring trust in the judiciary to a historical minimum.
Next, most of the efforts to contain damage inflicted by recent CCU verdicts only exacerbate the deficiency of rule of law in Ukraine. When in the heat of the moment, President Zelensky introduced his draft law No. 4288 to impeach the CCU, he ignored the fact that, according to the Constitution, neither president nor parliament has such power. Initiatives by the legislature itself are no less vociferous and no more legal. A draft law (No. 4308) by MP Halyna Yanchenko proposes to revise the budgetary allocations and cut spending on the CCU. Yet another motion by 47 MPs (No. 4311) strives to change the requirement that 12 out of 18 CCU judges must be present to interpret the constitution. The draft law in question increases the number to 17, which allegedly should make the previous CCU rulings invalid. The initiatives clearly exemplify political hardball, but the only effect will be the loosening of the checks-and-balances principles.
Finally, and most tragically, civil society, especially the sectors that aim to promote good governance, is likely to be the biggest loser of the ongoing constitutional crisis. NGOs and individual activists will have to choose between two evils, namely either to uphold the principles of constitutionality, thus supporting the CCU judges who actively oppose the good governance agenda; or to rally behind the president and the parliament, who are ostensibly seeking to protect the reformist thrust through blatantly unconstitutional methods. Either choice is bound to be deleterious.
Dr. Ivan Gomza is Head of Public Policy and Governance Department at Kyiv School of Economics. Trained as a political scientist, he received his Ph.D. in 2012 after studying at the Joint Franco-Ukrainian Ph.D. Program at the University of Paris X-Nanterre and the Kyiv-Mohyla Academy. Later, Gomza was a German fellow of the German Academic Exchange Service (DAAD) in 2013 and the Fulbright Faculty Development Program in 2016-2017. He taught at Kyiv-Mohyla Academy until joining the Kyiv School of Economics team in October 2019.