News (#12 December 2016)


On Mediation Draft Act

On 3 November the Verkhovna Rada adopted Draft Act No. 3665 On Mediation. The Act defines terms “mediation” and “mediator”, defines the basic principles of mediation, legal basis of mediation procedure, conditions for getting status of a mediator, features of mediation procedure during court or arbitration proceedings, quality control mechanisms as of mediation services, and principles of state policy in the field of mediation. The Draft also provides guarantees to support access to a court for citizens, who will resort to mediation, and introduces the following restrictions: means and methods of mediation, which are chosen by a mediator, should not contradict current legislation of Ukraine; agreement on mediation results should not contain provisions that are contrary to Ukrainian legislation, interests of the state and society, its moral principles, and other legal requirements. The scope of application of limitations is also established. Mediation cannot be applied in cases (proceedings), in which the parties cannot conclude an amicable agreement or an agreement on reconciliation in accordance with current legislation of Ukraine. Thus, mediation can be used in any conflicts (disputes), including civil, family, labor, economic, administrative ones, as well as in criminal cases and cases on administrative violations. Mediation can be carried out in case of a conflict (dispute) both before bringing the matter before the court (arbitration court), and during or after judicial or arbitral proceedings, including during enforcement proceedings. If a mediation party committed a serious or especially serious crime, mediation can be carried out solely as related to amount and method of compensation for damage incurred by that crime. Under the Draft, the institution of mediation supplements (and does not change) existing legal institutions, such as amicable agreements in civil and economic procedures, reconciliation in administrative and criminal proceedings and the like. Thus, the Draft introduces a model of voluntary judicial mediation, where the court has the right to recommend mediation to parties, and parties may elect not to resort to it.


Government reform of wage system

The Cabinet of Ministers registered with Parliament Draft Act No. 5130 On Amendments to Certain Legislative Acts of Ukraine, which is intended to reform the existing wage system. The document establishes a new procedure for formation of the wage tariff system: in the public sector. The minimum wage rate (salary) will be determined by the Cabinet of Ministers. In non-budget sector companies will determine tariff rates on their own in collective labor agreements. Furthermore, Acts On Scholarship Payment to Students (cadets) of Higher Educational Institution, On Social Security Tax Payment by Payers of the Single Tax and On Provision of Court Fee and State Duty will also be changed. At the same time, the minimum wage rate cannot be lower than the minimum cost of living as established for able-bodied persons as of 1 January of the calendar year. Establishment of penalties in the amount of three minimum wages for legal entities and individual entrepreneurs for preventing a state labor inspector from carrying out an inspection is stipulated. If the inspector is prevented from holding an inspection, the aim of which is to identify employees with non-concluded labor contracts, wage payments without incurring and paying social security tax (payment of envelope wages), the penalty will be 100 minimum wages.


Protecting the rights of defrauded bank depositors

The Verkhovna Rada of Ukraine approved Draft Act No. 5390 On Amendments to Some Acts of Ukraine regarding Remuneration through the Deposit Guarantee System of Damage Caused by Abusive Practices in the Field of Banking and other Financial Services to Physical Persons, which was submitted by the President of Ukraine to Parliament as an urgent piece of legislation. A scheme recently became widespread by which a bank in its premises proposed citizens of Ukraine to conclude not bank deposit agreements with this bank but loan agreements with non-bank financial institutions through a proxy holder, which was such a bank. In this case, with a view to carrying out manipulative deception of consumers as to the real subject of agreement, a bank opens each client an account, from which funds were transferred further to the accounts of the above-stated non-bank financial institutions. The funds shall be guaranteed as recoverable in the event that on the date of this law’s coming into force a bank-proxy holder was declared insolvent. It is also stipulated to entrust the Deposit Guarantee Fund with the right to carefully examine documents relating to each physical person who is equaled to a depositor, and not later than 20 business days from the date of this law coming into force to start paying remuneration. The Deposit Guarantee Fund shall have the right to submit claims to non-bank financial institutions, which attracted funds from the public. Funds collected from such non-bank financial institutions shall be included in the liquidation estate of a corresponding bank.

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