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The state registrar from Donetsk Oblast gets his accreditation withdrawn

06.12.2019

Complainee: The Ministry of Justice of Ukraine (MoJ) 

Complaint in brief: A metallurgical company from Donetsk Oblast appealed to the Council with a complaint against the state registrar malpractice.
 
In the fall of 2013, the company took a loan from the bank with the maturity until the end of 2015. The company pledged its property complex under the loan. In the fall of 2014, the Complainant repaid the loan under this agreement by debiting funds from its current account in the same bank. 
 
Troubles began when the lending bank went bankrupt. The bank liquidators concluded the loan repayment was incompliant with the Resolution of the NBU Management Board on establishing supervision over the bank activities, since the funds for loan repayment had been transferred not to the NBU correspondent account.
 
In the autumn of 2018, almost four years after recognizing legal relationship under the loan agreement terminated, the bank’s representatives addressed the Complainant with demand of the loan repayment, and in February 2019 the village council state registrar registered the ownership right to mortgaged property owned by the complainant for the bank. 
 
Company lawyers took diverse appropriate actions to protect their rights. In particular, pre-trial investigations were initiated based on the Complainant’s applications, within the framework of which the property had been arrested. The Complainant also appealed to the Commercial Court to declare the debt obligations terminated, to the Complaints Commission in the sphere of state registration of the MoJ (Commission), and to the Business Ombudsman Council – regarding the registrar’s actions. 
 
Actions taken: The investigator examined the circumstances of the case and identified that in May 2019 the Commercial Court recognized the Complainant’s debt liability terminated as of 2014; and the Deposit Guarantee Fund authorized temporary administrator’s actions - an infringement of peaceful property disposition rights. 

The investigator also established the registrar had no legal grounds for re-registering property since at that time the ban on alienation of businesses’ immovable property located in the zone of Anti-Terrorist Operation as provided by Article 9 of the Law of Ukraine “On Temporary Measures for the Anti-Terrorist Operation Period” was in force.
 
The Council turned to the Deputy Minister of Justice of Ukraine for state registration. The investigator asked to initiate a review of the state registrar activities, who re-registered the property complex to the bank. The Council’s investigator also participated in the complaint consideration by the Commission.
 
Result achieved:
The MoJ informed the Council of the withdrawal of accreditation of the registrar, who violated a direct prohibition of Article 9 of the Law of Ukraine “On Temporary Measures for the Anti-Terrorist Operation Period”.

However, the Commission refused to cancel registration actions, stating that at the time of complaint consideration the court decision on recognition of debt liabilities terminated was considered in the second instance. As the Council does not interfere with the work of the courts, we dismissed the case at this stage.
 
After receiving the appeal judgement in its favor, the company filed a claim for cancellation of registration actions, not canceled by the Commission. 
 
Currently two pre-trial investigations are ongoing: one regarding abuse of office by the state registrar and the other one – regarding bank officials under Article 356 of the Criminal Code (Arbitrariness).