Collection of state income as one type of sanction – part II

14/ 03/ 2023

Author: Darya Vasina, attorney at Dynasty Law & Investment The legitimate purpose of this type of sanction is to ensure control over the assets of a person who poses a potential threat to the state and its sovereignty; stopping the aggression against Ukraine and targeting the financial capabilities of the supporters of Russian peace. This type of sanctions can be applied only to individuals and legal entities, as well as to residents within the meaning of the Law On the Basic Principles of Forcible Expropriation in Ukraine of Objects of Property Rights of the Russian Federation and its Residents. The main conditions for the possibility of applying this type of sanction are its application during the period of the legal regime of martial law and the prior imposition of a sanction on a person in the form of blocking his assets by decision of the National Security Council of Ukraine. It is necessary to pay attention, first of all, to the understanding of the category of indirect performance of actions identical to the exercise of the right to dispose of assets, the specified clarification was made with the aim of covering property that, although formally, does not belong to the subject, but he informally controls it property, determines its actual fate, i.e. disposes of it. After all, such non-formalized control can be carried out both directly and through third parties on whom the relevant property right has been registered. According to Art. 316 of the Civil Code of Ukraine, which regulates the components of property rights, it follows that both assets belonging to a person and those assets with respect to which such a person can directly or indirectly perform actions identical in content to the exercise of the right to dispose of them are subject to collection into state income. If it is proven that the sanctioned person has an indirect influence on the actual and legal fate of the assets of such a company, such assets should also be subject to recovery. It is important in this matter to prove the fact of such influence, through the prism of establishing and researching the order of decision-making by the management bodies of the company in accordance with the law and statutory documents. At the same time, the interests of other persons, which may be violated as a result of the application of sanctions in the form of confiscation of assets into state income, may be protected outside the administrative case on the application of such a sanction by means of private law.

Author: Darya Vasina, attorney at Dynasty Law & Investment

The legitimate purpose of this type of sanction is to ensure control over the assets of a person who poses a potential threat to the state and its sovereignty; stopping the aggression against Ukraine and targeting the financial capabilities of the “supporters” of Russian peace.

This type of sanctions can be applied only to individuals and legal entities, as well as to residents within the meaning of the Law “On the Basic Principles of Forcible Expropriation in Ukraine of Objects of Property Rights of the Russian Federation and its Residents.”

The main conditions for the possibility of applying this type of sanction are its application during the period of the legal regime of martial law and the prior imposition of a sanction on a person in the form of blocking his assets by decision of the National Security Council of Ukraine.

It is necessary to pay attention, first of all, to the understanding of the category of “indirect performance of actions identical to the exercise of the right to dispose of assets”, the specified clarification was made with the aim of covering property that, although formally, does not belong to the subject, but he informally controls it property, determines its actual fate, i.e. disposes of it. After all, such non-formalized control can be carried out both directly and through third parties on whom the relevant property right has been registered.

According to Art. 316 of the Civil Code of Ukraine, which regulates the components of property rights, it follows that both assets belonging to a person and those assets with respect to which such a person can directly or indirectly perform actions identical in content to the exercise of the right to dispose of them are subject to collection into state income.

If it is proven that the sanctioned person has an indirect influence on the actual and legal fate of the assets of such a company, such assets should also be subject to recovery.

It is important in this matter to prove the fact of such influence, through the prism of establishing and researching the order of decision-making by the management bodies of the company in accordance with the law and statutory documents.

At the same time, the interests of other persons, which may be violated as a result of the application of sanctions in the form of confiscation of assets into state income, may be protected outside the administrative case on the application of such a sanction by means of private law.