Supreme Court clarifies jurisdiction on allocation of participatory interest jointly owned by spouses

18/ 07/ 2020

On 16 June 2020, Ukraine’s Supreme Court issued a judgement clarifying that cases relating to the allocation of a participatory interest in a limited liability company jointly owned by spouses, for the purpose of foreclosure on such interest, should be heard by the general courts. One of the defendants in this case was a surety under a defaulted loan. The bank filed a court claim to recover the indebtedness from the defendant. In addition, for the purpose of foreclosing on the participatory interest held by the defendant in several limited liability companies, the bank instituted proceedings at a general court seeking a judgement allocating the defendant’s interest in such companies from the joint spousal ownership. The trial general court refused to open proceedings in the case arguing that, as the case was related the ownership of an interest in a commercial company, it was not subject to the jurisdiction of the general courts, implying that the case should be handled by the commercial courts instead. However, the appellate court and later the Supreme Court ruled that the case was subject to the jurisdiction of the general courts. In particular, the Supreme Court opined that the dispute, although involving a participatory interest in a commercial company, essentially concerned the allocation of ownership between two spouses, which brought the case within the jurisdiction of the general courts. Application of Ukrainian procedural rules relating to the allocation of a subject matter jurisdiction between different courts may at times prove complex when it comes to sophisticated cases involving various types of relations, e.g. commercial, family, and civil. The above case illustrates that parties must carefully analyse the applicable rules and practice to correctly determine the court that has jurisdiction over the matter before instituting proceedings, in order to avoid wasting time and resources on futile litigations that will be set aside due to a violation of jurisdictional rules. Contacts Olexander Martinenko Partner, Head of Commercial, Regulatory and Disputes, CMS Cameron McKenna Nabarro Olswang Olga Shenk Counsel, Commercial, Regulatory and Disputes, CMS Cameron McKenna Nabarro Olswang Vladyslav Kurylko Associate, Commercial, Regulatory and Disputes, CMS Cameron McKenna Nabarro Olswang

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