It’s hard enough to win a court case in Ukraine. But it’s even harder to get a judge’s decision enforced.
Although official statistics put the numbers higher, many legal experts estimate that only 3 to 4 percent of court orders are properly executed and enforced.
The blame lies largely with the State Enforcement Service, the inefficient and underfunded agency under the Justice Ministry, which is supposed to execute court orders. State executors in Ukraine seek to enforce on issues ranging from taking a child into foster care to confiscating a debtor’s car.
Now, following more than a decade of discussion, two laws aimed at making the service more efficient and reducing corruption are up for second reading in parliament in March.
According to the new legislation, Ukraine will move towards a mixed system of state and private executors, working conditions for executors will be improved, and elements of competition will be introduced to encourage efficiency.
The laws are part of the wider reform of Ukraine’s judiciary system that the International Monetary Fund has flagged as a prerequisite for its continued financial assistance to Ukraine.
Salaries low, bribery high
“There’s no point in having a good court system if the judge’s decisions aren’t carried out,” said Deputy Justice Minister Serhiy Sklyar, who heads the State Enforcement Service.
The main issues hurting performance are low salaries and bad working conditions of state executors. Salaries are Hr 2,200 ($83 per month) — an invitation to corruption.The workload is heavy. Each employee is expected to take on 1,000 cases per year, Sklyar said.
Andrey Avtorgov, a partner at the Agency for Debtors and Bankruptcy, said that this is a recipe for corruption: “Each side (the executor and the claimant) tries to find their own way to benefit, so that’s when corruption takes place,” he said.
High staff turnover is also another consequence as people leave in search of better pay and conditions.
Lawmaker Ruslan Sydorovych, who sits on parliament’s judicial committee, agreed that — along with the stick — more carrot is needed to keep state executors performing well in their jobs.
“The fight against corruption can’t just come from prosecuting those who abuse their positions, it also has to be about changing conditions… We need to motivate the executors,” Sydorovych said.
Guards let Sergey Makarenko (L) and Anatoliy Televskiy, state executors in Kyiv, into a state car depot on March 17. (Anastasia Vlasova)
Legal earnings
Under the proposed new laws, executors will be entitled to a commission or bonus, depending on the type of case they’re working on. Private executors will also be free to negotiate an additional bonus with the claimant. For instance, they might ask for an extra fee to prioritize certain cases.
“Of course we understand that we need to raise state workers’ salaries, but at the same time we understand that the state doesn’t have the resources to increase salaries without raising them across the board,” said Sklyar. “So we’re creating a system where these people can legally earn money themselves.”
Sklyar said “populists” in parliament have been claiming that private executors will seek to profit by evicting grandmothers who can’t keep up with their loan repayments, or that government is effectively legalizing loan sharks.
“This is simply not true, there’s nothing to be scared of,” Sklyar said. Under the new law, any cases involving individuals, children or state debtors will continue to be under state jurisdication, he said. In private matters, claimants will be able to choose between a state or private executor.
Furthermore, according to Sklyar, all private executors are required to have a university degree and undergo examinations created by foreign experts. Private executors will not be hired if they have criminal convictions or a poor disciplinary history. In contrast, “a loan shark doesn’t need any qualifications,” Sklyar said.
He said private executors are more efficient and cost-effective. “I hope that in the next five years that most of Ukraine’s executors will come from the private sector,” he said.
The new laws were drawn up using experiences from other countries, particularly Bulgaria, lawmaker Sydorovych said.
The Ukrainian state currently employees 5,500 state executors, whereas Latvia and Bulgaria employee 250 and 400 respectively. Although Ukraine’s population is much larger, smaller countries have shown that not all court orders have to be executed by the state, Sydorovych said.
Cautious optimism
Lawyers, state executors and businesses appear to welcome the changes.
“I think both laws will be passed, as the current situation doesn’t help anyone – not the banks, not businesses,” said Avtorgov, a bankruptcy law specialist.
Sydrovych said: “When the number of court orders executed starts to increase, this will be a very good signal for business and foreign investors.”
Valentyna Danishevska, director of the Center for Commercial Law, who worked on the first drafts of the laws, said change is welcome. “Ukraine finally needs to introduce private executors,” she said.
However, she noted that private executors would still be working within the same legal confines as state executors. For instance, certain law prevents an executor from quickly freezing a person’s assets, which complicates their work.
“We need to create the right conditions so that private executors are immediately successful, or the public won’t value this reform. Not everything has been done for this to happen,” Danishevska said.
“We are only for reform,” Anatoliy Televskiy, a state executor of the Dniprovsky region in Kyiv told the Kyiv Post on the way to a state car depot where debtors’ cars are held.
“But the problem is we still won’t have enough law enforcement support,” Televskiy said. “At the moment we have to just approach people and ask politely. We need to have our own police force within the department. People aren’t scared of us.”
Sergey Makarenko, a state executor also in the Dniprovsky region, told the Kyiv Post on a routine job involving debtors’ cars, that executors are not happy that the new law only allows three days to claim their rewards.
“Three days is not enough. What if the accountant is sick? I think five is more reasonable,” Makarenko said.
Danishevska noted other factors, such as requirements in the proposed new laws that restrict private executors to working in particular territories. She said the restriction also hurts the consumer, who might want to use a certain executor – say a top-notch private one from Kyiv to help in a case in Odesa – but who wouldn’t be able to have that choice.
“Unfortunately there is little understanding of these subtleties,” Danishevska said. “But that doesn’t mean that (the laws) shouldn’t be passed, because if we don’t start with something, we will never learn.”
Meanwhile, even if the laws do make it through parliament, it will still be another half a year before the promised changes appear, the Justice Ministry’s Sklyar said.
“If the laws are passed in March, it will take six months of preparations before we see the first private executors,” he said.
