Dangerous Legal Collision: What's Wrong with the Supreme Court's Decision Regarding Concord Bank

The Supreme Court, as part of the panel of judges of the Cassation Administrative Court, adopted a resonant decision that casts doubt on the constitutional right of shareholders of liquidated banks to access justice. The court closed the proceedings in the case based on the lawsuit of the co-founder of Concord Bank, Olena Sosedka, concluding that the claims of former shareholders of banks undergoing liquidation are not subject to consideration by any court. At the same time, the cassation appeals were not even considered on their merits, UNN writes.

ContextEarlier, the courts of first and appellate instances recognized as illegal the decision of the National Bank of Ukraine to revoke the license of Concord Bank and ordered its cancellation. The NBU and the Deposit Guarantee Fund for Individuals disagreed with these decisions and filed a cassation appeal. They demanded the cancellation of the court decisions and the closure of the proceedings.

“Friends, the Supreme Court overturned two previous court decisions, by which we proved the illegality of the NBU’s actions regarding the deprivation of Concord Bank’s license. After 7 months of waiting for cassation, we received a decision that not only contradicts the law, but also common sense. We were not even summoned to court. The consideration took place in written proceedings – without hearings, without arguments, without the participation of the parties,” Olena Sosedka reported on her Facebook page.

DetailsIn paragraph 56 of the resolution, the panel of judges directly stated that no court in Ukraine is empowered to consider lawsuits by shareholders of banks undergoing liquidation regarding unlawful actions or decisions of the National Bank of Ukraine.

In this resolution, the Cassation Administrative Court as part of the Supreme Court set forth a legal conclusion that, according to the specifics of the legal regulation of the disputed legal relations, the claim of a former shareholder of an insolvent bank (in this case, a liquidated bank) is not subject to consideration either under administrative or commercial legal proceedings, and by the subjective composition of the participants in legal relations, it does not fall under the jurisdiction of a civil court. That is, such claims are not subject to consideration by any court

According to Oleksandr Babikov, former deputy head of the State Bureau of Investigation and a lawyer, such an approach is a deliberate deprivation of bank shareholders’ right to a fair trial.

Such an approach is a deliberate violation of the guaranteed right to access to justice and a fair trial. Every person has the right to resolve disputed legal relations by an impartial court. Any other approach is merely an attempt by the state to avoid fulfilling its obligations to administer justice.

Thus, despite the fact that the courts of first and appellate instances recognized as unlawful and canceled the decision of the National Bank of Ukraine to revoke the banking license and liquidate Concord Bank, the Supreme Court did not consider the cassation appeals on their merits.

In addition, the panel of judges emphasized in the resolution that satisfying the claims for recognizing as unlawful the decision of the Board of the National Bank of Ukraine to revoke the banking license and liquidate the bank is not capable of restoring the plaintiff’s rights and would contradict the provisions of paragraph 3 of part 9 of Article 266-1 of the Code of Administrative Procedure of Ukraine.

Let’s addDespite the war in Ukraine, the process of withdrawing banks from the market has not stopped. Thus, since February 24, 2022, liquidation has been initiated for 8 banks. In 2023, for the first time in Ukraine, not only bankrupt banks but also profitable institutions were subject to liquidation and license revocation – this refers to Concord Bank. As Olena Sosedka stated, at the time the regulator announced the decision to liquidate the bank, the financial institution had enough highly liquid assets to make all necessary payments within 2-3 weeks. However, the bank liquidation process is strictly regulated by law and can generally last up to three years.