As early as 2020, MPs warned about a legal conflict that has now deprived bank shareholders of access to justice

The Supreme Court used a legal conflict to close the proceedings in the case of Concord Bank, which is in the process of liquidation. The panel thus effectively deprived the financial institution’s shareholders of access to justice. A number of people’s deputies warned that this would be possible back in 2020, and even submitted a corresponding petition to the Constitutional Court of Ukraine, writes UNN.

Deprivation of access to justiceThe panel of the Cassation Administrative Court within the Supreme Court made a decision in the case of Concord Bank, which lawyers consider biased. They point out that with its decision, the court effectively deprived the bank’s shareholders of access to justice.

In its decision on this case, the Supreme Court referred to the provisions of Law No. 590-IX “On Amendments to Certain Legislative Acts of Ukraine Regarding the Improvement of Mechanisms for Regulating Banking Activities”. 

In 2020, 64 people’s deputies appealed to the Constitutional Court of Ukraine with a constitutional submission regarding this draft law. In their appeal to the CCU, they warned that the new version of Article 79 of the Law “On Banks and Banking Activities” and the introduction of Article 266-1 to the Code of Administrative Procedure create a dangerous legal conflict.

The law contradicts the ConstitutionThe law directly stipulates that even if the decision of the National Bank of Ukraine or the Deposit Guarantee Fund is recognized as unlawful, this does not restore the rights of shareholders and does not return the bank to its previous state, and the only way to protect remains only monetary compensation for damages. Thus, shareholders in the process of liquidation were effectively deprived of the opportunity to protect their rights in court by canceling the regulator’s decisions, even if the NBU’s decisions are illegal.

In their appeal, the deputies emphasized that such norms contradict Article 55 of the Constitution of Ukraine, which guarantees everyone the right to judicial protection, as well as Article 6 of the Convention for the Protection of Human Rights and Fundamental Freedoms. The constitutional appeal emphasized that the parliament created a situation where citizens and investors can formally apply to court, but in fact have no effective way to restore violated rights.

The CCU distanced itself from considering the submission and closed the proceedings, citing the fact that the constitutional submission does not meet the requirements of the law. Therefore, the said law was never considered for compliance with the Constitution of Ukraine.

Precedent-setting decision of the Supreme CourtIn practice, the “Concord” case demonstrated that judges interpret the law freely. The absurdity reached such a point that the court panel even refused to consider the case on its merits.

Moreover, in its decision, the Supreme Court explicitly stated that the claims of Concord Bank shareholders “are not subject to consideration by any court.” That is, even with obvious violations of the law by the National Bank, shareholders remain without real protection of their rights and the possibility of judicial appeal.

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Previously, courts of first instance and appellate instance recognized the decision of the National Bank of Ukraine to revoke Concord Bank’s license as illegal and ordered its cancellation. The NBU and the Deposit Guarantee Fund 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 revocation 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

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

In this resolution, the Cassation Administrative Court within the Supreme Court set forth a legal conclusion that, according to the peculiarities of the legal regulation of 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 in administrative or commercial 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

So the Supreme Court did not even consider the “Concord” case on its merits, but immediately closed the proceedings. That is, the panel did not evaluate the decisions of the lower courts and did not recognize that they were illegal or unfounded.

AddendumDespite 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 fell under 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.