EQUITY Protects Yet Again Interests of Ukrincom PJSC from Unlawful Attacks of Deposit Guarantee Fund and National Bank of Ukraine

On October 27, 2020, EQUITY yet again successfully protected interests of its client – Ukrincom PJSC – in the Sixth Administrative Court of Appeal in its dispute with the National Bank of Ukraine and the Deposit Guarantee Fund over recognition of the decisions of the regulators to declare Ukrincom PJSC insolvent as unlawful and cancel them.

Let us remind that it was on August 9, 2020, when the Supreme Court upheld decisions of courts of lower instances in case No 826/14033/17 to rule the resolution of the board of directors of the National Bank of Ukraine to declare the Ukrincom PJSC insolvent as well as the respective decision of the Deposit Guarantee Fund to introduce provisional administration unlawful and cancel them.   

Despite the final court decision in case No 826/14033/17, the Deposit Guarantee Fund and the National Bank of Ukraine flouted it and made systematic actions aimed at gaining control over the Ukrincom PJSC regardless the missing valid decision to resort to the provisional administration procedure and liquidate the entity. The National Bank of Ukraine and Deposit Guarantee Fund substantiated the aforementioned decisions with alleged lack of a mechanism to implement the court decision to find unlawful and cancel the decisions of the regulator to introduce provisional administration.

In particular, the Deposit Guarantee Fund addressed the court to review the decision of the court in case No 826/14033/17 based on newly discovered facts. In the substantiation of the aforementioned claim the Deposit Guarantee Fund referred to the ruling of the Grand Chamber of the Supreme Court in case No 925/898/16 which allegedly established the fact that the Ukrincom PJSC is not a legal successor of the Ukrinbank PJSC. Therefore, the Ukrincom PJSC could not file a claim in case No 826/14033/17.

The Sixth Administrative Court of Appeal considered appeals within claims to review the decision in case No 826/14033/17 based on newly discovered facts as well to interpret the decision, particularly in regard to implications of cancelling the decision of the regulator to introduce provisional administration.

Following the aforementioned consideration, the Sixth Court of Appeal ruled the decision of the board of the National Bank of Ukraine to declare the Ukrincom PJSC insolvent as well as the respective decision of the Deposit Guarantee Fund, which were deemed unlawful and cancelled by the court, to be unlawful and cancelled from the moment of their adoption. At the same time, the court stated that the fact that the cancelled resolution of the regulator to declare the Ukrinbank PJSC insolvent is so obvious that there is no need for additional interpretation of the court decision in this part.

Denying the appeal of the Deposit Guarantee Fund, the court of appeal made it clear that the resolution of the Grand Chamber in case 925/698/16 may not create or establish powers of the Deposit Guarantee Fund and is not a newly discovered fact, because the subject of consideration in the aforementioned case was recovery of indebtedness rather than introduction of administrative procedures in regard to the Ukrinbank PJSC.

Thus, the court has yet again stated:

• attempts to review the court ruling finding the decisions to declare the Ukrincom PJSC insolvent made by the Deposit Guarantee Fund and the National Bank of Ukraine unlawful and cancel them are groundless
• the ruling of the Supreme Court in case 925/698/16 may not be a newly discovered fact as it, relating to the indebtedness recovery, may not create or establish powers of the Deposit Guarantee Fund
• the resolution of the board of the National Bank of Ukraine to declare the Ukrincom PJSC insolvent cancelled by the court has been invalid since the moment of its adoption and, therefore, does not lead to introduction or continuation of the provisional administration.