Disputes on Contesting State Registrars’ Decisions: What Court to Apply to?

By the results of the first year of the newly created Supreme Court it is worth noting its clear determination to unify court practice on differentiating subject-matter jurisdiction. Undoubtedly, it has been triggered by a legislative novelty of three procedural codes whereunder all cases in which a claimant contests a court decision on the grounds of violation of the rules of subject-matter jurisdiction must be forwarded for consideration to the Grand Chamber of the Supreme Court.

Choosing Subject-matter Jurisdiction depending on Dispute Subject

However, in disputes to contest state registrars’ actions made to exercise the Law of Ukraine on State Registration of Property Rights to Immovable Property and their Encumbrances, the Grand Chamber of the Supreme Court is still continuing to work out the unified position as to what disputes must be considered under the rules of administrative procedure and what disputes must be considered under the rules of commercial or civil procedure.

If the subject-matter of the dispute is restoration of the ownership right of the claimant to immovable property, rather than actions and decisions of a state registrar being a person vested with authority and management functions, and the cause of action is substantiation of a real right to property, one can state private and legal, rather than public and legal nature of disputable relations. Such protection by court depends on deciding who exactly has the right to use the disputed immovable property and lawfulness of acquiring such right.

The Grand Chamber of the Supreme Court in its rulings dated 20.06.2018 in case №820/4146/17, 18.09.2018 in case №823/235/16, 29.08.2018 in case №807/719/15 points out that contesting a decision on state registration that resulted from exercising by the parties to the case of their rights to the disputed immovable property must be considered under the rules of commercial and civil procedure.

If claims arose exclusively as the result of performance by the registrar of his authority and public and management functions, violation of the requirements of the Law on State Registration, it is necessary to apply to an administrative court.

The Grand Chamber of the Supreme Court in its ruling dated 12.06.2018 in case №823/378/16 (where the decision on registration of lease of a land plot with another person was contested) came to the conclusion that a dispute had no signs of private and legal nature, if the subject of the examination in this case is exclusively the compliance by the state registrar, as a public officer, with public and authority management functions, particularly, lawfulness of making re-registration (in the given case — the right to use the land plot), in the event of existing and registered identical right to this very land plot in the name of another user.

Thus, resolving on differentiating jurisdiction, courts must pay attention to the subject of the claim substantiation. In its ruling dated 25.07.2018 in case №128/3652/16-ц the Grand Chamber of the Supreme Court stated public and legal nature of the dispute, as the subject and the cause of action are not even closely related to real rights, performance or non-performance of civil and legal agreements, but what must be considered is exclusively authority, management decisions and actions of a notary as a state registrar acting as a public officer.

Any registration actions contested under general/commercial procedure

However, following such rather clear conclusions the Grand Chamber withdrew from its legal position (particularly, in case No 823/378/16). In its rulings dated 04.09.2018 in case 823/2042/18, 04.04.2018 in case No817/1048/17 dated 804/1001/16 the court came to the conclusion that the claimant was not an applicant in regard to contested registration actions, or in other words, the latter were made upon an application of another person. For this reason, such dispute is a dispute over civil law regardless of the fact whether a state registrar complied with requirements of the law to perform state registration of the rights to immovable property, and whether, apart from claims to reverse a contested decision and an entry in the State Register of Rights, claims to deem juristic acts on the ground of which a contested decision was made invalid were filed, and whether a contested record was made. The aforementioned refers to private legal nature of the dispute.

The Grand Chamber of the Supreme Court substantiated its withdrawal from its previous positions by the fact that the criterion to determine a dispute jurisdiction such as violations of requirements of the current registration legislation in actions of the state registrar during his state registration of rights to immovable property is not always sufficient and efficient, as these violations may be established only while considering a case on its merits, rather than at the moment when the claimant files his claim. Also, the Grand Chamber of the Supreme Court is of opinion that withdrawal of the state registration of a right held by one person upon application of another person under administrative procedure does not help to finally settle a dispute between these persons, resulting into nonperformance of the main task of the judiciary. Besides that, the Grand Chamber of the Supreme Court noted that in such disputes a court resolving a dispute is sure to face the issue of lawfulness of concluding civil and legal contracts under which registration action are held regardless of the fact whether the claimant filed a claim to appeal such contracts.

Based on the aforementioned position, the person may not challenge under administrative procedure decisions of a state registrar on registration of a real right made upon application of the third person, even of the court examined only public management functions. Such approach narrows the sphere of application of administrative procedure. As a result, a decision of an authority or public officer made with violation of the administrative legislation, shall be considered under civil or commercial procedure.

Also, there is a negative practice in Ukraine of performing the so called “black” registration actions, when the right of a property owner to respective registration of his real right is violated by cancelling lawful signatures in the register of real rights on invalid or faked legal grounds. Existence of an invalid ground giving rise to a real right, or an exhausted ground, may not violate state registration of a person’s real right, unless it is terminated and his right is registered with another person as a result of unlawful actions of the registrar. In addition to it, such unlawful registration actions do not abolish this real right which shall be exceptionally additional evidence in the process of challenging actions of the registrar.

Concurrently, the position of the Grand Chamber of the Supreme Court that withdrawal of the state registration of a right enjoyed by one person under administrative procedure does not help to finally resolve a dispute between these persons is natural provided that the first unlawful registration action is followed by other actions on new grounds for a real right to arise contrary to the real right of their lawful holder. In such event the main task of the judiciary is not performed. It is worth noting that some judges of the Grand Chamber of the Supreme Court do not agree with such new approach referred to by the separate opinion of two judges of the Grand Chamber of the Supreme Court in case No 817/2398/15.

It is interesting that the Cassation Administrative Court continued holding the position that disputes over appealing a decision of a state registrar, taken existence of a lawfully registered real right, must be heard under rules of the administrative procedure (for example, in ruling dated 04.09.2018 in case No 823/362/16). Also, courts of lower instances continue instituting proceedings and considering disputes of the aforementioned category under rules of the administrative procedure.

Thus, it is obvious that to ensure the same application of the norms of the procedure legislation by courts of all instances while resolving the issue regarding differentiation of jurisdictions of disputes over appealing decisions of state registrars one is supposed to summarize the practice at a plenum of the Supreme Court, with categorical approaches contrary to tasks of this or that judiciary being avoided.