Dangerous precedent: The Supreme Court confirmed that the rights of bank shareholders are not protected
Kyiv • UNN
The Supreme Court ruled that the claims of shareholders of banks in liquidation are not subject to judicial review, creating a dangerous precedent. This decision contradicts the Constitution of Ukraine and the European Convention on Human Rights, depriving investors of the basic right to judicial protection.
Currently, a dangerous situation has developed in Ukraine, in which the banking sector regulators, the National Bank and the Deposit Guarantee Fund, have carte blanche to act against banks, and the shareholders of the latter are not protected from arbitrary actions and cannot even go to court. Nina Yuzhanina, a member of the Verkhovna Rada Committee on Finance, Tax and Customs Policy, expressed this opinion in an exclusive comment to UNN.
It seems to me that in a democratic country, procedures or decisions cannot be adopted against an investor, against a citizen, that would not provide for further appeal, the possibility of appealing their actions. This simply means that indeed, the permissiveness of certain individuals can exist, and this cannot be overcome, because we do not give people such a right to protection.
Earlier, the Supreme Court put an end to the case of a shareholder of Concord Bank against the National Bank of Ukraine, having made a decision that became significant not only for the specific plaintiff, but also for the entire banking system. The court, without evaluating the arguments of the parties, closed the proceedings, recognizing that the claims of shareholders of banks that are in the process of liquidation are not subject to consideration by any court at all. That is, the Supreme Court ignored the decisions of the first and appellate instances, which recognized the liquidation of "Concord" as illegal. This means that the owners of banking institutions in Ukraine are deprived of a basic right - to judicial protection, guaranteed by the Constitution and the European Convention on Human Rights.
In its decision, the Supreme Court, referring to Law No. 590-IX of 2020, closed the proceedings, indicating that even if the shareholder proved the unlawfulness of the regulator's actions, this does not restore his rights, and such claims cannot be the subject of judicial review. Such a decision, along with the fact that the process of withdrawing the bank from the market, initiated by the National Bank and the Deposit Guarantee Fund, is irreversible, indicates the complete permissiveness and impunity of the regulators.
Today, a dangerous precedent has been created in Ukraine. It turns out that the state, represented by the National Bank and the Deposit Guarantee Fund, can make any decision regarding a bank, even a clearly illegal one, and no shareholder will be able to appeal it in court. Moreover, even a crime report to law enforcement agencies will not help here, because both regulators are collegial bodies, in which personal responsibility is sufficiently blurred to avoid this.
The situation itself, depriving shareholders of basic rights, not only contradicts the Constitution of Ukraine, but also directly violates Article 6 of the European Convention on Human Rights, which guarantees everyone the right to a fair trial. In essence, we are talking about institutionally enshrined permissiveness of regulators - the National Bank and the Deposit Guarantee Fund.
People's Deputy Nina Yuzhanina emphasizes that the problem lies not only in the absence of judicial protection, but also in the absence of personal responsibility of officials for the decisions made: "It seems to me that these issues that you raise are somehow hushed up and not resolved in the country, because either they concern a small number of people, or it is done intentionally. If you take any executive body that makes illegal decisions, there is no personal responsibility. No matter how many times this issue was discussed in committees, there were proposals, it is not possible to apply it due to the norms of other legislative documents that protect such civil servants and do not allow them to be held accountable," Yuzhanina noted.
According to her, there are currently no legislative initiatives that would allow strengthening the responsibility of regulators.
For comparison, in the European Union, Directive 2014/59/EU is in force, which regulates the procedure for withdrawing insolvent banks from the market. It provides that shareholders have the right to appeal the regulator's decision. As in Ukraine, in the EU, the cancellation of a decision does not return the bank to the market, but the investor retains the right to judicial review and fair compensation. In Ukraine, the court directly stated that the claims of shareholders are not subject to consideration by any court.
The consequences of such a practice go far beyond a specific case. They send a signal to all potential investors that players in the banking sector in Ukraine are not protected.