There is often a dilemma about which is the best way of enforcement for the plaintiff (recoverer): the Private Enforcement Officer or the State Enforcement Service of the Ministry of Justice of Ukraine. We will tell you about these two institutes and summarize the pros and cons of each.
Private Enforcement Officer
Private Enforcement Officers are authorized by the state of Ukraine in the person of the Ministry of Justice to carry out enforcement activities, have received certificates of Private Enforcement Officers and are included in the Unified Register of Private Enforcement Officers of Ukraine.
The Recoverer has the right to choose a Private Enforcement Officer among those included in the register, as well as the legal possibility of extra stimulation of him by paying additional fees under the agreement.
The Private Enforcement Officer is a subject of independent professional activity and works individually.
Enforcement districts have been established in Ukraine by the law: the territories of regions (oblasts) and the city of Kyiv, the Autonomous Republic of Crimea and the city of Sevastopol. A Private Enforcement Officer has the right to initiate enforcement proceedings if the debtor or his property is located within the enforcement district wherein he has a registered office. However, having opened enforcement proceeding, the Private Enforcement Officer has the right to act throughout the territory of Ukraine searching for and recovering the debtor’s property and income.
The Private Enforcement Officers acts under the authority of a writ of control, enforcement orders, enforcement letters, resolutions and decisions of courts, enforcement inscriptions of notaries, certificates of commissions on labor disputes, resolutions of the Private Enforcement Officers on recovery of the basic remuneration and costs of executive proceedings.
Jurisdiction of the Private Enforcement Officer is limited by Article 5 of the Law of Ukraine “On Enforcement Proceedings”, according to which a private the Private Enforcement Officer enforce judgments, except:
1) judgments on taking away and transfer of the child, setting up a meeting with or removal of preclusions of the meeting with the child;
2) judgments under which the debtor is the state, state bodies, the National Bank of Ukraine, local governments, their officials, state and municipal enterprises, institutions, organizations, legal entities, the state’s share in the authorized capital of which exceeds 25 percent, and / or which are financed exclusively from the state or local budget;
3) judgments under which the debtor is a legal entity, the forced sale of whose property is prohibited by the law;
4) judgments on which recoverers are the state, state bodies;
5) judgments of administrative courts and judgments of the European Court of Human Rights;
6) judgments that provide actions on state or municipal property;
7) judgments on eviction and resettlement of individuals;
8) judgments according to which the debtors are children or legally incapable person or whose civil capacity is limited;
9) judgments on confiscation of property;
10) judgments, the execution of which is referred by the Law directly to the powers of other bodies, which are not enforcement bodies;
11) other cases provided for by the Law of Ukraine “On Enforcement Proceedings” and the Law of Ukraine “On Bodies and Persons Enforcing the Judgments and Decisions of Other Bodies”.
For new Private Enforcement Officers with less than one year of experience, a limit of 20 million hryvnias or more or the equivalent amount in foreign currency (740.000USD) has been set. From the second year of activity, a Private Enforcement Officer has the right to enforce judgments for any amount without a minimum and maximum limit.
Before start up the official activity, the Private Enforcement Officer is obliged to insure his civil liability to third parties, the amount of insurance must not be less than the total amount of recovery under enforcement documents (during the first three years of activity, then not less than 10% of such amounts).
The opening of enforcement proceedings is based on the application of the recoverer to which the original enforcement document is attached. The terms of initiating enforcement proceedings and seizing the debtor’s property are the same for a Private Enforcement Officer and the State Enforcement Service and are up to three days from the date of submission of the enforcement document for opening and immediate for property seizure.
Private Enforcement Officers usually do it faster than state ones because they receive documents and make decisions directly without bureaucratic red tape.
There are no court or other fees for submitting a judgments for enforcement to a Private Enforcement Officer.
Private Enforcement Officers earn their remuneration from the debtor in the amount of 10% of the amount of debt collected by him or the value of the property to be transferred under the judgment. Private Enforcement Officers will collect your judgment debt, your court costs, your warrant cost and interest (if prescribed) from the defendant.
Also, the Private Enforcement Officer will collect from the debtor the costs of enforcement proceedings, and reimburse them to creditor in case of advance payment. If a Private Enforcement Officer cannot collect the debt, he usually does not get paid. But often Private Enforcement Officer asks creditor to pay in advance basic costs of enforcement proceedings, which, if it is impossible to recover, are laid to a creditor. In this case, the Private Enforcement Officer will provide written report detailing why enforcement has been unsuccessful and the calculation of costs incurred.
Collection rates of Private Enforcement Officers are significantly higher than that of the State Enforcement Service who receive a salary and small 2% fee, but with restrictions of maximum and bureaucratic delays in payments, and therefore do not have much incentive to collect.
State Enforcement Service
Bodies of the State Enforcement Service have a territorial and hierarchical structure.
The competence of most primary departments of the State Enforcement Service (SES) has geographical boundaries and extends only to districts of the region or city with the recovery amount limit up to UAH 25 million (cir.$0,9mln), regional departments from UAH 25 to 50 million, and the Enforcement Department of the Ministry of Justice from UAH 50 million.
Departments function as a classic state body with a registry, distribution of cases between state enforcement officers, compliance with labor legislation, workload and chronic staff shortages, procedural approvals by the head of the department, accounting in the state treasury and other bureaucratic attributes and procedures.
With the exception of the highest department, other territorial departments do not have the authority to enforce judgments independently throughout Ukraine cause geographical boundaries and are obliged to either transfer the entire case to another territorial department or provide separate instructions to other departments in case of change of location of the debtor or recovery of property located on another territory, that significantly slows down the recovery process.
Actions and inactions of the state enforcement officer can also be appealed administratively to the immediate supervisor and senior managers. Decisions and actions of the Private Enforcement Officers can be appealed only to a court.
In case of success the State Enforcement Service will collect your judgment debt and your enforcement costs.
If unsuccessful, the State Enforcement Service will return the warrant with a written report the outcome detailing why enforcement has been unsuccessful.
In summary:
Private Enforcement Officer pros:
- Far higher collection rates due to significant financial incentives
- Mobility and no geographical and recovery amount limits throughout Ukraine;
- Agility of enforcement actions without bureaucratic red tape;
- Free choice of a specific Private Enforcement Officer among the registered
- Permission to force entry into land parcel and premises owned by legal entity.
Private Enforcement Officer cons:
- Insufficient number in certain regions of Ukraine;
- Restriction to enforce judgments against the state and state enterprises;
- Restriction to enforce judgments on eviction and resettlement of individuals, children concerned judgments;
- Required coverage of basic costs when it is impossible to enforce.
State Enforcement Service pros:
- Presence in almost every administrative-territorial unit of Ukraine;
- No restrictions by categories of judgments: against the state and state enterprises, eviction and resettlement, concerned children; additional alimony functionality;
- No required fees and advances of enforcement proceedings, even if it is impossible to enforce.
State Enforcement Service сons:
- Poor collection rates as no financial incentive and due to bureaucracy and workload, staff shortages relative to amount of conducted cases;
- Geographical boundaries within determined district, inability to act promptly throughout Ukraine;
- No free choice of a certain State Enforcement Officer from among the employees of the State Enforcement Service body and among the departments of the region;
- corruption risks.
