Theme: Business protection

December became a month of profound discussion for the Riyako & Partners team regarding the new reality of corporate oversight—a shift away from high-profile raids toward less visible but equally damaging consequences.

The relaunch of the Economic Security Bureau of Ukraine (ESBU) has decisively changed the rules of the game: physical ‘masque shows’ (tactical raids) are increasingly being replaced by analytical findings that trigger asset seizures, account freezes, and criminal proceedings.

Our solicitors addressed this very topic during two recent public speaking engagements.

During the webinar “Why Analytics is Becoming More Dangerous than ‘Masque Shows’?”, we broke down the scenarios and specific figures that place a company in the BES spotlight. We explored how a business’s risk profile is formed, why a BES analytical product becomes the foundation for criminal prosecutions, and how forensic economic expertise can transform figures from prosecution evidence into a tool for the defence.

The event featured: Oleksandr Shevtsov, Solicitor at Riyako & Partners; Yevgen Riako, CEO of Riyako & Partners; and Iryna Ped, CEO and Managing Partner of S&D Expert Group, Doctor of Economics, and Forensic Economic Expert.

The following day, Yevgen Riako spoke at the Ukrainian Building Awards, where he focused specifically on risks within the construction sector:

  • New ESBU approaches to analytics and risk assessment for construction companies;
  • Triggers that most frequently initiate tax audits, account freezes, and criminal proceedings;
  • Defence strategies for businesses operating with public funds.

The key message is simple: today, the ESBU no longer needs to arrive on-site to paralyse a company. An analytical conclusion, generated in the background while the business continues to operate, is sufficient. Oversight is becoming more systemic and data-driven; however, countermeasures exist—provided the business understands the logic of this new model and acts proactively alongside its legal counsel.

To receive a consultation on business protection in 2026, contact us today.

Overpricing of works and goods is one of the most common reasons for initiating criminal proceedings against participants in public procurement. Defence procurement is generally under close scrutiny by law enforcement agencies, so participants should be prepared to face allegations of abuse and defend their position in advance. Let us illustrate this with one of our cases.

A manufacturing company won a tender to supply certain goods to the Ministry of Defence, and soon after, its management was charged with a criminal offence.

WHAT WE DID

During searches at the enterprise, Riyako&Partners lawyers were able to defend the position that the seizure of equipment was unfounded, which would have led to the indefinite suspension of the entire enterprise’s operations. Subsequently, the lawyers sent more than 50 requests for information, including through court decisions.

This painstaking work allowed us to appoint a number of forensic economic and forensic commodity experts from various leading expert institutions throughout the country. The case was given maximum transparency and objectivity, and as a result, the charges were refuted.

Do you participate in public procurement? Check today whether your business is ready for pressure from law enforcement agencies: digital security in the company, legal awareness of your team, availability of all documents and independent expert opinions on the transaction.

For decades, minerals were mined in this place, and our client, who had been working there for less than a year, was accused of illegal mining and causing 700 million hryvnias in losses to the state.

WHAT WE DID

Riyako&Partners lawyers conducted a thorough investigation of the work performed and engaged highly specialised experts using measuring equipment. We were able to substantiate the actual volume of minerals extracted by the client’s company over the actual period of time that it had been working at the site using the amount of equipment that it actually had. Our calculations and evidence refuted the charges in the case and protected our client’s reputation and business.

Defence in criminal and civil cases is based not only on knowledge of the law and its application. The key to success is the lawyer’s willingness to look at the case strategically, work deeply with the client’s niche and engage the best specialists to build a proper evidence base.

In today’s business environment, entrepreneurial activity is like walking on thin ice – risks arise constantly, and not all of them can be predicted. One of the most serious challenges is the intervention of law enforcement agencies in economic activity, which can have significant negative consequences for a company. This is the topic of an article by Alexander Shevtsov, head of criminal practice at Riyako&Partners Law Firm.

Key risks for business

The lawyer points out that current legislation allows law enforcement agencies to initiate pre-trial investigations without prior checks. A statement or report of a probable crime is sufficient to open criminal proceedings. From that moment on, law enforcement agencies have the right to conduct investigative actions, including

  1. Covert investigative (search) actions – wiretapping, visual surveillance, access to electronic correspondence and messengers, seizure of postal items, etc.
  2. Searches and seizure of property – law enforcement agencies can conduct searches in company offices, production facilities or even residential premises.
  3. Seizure of assets – seizure and freezing of company accounts.
  4. Interrogation of management and employees – summonses for interrogation can create additional pressure on the company and its staff.

The most common criminal offences against businesses

Among the articles of the Criminal Code of Ukraine that most often become the basis for law enforcement intervention in business activities, the following are highlighted:

  1. Fraud – illegal appropriation of another person’s property or rights to it through deception or abuse of trust (Article 190 of the Criminal Code of Ukraine).
  2. Appropriation, embezzlement or acquisition of another person’s property through abuse of official position (Article 191 of the Criminal Code of Ukraine).
  3. Evasion of taxes, fees (mandatory payments) (Article 212 of the Criminal Code of Ukraine).
  4. Legalisation (laundering) of property obtained by criminal means (Article 209 of the Criminal Code of Ukraine).
  5. Collaboration (Article 111-1 of the Criminal Code of Ukraine).
  6. Aiding an aggressor state (Article 111-2 of the Criminal Code of Ukraine).
  7. Obstruction of the lawful activities of the Armed Forces of Ukraine (Article 114-1 of the Criminal Code of Ukraine).

How to protect your business from pressure from law enforcement agencies?

To minimise the risks of interference in the activities of the enterprise, it is important to develop a preventive strategy. Key measures:

  1. Legal audit – checking company documents and internal processes for compliance with legislation.
  2. Staff training – conducting training on how to act during inspections and searches.
  3. Cooperation with a lawyer – providing legal support in the event of investigative actions.
  4. Transparent financial activities – compliance with tax legislation and clear accounting.

How to properly prepare for a search, how to act during it, and what additional security measures can protect your business – read the full version of the article by lawyer Alexander Shevtsov at the link here.

The construction business, which works with government tenders, is under constant supervision by law enforcement agencies. Even conscientious contractors face criminal proceedings due to subjective assessments by investigators, inaccuracies in documentation, or formal violations. Today, every company manager must understand that performing work under a contract does not guarantee the absence of claims. Is it possible to operate legally, profitably, and at the same time avoid the risk of criminal prosecution? Yes, if you act proactively, build the right legal strategy, and have the protection of an experienced lawyer.

Why is the construction business under attack?

Criminal proceedings are most often initiated according to the following standard scenarios:

Overstatement of the cost of work – the investigation checks the compliance of the contract price with actual market rates.

Non-compliance with project documentation – any changes or deviations may be classified as a breach of contract.

Violation of tender procedures – most often, law enforcement agencies conduct checks for collusion between tender participants.

Improper performance of work – even minimal delays or adjustments to the project can be grounds for criminal charges.

Can a company that has performed all the work efficiently and on time find itself in a criminal case? Unfortunately, yes. The system works in such a way that even formal grounds can be used to initiate a case, and then everything depends on the effectiveness of the defence.

What can be done to minimise risks?

  1. Conducting your own expert examinations – independent forensic examinations of goods, work and damages help prevent accusations of overpricing or non-compliance of work with technical requirements.
  2. Audit of the enterprise for the period of contract execution – assessment of financial transactions and internal processes allows you to identify possible risks in advance and eliminate them before the start of inspections.
  3. Digital hygiene and information security – it is important not to store confidential information in open access, minimise correspondence about business transactions and control corporate devices.
  4. Preparedness for searches and inspections – the company must prepare its employees and office in advance for possible investigative actions, provide legal support and a response algorithm.
  5. Checking counterparties before concluding agreements – unreliable partners can lead to criminal prosecution even for conscientious companies, so due diligence is mandatory.
  6. Compliance and internal control – clear mechanisms for controlling financial transactions and contractual relationships help minimise risks and comply with legal requirements.
  7. Protecting corporate equipment from seizure and analysis – the company must implement preventive measures to avoid situations where electronic devices are used as evidence in a case.
  8. Legally correct response to law enforcement requests – monitor deadlines and wording in responses to avoid undue attention and additional investigative actions.
  9. Preparing the team for unusual situations – staff should know how to behave during searches and interrogations so as not to give investigators grounds for further accusations.
  10. Working with open sources – monitoring public registers and the media helps to quickly identify risks and respond to potential threats in a timely manner.

If your business is under pressure, act immediately

RIYAKO & PARTNERS law firm specialises in criminal defence of businesses operating in the field of public procurement. We help minimise risks, accompany companies during inspections and investigative actions, and build defence strategies before the situation gets out of control.

If you work in the construction industry and are facing inspections or pressure, please contact us for advice. We know how the system works and we know how to work around it within the law.

Forensic examinations are one of the most crucial tools for substantiating a position, both for the prosecution and the defence, in any legal case, especially in complex and multifaceted cases such as those involving embezzlement in procurement for defence and infrastructure needs.

Over the past two years, there has been a significant increase in the number of registered criminal proceedings in the field of public procurement.

According to statistical data from the Office of the Prosecutor General, while law enforcement agencies initiated pre-trial investigations into 270–330 criminal offences in this area annually up to 2021, this number dropped to 263 in 2022, rose to 727 similar offences in 2023, and reached 997 cases in the first 10 months of 2024.

Public procurement for defence and infrastructure needs constitutes a significant share of overall procurement. The proportion of criminal offences recorded by law enforcement in this area during 2023–2024 is consistent with the trends observed in previous years for this category.

This trend, among other things, reflects the heightened scrutiny of all types of public defence procurement by law enforcement agencies.

What Are the Key Indicators for Initiating a Pre-Trial Investigation from the Perspective of Law Enforcement?

Based on the results of procurement for defence and infrastructure needs, representatives of both the supplier and the buyer may become subjects of criminal prosecution if the following indicators, according to law enforcement authorities, are present:

  • Provision of goods or services at inflated prices; non-compliance of the supplied goods or services with the requirements of tender documentation and the contract;
  • Failure of the supplier to fulfil obligations under the concluded contract properly;
  • Violation of procurement procedures by either the buyer or the supplier;
  • Alteration of contract terms after it has been concluded.

At the same time, the most common legal provisions used to classify criminal offences in cases of procurement for defence and infrastructure needs are:

  • Article 191 of the Criminal Code of Ukraine – regarding the embezzlement or misappropriation of budget funds by officials of both the supplier and the buyer;
  • Articles 367 and 425 (for military officials) of the Criminal Code of Ukraine – regarding negligence by officials in performing their duties, leading to unjustified expenditures of budget funds;
  • Article 366 of the Criminal Code of Ukraine – regarding the inclusion of false information by officials in tender documents or documents related to the execution of a concluded contract;
  • Articles 364 and 426-1 of the Criminal Code of Ukraine – regarding decisions made by officials exceeding their authority, resulting in unjustified expenditures of budget funds;
  • Article 358 of the Criminal Code of Ukraine – regarding the creation and use of forged documents, including for participation in procurement and for fulfilling the conditions of a concluded contract;
  • Article 190 of the Criminal Code of Ukraine – regarding the unjustified appropriation of funds by suppliers through fraudulent actions.

At the same time, during the pre-trial investigation, the defence must be prepared to refute the stated circumstances using legally provided tools, the most effective of which are forensic examinations.

According to Article 101 of the Criminal Procedure Code of Ukraine, an expert opinion is a detailed description of the studies conducted by the expert, the conclusions drawn from those studies, and substantiated answers to the questions posed by the party engaging the expert or by the investigating judge or court that ordered the examination.

In the context of criminal proceedings, each party has the right to present an expert opinion to the court, based on the expert’s scientific, technical, or other specialised knowledge.

When Can the Defence Conduct Forensic Examinations in Criminal Proceedings Related to Procurement for Defence and Infrastructure Needs?

The defence can conduct forensic examinations in criminal proceedings of this category both during the pre-trial investigation and during the court trial stage, with the purposes of such examinations often overlapping.

At the pre-trial investigation stage, it is not necessary to wait for a formal notice of suspicion to initiate and conduct the relevant forensic examinations.

Law enforcement agencies gather evidence prior to issuing a notice of suspicion, including by sending requests under Article 93 of the Criminal Procedure Code of Ukraine and executing investigative judges’ orders for temporary access to items and documents. From these documents, potential participants in such criminal proceedings can learn about the key circumstances of the alleged offence and take measures to refute the existence of criminal elements in the investigated case even before a notice of suspicion is issued.

Such actions must be undertaken at this stage, including to refute the following circumstances:

  1. inflated prices for supplied goods or services;
  2. improper fulfilment of contract terms;
  3. non-compliance of supplied goods or services with the tender documentation and the concluded contract;
  4. the amount of damage caused;
  5. poor quality of supplied goods;
  6. discrepancy between the cost and volume of completed work.

At the same time, the direct objectives of conducting forensic examinations by the defence may include, in particular:

  • obtaining additional evidence to refute the charges brought or to mitigate the responsibility of the accused;
  • challenging the conclusions of examinations conducted by the prosecution; obtaining new information that may influence the court’s decision;
  • proving the legality of the supplier’s business activities.

In a broader sense, conducting forensic and comprehensive forensic examinations supports the defence strategy by contributing to:

  1. Ensuring the establishment of objective truth: Forensic examinations provide an independent assessment of evidence, which is crucial for establishing the truth in a case.
  2. Refuting charges: Expert conclusions can disprove the presence of a criminal offence or reduce the degree of culpability of the accused.
  3. Substantiating the defence’s position: Expert conclusions serve as a significant argument for the court and can influence its decision.
  4. Protecting rights and legitimate interests: The defence has the right to a comprehensive and impartial investigation, and forensic examinations are one of the ways to ensure this right.

In such circumstances, the successful implementation of the client’s defence strategy is practically impossible without the defence obtaining expert opinions on the key aspects of the charges brought or the suspicion raised.

What Types of Forensic Examinations Can the Defence Use in Criminal Proceedings Related to Defence and Infrastructure Procurement?

Depending on the nature of the crime under investigation and the incriminating circumstances of its commission, the following types of forensic examinations are almost essential for the defence to ensure a successful strategy:

  • Forensic Commodity Examination: to refute allegations of inflated costs of supplied goods, confirm their compliance with the contract terms and specifications, and more.
  • Forensic Economic Examination: to verify the supplier’s business operations, confirm the cost of goods and services based on production cost calculations, refute allegations of financial damage, or objectively establish the amount of such damage.
  • Forensic Handwriting Examination: to confirm or refute the authenticity of signatures on official documents, and to challenge indications of forged signatures.
  • Technical Examination of Documents: to verify or refute the authenticity of seals, and identify signs of document forgery, including signatures and stamps.
  • Forensic Examination of Accounting, Taxation, and Reporting Documents, and Forensic Examination of Documents on the Economic Activities of Enterprises and Organisations: to analyse the financial and business activities of companies involved in procurement, refute signs of fraud and other financial violations.
  • Forensic Construction and Technical Examination: to challenge allegations of discrepancies in the volume and cost of completed construction or design works, or the quality of their execution in relation to the requirements of tender documentation.

In certain cases, it is advisable to appoint and conduct comprehensive forensic examinations to allow simultaneous analysis by experts from various fields. For example, a combined commodity examination and materials, substances, and products examination may be conducted when a commodity examination requires an analysis of the chemical composition of materials included in the product.

At the same time, it is important to understand that appointing and conducting a forensic examination is a complex and responsible process that requires professional knowledge and expertise. Therefore, selecting an expert should be approached with great care, taking into account the specialisation and credibility of the expert institution. Experienced experts ensure high-quality examinations and the reliability of the results obtained.

Thus, forensic examinations are an indispensable tool for protecting rights and legitimate interests in cases of embezzlement in defence procurement. Professionally conducted examinations provide objective data, refute accusations, and prove innocence.

The war in Ukraine has presented entrepreneurs with complex challenges, forcing them to adapt to the new realities. Despite the difficulties, many companies not only continue to operate, but also find new opportunities for development. In this article, we will look at the key aspects of doing business during the war and give recommendations on how entrepreneurs should act in conditions of instability.

1. Legislative changes and new regulations

In the context of the war, the Ukrainian government has introduced a number of legislative changes aimed at supporting the economy and business. The main changes include:

  • Simplification of the tax system. A number of incentives for entrepreneurs have been introduced, including the possibility of switching to a simplified taxation system. This allows businesses to focus on operating activities, reducing the tax burden.

  • Moratorium on inspections. The government has temporarily restricted tax and other types of inspections, allowing businesses to focus on adapting to new conditions

  • Introduction of special economic zones. Special regimes providing tax breaks and other preferences for businesses have been introduced in the regions most affected by the war.

On 18 June 2024, the Verkhovna Rada adopted the Law of Ukraine ‘On Amendments to the Tax Code of Ukraine regarding the peculiarities of tax administration during martial law for taxpayers with a high level of voluntary compliance with tax legislation’, by which for legal entities and individuals-entrepreneurs p. par. 69.41.3. pts. 69.41. The Tax Code of Ukraine establishes such peculiarities of tax administration, in other words, a number of advantages, namely:

  • a moratorium on documentary audits (subject to certain exceptions)
  • reduced period of desk and documentary audits (5 and 10 working days, respectively);
  • provision of COE to the taxpayer within 15 calendar days, without extending the period of consideration of the application;
  • assigning a compliance manager to the taxpayer;
  • receipt by a taxpayer, upon request, within 5 days, of information on the availability of tax information that may indicate tax risks in the activities of such a taxpayer.

Law No. 3813-IX of 18.06.2024 defines a list of requirements that taxpayers – legal entities and physical persons – entrepreneurs must meet in order to be included in the List of taxpayers with a high level of voluntary compliance with tax legislation. It should be noted that inclusion in this List is possible only if the taxpayer meets all the requirements specified in par. 69.41.1 p.p. 69.41.1 of the TC of Ukraine.

As to simplification of conditions for business, the Verkhovna Rada of Ukraine supported in the second reading and as a whole Draft Law No. 7331 ‘On Amendments to Certain Laws of Ukraine Concerning Simplification of Conditions for Conducting Business Activities during the Period of Martial Law in Ukraine’, which transfers permits and licences to the declarative principle for the period of wartime, thus significantly simplifying business activities.

According to this draft law, during the period of martial law the declarative principle will apply to business entities whose activities require licences and permits. In terms of status, the declaration is equal to licences, permits and other results of public services and has a number of advantages, such as: the possibility of filing the declaration in any place regardless of the legal/actual address of the business; no need to change the information in the declaration and other permits during the period of martial law, etc.

2. Risk management and security

Doing business in times of war requires special attention to security and risk management. The main aspects to be addressed are:

  • Employee safety. Companies must provide their workers with a safe working environment, taking into account possible hazards. This may include evacuation to safe regions, provision of personal protective equipment and psychological support. Employers must also organise a process for employees to receive briefings and training on safety measures during air raids and first aid to victims of shelling. Managers of enterprises should provide workers with a workplace in a building with mandatory shelter, which, if possible, should be equipped to perform work in order to ensure continuous operation of the enterprise.

  • Asset protection. Businesses should take steps to protect their assets by, among other things, insuring property, providing physical security and utilising modern technology to monitor facilities remotely.

  • Financial risk management. Economic instability requires careful cash flow management, planning financial reserves and utilising instruments to hedge currency risks.

For proper risk management, businesses need to implement a risk management system at enterprises, which consists of building a strategy and making decisions to minimise losses that may arise due to the impact of negative and unpredictable circumstances, as well as to reduce such impact on the activities of the business entity.

3. Changing the business model and adapting to new conditions

In the context of war, many businesses are forced to rethink their business models. The main approaches to adaptation include:

  • Diversification. Expanding product or service lines, entering new markets, changing suppliers are just a few ways to minimise risk and remain competitive.

  • Digitalisation. With the constraints of physical mobility, the importance of going online has increased significantly. This can include developing online shops, implementing CRM systems and other measures to optimise business processes. With regard to document management in the enterprise, the process of digitising paper documents related to the enterprise’s activities and the introduction of digital document management is important. To implement electronic document management at the enterprise will be the use of document management systems such as M.E.Doc and ‘Vchasno’, which greatly simplify and accelerate the exchange of documents between counterparties, as well as give the opportunity to maintain primary documentation in electronic form. Thus, it is especially important to ensure the digitisation of primary documentation, as under martial law there is an increased risk of its loss, and the process of restoring such documents is both difficult and sometimes even impossible. It should also be noted that signing contracts and other documents with EDS is equal to signing them in paper form and has the same legal effect.

  • Relocation. Under martial law, there was a need to preserve the capacity and protect the employees of enterprises in order to ensure their proper functioning. In this regard, managers, in order to protect enterprises, often make decisions to relocate the main facilities of the business to safer territories where there is no active hostilities and business operations are possible. Sometimes enterprises do not carry out full relocation of business, if it is possible, taking into account the situation in the territories where the legal entity is located, but partial relocation of facilities, if the enterprise is not in the territory of active hostilities, but still in the zone of greater risk.

  • Co-operation with the government and international organisations. The government and international donors offer various business support programmes, including financial grants, credit lines and advisory assistance. Active participation in such programmes can help a business not only to survive, but also to find new opportunities for growth

  • Entering the international market. For many companies – representatives of big business, it became an incentive to scale up – to move to the next stage and enter the international market. To enter the international market, a company needs a comprehensive approach and mandatory development of a strategy and step-by-step plan to ensure proper functioning of all processes, study of local legislation in terms of regulation of business and tax relations in a foreign country.

4. Social responsibility and community support

The concept of social/corporate social responsibility is particularly relevant in war conditions, as during the martial law period business plays an important role in supporting society and the economy. Many companies actively participate in volunteer projects, provide support to the Armed Forces of Ukraine, help migrants and other vulnerable categories of the population.

Such economic activities are carried out mainly by companies that belong to large businesses, but it should be noted that increasingly small and medium-sized businesses are also actively joining initiatives for social support of society.

5. Legal aspects and recommendations

In war conditions, there are many legal issues faced by entrepreneurs, as legislation in such conditions is particularly dynamic and subject to change in response to the current situation in the country. In this regard, it is extremely important to monitor current changes in legislation and take them into account when conducting business activities. Here are some recommendations:

  • Consultation with a legal professional. Consult with legal counsel regularly to understand current legislative changes and their impact on your business.

  • Document preparation. Ensure that all transactions, particularly contracts with at-risk counterparties, are properly documented.

  • Labour law compliance. Ensure that workers’ rights are respected, particularly regarding pay, holidays and safe working conditions.

  • Military records at the enterprise. Keeping military records is mandatory for business entities; this obligation is enshrined at the legislative level. Business managers need to ensure proper maintenance of military records at the enterprise, preparation of necessary documents and control over compliance with the legislation, as violation of the rules of military registration and mobilisation is punishable by fines, the amount of which can reach up to UAH 59,500.

Conclusion

Doing business in times of war is a complex process that requires entrepreneurs to be flexible, think strategically and adapt quickly to change. However, by taking into account all challenges and opportunities, companies can not only survive these difficult times, but also emerge from them stronger and more competitive.

Entering into contracts with counterparties is an important factor in conducting business activities. When entering into a contract, it is necessary to consider the potential risks that may arise in the course of fulfilling that contract.

Main risks when concluding contracts

1. Improper counterparty due diligence

It is advisable to check the counterparty with whom the contract will be concluded, even if the company has been cooperating with it for a long time, but there has been a break in such cooperation. If the contract is concluded with a new counterparty, such verification is mandatory.
Проверка контрагента осуществляется с целью установления “добросовестности” субъекта хозяйствования. Ненадлежащая проверка контрагента может стать основанием для возникновения споров в процессе выполнения договора, а в дальнейшем – обращения в суд.

This verification is done with the help of open resources such as:

  • ‘Judicial Power of Ukraine’
  • Unified State Register of Court Decisions
  • Automated system of enforcement proceedings
  • Unified register of debtors
  • Unified State Register of Legal Entities, Individual Entrepreneurs and Public Formations

It is also necessary to check that the person signing the contract has the authority to sign the contract. The existence of such authority should be stated in the company’s Articles of Association or another document to be provided to the other party to the contract to confirm the signatory’s authority.

A number of rulings of the Supreme Court contain a stable legal position on this issue, which is that if the contract contains a condition that it is signed by a person acting on the basis of the company’s charter or other document confirming his powers, this indicates that the other party to the contract is aware of such documents, and the court may not take into account the references of this party to the fact that it was unaware of the limitation of the powers of the counterparty’s representative (rulings of the Supreme Court of 09. 04.2019 in case No. 924/491/17

2. Failure to agree on contentious issues at the stage of drafting the treaty

The agreement by the parties of the material terms of the contract is a very important stage in the process of contract conclusion.Issues arising in the process of consideration and agreement of the parties to the draft contract can be settled and recorded in a protocol of disagreements. Thus, the parties will reach a compromise and establish mutually beneficial terms of co-operation.

3. Failure to record oral agreements between the parties to the contract in writing

Contractual relations between counterparties are often not limited to the conclusion of a contract. Certain conditions for the fulfilment of the contract are disclosed in more detail in annexes to the contract. Also, in the process of co-operation, the parties may agree on the need to make changes to the concluded contract. Such changes must be fixed by signing additional agreements to the contract or other documents. Lack of written agreement on amendments to the contract may in the future become the basis for the counterparty to apply to the court and proving the existence of agreements in such a case becomes much more difficult.

4. Insufficient attention to the section that provides for the application of penalties for improper fulfilment/non-fulfilment of the terms of the contract

A fairly common situation is when the parties to a contract decide not to specify in detail the section providing for the application of penalties for non-fulfilment or improper fulfilment of the terms of the contract.
As a consequence, it is impossible to collect penalties (fines, penalties) from the counterparty for breach of fulfilment of the obligation.
The ruling of the BP of the Supreme Court of 10.12.2019 in case No. 904/4156/18 states that if the terms of the contract do not establish the amount of penalty for breach of monetary obligation, and part six of Article 231 of the Civil Code of Ukraine does not establish a specific amount (percentage) of the penalty, but only determines the procedure for its establishment in the contract based on the discount rate of the National Bank of Ukraine and the period of application of the sanction, there are no grounds for the application of such a measure of liability as a contractual sanction.

5. Lack of specificity in the contract regarding actions in case of force majeure events

The occurrence of force majeure in itself does not release the business entity from liability for breach of contract terms, as such circumstances must be certified by the Chamber of Commerce and Industry of Ukraine or regional CCIs, which establishes the causal link between the presence of force majeure and the inability to fulfil the obligation under the contract. Accordingly, the document certifying the existence of force majeure in a particular case is the CCI certificate issued as a result of consideration of the company’s application.

On the question whether the CCI letter dated 28.02.2022 No. 2024/02.0-7.1 is evidence of the existence of force majeure, the Supreme Court in its ruling dated 13 September 2023 in case 910/7679/22 expressed the following position:

‘The letter of the CCI dated 28.02.2022 No. 2024/02.0-7.1 is not proof of the onset of force majeure for all economic entities of Ukraine with the beginning of the military aggression of the Russian Federation. Each business entity that cannot fulfil its obligations under a certain contract must prove the existence of force majeure.’

Thus, there is a need for a business entity to obtain a CCI certificate of certification of force majeure in each specific case.Also, it should be taken into account that if the contract defines a term within which a party must notify the other party of the occurrence of force majeure, such notification is mandatory. If the contract establishes a term for such notification, late notification or failure to notify the counterparty of the occurrence of force majeure deprives the party of the right to refer to these circumstances, if provided for in the contract. Otherwise, a breach of the notice period does not automatically mean the loss of the right to invoke force majeure.