Limitation of actions for rental agreements: position of the Constitutional Court of Ukraine
- Author: Andriy Buzynnyi
- Practice areas: Litigation
Legal representation in courts of general jurisdiction of Ukraine
- Standardized procedures: Legal representation in Ukrainian courts
Lawyer’s participation in negotiations and/or agreement signing (Kiev)
- Date of publication: 25/09/12
Courts cannot use the law depending on wealth of sides, at least not in regard to one of the regulations from the Civil Code of Ukraine: the Constitutional Court of Ukraine (hereinafter - CCU) provided the official interpretation of Section 2 of Article 786 of the Civil Code in regard to its application to relations arising from rental agreement.
Indeed Section 2 of Article 786 of the Civil Code of Ukraine was worded in such way that even a layman would think of two different interpretations. In general the article stipulates the following:
“1. Claims for compensation related to an object which was given to a tenant and being damaged as well as claims for compensation for the improvement of the object have one year term of limitation of actions.
2. Term of limitation of actions for a lessor starts since the moment when an object was returned to him and as for a tenant the term starts after the termination of rental agreement.”
Apparently it turns out that if Section 2 of this Article is a solely semantic extension of the first one then the start of limitation of actions term is defined only for cases related to the improvement / damaging of object which was rented. However the article 786 of the Civil Code itself is called “Limitation of actions that is applied to claims arising from the rental agreement” which allows to extend regulation stipulated by the Section 2 on all legal relations arising from such agreements.
This duality of interpretation allowed courts to manipulate the law the way which was needed: they would either apply the regulation only to cases related to Section 1 of the article or use a "broad" interpretation of the regulation. In particular the Higher Commercial Court of Ukraine (hereinafter – the HCCU) in the Resolution number 18/29-531 dated 27.01.2010 states that the beginning of limitation term for claims related to recovery of payments for "extra-term" of property usage as well as for other claims based on rental agreement is defined in Section 2 of Art.786 of the Civil Code. At the same time many other Resolutions have absolutely opposite interpretations and they all are summarized by a newsletter number 01-06/735/2012 of the HCCU dated 29.05.2012 which clearly indicates that the regulations of Section 2 of Art.786 of the Civil Code can be applied only to cases that are described in the first section of this article.
The Constitutional Court of Ukraine supported the position set out in mentioned letter and provided more extensive reasoning. The Constitutional Court of Ukraine concluded that the stipulations of Article 786 of the Code form “single content”, have complete structure and set special limitation of actions - one year - and the start of its term for claims of lessor related to compensation of damage caused to the object which was given to be used by a tenant as well as claims of a tenant related to compensation for improvement of the object."
Thus it can be assumed that the Constitutional Court of Ukraine brought disputes that arise around this issue to the end. Although the matter is not of primary importance but as practice had shown it is quite relevant. Lawyers must consider the interpretation of the Constitutional Court of Ukraine since it is unlikely to see an opposite position in court decisions now.