Consumer protection in Ukraine: new rules

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As of today the market of goods and services is filled with a wide variety of goods that are both nationally produced and imported from abroad. But unfortunately some of them are not in compliance with quality requirements that are set by the legislation while others do not meet needs and expectations of consumers. As the result of such inconsistence entrepreneurs and consumers have numerous clashes that often transform into court cases the results of which are hard to predict due to unambiguous judicial practice. The letter of the Supreme Court of Ukraine dated 01.02.2013 was intended to generalize judicial practice and unify it. Main provisions of the law will be useful to both consumers and entrepreneurs.

Who is capable of filing lawsuits about consumer rights protection in Ukraine?

Clause 22 of Section 1 of Article 1 of the law “On consumer protection” defines consumer as an individual who purchases, orders, uses or has an intention to purchase or order products for personal needs that are not directly related to entrepreneurship or employee’s duties performance.

Based on this the Supreme Court of Ukraine reached the conclusion that if a person purchases product as an employee, entrepreneur or directly uses it for entrepreneurship then provisions of the law “On consumer protection” are not applied to him. Also its provisions are not applied in case if:

• Products, works or services are provided by an individual instead of an enterprise or a sole trader;
• Products (works, services) are provided to an enterprise, establishment or organization;
• Seller of a product is not a party of a contract that was entered into with a consumer (for example lawsuits of consumers filed against agents or other commercial representatives).

Seller of a product is not a business entity that manufactures products, performs works or renders services (for example if a legal entity sells non-residential premise or other property to an individual that is owned by it).

In these cases lawsuits about consumer rights protection cannot be filed.

At the same time if a business entity purchased a good to use it for its entrepreneurial activities but actually used it for personal needs (or vice versa) then provisions of the law “On consumer protection” can be applied to it if the good was used for personal needs. Moreover the Supreme Court of Ukraine supports judicial practice according to which provisions of the law “On consumer protection” are applied to persons who conduct independent professional activities (lawyers, notaries, trustees in bankruptcy, appraisers, etc.). Thus these persons can also file lawsuits about consumer protection.

Bodies of the State Inspection on Consumer Rights Protection and non-governmental organizations of consumers also can act as claimants in cases related to consumer protection. The Supreme Court of Ukraine reached the conclusion that the latter can file lawsuits even regarding those consumers who are not their members as well as with an intention to protect unlimited amount of consumers. Besides, any consumer is capable of filing a lawsuit about consumer rights protection despite the fact whether he entered in contractual relations with a seller or not.

Where is it possible to file lawsuits about consumer rights protection?

Consumers, their non-governmental organizations and bodies of consumer rights protection can file lawsuits about consumer rights protection to courts of general jurisdiction under civil procedure. Such conclusion of the Supreme Court of Ukraine was based on the abovementioned definition of term “consumer” as well as provisions of Article 12 of the Code of Commercial Procedure and Articles 24- 28 of the Law “On consumer protection”.

Administrative procedure is applied by courts of general jurisdiction to lawsuits against local authorities and executive bodies which set the criteria and conditions of services provision (sale of goods) and which can impose sanctions on violators of consumer-related legislation. For example administrative procedure is applied to lawsuits against regional departments of the National Commission for the State Regulation of Energy Industry, bodies of consumer rights protection and inspections of prices control.

Lawsuits in cases about consumer rights protection are filed to local courts at the following locations that are chosen by a claimant:

• At the consumer’s registered place of living;
• At the location where defendant stays;
• At the location where damage was caused;
• At the location of contract’s fulfillment.

Exceptions include lawsuits regarding real property and lawsuits against transporters that arise from cargo (luggage, mail) transportation contracts or passenger transportation. Based on the fact that Article 114 of the Code of Commercial Procedure provides exclusive jurisdiction for these lawsuits, they can be filed only at the location where real property and a transporter are situated. However this exception is not applied to foreign transporters. In accordance with the Convention for the Unification of Certain Rules for International Carriage by Air lawsuits of consumers against air carriers can be filed either to a court at the location of the carrier (location of its main activity) or at the transportation destination as well as at the location where an enterprise which acted as an agent for entry into contract is situated (claimant chooses one of the options).

This opinion was prepared by lawyers of Kiev law firm “Pravova Dopomoga”.