On 17 July 2018, the Supreme Court supported the legal position of the National Bank of Ukraine (NBU) in a dispute with a client of CB PrivatBank JSC.

The dispute arose out of a lawsuit filed by the individual, who, inter alia, asked to declare illegal the NBU’s inaction regarding the recognition of CB PrivatBank JSC as a problem bank. CB PrivatBank JSC was the third party in the dispute.

The first instance courts and courts of appeal rejected the claims of the claimant. Thereafter, the claimant submitted a cassation claim to the Supreme Court.

The Supreme Court dismissed the claim and made no amendments to the Order of the District Administrative Court dated 16 September 2016 and the Ruling of the Kyiv Administrative Court of Appeal dated 10 November 2016.

The Supreme Court made the following judgements under its decision:

Due to the absence of a consistency criterion, the NBU is under no obligation to make decisions on recognition of a bank as the problem bank. A warning letter as the corrective measure taken by the NBU against a failure to submit and publish annual statements within a specified period of time is proportionate to the violation committed by CB PrivatBank JSC.

The illegal inaction of the authority must be understood as an outward form of the authority’s behavior (activity), which constituted the lack of decisions or legally binding and mandatory actions in favor of the concerned parties, which fell within the scope of the authority’s competence under a law or a different regulatory legal act, were objectively necessary and practically possible for the implementation, yet not implemented.

The NBU considers this decision to be an example of how the rule of law is ensured under the current reforms in the justice sector of Ukraine.

The NBU also expects that courts will further take into account the legal position of the Supreme Court in similar disputes.