6.  On 17 April 1936 the government of the Union of Soviet Socialist Republics (“the USSR”) entrusted the management of the network of recreational facilities for workers in the USSR to the Union-wide Central Council of Trade Unions (“the Union-wide Council”), the central authority for the USSR’s official State-controlled trade unions.
7.  By a resolution of 17 April 1956 the Council of Ministers of the Ukrainian Soviet Socialistic Republic (“the Ukrainian SSR”) obliged the Ministry of Healthcare of the Ukrainian SSR to “take” (прийняти) from the trade unions and other ministries and State agencies various assets (including the Sanatorium).
8.  By a resolution of 23 April 1960 on transferring to trade unions sanatoria and recreational resorts of the Ministry of Healthcare of the Ukrainian Soviet Socialistic Republic, the Council of Ministers obliged the above-mentioned Ministry to transfer “for free use” (безоплатно передати у відання) to the Ukrainian Republican Council of Trade Unions (a Ukrainian entity functioning under the charter of trade unions of the Soviet Union and under the auspices of the Union-wide Council; “the Republican Council”) all functioning self-supporting sanatoria, recreational resorts and health centres (including the Sanatorium).
9.  On 6 October 1990 the XV Congress of Trade Unions of the Ukrainian SSR adopted a decision whereby it transformed itself into the First Founding Congress of Independent Trade Unions of Ukraine. That congress founded the Federation of Independent Trade Unions of Ukraine (which subsequently became the Federation) and declared its independence from the State and from commercial bodies of the Ukrainian SSR and the Soviet Union. It also declared its refusal to function under the charter of trade unions of the Soviet Union. The Federation was also declared the Republican Council’s legal successor.
10.  On 18 November 1990 the Council of the General Conference of Trade Unions of the Soviet Union approved an agreement of 18 November 1990 between the General Conference of Trade Unions of the Soviet Union and the Federation, whereby various assets (including the Sanatorium) were “reserved” (закріплені) for the Federation.
11.  By a resolution of 29 November 1990 on the protection of sovereign property rights of the Ukrainian SSR, the Parliament of the Ukrainian SSR ordered that until a law on privatisation (роздержавлення) of property was enacted, a moratorium on the State authorities making any change to the title to State property and owners thereof was to be introduced.
12.  On 24 August 1991 Ukraine declared its independence.
13.  On 10 September 1991 the Law on Enterprises, Establishments and Organisations of the Soviet Union located on the Territory of Ukraine was enacted. The assets and financial resources of enterprises, establishments, organisations and other entities subordinated to the former Soviet Union and located on the territory of Ukraine were declared State property of Ukraine. All contracts concluded in breach of the 1990 moratorium were declared null and void.
14.  On 22 November 1991 the Federation decided to create UPO, a joint-stock company (currently, a private joint-stock company). Pursuant to that decision, the Federation transferred to UPO various assets (including the Sanatorium). On 4 December 1991 the Federation and the Social Insurance Fund of Ukraine (“the SIFU”) ratified UPO’s articles of association and statute.
15.  On 23 December 1991 the local authorities registered UPO.
16.  By a resolution of 4 March 1992 on the implementation of the Law of Ukraine on Privatisation of Property of State Enterprises, the Parliament of Ukraine repealed the resolution of 29 November 1990 and instructed the Cabinet of Ministers of Ukraine to draw up, by 15 March 1992, a list of enterprises which had concluded contracts whereby title to State property had been transferred, in breach of the 1990 moratorium.
17.  By a resolution of 10 April 1992 on property complexes and financial resources of civic organisations of the former Soviet Union located on the territory of Ukraine, Parliament ordered that, until a list of legal successors of Union-wide civic organisations of the former Soviet Union had been drawn up, the assets and financial resources of enterprises, establishments and entities, which were located on the territory of Ukraine and which were under their central bodies’ authority, were to be temporarily transferred to the State Property Fund of Ukraine (“the SPFU”), an authority managing State property.
18.  By a resolution of 4 February 1994 on the property of Union-wide civic organisations of the former Soviet Union, Parliament further ordered that, until the owners of the above-mentioned assets had been determined in legislation, those assets were to be regarded as State property. No such legislation has been adopted to date (see paragraph 40 below).
19.  On an unspecified date the SPFU brought a claim against the Federation, the SIFU and UPO, arguing that the assets the Federation had transferred to UPO had not belonged to it, but had belonged to the Union-wide Council, and the SPFU had therefore been their managing authority.
20.  By a judgment of 20 January 1997 (case no. 137/7), the Higher Arbitration Court of Ukraine (“the HACU”; in 2001 renamed “the Higher Commercial Court of Ukraine”, “the HCCU”) rejected the claim. Referring to the resolutions of 10 April 1992 and 4 February 1994, it stated that the SPFU had not established what had constituted assets under those legal acts. The assets on the basis of which UPO had been created had been transferred to the Republican Council, succeeded by the Federation, as was evident from the latter’s founding documents. Since the assets had not been transferred to the Union-wide Council, they were not covered by those resolutions. Moreover, since their transfer to trade unions, the assets had not been “recalled” (не вилучалися) by the State in accordance with the established procedure. The trade unions’ title to those assets had not been challenged and had therefore been lawful. Under Article 92 § 7 of the 1994 Constitution of Ukraine, the legal regime applicable to property was to be determined by the laws of Ukraine only. Since a special law governing the legal regime of assets belonging to Union-wide civic organisations of the former Soviet Union had not been adopted when the case was examined, there had been no legal restrictions on the creation of UPO on the basis of sanatoria’s assets. Accordingly, UPO had been founded lawfully, there was no basis for annulling its founding documents and the SPFU’s allegation that it was the managing authority of UPO’s assets was at odds with the law and the circumstances of the case.
21.  On 17 June 1997 the HACU review panel upheld the above judgment. It held that assets which had formed the basis for the creation of UPO had been transferred to the Republican Council pursuant to the resolution of 23 April 1960. They had not been in the Union-wide Council’s use and were not, therefore, covered by the resolution of 10 April 1992.
22.  On 27 June 2000, at UPO’s request, the local authorities registered its title to assets transferred to it in accordance with its founding documents.
23.  By a decision of 22 November 2007, which is available to the public, the Supreme Court of Ukraine refused to allow a request submitted by the Prosecutor General for a review of the decision of 17 June 1997. The Supreme Court did not provide the details of its decision.
24.  In 2000 the applicant founded the “Kovcheg” Social Rehabilitation Centre (“the Centre”). According to the latter’s Statute, its activities include “social protection, social-pedagogical and psychological rehabilitation of children between the ages of six and eighteen, who are in difficult life circumstances[, and] assistance with the provision of complex social, psychological, pedagogical, medical, legal and other types of individual and family assistance.”
25.  On 30 August 2002 the applicant and the Centre purchased from UPO certain premises of the Sanatorium (dormitory blocks, cafeteria, library, medical block, laboratory and some other premises). Their price under the contract was 1,915,200 Ukrainian hryvnias[1] (UAH). According to the contract, the premises were owned by UPO on the basis of the title certificate of 27 June 2000.
26.  The applicant subsequently registered its title to the above-mentioned premises with the local authorities, and the Centre has been using the premises for its activities and is based there. In particular, the premises have been used as accommodation for children from “difficult” families and from families of internally displaced persons (“IDPs”).
27.  In August 2011 a prosecutor acting on behalf of the State lodged a claim with the Kyiv City Commercial Court against UPO, the applicant and the Centre, seeking the annulment of the 2002 contract. He argued, in particular, that the premises that had been sold were State property and had never been transferred from the State to UPO’s ownership. The 2002 contract had thus breached State interests. The prosecutor also stated that he had only learned about the 2002 contract in July 2011.
28.  On 19 September 2011 the court allowed the claim. It held that in 1960, the State had transferred sanatoria and recreational facilities, including the disputed property to trade unions for their free use but not their ownership. Therefore, when UPO had been created, the disputed premises had belonged to the State. The 2002 contract had thus been invalid. The court dismissed UPO’s reference to the judgment of 20 January 1997, stating that the parties in that case and in the present one were not the same, and that judgment contained value judgments rather than facts as regards the owner of the disputed property. Furthermore, that judgment had not been in accordance with the Supreme Court’s findings in its decisions of 25 September 2007 and 16 September 2008, in which it had held that property transferred for free use under the resolution of 23 April 1960 had been State property (the parties did not provide copies of those decisions). Lastly, the court rejected the prosecutor’s argument that the resolutions of 10 April 1992 and 4 February 1994 had been breached, holding that they were inapplicable in the present case, as they concerned property owned by civic organisations of the former Soviet Union (including trade unions), whereas the disputed property had not been transferred from the State (that is to say, trade unions had never gained title to the property).
29.  The applicant appealed, stating that UPO had a title certificate to the disputed property. Even assuming that UPO had had no right to sell that property, the applicant was a bona fide purchaser. Moreover, it had spent around UAH 5 million on renovation of the purchased premises.
30.  On 1 April 2014 the Kyiv Commercial Court of Appeal quashed the judgment of 19 September 2011 and found for the applicant, stating that there were no legal grounds to conclude that the disputed premises belonged to the State. In particular, the resolutions of 10 April 1992 and 4 February 1994 had not concerned the Federation’s trade unions, because the latter had left the Union-wide Council as early as 1990. Moreover, those legal acts had been in breach of Article 92 of the Constitution of Ukraine, pursuant to which the property regime could be regulated by laws of Ukraine only. UPO had therefore become the owner of property transferred to it. The court also referred to the judgment of 20 January 1997 and decisions adopted in case no. 48/202-20/191 (see a summary of the latter decisions in paragraph 42 below), holding that facts established by a decision of a commercial court were not to be proved again when deciding other disputes with the same parties. The applicant had been a bona fide purchaser as it could not have known about the existence of any obstacles for concluding the 2002 contract, and such obstacles had not been present when it had been concluded.
31.  On 24 July 2014, following an appeal on points of law lodged by the prosecutor, the HCCU quashed the judgment of 1 April 2014 and upheld the judgment of 19 September 2011. It held that following a systematic analysis of various legal acts, including the law of 10 September 1991 and the resolutions of 10 April 1992 and 4 February 1994, there were no grounds to conclude that under the resolution of 23 April 1960 the State had transferred title to the disputed property to the trade unions. The latter resolution contained no indication that the disputed property would be transferred to the ownership of the Republican Council, nor any intention on the part of its owner (the Ukrainian SSR) to alienate it to the Republican Council. The resolution of 29 November 1990 had set a moratorium on any change of title to, and owners of, State property until the enactment of a law on privatisation of property. Accordingly, the disputed property which had been transferred to the Republican Council and used by it had been State property. The HCCU also held that its position was confirmed by its own decisions and those of the Supreme Court given in 2007-2014 (the parties did not provide copies thereof).
32.  In October 2014 the applicant applied to the Supreme Court for a review of the decision of 24 July 2014.  On 4 February 2015 the Supreme Court rejected its request. It referred, inter alia, to the resolution of 23 April 1960, the resolution of 29 November 1990 and the law of 10 September 1991, and stated that it did not follow from them that the transfer of property to the Republican Council had entailed a change in the State’s title to it. Trade unions had been operating under the charter of trade unions of the Soviet Union and had been Union-wide civic organisations. Therefore, the Sanatorium had been the property of a civic organisation of the former Soviet Union located on the territory of Ukraine and, when UPO had been created, the Sanatorium had belonged to the State and could be alienated only with the State’s consent. The Supreme Court also referred to the resolutions of 10 April 1992 and 4 February 1994 in support of its findings. In particular, it held that the question of holders of title to property of Union-wide civic organisations had not yet been regulated by domestic law and the property of such organisations was at present regarded as State property. Accordingly, there had been no legal grounds for the Federation to dispose of the property of Union-wide civic organisations.
33.  On 2 April 2018 relevant changes were entered in the register of ownership rights to real estate. The State, as represented by the SPFU, was indicated as the new owner of the disputed property.
34.  Despite the judgment of 19 September 2011, the applicant is still able to use the disputed property and children from “difficult” families and IDP families still live on those premises. The applicant also informed the Court that on 1 February 2018, at its request, the Kyiv City Commercial Court decided to postpone the execution of the judgment until 31 May 2018. As it appears from the decision of 1 February 2018, the representatives of the State did not object to that postponement.