Ukraine Country Profile

Judicial System

Individual Corruption

The Ukrainian judicial system is identified as being among the most corrupt institutions by public opinion surveys. For instance, according to Transparency International's Global Corruption Barometer 2009, the judiciary is perceived as the most corrupt institution in Ukraine, with more than half of the surveyed households assessing it as 'extremely corrupt'. Similarly, according to the Kyiv International Institute of Sociology 2007 surveys - Cost of Corruption for Ukrainian Households and Public Trust of the Judicial System - the judiciary is found to be the most corrupt government branch, as reported in a 2008 article by Kyiv Post. Furthermore, according to Freedom House 2009, no progress was made in 2008 to correct the main shortcomings of the Ukrainian judiciary, which include a lack of public trust in court decisions and the judicial system as a whole, insufficient financing of the court system, and an inefficient and opaque process for appointing judges. In contrast, the Freedom House 2009 also emphasises that prior to the Orange Revolution, the judiciary was even more inefficient and subject to corruption. According to the source, corruption problems remain, but to a marginally lesser degree than in the past.

According to law, all citizens have the right to a fair, timely and open trial. The Bertelsmann Foundation 2010 reports that, for several reasons, this is not respected in practice. Pressing problems include insufficiently trained judges, low salaries and dependence on the executive branch in matters of enforcement. In addition, there is a lack of procedural transparency.

Business Corruption

Reportedly, it has become more common for companies operating in Ukraine to pay bribes in their dealings with the courts. Relatively few companies use court proceedings in order to settle disputes and the courts have a long record of striking down or ignoring contractual provisions that assign legal responsibility for foreign disputes to a foreign court or arbitrator. Companies in general, both foreign and domestic, do not trust the Ukrainian judiciary to be an effective and fair broker in business matters. The courts are notoriously non-transparent. Aggressive minority shareholders have reportedly been able to obtain questionable court decisions allowing them to take control away from majority shareholders.

Enforcement of judicial decisions is managed by the Ministry of Justice's State Enforcement Department, which, according to USAID & MSI Corruption Assessment 2006, is not effective and allegedly subject to corrupt practices. Corruption is the main reason for many investment disputes. Investment dispute resolution mechanisms are neither fair nor impartial and frequently favour domestic companies and their government allies.

Political Corruption

Although an independent judiciary is anchored in the constitution, its actual independence is impaired, according to the Bertelsmann Foundation 2010. Similarly, Freedom House 2009 reports that there is little respect for the division of power in Ukraine, and all political factions have attempted to manipulate courts, judges, and legal procedures. According to another Freedom House 2009 source, obvious misuse of the judicial system in political interests was a given in 2008. The source concludes that misuse of the judiciary for political purposes reached a scope of unprecedented proportions in 2008, which in turn may lead to a degradation of state power, the economy, and public administration in Ukraine. The GRECO Compliance Report on Ukraine 2009 recommends that the country reforms its judicial system in order to enhance its independence in the long run.

Former President Yushchenko sacked 3 Constitutional Court judges in 2007 for procedural and ethics violations while the court was determining the legality of his decree to disolve Parliament before its term ended. Yushchenko had described the fight against corruption in the judiciary as inefficient in 2008.

In March 2009, former head of the Lvov Administrative Appeal Court Igor Zvarych was arrested on charges of corruption and bribery, according to a December 2009 article by Zerkalo Nedeli. Law enforcement bodies had conducted a search in Zvarych's office and found over USD 1 million as well as UAH 2 million.

Frequency

The World Bank & IFC: Doing Business 2010:
- It takes 30 procedures and 345 days at a cost of 41.5% of the claim to enforce a commercial contract.

- Both the number of procedures and the time it takes to enforce a claim are lower than regional averages, as opposed to the associated cost, which is nearly twice the regional average.

World Economic Forum: The Global Competitiveness Report 2009-2010:
- Business executives give the independence of the judiciary from influences of members of government, citizens, or companies a score of 2.3 on a 7-point scale (1 'heavily influenced' and 7 'entirely independent').

- Business executives give the efficiency of the legal framework for private companies to settle disputes and to challenge the legality of government actions and/or regulations a score of 2.3 and 2.2 respectively on a 7-point scale (1 being 'extremely inefficient' and 7 'highly efficient').

Transparency International: Global Corruption Barometer 2009:
- 63% of households surveyed consider the judiciary to be 'extremely corrupt'.

- 25% of households who had contact with the judiciary in 2008 report having paid a bribe.

- Citizens give the judiciary a score of 5 on a 5-point scale (1 being 'not at all corrupt' and 5 'extremely corrupt').

The World Bank & IFC: Enterprise Surveys 2008:
- 19% of companies believe the court system is fair, impartial and uncorrupted.

- A little more than 39% of companies identify the functioning of the courts as a major business constraint.

MSI & KIIS: Corruption in Ukraine 2007:
- 72% of the citizens surveyed think that corruption is a problem in the courts.

EBRD & World Bank: BEEPS Ukraine 2005:
- 12% of companies surveyed stated that bribes are frequent in dealing with courts.

- 35% of the companies surveyed reported that the functioning of the judiciary poses a problem for doing business.

- 51% of companies stated that they were confident that the legal system would uphold property and contract rights.