Judicial Practice in Ukraine with the regard to application of the Principles of Justice, Good faith and Reasonableness

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Annotation. The article explores the principles of justice, good faith and reasonableness, their application and implementation in judicial regulation of relations. It also provides analysis of specific peculiarities of application and interpretation of these principles in Ukrainian courts.

Key words: the principle, good faith, justice, reasonableness, compensation for moral harm, compensation.

 

Judicial practice with the regard to application of the principles of justice, good faith and reasonableness is currently demonstrating no signs of massive involvement, since the participants of legal arrangements do not always seriously perceive an effective mechanism for implementation of their rights. However, there are some examples of using references to the abovementioned criteria.

The principle of justice is used in the liabilities of sensitive nature with the further assigning of compensatory damages for moral harm to an aggrieved person. The size of punitive damage is defined by the court depending on the nature of the offense, physical or mental suffering, impairment in ability of the injured person or deprivation of an opportunity to use the ability; the degree of guilt of the person who caused moral damage, if the offense constitutes grounds for compensation; and other circumstances that are material to the case. The demands for reasonableness and justice are also taken into account when determining the amount of compensation for moral damage. The principle of justice is a key factor for the court’s decision on assigning a certain amount of compensatory damages for moral harm, which by its nature cannot be accurately calculated by the court ahead, as the judicial body defines the sum based on the principle of justice [1].

For instance, by its decision, the Judicial Chamber on Civil Cases of the Supreme Court of Ukraine reduced the amount of compensatory damages for moral harm caused to the citizen K. by the activity of the bodies of inquiry, preliminary investigation and prosecution during the process of criminal proceedings and investigative actions, from UAH 500,000 to UAH 100,000. In order to justify such a reduction, the Court referred to the need to consider the principles of reasonableness, prudence and justice when deciding on a punitive damage. The Judicial Chamber on Civil Cases of the Supreme Court of Ukraine applied this principle in a similar way when decided on reduction of the amount of compensatory damages for moral harm caused to the individual J. by prosecution bodies, from UAH 1 million to UAH 150,000 [3].

The principle of justice demands that the laws are equally applied to all: everyone gets what the law prescribes. The idea of justice influences directly every branch of the law, being reflected in its norms in diverse ways. The abovementioned principle permits to implement completely the particularities of civil law as the ones of private law, according to the provisions of which, the key factors include the equality of parties, the autonomy of will and the autonomy of property.

The principle of fulfillment in good faith of obligations has become the basis for one of the trends in the development of the judicial practice in countries with the continental legal system. This trend, aimed at filling of some gaps in the offer, is most clearly observed in relation to the concluded agreements, the clauses of which the parties have already begun to implement and even have already partially completed, but during this process, they have encountered a gap in the offer.

The process of “mastering” of the civil law on contractual obligations in good faith by judges is definitely a positive trend. The particular determining factor is the fact that the Constitutional Court of Ukraine used the reference to the principle of good faith in making the famous decision “in the case on the interest protected by law”. Thus, the concept of “the interest protected by law”, as used in the Civil Procedural Code of Ukraine, was determined by the Constitutional Court of Ukraine as a “drive for the use of specific tangible and/or intangible benefits, conditioned by the general content as a simple legitimate permit, which is objective and not directly mediated in the subjective rights, being the subject of an independent judicial protection, as well as the other means of legal protection, serving to satisfy individual and collective needs that do not contradict the Constitution, the laws of Ukraine, public interests, justice, good faith, reasonableness and other general principles of law” [5].

In fact, the Constitutional Court of Ukraine has defined by this particular decision that good faith is one of the criteria for determining whether any interest is “protected by law”, i.e. independent object of legal protection. It is difficult to overestimate the importance of this conclusion for implementation of the principle of good faith in the judicial practice. Nowadays, the courts of Ukraine, examining any dispute the object of which is an abuse of the interest protected by law, are actually obliged to analyze, based on the decision of the Constitutional Court of Ukraine, the question of whether such interest is aimed at satisfaction of individual and collective needs that, in particular, do not contradict with the principle of good faith.

Case records of the court indicate that the subjects of contractual relations refer more and more to the corresponding principle. For example, in one of the cassation appeals the appellant stated that “the defendant did not fulfill the terms of the contract in good faith and violated the principle of good faith enshrined in Article 509, paragraph 3 of the Civil Code of Ukraine”. Having no legitimate grounds for realization of his right under the contract and provided the proper and conscientious fulfillment of obligations by the appellant, the defendant, with no reason and in bad faith, applied to the appellant the operational and economic sanctions in the form of prohibition to provide air services. The fraudulent actions of the defendant resulted in material damage caused to the appellant in the form of lost revenue from unsold tickets. In another case, the defendant referred to the fact that the appellant violated the principle of good faith by not fulfilling the terms of the subcontract with a third party simply because the defendant did not allow the appellant to enter the premises rented by the defendant. Meanwhile, if the appellant had acted in good faith, he would have had every reason to execute a subcontract, since there were other properly equipped facilities in his possession [4].

Application of the criteria of reasonableness is explained by the fact that the smaller and the less abstract is the description of a certain action or rule in the text of the law or the contract, the more general becomes its use for ascertaining whether it corresponds to the permitted models or proper behavior patterns. The analysis of civil legislation proves that in most cases specific actions are related to the demand for reasonableness: sales of goods at reasonable prices, reasonable periods for fulfillment of obligations.

The principle of reasonableness is also taken into account in civil proceedings. For example, Ukrainian Mobile Communications JSC filed a lawsuit against C. to the court on debt enforcement and contractual penalties under the contract, citing that, in breach of the contract for cellular communications services signed by both parties, the woman-defendant was in default with payment for services received owing to the company UAH 118.09. Moreover, in accordance with the paragraph 1.2 of the supplementary agreement to the Contract, the appellant requested the defendant to recover the contractual penalties in the amount of UAH 3.65 for each day remaining until the expiration of the principal contract, starting from the date of its dissolution, the amount of the total payment equaling to UAH 1,536.65.

The court of the first instance rejected the claim. The appellate decision reversed the decision of the first instance and then, the appellate court made a new judgment, according to which the claim was upheld in part. The defendant recovered to the appellant the penalties for services rendered being estimated to UAH 118.09 and UAH 110 of penalties for failure to fulfill obligations of the contract. The decision of the Supreme Court of Ukraine stated the dismissal of the cassation appeal, but affirmed the appellate court decision [2]. Therefore, the amount of penalties can be reduced by a decision of the court if it significantly exceeds the amount of caused damages. That is to say, deciding on a claim, the courts first took into account the principle of reasonableness, which included an objective assessment of the situation of the defendant and an unaffected consideration of the provisions of the Civil Code of Ukraine.

The principle of reasonableness is also taken into account in civil disputes and in arbitration courts. For instance, the “Bank” filed a claim to the Standing Independent Arbitration Court under the Ukrainian public organization “League of legal protection of the consumers’ interests” to recover from the borrower the amounts owed of the loans: the principal amount of the loan being UAH 503.20; the unpaid credit-use interest – UAH 35.89; the penalties charged for outstanding loan and late interest repayment – UAH 9,543.46, accrued during the period of 12 months at a rate of 6.5% for each day of the late payment, of the total debt for the entire period of delay. The total amounts owed of the loans were estimated to UAH 10,082.55 [6]. By its decision, the Arbitration Court declared the use of the principle of reasonableness as possible, considering the financial situation of the defendant and based on the analysis of other evidence and circumstances of the cases. The Arbitration Court made the decision upon the pretext that if the due penalties were excessively large compared to the losses of the creditor, the court might have reduced the amount of the penalty.

Application of the principle of reasonableness in judicial practice helps avoid unnecessary and unjustified losses not only of the participants of civil relation, but also of the economic activities. It should be mentioned that in addition to indication of an intelligent person, a recourse to the principle of reasonableness is also applied when determining the timeframes and the amount of compensation for damage. For instance, in the light of the jurisprudence of the European Court of Human Rights, the category of “reasonableness” is usually used in combination with the word “timeframe”, given that the European Convention for the Protection of Human Rights and Fundamental Freedoms enshrined the right equal to all persons to be tried within a reasonable time.

Therefore, providing the study on civil legislation and judicial practice, we come to the conclusion that the principles of good faith, justice and reasonableness are essential for making decisions in disputes that involve assignment of a compensation for damages caused. Both the courts and the disputing parties may invoke these principles (collectively or individually) in order to use them as an argument for raising or reducing the amount of the compensation.

 

Bibliography

  1. Bakalinska, O.O. (2011), Osoblyvosti zastosuvannia katehoriji spravedlyvosti v tsyvilnomu pravi i protsesi Ukrainy [Peculiarities of application of the category of justice in civil law and litigation of Ukraine] // Yurydychni nauky, 2011. – No. 3. – pp.39.
  2. Belkin, M.L. and Belkina, Yu.L. (2009), Zastosuvannia pryntsypu rozumnosti v hospodarskykh ta tsyvilnykh sporakh [Application of the principle of reasonableness in commercial and civil disputes] // Bulletin of economic justice, 2009. – No. 1. – pp.101.
  3. Otradnova, O.O. (2007), Realizatsiya pryntsypu spravedlyvosti u tsyvilno-pravovyh zoboviazanniakh iz zavdannia nedohovirnoi shkody [Realization of the justice’s principle in civil commitments from the task of the uncontractual damage] // Yurydychni nauky, 2007. – No. 74. – pp.122.
  4. Pavlenko, D. G. (2009), Sudova praktyka zastosuvannia pryntsypu dobrosovisnosti u vyrishenni dohovirnykh sporiv [Application of the Principle of Good Faith in Judicial Practice related to Contractual Obligations] // Legal Journal “Justinian”, 2009. – No. 12.
  5. Decision of the Constitutional Court of Ukraine No. 18-rp/2004 dated December 1, 2004 (the case on the interest protected by law) // The Bulletin of the Constitutional Court of Ukraine. – Kyiv. – No. 6. – 2006. – pp.6-16
  6. Civil proceedings: Judicial practice in civil cases. – Kyiv: LLC In Jure Publishing House, 2008. – No. 1 (7). – pp. 10-11.

 

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