NBU’s inaction may become the grounds for bank shareholders’ appeal to international institutions on receiving compensation for the value of lost assets.

According to the Deposit Guarantee Fund (hereinafter – “Fund”), a procedure was launched for the liquidation of 94 banks (more than 50% of the total number) during 2014-2017. The National Bank of Ukraine (hereinafter – “NBU”) carried out total liquidation in the name of “banking system purification”. 90 banks are currently under liquidation. Another three are under provisional administration (including Unison and Financial Initiative, whose liquidation by the Fund was prohibited by courts). One bank (Astra) was sold to an investor.

What is required to file a thorough claim (which will be considered and granted) with court?

First of all, it is required to determine the type of “international institutions”. As regards the European Court of Human Rights, all domestic remedies in Ukraine must be exhausted on filing an application and, accordingly, must be refused. As regards the merits of a case, it appears that key factors, the presence of which it to be proved to court, include: 1) establishment of the fact of inaction and its illegality; 2) proof of a cause and effect relationship between the loss of assets, damage and bank’s actions/inactions; 3) proof of NBU’s guilt in actions that entailed plaintiffs’ claims.

It is expected that if such litigation processes are to be successful for anyone, it will be one-off complex cases. In general, it is unlikely to impose any heavy liability for this category of cases on the state represented by NBU.

 Ihor Kravtsov, Head of Dispute Resolution, exclusively for “Yurydychna praktyka”  №25 від 19.06.2018