EVERLEGAL successfully defended the interests of a top-100 Ukrainian agroholding
In April 2023, the team of the EVERLEGAL practice of agricultural and land law successfully defended the correct position on the moment of entry into force of land lease agreements concluded after 1 January 2013 within the framework of case № 357/8277/19 at the level of the Grand Chamber of the Supreme Court.
Prior to this, courts were largely guided by the decision of the Supreme Court of Ukraine dated 13 June 2016 in case № 6-643цс16, which did not comply with land lease legislation in force since 2013.
History and complexity of the dispute in case № 357/8277/19
In 2013, EVERLEGAL client, one of the subsidiaries of one of the leading agroholdings in Ukraine – Agromino, concluded a land lease agreement with its owner, and in 2015, registered the right to lease the land in the State Register of Rights to Real Property and subsequently used this land for the cultivation of agricultural crops.
At the end of February 2018, the owner of the leased land together with a group of other landlords appealed the decisions of the state registrars on the registration of the client’s right to lease their land plots to the Anti-raider Commission under the Ministry of Justice of Ukraine, which, not justifying its name, satisfied this complaint and canceled the corresponding decisions of the state registrars, effectively depriving the client of the right to lease. Immediately on the day of issuance of the relevant order by the Ministry, the right to lease the land plots of the complainants was registered by another tenant.
EVERLEGAL team challenged in court both the order of the Ministry and the land lease agreements concluded with the new tenant, however, during the consideration of these legal proceedings, the disputed land plots were divided or merged, and new land lease agreements were concluded with regard to them, which forced the legal team to file new claims on behalf of the client regarding the plots formed as a result of division/merger, one of which was considered in the case No. 357/8277/19.
What conclusions were provided by the Supreme Court in case No. 357/8277/19?
The decision of the Supreme Court in this case provides several conclusions that should be taken into account in disputes related to land lease and even in disputes related to real estate:
- Starting from 1 January 1 2013, the right to lease a land plot, not the lease agreement itself, is subject to state registration. The land lease agreement concluded after 1 January 2013 is considered concluded from the moment the parties have agreed on all its essential terms and signed it in a prescribed simple written form, unless otherwise agreed between the parties, and not from the moment of state registration of the right to lease, as incorrectly indicated by the Supreme Court in its decision of 13 June 2016 in the case No. 6-643цс16. The registration of the right to lease affects the emergence of this right.
- In case the Ministry of Justice of Ukraine cancels the decision of the state registrar on the registration of the right to lease a land plot and subsequently the corresponding order of the Ministry is recognized it as illegal in court, the right to lease is valid from the moment of the initial registration in the State Register of Rights to Real Property,, since the cancellation of such order restored the validity of the state registration of this right. These conclusions are generally applicable to all cases of cancellation by the Ministry of Justice of Ukraine of decisions on the state registration of rights on real property.
- In case of a dispute over the right to lease a land plot, the reclaiming the plot from the illegal possession of the subsequent tenant could be applied to protect the rights of the initial tenant, since the registered right to lease land is a property right and the methods of its protecting could be those that are inherent to property rights. In this case, the reclamation of the land plot fully restores the violated rights of the initial tenant. If such a claim is made, there is no need to challenge the lease agreement with the subsequent tenant, as a court decision on the reclamation of the land plot in this case will be the basis for making the necessary changes to the State Register of Rights to Real Property. At the same time, this does not mean that challenging the lease agreement with the subsequent lessee is an improper way of protecting rights in a similar situation, it just cannot be applied simultaneously with reclamation.
- If the land plot belongs to a natural person, and the initial and subsequent tenants are legal entities, the dispute over the reclamation of the plot is subject to consideration in civil proceedings, since in this case, the subject of the dispute is the land plot, the owner of which is a natural person as a party to the land lease agreements (both the initial one concluded with the plaintiff and the two subsequent ones concluded with the defendant), and the subject of the dispute directly concerns the rights and obligations of the land plot owner.
- Based on the norms of Article 110 of the Land Code of Ukraine, the division of a land plot does not terminate either the tenant’s right to it or the validity of the land lease agreement, since the entire land plot leased was divided and entered into two formed land plots. This conclusion can also be applied in the case of merging land plots and not only with regard to the right to lease, but also to any other rights to a land plot (such as the right of permanent use, emphyteusis).
You can read the full text of the decision of the Supreme Court in case No. 357/8277/19 at the following link: https://reyestr.court.gov.ua/Review/110367952.
The team of EVERLEGAL, specializing in agricultural and land law and headed by Svitlana Teterya, worked on the case.