Legalization of Lobbying to Aid Ukraine’s Post-War Recovery

In the next five years, the European Bank for Reconstruction and Development intends to invest between 7.5 billion and 15 billion EUR in Ukraine.

Bayer AG and Fixit (Germany) have also announced million-dollar investments.

BAE Systems (UK), Baykar (Turkey), and Rheinmetall (Germany) have already begun construction of plants in Ukraine.

Interest in investments in the construction industry has been expressed by Rolls-Royce (UK), Chicago Atlantic (USA), and Wasatch Group (USA).

Thousands of other companies around the world are preparing to participate in the recovery of Ukraine.

However, investments coming into Ukraine depend not only on the course of hostilities and the outcome of the war but also on the levels of  corruption and regulatory risks within the country. Therefore, to ensure that the dialogue between foreign business and the Ukrainian government is transparent and practical, the Group of States against Corruption (GRECO) and the European Commission have recommended that Ukraine regulate relations between business and political institutions and legalize the lobbying market.

Our law firm, which has been providing services in the sphere of government relations for almost 20 years, participated in the working group preparing the draft law on the regulation of lobbying activities at the Verkhovna Rada Committee on Legal Policy.

We serve as a kind of protective umbrella for business, so we naturally supported the legalization of lobbying, which will enable the creation of a market of legal influence, transparent mechanisms, regulating tools, and finally eliminating behind-the-scene agreements involving top officials.

Legal lobbying opens doors for everyone, not just a few. When lobbyists from one business see the work of others, it has a qualitative impact on the sphere, and players engage in intellectual competition through debates, ideas, and inventive approaches. The arrival of foreign companies in Ukraine will also raise the standards for lobbying practices.

The lobbying law has already been adopted by Parliament.

We expect the creation of a Transparency Register. Its launch automatically becomes the moment when our team officially obtains lobbyist status and starts working under new rules that will be transparent and clear to both service consumers in the domestic market and foreign investors. 

The rules of the Ukrainian lobbying model

By its nature, the law on the legalization of lobbying is a framework one. In fact, it defines the status of a “lobbyist,” introduces them into the legal environment, and unfortunately does not provide many opportunities or instruments for activity.

The law enables lobbying only by individuals who have obtained lobbyist status. Lobbyists can be both private individuals or companies, including foreign ones that have their representative offices in Ukraine.

Such status will be obtained by entering information about the lobbyist to the Transparency Register, which will be maintained by the National Agency on Corruption Prevention. It will contain not only information about lobbyists but also reports on their activities.

Similar registries are established in many countries and enable tracking of those who have lobbied for which interests and for what compensation.

In the EU, such a tool, the EU Transparency Register, was launched by the European Parliament and the European Commission in June 2021. It is an open database of groups and organizations that influence the formation or implementation of EU policies and laws. So, as of February 2024, it has nearly 12,500 registered businesses, non-governmental organizations, law firms, lobbying companies, private individuals, research institutions, associations, and personal advisors.

The data in the Ukrainian Transparency Register will be free, open, publicly available (excluding personal data), in Ukrainian and English. Access to the Register on the official NACP website will be available 24/7.

Who cannot be a lobbyist and what cannot be lobbied in Ukraine

▪ Lobbying without registration in the NACP Transparency Register will be considered illegal.

▪ Political parties, media, religious organizations, and election candidates will not be allowed to be lobbyists or promote their interests through lobbyists.

▪ Lobbying will be prohibited for officials (including former ones within a year of dismissal), individuals with a criminal record, citizens and companies from the aggressor state (i.e., Russia), and sanctioned individuals.

▪ The activities of non-governmental associations and various types of non-profit organizations will not be considered to be lobbying if they do not pursue commercial interests.

▪ Lobbying for the announcement of mobilization, imposition of martial law, use of troops, declaration of war, conclusion of peace, and changes to Ukraine’s territory will be prohibited.

▪ The law will also not apply to activities carried out in connection with obtaining, using, monitoring, providing, and utilizing international technical assistance, implementation of projects and programs of international technical assistance.

▪ Administrative regulations and administrative enactments cannot be lobbied. 

The rights of lobbyists in Ukraine

A significant signal for foreign business is the statutory recognition of the lobbyist’s rights, and consequently, the opportunities for the employer.

The lobbyist is granted the right not only to enter administrative buildings but also to participate in discussions related to lobbying.

It involves more than just showing up in person for a meeting; it also involves having the capacity to express ideas clearly, provide arguments and defend a position.

An equally important novelty is the regulations that open up the possibility for foreign investors not only to discuss their wishes like “it would be good if it were so”, but also to directly specify “how.”

A lobbyist has the right to initiate the preparation of draft regulations. Moreover, we perceive this regulation not only as a unilateral right of the lobbyist, but also as a mutual obligation for the official to react to our initiative and start dialogue.

We believe that this opens up new opportunities for international companies, both at the stage of entering the Ukrainian market and in the process of operating in our country. Internal regulations of international companies often require alignment with Ukraine’s regulatory legal framework.

Lobbyists have also been granted the right to freely disseminate information about lobbying in the media and on the Internet. This opens new opportunities for shaping objective public opinion on the regulation of specific issues, especially if they relate to entire economic sectors or socially sensitive matters.

This option can be seen as a tool for overcoming misunderstandings between business and consumers and seeking mutually-beneficial compromises. This is extremely important for responsible businesses and global brands, which have not only business, but also social capitalization.

Any business or business association can conclude a contract with a lobbyist, except for businesses and individuals associated with the aggressor state, sanctioned individuals, or engaged in terrorist activities.

Lobbyists will have the opportunity to receive remuneration for their work. However, the law prohibits setting the amount of remuneration based on the results of lobbying.

It is important that the financing of lobbying cannot come from funds and other resources received from top officials and civil servants, state and local budgets, or from the aggressor state, and from companies and organizations associated with it.

The law enables the lobbying of private commercial interests, including the interests of the lobbyist (him/her).

Thus, it is evident that business, working in tandem with lobbyists and collaborating closely with the government, can prompt the phenomenon of rapid economic growth, similar to that in South Korea. It also developed on the remnants of the war. In a record amount of time, the state of Korea established a robust economy, positioning itself among the top 20 strongest countries globally in terms of GDP. We believe that Ukraine’s chances of doing so are no worse.

But like any other business, lobbying requires proper government control. The National Agency for the Prevention of Corruption will monitor the activities of lobbyists, and authorised officials will draw up reports on offences. The relevant law has already been approved by Parliament and signed by the President of Ukraine.

It will come into force simultaneously with the main lobbying law, but no later than 1 January, 2025.

Overall, we note that the adopted lobbying law and its implementation are a signal to partner countries with regard to Ukraine’s ability to implement reforms and its readiness to work according to international standards.

We are optimistic about the law despite the fact that it has drawn criticism from colleagues in the legal market and from Ukraine’s civic society. Our team is a member of the working group of the Verkhovna Rada Committee on Legal Policy, which is already developing respective legislative initiatives to amend the adopted law and improve the lobbying services market.  And this is just the beginning…

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