5 Closures of Rotterdam+ Case

Recently, the High Anti-Corruption Court closed the first episode in the case on abuse of UAH 19 bln paid by electricity consumers — the Rotterdam+ case.

This case concerns the adoption of Resolution No. 289 by the National Commission for State Regulation of Energy and Public Utilities; according to the prosecution, the price of coal for Ukrainian thermal power plants unreasonably included transportation costs under the resolution. According to the investigation, because of this, consumers overpaid more than UAH 18 bln to a number of companies purchasing coal, including DTEK.

On October 9, the panel of judges of the HACC announced the decision, which closed the criminal proceedings due to the expiration of the terms of pre-trial investigation. The judges decided that the prosecutor filed an indictment in court after this period had expired, and in accordance with Article 284, part 1, clause 10 of the Criminal Procedural Code of Ukraine, this constitutes grounds for closing the case.

The HACC Appeals Chamber commenced the appellate review of this decision on November 14, 2023.

However, is everything so clear in the HACC decision? Are there perhaps grounds for overturning the decision of the court of first instance on the closure? Let’s find out.

What about the deadlines in the case? What do “Lozovyi’s Amendments” have to do with them?

The investigation of the case started in March 2017. It was back then that we found out about the probable facts of unreasonable overpricing of coal for Ukrainian power plants.

The pre-trial investigation lasted almost 5 years, and during this time, NABU detectives gradually established new facts and new defendants in the case. This required them to enter new information into the Unified Register of Pre-Trial Investigations every time. Thus, in 2017–2019, in addition to the first one, seven more criminal proceedings were registered, which, as a result, were consolidated with the first one, opened in March 2017.

However, the key point was that it was in this interval that the Verkhovna Rada adopted the notorious “Lozovyi Amendments,” which we have repeatedly talked about and called for their reasonable application in consolidated criminal proceedings.

These amendments to the Criminal Procedural Code of Ukraine established a new procedure for extending the terms of the pre-trial investigation. Namely, they should be extended by the investigating judge if it is a question of extending the terms to 6 and up to 12 months. The law that introduced the relevant amendments contained an indication that they did not have retroactive effect and applied to cases in which information about a criminal offense was entered into the Unified Register of Pre-Trial Investigations after the introduction of these amendments.

In addition, Article 284, part 1, clause 10 of the Criminal Procedural Code allowed closing the proceedings if, from the moment of serving a person with a suspicion notice until the transfer of the indictment to the court, the terms of the pre-trial investigation expired.

Actually, the issue of interpreting the special instruction on the temporal application of the amendments became the stumbling block for the parties to the case.

What motivated the panel of judges of the HACC to close the case?

The judges’ motives for closing the case can be divided into two parts. The first part concerns the motivation to close the case due to the extension of the terms of the pre-trial investigation by the prosecutor, who, according to the judges, is not an authorized entity. The second part concerns the court’s assessment of the impact of prosecutors repeatedly closing the case during the investigation on the terms of the pre-trial investigation.

Regarding the extension of the terms of the pre-trial investigation by an unauthorized entity 

The legislator did not give a clear answer as to how to extend the terms in the consolidated proceedings that were registered both before the entry into force of the “Lozovyi’s Amendments” and after. As far as the judicial practice is concerned, the HACC investigating judges refused to extend the terms of the investigation in similar situations, referring to the lack of powers to do so.

Information about the criminal proceedings, under which the indictment was sent to court in the Rotterdam+ case, was initially entered into the Unified Register of Pre-Trial Investigations before March 16, 2018. But even after the consolidation with other criminal proceedings, after this date, SAPO prosecutors extended the terms of the pre-trial investigation through the decisions of the heads of the prosecutor’s office.

This was one of the reasons why the HACC panel of judges closed the case.

In October 2022, the Joint Chamber of the Criminal Cassation Court within the Supreme Court (hereinafter referred to as the CCC) concluded that the investigating judge, and not the head of the prosecutor’s office, should extend the terms in consolidated proceedings, as this strengthens human rights guarantees in criminal proceedings.

The fact is that in the first episode of Rotterdam+, the suspicion notices were served on August 8, 2019. The SAPO prosecutor, instead of appealing to the investigating judge to extend the terms of the pre-trial investigation, appealed to the SAPO Head. Therefore, the panel of judges effectively declared the following resolutions of the SAPO Head, which extended these terms, to be illegal: dated December 8, 2019; February 8, 2020; April 8, 2020; June 8, 2020; and August 8, 2020.  

For the case, this means that the terms were not extended at all, and therefore the investigation should have been completed on November 8, 2019, either by closing the case or transferring the indictment to the court. None of these actions were performed within the specified time.

Regarding the expiration of the terms due to repeated suspension and closure of the case 

This was not the only reason for the decision of the panel of judges. The Rotterdam+ case was repeatedly suspended and closed at the initiative of SAPO prosecutors. As a result, even prosecutors stated that the deadline for the pre-trial investigation had been exceeded.

The court assessed that SAPO prosecutors closed this criminal proceeding:

1)    on August 27, 2020, due to the impossibility to prove causing losses of UAH 19 bln and due to the expiration, according to the prosecutor, of the terms of the pre-trial investigation;

2)    on January 21, 2021, due to the impossibility to prove the unlawfulness of adopting the Resolution No. 289 of the National Commission for State Regulation of Energy and Public Utilities;

3)    on April 9, 2021, due to the impossibility to prove the guilt of the defendants, the direct damage caused, and further money laundering;

4)    on May 20, 2021, due to the impossibility to prove the guilt of the defendants and the expiration of the terms of the pre-trial investigation.

The conclusions of the prosecutor in the last resolution were subsequently confirmed by the investigating judge, indicating that each day of cancellation of the decision to close the proceedings should be included in the terms of the pre-trial investigation. Since there were 4 closures in total, and as of August 27, 2020, there were only 3 days left out of the 12 months, the specified period expired.

The panel of judges of the HACC considered this conclusion of the investigating judge. It also took into account the conclusion of the CCC within the Supreme Court dated April 3, 2023, which was disappointing for the prosecution; according to it, the period between the closure of the proceedings in which there are suspects and the cancellation of this decision by the prosecutor should be included in the terms of the pre-trial investigation.

Senior prosecutors have canceled the closure of the Rotterdam+ case three times. Therefore, if we follow the logic of the mentioned resolution of the CCC, the time intervals 21.01.2021 — 25.01.2021 (5 days), 09.04.2021 — 15.04.2021 (7 days), and 20.05.2021-22.09.2022 (491 days) should be included in the terms of the pre-trial investigation.

These points gave grounds for the panel of judges to believe that the terms had expired long before the indictment was submitted to the court.

Chronology of calculating terms in the Rotterdam+ case

On August 8, 2019, the defendants were served with suspicion notices;

On August 3, 2020, the proceedings were suspended for 13 days.

On August 8, 2020, the maximum twelve-month period of the pre-trial investigation should have expired;

On August 20, 2020, the proceedings were resumed and suspended the same day.

On August 27, 2020, the proceedings were resumed and closed for 62 days.

On October 27, 2020, the closure was canceled by the investigative judge of the HACC and suspended by the prosecutor for 87 days.

On January 21, 2021, the proceedings were resumed and closed for 5 days.

On January 25, 2021, the closure was canceled by the deputy head of the SAPO and suspended for 116 days.

On April 9, 2021, the proceedings were resumed and closed for 7 days.

On April 15, 2021, the closure and resumption were canceled by the deputy head of the SAPO.

On May 20, 2021, the proceedings were resumed and closed for 491 days.

On September 22, 2022, the closure was canceled by the SAPO head.

What were the motives of the judge who disagreed with the decision of the majority in the panel?

Two judges agreed to close the case, while panel member Viktor Nohachevskyi did not agree with them.

In his separate opinion, the key motive was that the court was not authorized to adopt such a decision at all in the preparatory proceedings.

These powers are defined in Art. 314 of the Criminal Procedural Code of Ukraine. They indicate that the court may close the case on the grounds specified in clauses 5-8, 10 of part one or part two of Article 284 of the Criminal Procedural Code of Ukraine. However, clause 10, to which this Article refers, concerns an entirely different ground for the closure of criminal proceedings, namely the presence of a resolution of an investigator or a prosecutor, which was not canceled, to close the criminal proceedings. This clause appeared in the text of Article 314 simultaneously with the addition of clause 10 to Article 284 of the Criminal Procedural Code of Ukraine. At that time, the “Lozovyi’s Amendments” did not exist, and the possibility of closing criminal proceedings after the expiration of the terms of pre-trial investigation appeared in Art. 284 of the Criminal Procedural Code of Ukraine much later, and under the same clause 10.

Therefore, Viktor Nohachevskyi believes that after the expiration of the terms of pre-trial investigation, only the prosecutor can close the case at the stage of pre-trial investigation. The court has the opportunity only to declare inadmissible evidence collected outside the investigative deadlines.

Another argument of the panel was that the charges of registered criminal proceedings after March 16, 2018, were derived from the main one, that is, they only expanded the primary charges set out in 2017. Therefore, such a consolidation did not indicate the abuse of power by the pre-trial investigation bodies.

The judge mentioned the relevance of the proceedings to remind that the amount of alleged damage caused is 3% of all expenditures of the national budget of Ukraine for 2015. Therefore, a judicial review should be conducted to clarify the circumstances of the events of such a scale.

Which decisions can the HACC Appeals Chamber adopt?

As we mentioned earlier, now the case is in the Appeals Chamber of the HACC; on November 14, the prosecutor’s complaint against the decision of the panel began to be heard.

Among the key parameters that, in our opinion, the appeal should assess are:

1)    the possibility of closing the case under Article 284, part 1, clause 10 of the Criminal Procedural Code of Ukraine;

2)    whether the terms of pre-trial investigation were properly extended;

3)    the possibility of including the period between the closure of the proceedings with the suspects and the cancellation of the decision to do so in the overall terms of the pre-trial investigation.

Let us share some considerations about this.

Regarding the first parameter.

A special indication in the law on the effect of the “Lozovyi’s Amendments,” including the provisions on the possibility of closing criminal proceedings due to the expiration of the terms of the pre-trial investigation, applies to cases in which information about a criminal offense was entered into the Unified Register of Pre-Trial Investigations after March 16, 2018.

However, as we have already noted, the legislator did not decide on the possibility of applying this ground to close proceedings that were registered before and after March 16, 2018, and subsequently consolidated.

On the one hand, the Joint Chamber of the CCC within the Supreme Court, by a resolution dated October 31, 2022, effectively allowed the application of this provision to such proceedings. On the other hand, the Joint Chamber of the CCC within the Supreme Court, in a resolution dated September 11, 2023, indicated that Article 284, part 1, clause 10 of the Criminal Procedural Code of Ukraine can only be applied to proceedings entered into the Unified Register of Pre-Trial Investigations starting from March 16, 2018. Although this resolution did not analyze the application of these provisions in consolidated criminal proceedings, the judges used clearer wording in formulating their conclusion than the legislator did in the instruction on the temporal effect of the “Lozovyi’s Amendments.”

On April 20 of this year, the panel of judges of the CCC within the Supreme Court formed a legal opinion in a similar case, where the criminal proceedings of 2017 on the basis of the same clause of Article 284 of the Criminal Procedural Court of Ukraine were closed by courts of lower instances. The Court of Cassation indicated that clause 10 could not be applied to this criminal proceeding or to all others that were separated from it into a separate proceeding or consolidated with it and which were registered later. All because this law did not exist at the time of entering information into the Unified Register of Pre-Trial Investigations regarding the specified criminal proceedings. The same opinion, with reference to the decision of the Joint Chamber of the CCC of September 11, 2023, was stated by the CCC panel of judges in its recent resolution of October 10.

This indicates that the matter of the possibility of applying the “Lozovyi’s Amendments” in consolidated criminal proceedings is not fully resolved. The latest practice of the cassation instance is not entirely consistent with the position set out in the resolution of the Joint Chamber of the CCC within the Supreme Court dated October 31, 2022.

Interestingly, the panel of judges of the HACC, when closing the Rotterdam+ case, effectively presumed the possibility of applying clause 10 to it and did not provide a justification for this. Therefore, we can assume that the HACC Appeals Chamber will consider and assess the opinion of the court of cassation applied by the first instance of the HACC and provide arguments about its irrelevance to this case.

This will lead to the recognition of the erroneous application of clause 10 to this case and the possible cancellation of the decision to close the Rotterdam+ case.

Regarding the second parameter.

The first instance, guided by the same legal conclusion of the Joint Chamber of the CCC within the SC dated October 31, 2022, came to the conclusion that the investigating judge was to extend the terms.

On these issues, the practice of the HACC AC is not unambiguous. The predictability of the criminal procedural law becomes more relevant here than ever, since neither prosecutors nor courts had a single vision of who should extend these terms.

For example, in the Oschadbank case, under similar conditions, the panel of judges of the HACC AC overturned the decision to close the case due to the expiration of the terms of the investigation after serving defendants with a suspicion notice. The key reason for the deviation from the above position of the joint chamber was that, at the time of adopting decisions on the extension by the prosecutor of such terms, his actions fell under the concept of “good faith” because he had previously unsuccessfully appealed to the investigating judge.

Although in the Rotterdam+ case, prosecutors did not appeal to the investigating judge, such judicial control was repeatedly carried out. In particular, when contesting the resolutions to close the first episode of the case and during the extension of the terms of the obligations imposed on the suspects in this case, these obligations cannot exceed the terms of the investigation.

The panel of judges of the HACC Appeals Chamber also deviated from the legal position of the Joint Chamber in the case of the Odesa Portside Plant, where the defendant is ex-MP Hranovskyi. The panel indicated that the conclusion could not be applied since it was formulated after the extension of the terms by the prosecutors, so they could not know and predict such a position of the CCC.

This gives reason to believe that the position of the judges of the HACC AC may remain unchanged.

However, we should not exclude the possibility that the panel of judges of the HACC AC will not consider in detail the relevance and applicability of the position of the Joint Chamber of the CCC within the Supreme Court regarding this case. It might not satisfy the appeal of the prosecutor and may uphold the decision of the court of first instance. In this case, the court will be deprived of the opportunity to check during the trial whether the SAPO prosecutors who repeatedly closed this case were right.

Regarding the third parameter. 

One of the arguments of the first instance of the HACC was that, due to the systematic closure of this case by prosecutors, the deadline could have expired back in May 2021.

This conclusion was reached by the panel of judges considering the position of the CCC within the Supreme Court dated April 3, 2023, which stated that the time between the closure of the case and its cancellation should be included in the time of the pre-trial investigation.

The position of the CCC was based on the reasonableness of the terms of criminal proceedings. According to it, everyone has the right that either the accusation against them becomes the subject of consideration as soon as possible, or that the relevant criminal proceedings are closed.

In total, according to our calculations, Rotterdam+ was in a state of closure for more than 500 days, which, from the position of the CCC within the Supreme Court dated April 3, 2023, indicates the unconditional expiration of the terms of pre-trial investigation.

However, we have not found cases where the HACC AC applied this position of the Court of Cassation. Therefore, it is up to the panel of judges of the HACC AC to decide how relevant it is to this case, including the consideration of the last argument provided in the separate opinion of Judge Viktor Nohachevskyi.

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If the appellate instance confirms the legality of the decision of the court of first instance, the prosecutor will have the right to file a cassation appeal, which will ultimately decide the fate of the first episode of the Rotterdam+ case. Thus, the judges of the cassation instance can solve many controversial issues regarding the application of the “Lozovyi’s Amendments.”

In addition to the first episode of this case, the second one may also be directed to the court — on abuse of more than UAH 20 bln. To date, the parties are at the stage of familiarization with the materials of the pre-trial investigation, and the investigating judge has limited its duration to December 29, 2023.