UPD. MPs supported the draft law with 278 votes.
At the end of July, the Parliament registered and almost immediately adopted as the basis draft law No. 7605, which is meant to optimize and improve upon the forced alienation of property during martial law. We explained what requisition was and the peculiarities of this process before, and now let’s see what the legislators are trying to change. MPs have already submitted amendments, and the designated committee recommended adopting the draft law in the second reading.
How is the requisition carried out now?
During martial law or a state of emergency, the government can alienate real estate, transportation, individually defined property (such as a phone, a laptop, a watch, etc.) from the owner. Those whose property was alienated must receive full reimbursement of its value from the state budget: this right is guaranteed by the Constitution.
Depending on the circumstances, the cost may be compensated:
- before the alienation;
- within five years after the martial law is lifted;
- within one year after the cancellation of the state of emergency.
The military command decides which property should be alienated in agreement with the local state administration or the executive body of the local council. Where hostilities are in progress, such consent is not required.
After the owner, authorized persons of the military command and the body that approved the decision signed the act of forced alienation of the property, it becomes the property of the state.
What is proposed?
The draft law proposes to determine a special procedure for alienation of equipment that is used or can be used for the purposes of the defense-industrial complex. A mandatory condition for alienation is the risk of interruption of the functioning of such property.
It is planned that this equipment will only be alienated based on the decision of the National Security and Defense Council of Ukraine. The property will become state property from the date of entry into force of the NSDC decision. In the future, in exceptional cases, the requisitioned equipment will be transferred to the management of the Asset Recovery and Management Agency, for a period of no longer than one month from the day of the cancellation or termination of martial law.
Compensation for forcibly alienated property (any property, not just equipment) under martial law will be provided if its location, as indicated in the act of requisition, is not in the temporarily occupied territory as of the date of compensation.
In addition, the new version of the Law proposes to eliminate part of the norm of Article 10, which defines the period during which the state is obliged to compensate for forcibly alienated property during a state of emergency (one year).
Analysis of the submitted amendments and risks of the draft law
The amendments submitted for the second reading eliminate part of the risks contained in the draft law adopted as a basis.
- The “risk of interruption of functioning” of property, as a mandatory condition for requisition, is proposed to be associated with the threat of temporary occupation of the territory or settlement where such property is located (provided that they are located no further than 30 km from the area of hostilities or from a temporarily occupied territory). This will narrow the scope for possible abuses by the National Security and Defense Council when justifying the alienation of property;
- The committee took into account the amendments regarding the exclusion of changes to the procedure for compensation of the value of alienated property during martial law or a state of emergency from the draft law. Such provisions would significantly violate the rights and interests of the owners of property subject to alienation, and depriving a person of the right to compensation contradicts Art. 41 of the Constitution of Ukraine, according to which anyone is guaranteed restitution of alienated property without restrictions;
- MPs decided to abandon the idea of transferring requisitioned property to the ARMA management. This is a valid suggestion, considering that such powers contradict the Agency’s status. It manages assets that have been seized/confiscated in criminal proceedings or seized by a court decision, rather than assets alienated into state ownership by a decision of the NSDC.
Secondly, it was assumed that the requisitioned equipment would be transferred to the Agency “in exceptional cases.” However, the draft law does not specify which cases should be considered exceptional, which would lead to an ambiguous interpretation of the norm and problems with its application in practice.
Despite this, draft law No. 7605 still contains many risks and is unlikely to improve the requisition procedure.
- The draft law does not specify which property belongs to the category of “equipment that is used or can be used for the purposes of the activity of the defense-industrial complex.” Moreover, during the second reading, it is proposed to replace the term “equipment” with “movable property,” which is even broader in scope. Under such condition, the risk arises that private or municipal enterprises whose activity is not connected with the military-industrial complex will have to give up any property which can potentially be used in this sector — from devices, machines, and tools, to computers or even vehicles. Such uncertainty will threaten possible abuses on the part of the NSDC regarding the alienation of property into state ownership.
- It is also unclear why the decision on the forced alienation of this “equipment” will be made exclusively by the NSDC, while other subjects remain outside the process. In practice, due to the lack of lists or clear criteria for assigning certain property to the category “can be used for the purposes of military operations,” its requisition can be carried out both according to the “new” mechanism — based on the decision of the National Security and Defense Council, and under the current one — based on the decision of the military command . This will lead to uneven application of the norm and the emergence of contradictions between departments, which will not contribute to the preservation of property, although that is one of the main goals of the draft law.
- Ownership of such equipment or movable property will arise after the implementation of the decision of the National Security and Defense Council, and not after the owner signs the requisition act. As a result, the latter may not even suspect that their property no longer belongs to them.
- There are also issues with the proposed optimization of the decision-making procedure concerning requisition. It will go as follows:
- The military administration of the locality formulates proposals for property requisition;
- It coordinates them with the oblast military administration.
- It submits the proposals to the NSDC.
- The NSDC votes at the meeting.
- The adopted NSDC decision is put into effect by the decree of the President of Ukraine.
Instead, according to the current version of the Law, in an area with active hostilities (that is, when there is a risk of temporary occupation of the territory or locality), forced alienation is carried out at the decision of the military command without mandatory consent of other agencies. Thus, the procedure proposed by the draft law does not optimize, but complicates the procedure for making decisions on property requisition.
- In addition, authorizing the NSDC to make decisions on forced alienation of property is not in line with the Law of Ukraine “On the Legal Regime of Martial Law” (which the draft law references, by the way). It provides that measures such as forced alienation of property can be carried out exclusively by military command together with military administrations with the involvement of executive bodies and local self-government bodies.
Despite the elimination of a few controversial items from draft law No. 7605 before the second reading, it still contains risks of potential abuses on the part of the agency making decisions on the forced alienation of property, and the proposed mechanism will not contribute to the achievement of the draft law’s objectives. Some of its provisions are inconsistent with the provisions of the Law “On the Legal Regime of Martial Law,” and the wording is inconsistent with the principle of legal certainty and allows ambiguous interpretation of the norms.
Therefore, we recommend rejecting the draft law in the second reading.