01.07.2015

Recent Novelties in the Field of Legal Regulation Regarding the Regime of Occupied Territories

Topics of this issue:

  • Specifics of the legal status of martial law
  • Procedure for entry to, and exit from, Crimea
  • Changes in the conditions for exercise of economic activity in occupied territories 

1.       Specifics of the legal status of martial law

On 11.06.2015 the Law of Ukraine "On the Legal Status of Martial Law" came into force introducing the procedure for invoking martial law and specifying the peculiarities of work of public and local self-government authorities, citizens and companies under martial law.

Pursuant to Article 1 of the Law, martial law means a special legal status which may be invoked in Ukraine or in its single territories in case of armed aggression or an aggressive threat, danger to state independence of Ukraine or its territorial integrity and envisages to vest in respective public authorities, military command, military administrations and local self-government authorities powers necessary to avert the threat, respond to armed aggression and protect national security, avert the threats to state independence of Ukraine, its territorial integrity, as well as to limit constitutional human and civil rights and freedoms, rights and legal interests of legal entities with specification of the period for such limitations. 

In territories with invoked martial law public bodies – military administrations – may be established in order to ensure the operation of the Constitution and the laws of Ukraine, to ensure together with military command introduction and implementation of measures of the legal status of martial law, defence, civil protection, public order and safety, protection of rights, freedoms and legal interests of citizens. Such administrations shall be established in one or several population centres (villages, settlements cities) where the respective councils fail to perform their duties vested in them by the legislation, including due to actual voluntary dissolution or self-removal from performance of their duties or actual non-performance of the same.

Powers of military administrations include, in particular, introduction of local taxes and duties pursuant to the Tax Code of Ukraine, if a respective council fails to make a decision on the issue, establishment of tariffs for household, utility (except such established by the national commission governing the sphere of power industry and utility services), transport and other services according to procedure and within limits set forth by the legislation, management of municipal property owned by the respective territorial community (except decisions on alienation, including through privatization of municipal property or its lease for more than one year).

It shall be noted that pursuant to the Law, in particular, the following martial law measures may be taken: use of facilities and labour force of companies, institutions and organizations of all ownership forms for defence purposes,  change or their work regime, other changes in production activity or labour conditions pursuant to the labour legislation; expropriation of private or municipal property, seizure of property owned by state enterprises or state economic unions for the needs of the state under martial law pursuant to the procedure established by the law and with issuance of respective confirming documents.

Article 23 of the Law sets forth that expropriation of private or municipal property under martial law invokes subsequent complete compensation of its value, in case its value has not been completely reimbursed previously. If property expropriated from legal entities or individuals survived after repeal of the martial law, former owner or a person authorized by such owner is entitled to judicially demand return of such property on terms specified by the law. Former owners of property expropriated due to martial law are entitled to claim allocation of other property, if possible.

2.      Procedure for entry to, and exit from, Crimea

Pursuant to the Law of Ukraine "On Creation of the Free Economic Zone "Crimea" and on Peculiarities of Exercising Economic Activity in the Temporarily Occupied Territories of Ukraine" and the Law of Ukraine "On Ensuring Civil Rights and Freedoms and the Legal Regime in the Temporarily Occupied Territory of Ukraine" the Cabinet of Ministers of Ukraine adopted its Resolution dated 04.06.2015 No.367 approving the Procedure for entry to the temporarily occupied territory of Ukraine and exit therefrom. It shall be noted that this Procedure applies only to entry to, and exit from, the free economic zone "Crimea". 

Entry to, and exit from, Crimea is permitted only through checkpoints on the administrative border of the free economic zone "Crimea" subject to border and customs control. Pursuant to the Procedure, there are the following border checkpoints – for automobiles – "Kalanchak", "Chaplynka", Chongar", for railway connection – "Kherson", "Melitopol", "Vadim" and "Novoalekseevka".

The procedure for all types of control at the checkpoints is carried out based on the technological scheme which is approved separately for each checkpoint by the head of the national border control point responsible for the respective checkpoint.  

It shall be noted that pursuant to Part 2 Article 10 of the Law of Ukraine "On Ensuring Civil Rights and Freedoms and the Legal Regime in the Temporarily Occupied Territory of Ukraine" entry to, and exit from, the temporarily occupied territory for foreigners and stateless persons is permitted only with a special permit.

This Procedure envisages that a special permit shall be issued in the following cases:

  • relatives or family members of foreigners or stateless persons live in the temporarily occupied territory of Ukraine which is confirmed with documents issued by authorized public bodies of Ukraine;
  • close relatives or family members are buried in  the temporarily occupied territory of Ukraine which is confirmed with respective documents;
  • death of close relatives or family members who lived in the temporarily occupied territory of Ukraine which is confirmed with respective documents;
  • ownership rights to real estate located in the temporarily occupied territory of Ukraine;
  • necessity to participate in protection of national interests of Ukraine for purposes of peaceful settlement of the conflict, liberation of the territory of Ukraine from occupation or   humanitarian policy issues (only upon petition of, or coordination with, the Ministry of Foreign Affairs of Ukraine);
  • necessity to exercise diplomatic or consular functions, in particular, within the framework   of activity of international organizations where Ukraine is a member (only upon petition of, or coordination with, the Ministry of Foreign Affairs of Ukraine);
  •  regular visits to the temporarily occupied territory of Ukraine as railway employees. 

Therefore, entry to, or exit from, Crimea outside of the checkpoints listed above constitutes violation of the regime of the temporarily occupied territory pursuant to Ukrainian legislation, same as entry to/exit from by a foreigner without special permit (for example, as a crew member of a marine vessel or an aircraft). It means that, in particular, any marine vessel or aircraft that crosses the Crimean border violates the regime of the temporarily occupied territory, same as any foreign citizen – crew member of such marine vessel or aircraft, as only foreign railway employees are entitled to obtain the special permit. We have repeatedly explained the risks of violating the regime of the temporarily occupied territory in our previous issues.

3.      Changes in the conditions for exercise of economic activity in occupied territories 

On 03.06.2015 Ukrainian Parliament registered the bill "On Ensuring Civil Rights and Freedoms and the Legal Regime in the Temporarily Occupied Territory of Ukraine (regarding increased control over movement of persons and freights (goods) through the temporarily occupied territory)". This Bill envisages, in particular, to extend the definition of the occupied territory with single districts, cities, settlements and villages in Donetsk and Lugansk regions which shall be determined by a decision of the Ukrainian Parliament. It shall be reminded that pursuant to Resolution of Ukrainian Parliament dated 17.03.2015 No. 254-VIII single districts, cities, settlements and villages in Donetsk and Lugansk regions, in which a special procedure for local self-government has been introduced pursuant to the Law of Ukraine "On the Special Procedure for Local Self-Government in Single Districts of Donetsk and Lugansk Regions" until withdrawal of all illegal armed groups, Russian occupation troops and their military equipment as well as fighters and mercenaries from the territory of Ukraine and reinstatement of control by Ukraine over the state border of Ukraine, have been recognized as occupied territories.

The Bill also envisages changes to the procedure for entry to, and exit from, the temporarily occupied territory. Pursuant to the proposed changes, citizens, foreigners and stateless person are allowed to entry to, and exit from, the temporarily occupied territory only based on special permits and through checkpoints. It means that even Ukrainian citizens are obliged to obtain special permits to cross administrative borders with temporarily occupied territories.

Another important change is the complete ban on import/export of goods to, and from, the temporarily occupied territory (except humanitarian aid imported under auspices of international organizations), and abolishment of the regime of a special economic zone in Crimea. Basically, passing of this Bill into law will put a complete stop to delivery of goods to occupied territories.

4.      Conclusions and recommendations

Amid risks of intensified military aggression against Ukraine passing of the Law "On the Legal Status of Martial Law" is an urgent step as it will allow authorities a time-sensitive reaction to emerging threats. At the same time, it is possible that the antiterrorist operation zone and adjacent territories will be the first districts where martial law will be invoked. Companies operating in such territories shall consider that in case of invocation of martial law it might come to limited interference in their activity and property expropriation for military purposes on the part of military command.

After formal regulation of the procedure for crossing the administrative border with the temporarily occupied territory of Crimea entry to, and exit from, the peninsula outside of automobile or railway checkpoints constitutes a violation of the regime of the temporarily occupied territory, same as crossing of the administrative border by foreigners or stateless persons without special permits.  Foreign crews on marine vessels or aircrafts violate, therefore, the regime of the occupied territory during any travel to, or from, Crimea. 

Passing of the bill "On Ensuring Civil Rights and Freedoms and the Legal Regime in the Temporarily Occupied Territory of Ukraine (regarding increased control over movement of persons and freights (goods) through the temporarily occupied territory)" into law in the current version will completely stop any economic activity with the temporarily occupied territories (including parts of Donetsk and Lugansk regions not under control of Ukraine). Therefore, companies that work with enterprises located in the occupied territories shall envisage contract provisions which will allow postponing mutual fulfilment of obligations in case of a legislative ban for commodity circulation with the occupied territories.

It shall be also noted that in case of abolishment of the special economic zone in Crimea the free customs zone regime on the peninsula will be abolished as well. All goods brought to Crimea from foreign countries as transit have been placed in the regime of free customs zone which basically meant that these goods have been put into circulation without payment of customs duties or taxes due to peculiarities of the legislation governing the activity in the free economic zone "Crimea". Abolishment of the free economic zone "Crimea" brings the risk that fiscal authorities will ask suppliers to pay customs duties, levies and VAT for putting goods into free circulation during the time when there was the free economic zone "Crimea".

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Lawyers of interindustry working group “Occupied Territories” of Arzinger Law Firm continue to review legislation and to search for the best solutions for clients, whose economic activity is related to Crimea, to help them to adapt to new conditions and protect their business.


Please do not hesitate to contact us in case of any questions regarding the information above.

Sincerely yours,

Andriy Selyutin

Counsel, Head of South Ukrainian Branch

Lana Sinichkina

Partner