Two codes contradict each other
As of January 1, 2004, new Civil and Economic Codes have taken effect in Ukraine, leaving lawyers, economists, and businessmen confused. How should one use two codes of equal legal effect that regulate the same relations, but differ which significantly and sometimes even contradict each other? In particular, foreign experts believe that the Economic Code mostly represents the Soviet economic and legal schools. In this connection, at numerous forums and round tables held after the approval of the two codes lawyers and businessmen insisted on harmonizing the two laws.
Consider some of the discrepancies. Under the Economic Code, there are “commercial” and “non- commercial” enterprises, while the Civil Code mentions “entrepreneurial” and “non-entrepreneurial” enterprises. Such loose use of terminology can provoke unpredictable legal conflicts. Of special note is the fact that the Economic Code does not reflect the interests of businessmen (assurances that were made in the parliament days before its approval did not materialize: the code primarily protects the state). How else should one interpret the clause stating that state enterprises cannot be declared bankrupt? This despite the fact that they are “full-fledged subjects of economic activity” on a par with all others.
It does not take an expert to see how differently the issues of property are addressed in the two codes. In the Civil Code “property” does not depend on the owner, be it the state or an entity or individual: rights are the same for all. Meanwhile, the Economic Code offers a concept of the form of ownership. For example, it envisions “collective property,” which in itself is a step backward rather than a progressive aspect. On the whole, the basic category of property is defined true to the “best” socialist traditions.
The codes also approach such a category of entities as joint-stock companies differently. While the Economic Code envisions open and closed joint- stock companies and lists the differences between them, the Civil Code omits the subject altogether. Joint-stock companies cannot work without weighed and trusted rules regulating the circulation of securities. But the codes also outline those rather vaguely. As a result, only one conclusion prompts itself: additional laws are needed for the normal regulation of economic processes. But whether they ever pass the parliament is anyone’s guess. For example, as The Day learned from Anatoly Fedorenko, member of the Board of the Association of Stock Market Lawyers, the bill On Joint-Stock Companies has been registered in the parliament for the fourth time. However, Fedorenko says that soon the lawmakers will have to amend not only special legislation but also the codes themselves. As he put it, the right of entities granted them under the Economic Code to impose limitations on the circulation of stocks in closed companies is in the interests of those who want to keep foreign investors away from their property.
“With the approval of the two new codes the judges will have the most difficult time,” General Director of the Ukrainian Legal Information Group Volodymyr Derzhavin is convinced. Moreover, in an interview with The Day he opined that it will be even more difficult for businessmen and owners of joint- stock companies to grasp the content of the new codes and make the correct decisions independently.
In criticizing the authors of these codes, many critics, however, find a serious justification for them. In their view, before adopting such vital documents as the Civil and Economic Codes the public at large should have considered and discussed many issues. Virtually every developed nation has decided for itself what kind of economic miracle it wants. What kind of economic model do we want for ourselves? Unfortunately, on this issue thus far Ukraine has no fundamental and realistic studies, which the lawmakers could rely on. It appears they were moving toward their goal almost blindly. Had they started off from these issues, the codes would have been drafted for specific goals and not aimlessly. Perhaps the collision of the two codes will cause a spark that will illuminate not only the problems but also ways to solve them.
