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This article deals with disputes between the customer and the contractor, and does not touch on the painful topic of disputes between construction investors and apartment owners with developers. This material contains not so much advice and considerations on litigation related to construction, as advice on the model of behavior with the contractor during the construction process. The goal is to minimize the risks in the event of a dispute, which may later fall into the courts.

In every dispute there are two parties, and as a rule each party has its own point of view:

Customer’s point of view: the work was not performed in full or of poor quality, we will not pay for it;

The contractor’s point of view: we performed the work in full in accordance with the terms of the project documentation, and the greedy customer refuses to transfer us honestly earned money.

In practice, both of these points of view may relate to reality and coexist in the same case, as there may often be “conceptual” arrangements between the customer and the contractor in addition to the paperwork, which do not always correlate with substantive law. Of course, the court fairly does not take into account such subtle nuances, and takes into account only the provisions of the contract, design estimates and executive documentation, acts and correspondence between the parties.

At the beginning of the dispute, one of the parties usually learns that despite the friendly relations that existed with the counterparty before the dispute, the other party cautiously insured and sent letters about each even minor deviation of the other party from the terms of the contract. It should be noted that such a cautious side acted quite correctly and at the start has a certain advantage over the other. For example: usually the contract stipulates the obligation of the contractor to start work only after the customer has performed certain actions: payment of an advance; transfer of the construction site (front of works), design and estimate documentation, declaration of the beginning of construction works, etc. In the event that the customer has not fulfilled its obligations (or performed but not documented), it will be much easier for the contractor to prove that the deadlines were violated through no fault of his if he provides evidence of notification of the customer’s failure to perform his duties which precede the contractor’s construction work.

What should always be remembered, as almost everyone is faced with this – if the customer  (usually this period is specified in the contract and is 5 days) after receiving the act KB-2V from the contractor did not immediately notify the latter of disagreement with the scope of work or did not state about the identified shortcomings – in the absence of other input data, the customer will most likely need to pay cash. Even if the customer later assessed the situation and sent a statement to the contractor about the identified deficiencies.

This unfortunate situation for the customer follows from the law, in particular Articles 853 and 882 of the Civil Code of Ukraine. The act, sent by the contractor to the customer properly, and not signed by the customer, is the basis for recovery of funds from the customer, provided that the customer did not react in time and did not declare deficiencies in the works specified in the acts. The Supreme Court has repeatedly come to this conclusion (for example: the decision of 24.10.2018 in the case № 910/2184/18, from 16.09.2019 in the case (921/254/18, from 15.10.2019 in the case (921/262/18).

In this case, customers often submit to the court contracts with other contractors and acts of work performed, which confirm (in their opinion) that other contractors were involved after a dispute with the “primary” contractor, and they completed the work started by the problem contractor, or eliminated shortcomings after the problem contractor. Such contracts and acts, of course, cannot be regarded as indisputable evidence that the contractor (the one who was originally involved) did not perform the work properly, and most likely the court will refer to the above articles 853 and 882 of the Civil Code of Ukraine. So, such actions are not superfluous, but they are not a panacea.

Instead, the right step would be for the customer to conduct a comprehensive construction, technical and economic examination before hiring new contractors and continuing construction work (this action can be complicated by time, as the customer under one contract may be a contractor under another contract with the general contractor).

Let’s take another option. The situation with the acts is disputable (in our practice there have been cases when even the fact of signing the act is disputable), the parties do not agree with the scope and / or quality of work performed and according to the amount of debt, neither party submitted an expert opinion. In this case, it would be expedient and logical to conduct a forensic examination to establish the truth – everything is clear here.

Let’s complicate the situation. The same controversial situation with the acts, but the contractor filed a lawsuit with the expiration of some time (possibly a short period of time), and filed a motion for the appointment of an expert. The customer, in turn, submits to the court contracts with other contractors and acts of acceptance of construction work performed. From these contracts and acts it can be understood that after the actual termination of the relationship with the problem contractor, other contractors involved have already performed the work that the “original” (problem) contractor had to perform in accordance with the terms of the contract. That is, the expert will undoubtedly come to the conclusion that the disputed works specified in the contract with the problem contractor have been performed, but will the expert be able to answer the question who exactly performed these works? What to do in such a situation, and whether the court will grant the request for examination in such a case?

The problem is that in the understanding of the Commercial Procedural Code of Ukraine (most likely the situation will arise in the economic process), the Law of Ukraine “On Forensic Science”, Scientific and methodological recommendations on preparation and appointment of forensic examinations and expert studies approved by the Order of the Ministry of Justice Of Ukraine dated 08.10.1998 № 53/5, and the Resolution of the Plenum of the Supreme Economic Court of Ukraine dated 23.03.2012 № 4 On some issues of the practice of appointing a forensic examination, ie in terms of everything relevant to this situation, the examination should be appointed. More precisely, it is necessary to appoint an expertise guided by a purely formal approach, not understanding (or not wanting to understand) the situation, and not fully and comprehensively investigating the circumstances of the case. Is special knowledge in a field other than law required in this case? Of course needed. Will the expertise be able to answer the question in the context of the simulated circumstances of the case? No, he can’t. The court is likely to assume that the customer may not be completely honest, and that he may take action to create a formal work plot for another organization. However, this assumption is only an assumption until the contracts provided by the customer are declared invalid, or the fact of non-performance of work by the organizations involved is not established in other proceedings, such as criminal. In our opinion (subjective, of course), in such a situation, the request for an examination should not be granted, because Part 4 of Art. 853 of the Civil Code of Ukraine provides that in the event of a dispute over the work performed at the request of either party, examination must be appointed. Thus, if the contractor did not immediately exercise his right to initiate an examination, and mentioned this possibility only in court after the lapse of time, it can be stated that the contractor will not behave in good faith, and seeing that work on the site continues, intends to appropriate the results of work (cash for work that is not actually performed).

Let’s look at another common situation. The customer is not satisfied with the cooperation with the contractor. Contracts often contain provisions that allow you to terminate the contract unilaterally out of court (in the case of cooperation with a large customer – such grounds are usually many). Depending on the terms of the contract, in addition to terminating the contract, the customer may also apply penalties and refund advance payments. For example, if the customer is a state or municipal enterprise, or a state body, the contract with such customer will be subject to the provisions of paragraph 19 of the Resolution of the Cabinet of Ministers № 1764 of December 27, 2001 which stipulates that the contractor undertakes to use the received advance (30 percent). purchase and delivery of materials, constructions, products necessary for performance of works within three months after receipt of the advance. At the end of the three-month period, the unused advance amounts are returned to the customer.

However, often the contract does not clearly set out the grounds for termination of the contract and refund of the amount of the advance payment. We are quite often faced with a formal approach to the execution of the contract – for the most part, one mistake that led to the consequences is enough to systematize and put in order the documents and document flow.

The law provides for the possibility of terminating the contract unilaterally on the basis of a court decision. The general rule of termination of the contract by court decision is set out in Art. 651 of the Civil code of Ukraine – essential violation of conditions of the contract. The special rule of termination of the contract applicable to the contract is set out in Part 3 of Article 849 of the Civil Code of Ukraine. The norm stipulates that if during the performance of work it becomes obvious that it will not be performed properly, the customer has the right to set a deadline for the contractor to eliminate defects, and in case of failure of the contractor – to withdraw from the contract and claim damages or instruct correcting the work of another person at the expense of the contractor.

As for the obvious impossibility of the contractor to perform the work within the period specified in the contract, this issue is unique for each case. As for the return of paid funds, in our opinion, the situation here is less ambiguous. The provision of Part 3 of Article 849 of the Civil Code of Ukraine allows to recover the amount of damages from the contractor. However, the concept of loss in this case is not identical to the concept of advance payment. That is, this rule does not allow the termination of the contract with the contractor in connection with a significant violation of the terms of work to recover the amount of the advance paid. In the register of court decisions you can find court decisions, usually of the first instance, in which courts on the basis of this rule upon termination of the contract charge the contractor the amount of advance paid (the legal basis for recovery of the advance is Article 849 of the Civil Code of Ukraine!!!). We do not completely agree that this rule may be grounds for recovery of the advance in this case.

In our opinion, upon termination of the contract on the basis of Article 849 of the Civil Code of Ukraine, advance payments paid by the customer may be considered unreasonably acquired funds, and the provisions of Article 1212 of the Civil Code of Ukraine may be applied to them. This conclusion is contained in the decision of the Supreme Court of June 1, 2021 in case № 916/2368/18.

Of course, disputes in the field of construction are much more diverse, such as: land disputes, disputes over the state registration of rights, disputes with the state architectural and construction supervision and control, disputes with local governments, and so on. However, such disputes are more specific, and may have some uniqueness in each case. Instead, the information in this article will be useful to anyone involved in construction.

This article deals with disputes between the customer and the contractor, and does not touch on the painful topic of disputes between construction investors and apartment owners with developers. This material contains not so much advice and considerations on litigation related to construction, as advice on the model of behavior with the contractor during the […]

Given the current vector of the state apparatus, which is entirely aimed at overcoming any manifestations of corruption in Ukraine, the question of distinguishing the provocation of crime from corruption in general is relevant.

Unfortunately, being in constant reform, the law enforcement agencies of Ukraine suffer from the so-called staff shortage, which, in turn, leads to a negligent investigation of criminal offenses, including those related to corruption, as evidenced by the frequent case law, which all is more inclined to provoke crimes in cases of this category.

In addition, despite the above-mentioned, ongoing process of law enforcement reform, the latter has not been able to move away from the so-called “stick system”. As a result, in the pursuit of the indicator, law enforcement agencies often resort to out-of-court methods of pre-trial investigation of criminal offenses related to corruption, ignoring the provisions of both Ukrainian legislation and international treaties approved by the Verkhovna Rada of Ukraine.

This article will discuss the separation of control over the commission of a corruption offense from the provocation of a crime, and how not to “cross the Rubicon” during the pre-trial investigation of criminal offenses of this category.

So, let’s start with the definition of the concept of interest to us. The current legislation of Ukraine does not disclose the meaning of this term, and the modern legal letter provides various interpretations of the latter. Therefore, we accumulate global and national experience and set out this term in the next edition.

 

A provocation to commit a crime is an active action, which is expressed in inciting a criminal offense and has a cause-and-effect relationship with the commission or attempt to commit a criminal act that the person did not plan to commit before. That is, a situation where the crime would not have been committed without the active participation of law enforcement.

 

The European Court of Human Rights has repeatedly stated its position on this issue, rightly stating that law enforcement agencies should take a passive position when investigating offenses in this category.

Consider the issue of distinguishing the provocation of a crime from the permissible behavior of law enforcement agencies through the prism of the case law of the European Court of Human Rights (hereinafter – ECHR), the Supreme Court and national law.

The main “tool” for gathering evidence during the pre-trial investigation of criminal offenses related to corruption is a number of covert investigative (search) actions in their entirety. A key measure to document a criminal offense in this category is to monitor the commission of a crime.

The legislator in Article 271 of the Criminal Procedure Code of Ukraine noted that control over the commission of a crime may be carried out in cases where there are sufficient grounds to believe that a serious or particularly serious crime is being prepared or committed. Having determined that the forms of control over the commission of a crime are controlled delivery, prompt purchase, special investigative experiment and imitation of the crime situation. However, the legislator specifically stated as an imperative that during the preparation and conduct of measures to control the commission of a crime is prohibited to provoke (incite) a person to commit this crime in order to further expose it, helping a person to commit a crime that he would not commit, if the investigator did not contribute to this, or for the same purpose to influence her behavior through violence, threats, blackmail. The things and documents obtained in this way cannot be used in criminal proceedings. In addition, the law establishes an obligation for the prosecutor to state the circumstances that indicate the absence during the covert investigative (investigative) action of provoking a person to commit a crime, in his decision to monitor the commission of a crime.

Among other things, Article 370 of the Criminal Code of Ukraine provides for criminal liability for provoking bribery, ie actions of an official to incite a person to offer, promise or provide an improper benefit or accept an offer, promise or receive such benefit, to then expose the offender, promised provided an improper benefit or accepted an offer, promise or received such a benefit.

Thus, having enshrined these provisions in the norms of substantive and procedural law, the legislator rightly “warned” law enforcement agencies against provoking crimes.

Although, it should be noted that the monitoring of the Unified State Register of Judgments does not establish convictions under Article 370 of the Criminal Code of Ukraine, which indicates the declarative nature of this legal norm.

 

In accordance with the established international and national jurisprudence, despite the fact that it is impossible to reduce the variety of situations that may arise in the context of our research, we have developed two criteria for aspects of incitement: substantive and procedural. (ECHR judgment: “Matanović v. Croatia”, § 122; “Ramanauskas v. Lithuania (§ 2)”, § 55).

The material criterion of provocation is disclosed on the basis of the above definition and consists in the commission of various, active actions of law enforcement agencies that incited a person to commit or attempt to commit a criminal offense.

For a clearer idea of the position of the courts on this criterion, it is advisable to refer to the case law and consider the latter on specific examples.

Thus, the ECHR defines provocation as opposed to lawful undercover investigation as a situation where the agents involved – law enforcement officers or persons acting at their request – are not limited to a purely passive investigation of illegal activity, mostly in passive form, but exert some influence on the person by provoking to commit an offense which she would not otherwise have committed in order to record it, ie to obtain evidence and to prosecute (“Ramanauskas v. Lithuania”, [GC] § 55). In another judgment, the ECHR states: “In order to establish whether the investigation was “purely passive”, the Court examines the motives justifying the intrusion operation and the conduct of the authorities which carried it out. In particular, the Court finds whether there were objective doubts that a person had been involved in criminal activity or inclined to commit a criminal offense” (“Bannikova v. Russia, § 38”).

Among other things, the ECHR considers that the conduct which can be considered as provoking a person to commit a crime of this category, regardless of whether the undercover agent was a law enforcement officer or a person who acted at their request, the following actions: the law enforcement agent contact with a person prosecuted (“Burak Hun v. Turkey”, § 44; “Sepil v. Turkey”, § 34); Following the previous refusal of the person prosecuted to commit the crime, the law enforcement agent renewed the motion to commit the said acts (Ramanauskas v. Lithuania) [GC], § 67, compare with “Ramanauskas v. Lithuania (no. 2)”, where the person against whom the criminal prosecution was carried out asked to be contacted); the law enforcement agent changed the value above the usual “market” for services/goods (“Malininas v. Lithuania”, § 37).

 

Another important issue in distinguishing provocation from the lawful conduct of law enforcement is whether agents acting on behalf of the state can be considered to have “joined” or “infiltrated” criminal activity, or whether they have caused it. In the first case, the mentioned action remains within the framework of secret development. As an example, in “Milinienė v. Lithuania”, §§ 37-38, the ECHR ruled that although the police had influenced the course of events, in particular by providing the agent with the technical means to record the conversation and prove that the applicant was offered a monetary incentive, he “joined” the criminal activity at the request of an individual. The man complained to the police that the person being prosecuted demanded a bribe from him to resolve his case, and only after receiving this complaint did the Deputy Attorney General authorize the operation to verify its validity (for such a reason, see “Sequier v. Portugal” (dec.); “Eurofinacom v. France” (dec.)).

The manner in which a secret police operation was initiated and conducted should be taken into account in determining whether a person who has been prosecuted has fallen victim to a trap. The lack of a clear and predictable procedure for obtaining permission, conducting this investigative measure and controlling it inclines the weight of justice to classify the impugned facts as a trap: see, for example, “Ramanauskas v. Lithuania”, [GC] § 64, at who was not allowed to say for what reason or for what personal reason the undercover agent had contacted the applicant on his own initiative without reporting it to his management; “Tchokhonelidze v. Georgia”, § 51, in which the Court found that there was no official authorization and control of the undercover operation in question.

 

The procedural criterion of provocation is the procedure of proving, establishing the latter in the actions of law enforcement agencies and the ability of the court to verify the presence or absence of the latter.

In cases involving the above-mentioned traps, Article 6 of the Convention can be complied with only if, during the trial, the applicant could have invoked the fact of provocation, for example by objecting or otherwise. Thus, it is not enough to comply with general guarantees, such as equality of arms or the rights of the defense (“Ramanauskas v. Lithuania”, [GC] § 69). In such cases, the ECHR ruled that proving the absence of provocation lay with the prosecution, provided that the defendant’s allegations were not plausible.

If certain signs indicate and confirm the provocation, the judicial authorities should verify the facts of the case and take the necessary measures to establish the truth to determine whether the provocation actually took place. If available, they must take action in accordance with the Convention (ibid., § 70). The mere fact that the person being prosecuted has pleaded guilty to the charge does not release the trial court from the obligation to examine the report of the provocation (ibid., § 72).

In such cases, the courts must examine whether the a priori well-founded complaint of provocation has a right to exist and is a real remedy, whether it helps to declare the evidence inadmissible or to cause similar consequences (“Bannikova v. Russia”, § 54). Although it is up to the public authorities to determine what procedure should be followed in the event of a notification of a provocation, the ECHR requires that such a procedure be adversarial, thorough, complete and answer questions about provocation (ibid., § 57). In addition, in cases where the investigating authorities refuse to disclose information, the ECHR attaches particular importance to adherence to the principles of adversarial proceedings and equality of arms (ibid., § 58).

If the accused alleges that he was provoked to commit an offense, the courts hearing the criminal case must carefully examine the case file, because in order for the trial to be fair within the meaning of Article 6 § 1 of the Convention, all evidence obtained by police provocation must be rejected. Especially if such a police operation was carried out in the absence of a legal basis and sufficient guarantees (“Ramanauskas v. Lithuania” [GC], § 60). In such a system, the instigation of an instigation complaint is the only effective means of verifying the validity of the reasons for the covert action and determining whether the agents acted “mainly in a passive manner” during these operations (“Lagutin and Others v. Russia”, § 119). It is also necessary that the decisions of the national courts rejecting the complaint of the person being prosecuted for provocation be sufficiently substantiated (“Sandu v. The Republic of Moldova”, § 38; “Tchokhonelidze v. Georgia”, § 52).

If, on the basis of the available material, the courts cannot conclude that a person has been prosecuted, then a judicial review of the matter becomes decisive in accordance with the court’s methodology for assessing provocation cases (“Edwards and Lewis v. The United Kingdom” [GC], § 46; “Ali v. Romania”, § 101, see also “Khudobin v. Russia”, in which the authorities did not analyze the relevant factual and legal factors in order to distinguish provocation from lawful investigative activities, “V. v. Finland”, in which the applicant could not use the fact of provocation as a remedy).

 

The Supreme Court expressed its position on the issue of distinguishing between provocation to commit a crime and lawful control over the commission of a crime.

In particular, in the decision of the Criminal Court of Cassation of the Supreme Court of 13 February 2018 in case № 646/6873/15-k the latter noted that the presence of the prosecutor’s decision to monitor the commission of the crime is subject to mandatory verification, as it is essential for recognition or non-recognition the evidence to be, in accordance with Article 94 of the Criminal Procedure Code of Ukraine, appropriate, admissible, reliable, which in the sentence substantiates the proof of the incriminated convicts.

In another decision, set out in the Supreme Court ruling of 06 March 2018 in case № 727/6661/15-k, the latter noted that in accordance with the requirements of the ECHR to distinguish provocation from the lawful conduct of law enforcement agencies there are a number of criteria, ie means the presence/absence of significant substantive features inherent in the provocation of law enforcement agencies, and the procedural criterion – the presence in court of opportunities to verify information about a probable provocation during the hearing in compliance with the equality of competition and equality of arms.

That is, any information relating to an existing intent to commit a crime or a crime committed must be verifiable, and the public prosecution must be able to demonstrate at any stage that it has sufficient grounds to carry out an operational measure.

A similar approach is followed by the Grand Chamber of the Supreme Court in its decision of January 16, 2019 in case №751 / 7557/15-k.

Thus, we can say that the Supreme Court in its practice is largely guided by the positions of the ECtHR on the criteria for distinguishing between provocation of law enforcement agencies from control over the commission of a crime.

 

Conclusions.

Thus, summarizing the above, we can conclude that the jurisprudence and national law provide a wide and uncertain range for recognizing the actions of law enforcement agencies as a provocation to commit a crime. In turn, control over the commission of a corruption offense should be purely passive, and law enforcement agencies should only engage in illegal activities without involving a person.

Despite the existing controversy on this issue, it should be noted that the public interest cannot justify the use of evidence obtained by inciting such activities by law enforcement agencies. If the actions of undercover agents or law enforcement agencies have prompted a person to commit a criminal offense, and there is nothing to suggest that it would have been committed without this intervention, then such actions of agents or law enforcement agencies are beyond the permissible and provoke a crime.

 

 

The article was previously published: https://blog.liga.net/user/ekalashnykov/article/40277

Given the current vector of the state apparatus, which is entirely aimed at overcoming any manifestations of corruption in Ukraine, the question of distinguishing the provocation of crime from corruption in general is relevant. Unfortunately, being in constant reform, the law enforcement agencies of Ukraine suffer from the so-called staff shortage, which, in turn, leads […]