A: JURISDICTION AND CONFLICT OF LAW

1. SOURCES OF LAW

• What is the primary source of law in relation to the breakdown of marriage and
  the welfare of children within the jurisdiction?

The provisions on the breakdown of marriage and welfare of children are mostly detailed in the chapters II-IV of the Family Code of Ukraine 2002. A child protection law in the Ukraine is based on the Constitution of Ukraine and on the Convention on the Rights of the Child. Some provisions on welfare in the Convention on the Rights of the Child have been codified in the Family Code of Ukraine and in the law on the Protection of Children.

The Ukraine ratified the Convention on the Rights of the Child in 1991. International conventions (treaties) that have been ratified by the Verhovna Rada of Ukraine are a substantial part of the Ukrainian legislation and, therefore, the Convention is a part of the Ukrainian law. In fact, if the Ukrainian law on the Protection of Children conflicts with the Convention, the international law will apply.

• Which are the main statutes governing matrimonial law in the jurisdiction?

The Ukraine is a civil law jurisdiction. The overarching code of Ukrainian civil law is the Civil Code of Ukraine 2003, which is supplemented by the Family Code of Ukraine 2002. The Ukrainian courts rely upon the codes, and there is no formally recognised doctrine of precedent.

The Family Code of Ukraine 2002, determines the principles of marriage, personal non-property and property rights, the duties of the married couple, the content of personal non-property and property rights, and the duties of parents and children, foster parents and adopted children and relatives.

Pursuant to Article 1 of the Civil Code of Ukraine 2003, civil legislation regulates personal non-property and property relations (civil relations) based on judicial equality, free will expression and property independence of their participants. The matrimonial relationship is a substantial part of civil legislation.

2. JURISDICTION

•    What are the main jurisdictional requirements for the institution of proceedings in relation to divorce, property and children?

The Civil Procedural Code of Ukraine 2005 aims at the just and timely consideration and settlement of family cases in the courts of Ukraine for the protection of rights and the freedom and interests of the persons involved. The courts consider cases on the protection of violated, non-recognised or disputed civil rights and freedom or interests.

A separate chapter in the Civil Procedure Code defines the procedure for cases involving the participation of foreigners. Pursuant to family disputes, they have procedural rights and duties equally with natural persons of the Ukraine.

The representative of parties to civil proceedings may be an attorney or another person who is over eighteen years of age and has civil procedural capability with certified authorities, and will be representative in court, except in cases where personal participation required.

The choice of jurisdiction, according to Ukrainian legislation, has some peculiarities where one of the spouses is not a Ukrainian national. In this instance, the Ukrainian citizen living in the Ukraine or abroad may apply to a Ukrainian court only in specific cases, namely:

• if the spouses indicated the jurisdiction of the Ukrainian courts in their agreement;
• if the defendant spouse has their residence, immovable or movable property, in the territory of Ukraine;
• if the ground for the claim took place in the territory of the Ukraine (eg, the pre-nuptial agreement was concluded in the territory of the Ukraine; the spouses got married in the territory of the Ukraine);
• in other cases foreseen by the international agreements and laws of the Ukraine.

A Ukrainian citizen is also obliged to apply to a Ukrainian court if the dispute concerns real estate located in the territory of the Ukraine. In the case where both spouses are nationals of the Ukraine, they may apply to a Ukrainian court irrespective of their habitual residence.

3. DOMICILE AND HABITUAL RESIDENCE

•   Explain the concepts of domicile and habitual residence as they apply to the jurisdiction.

The civil jurisdiction regime in the Ukraine is formally based on the principle of conclusiveness and does not affect habitual residence. 

Freedom of movement and choice of the place of residence in the territory of the Ukraine shall be guaranteed to the citizens of the Ukraine, foreigners and stateless persons who stay in the Ukraine legally. Registration of the place of residence or temporary address of the person or the absence of such shall not be a condition or grounds for exercising the rights and freedoms provided for by the Constitution, laws or international agreements of the Ukraine.

According to the law of the Ukraine on Freedom of Movement and Free Choice of Place of Residence in Ukraine 2004, habitual residence is normally understood as the place of permanent residence or, in case of absence, the place where the person resides for over six months of the year.

A claim to the Ukrainian court may be initiated in respect of the habitual residence of respondent or the habitual residence of the plaintiff in alimony, paternity and/or divorce cases.

Foreigners and stateless persons are eligible to apply to the courts of the Ukraine for the protection of their rights, freedom or interests. The procedural capacity and capability for foreigners in Ukraine are equal to Ukrainian citizens and determined according to Ukrainian legislation.

4. CONFLICT OF LAW/APPLICABLE LAW TO BE APPLIED

•   What happens when one party applies to stay proceedings in favour of a foreign jurisdiction? What factors will the local court take into account when determining forum issues?

In the case where one of the parties during a Ukrainian court proceeding applies in favour of foreign jurisdiction, it is for the court only to decide whether it is in position to have jurisdiction over the dispute.

According to the law of Ukraine on International Public Law 2005, parties may independently choose the law that shall apply to legal relations. The choice of law shall be clear follow directly from the actions of the parties to legal proceeding.

Application of a norm of a foreign state shall not be limited, by reason of the fact that this norm is part of public law. While determining the applicable law, the court shall be guided by the interpretation of norms and notions according to the law of the Ukraine, unless otherwise is envisaged by law. If the content of the legal norms of a foreign state has not been established in reasonable time, the law of the Ukraine shall apply.

The court shall apply foreign law regardless of whether the law of the Ukraine is applicable to similar legal relations in the respective foreign state, except for cases where the application of the law of a foreign state on a mutual basis is envisaged by a law of the Ukraine or an international agreement of the Ukraine.

In the absence of a pre-nuptial agreement on applicable law, it is for the court to initially seek to apply the following:

• the shared national law of the spouses (if both are foreign nationals); or in the absence of this;
• the law of the state where the spouses had their last common place of residence, provided that one spouse remains there and is a national; or in the absence of this;
• the law of the state most closely connected with the spouses.

B: PRE AND POST-NUPTIAL AGREEMENTS

5. VALIDITY OF PRE AND POST NUPTIAL AGREEMENTS

•    To what extent are pre and post-nups binding within the jurisdiction? Could you provide a brief discussion of the most significant recent case law on this issue?

Pre-Nuptial agreements are valid and enforceable under Ukrainian legislation. Spouses may indicate the jurisdiction of the Ukrainian courts in their agreement.

A Ukrainian pre-nuptial agreement is described as a carriage contract and dealt with in chapter 10 of the Family Code of Ukraine. The nub of any agreement will be a clause to misapply or vary Article 60 of the Family Code, which creates the common joint property regime for spouses.

Therefore, there are three primary purposes of a marriage agreement:

• to regulate the division of common joint property arising from the marriage;
• to regulate or exclude the division of common joint property arising from any pre-marital cohabitation;
• to anchor governing jurisdiction and law.

The Family Code of Ukraine states that a marriage agreement may be concluded between the persons who applied for the registration of marriage, as well as between married couples. If it has been concluded before the registration of marriage, it shall come into effect from the date of the state registration of marriage. It shall not regulate the personal relations of a married couple, or personal relations between the married couple and children. A marriage contract is dealt only with privity (property relationships) and specifies the rights and duties of the spouses. A marriage contract may be cancelled on the demand of one of the parties only on the basis of a judicial decision or by mutual consent of both spouses.

There is undoubtedly an incentive for the higher net worth divorcing spouse to seek a watertight pre-nuptial agreement to reduce the impact of the law, whilst still allowing them to enjoy its comparative benefits. The comparative harshness of the jurisdiction to the lower net worth spouse is important to consider, as it is against this subjective standard that a pre-nuptial agreement will be judged for whether it places a lower net worth spouse in ’an extremely disadvantageous material situation’. If the metaphorical bar is low, a marriage agreement that appears objectively unfair may still survive, to the benefit of the higher net worth client.

The formalities for executing the agreement are minimal. Both parties must attend before a Ukrainian notary public official and sign the agreement in front of them. If required by the circumstances, an agreement in Ukrainian and an official translation into the other language of any party must be signed in front of notary public official. No lawyers, translators or witnesses are required to be present or to sign the agreement. There is no obligation for legal advice or full and frank disclosure of assets or liabilities. There is also no obligation to show that either side has taken legal advice and no obligation at this point to show that no undue pressure has been put on either party. There is no assessment at this point of whether the agreement is arguably fair.

It is possible under the Family Code to include children expenses in the main text of an agreement. This arrangement would make these expenses enforceable in most other jurisdictions which allow provision for children’s maintenance within the body of such agreements.

The Ukrainian courts do not recognise the doctrine of precedent and rely only upon Ukrainian legislation (codes, laws). The judge deciding a case may take into account interpretations of law stated by the Supreme Court of Ukraine.

A Ukrainian pre-nuptial agreement can be challenged by the court on the basis that it places one spouse in an ‘extremely unfavourable material position’, under Article 93 Family Code of Ukraine. However, the question for the court is whether the spouse has, as a result of a pre-nuptial, been placed in a position significantly less favourable than the position they would have been in under the Family Code.

C: Divorce, Nullity and Judicial SEPARATION

6. RECOGNITION OF FOREIGN MARRIAGES/DIVORCES

• Summarise the position in your jurisdiction.

The Law of Ukraine on Private International Law 2005 sets the procedure for the regulation of private legal relations which are related through at least one of their elements to one or some legal orders different from the Ukrainian legal order and includes the material aspects of foreign marriages/divorces recognition.

Article 58 on The Law of Ukraine on Private International Law states that marriage  recognised by the law of foreign state, regardless of the nationality of spouses, is valid and enforceable in the Ukraine.

The applicable law of the spouses specifies the procedure of divorce/annulment of marriage(Article 63 of the law of the Ukraine of Private International Law)

Documents issued by the authorised bodies of foreign states according to the set form shall be valid in the Ukraine in the case of their legalisation, unless it is otherwise envisaged by a law or an international agreement of the Ukraine.

7. DIVORCE

•    Give an explanation of grounds for divorce within the jurisdiction (please also deal with nullity and judicial separation if appropriate).

Under the law of the Ukraine of Private International Law, the divorce matters of spouses shall be regulated by personal joint law or, in the case of its absence, by the law of the state where the spouses had their last place of residence, provided at least one spouse resides in that state, or in case of that absence, by the law of the state most closely connected with the spouses. In any case, the choice of law during the divorce procedure is restricted by the personal law of one spouse.

The Ukraine follows the regional trend of offering considerable advantages to a higher net worth spouse seeking to guard against the possibility of future divorce. The breakdown of marriage is the only formal ground for divorce. Even without a pre-nuptial agreement, the jurisdiction demands strictly limited obligations for maintenance and a refusal to consider assets invested in offshore trusts or companies.

The Family Code of Ukraine envisages that, for breaking marriage relations, the interested party shall apply to the body of state civil state acts registration and, in some cases, to the court. While settling a family dispute the court, on the application of the interested party, may take into account local custom as well as the customs of the national minority that either parties or one of them refers to, if the customs do not contradict the requirements mentioned in the Family Code, other laws of the Ukraine and public moral.

The court is not obliged to enquire about the reason(s) for divorce and the spouses can apply for divorce on the ground of mutual consent. In a case where one of the spouses does not give their consent to the dissolution of the marriage, the court will give a reconciliation period. After this period of time has elapsed, the court will establish irretrievable breakdown and grant a decree. The marriage is finally dissolved on registration of the divorce in the state civil state acts registration.

The circumstances where a marriage may be nullified by the Ukrainian court are:

the marriage was concluded with a person under the age of consent and legally not allowed to marry;

• the marriage was registered with a previously married person;
• the marriage exists as a result of mental or physical violence;
• the marriage was registered between an adopter and the adopted;
• the marriage is with person who has concealed a serious disease to the other spouse;
• 6the marriage is without the free consent of the spouses (a person during the marriage did not fully realise their actions and were unable to control it).

Article 119 of the Family Code of Ukraine provides the court with the option for both or one of the spouses, on their demand, to assign a judicial separation of habitual residence. The court also has the power to reverse a judgment. Before a court grants a judicial separation, there are many factors to be taken into account. These will include the current and future financial situations of both of the spouses, accommodation and property and dependent children and their future needs and welfare.

The judicial separation of spouses has some peculiarities. Property acquired by one of the spouses during the time of the judicial separation is considered to be separate personal property. A child born after the expiration of 10 months from the day of the judicial separation will not be considered to be from the husband.

8.         FINANCES/CAPITAL, PROPERTY

• What powers does the court have to allocate financial resources and property on the breakdown of marriage?

The Family Code of the Ukraine determines the procedure for the division of property acquired before, as well as during the marriage, between the married couple after divorce.

A ‘common joint property’ regime is the default position for the property of spouses within the Ukraine, established by Article 60 of the Family Code. The court is in a position to have full power to allocate property and financial resources on the territory of the Ukraine. The court is likely to find that assets placed offshore in foreign companies or trusts are beyond its jurisdiction.

‘Separate personal property’, by contrast, are assets acquired prior to the marriage, or by gift or for personal money (Article 57). If separate personal property produces income during the marriage, that income will also be separate personal property.

However, if an increase in the value of one spouse’s separate personal property has been due to the efforts or contribution of the other, that separate personal property may be held as common joint property by the court and the other spouse will be entitled to a share of it.

It is stipulated that the property acquired by a man and a woman who live together as a family, but who are not married (cohabitation regime), will be common considered joint property, if it is not otherwise set by a written agreement (marriage contract) between them.

The spouses may wish to vary this default regime in their agreement, re-designating present and future separate personal property and common joint property.

• Explain and illustrate with reference to recent cases the court's thinking on
  division of assets.

On 21 of December 2007, the Supreme Court of the Ukraine interpreted the provisions of the Family and Civil Code of the Ukraine on the division of assets and stated that divorce itself does not effect a regime of the common joint property of the spouss. Divorce may effect a regime of the joint property in following cases only:

• where the spouses dispose their property;
• where the spouse after divorce evaluate the sum of the common joint property;
• where the court determines the actual value of the joint property of the spouses;
• where the court considers the family debts of the spouses during the procedure of division of property of the spouses.

9.       FINANCES/MAINTENANCE

• Explain the operation of maintenance for spouses on an ongoing basis after the
  breakdown of marriage.

Article 76 of the Family Code of Ukraine determines that divorce does not make spouses free from maintenance obligations that originated during marriage. A former spouse is obliged to support the other in certain cases described in Article 75 of the Family Code of Ukraine if that spouse became disabled (ie, unable to work) during the marriage or within a year from the day of the marriage breakdown; if the spouse is pregnant; raising a child under the age of three or caring for a disabled child; is set to reach pension age within five years; or in other certain cases listed in the Family Code.

• Is it common for maintenance to be awarded?

Spouses are obliged to support each other materially during marriage, as well as after divorce. Article 77 of the Family Code of Ukraine provides that spouses are free to decide the manner of maintenance. The provision of maintenance is also possible through an agreement of a fixed sum of money or in natural (material) form. The family code assigns spouses support (alimonies) that are imposed by the court with a certain percentage of the total net income and to be fixed in money. Alimonies are to be paid on monthly basis. The court has the discretion to increase or decrease these sums to reflect other relevant circumstances. In certain circumstances, where the spouse responsible for the alimony leaves the territory of the Ukraine, they may be obliged to pay alimonies in advance.

• Explain and illustrate with reference to recent cases the court’s thinking on
  maintenance.

The Supreme Court of Ukraine interpreted the provisions of the Family and Civil code of Ukraine on the maintenance of spouses and stated that divorce does not make a former spouse free from the obligations of maintenance and a cohabitant spouse has the right to maintenance where they are unable to work during joint habitation.

10.    CHILD MAINTENANCE

•    On what basis is child maintenance calculated within the jurisdiction?

According to the Family Code of Ukraine, after the breakdown of the marriage, the parent is required to pay child support (alimonies). Maintenance is also possible through a support agreement. The Family Code of Ukraine states that child support is to be imposed by the court allowing a certain percentage of the total net income for one child or it could be fixed in money.

Pursuant to Article 182 of the Family Code of Ukraine, the court has the discretion to increase or decrease the sum of alimonies to reflect other relevant circumstances, such as the health and welfare of a child; the health and welfare of the spouse responsible for paying the alimonies; the availability of other family members, children, availability of legally incapable wife(husband) and/or children from new marriage and other circumstances which may be relevant for the court.

The Family Code of Ukraine provides that alimonies should not be decreased lower than 30% of the minimum level of wage for one child. The minimum level of wage will be revised every year according to the law of the Ukraine upon the establishment of a living wage and a minimum wage.

11. RECIPROCAL ENFORCEMENT OF FINANCIAL ORDERS:

• Summarise the position in your jurisdiction.

A variety of international bilateral and multilateral treaties exist between the Ukraine and other countries, which provide the enforcement of maintenance orders made in the Ukraine and vice-versa. Maintenance is defined as periodical payments. Sometimes it may include capital lump sums. The reciprocal enforcement proceedings available in each case depend on the terms of the treaty or other arrangements that are in place between the Ukraine and the other country concerned. Ratification of such treaty by Verhovna Rada of the Ukraine is a mandatory requirement.

The Civil Procedure Code of Ukraine 2005 defines two different procedures for the recognition and execution of a decision of the foreign court. The first establishes the order of execution with force and second on a voluntary basis.

In the Ukraine, the judgment of the international court is fully transportable only during a period of three years. An exclusion to this rule is periodical payments, which may be collected during a period of sanction (Articles. 390, 391 of the Civil Procedure Code of Ukraine). Due to the civil legislation of the Ukraine, it is necessary to commence a civil petition action in the local court of a general jurisdiction of the Ukraine to seek enforcement of a foreign judgment. Enforcement by this method is generally limited to the enforcement of a lump sum or costs orders.

12. FINANCIAL RELIEF AFTER FOREIGN DIVORCE PROCEEDINGS

• What powers are available to make orders following a foreign divorce?

According to Article 398 of the Civil Procedure Code of Ukraine, after granting a positive decision, the court issues a writ on execution. The writ should be forwarded by the applicant to the execution authority of Ukraine, according to the law of the Ukraine on the Execution Procedure 1999. This law defines conditions and procedures for the execution of decisions of the courts, including divorce which, according to the law, shall be subject to forced execution in the case of their voluntary non-fulfilment.

The execution authority has powers which are strictly limited by the content of the Ukrainian court decision and which may also be granted solely on foreign court orders. 

Generally, the following legal measures for the forced execution of decisions are envisaged by the Ukrainian court as follows:

• the imposition of a penalty on the debtor's property;
• the imposition of a penalty on the debtor's salary (earnings), incomes, pensions, grants;
• a seizure from the debtor, and transmission to the beneficiary, of some of the things indicated in the decision;
• other measures stipulated by the decision.

D: CHILDREN

13. INTERNATIONAL ABDUCTION

• Summarise the position in your jurisdiction.

The Ukraine follows a global trend of child protection. Firstly, the Ukraine ratified UN Convention on the Rights of a Child since 1991.

In 2006, Verhovna Rada of Ukraine passed the Act of Ukraine on Accession of Ukraine to Convention on the Civil Aspects of International Child Abduction.

The objectives of the present Convention are to secure the prompt return of children wrongfully removed to or retained in any contracting state and to ensure that the rights of custody and access under the law of one contracting state are effectively respected in the other contracting states.

Contracting states, including the Ukraine, shall take all of the appropriate measures to secure within their territories the implementation of the objectives of the Convention. For this purpose they shall use the most expeditious procedures available.

14. LEAVE TO REMOVE/APPLICATIONS TO TAKE A CHILD OUT OF THE JURISDICTION.

•      Summarise the position in your jurisdiction.

Pursuant to Article 66 of the law of the Ukraine on International Private Law, the rights and duties of a child and their parents are determined by the personal law of a child and the parents or according to that law which is closest to the relevant relationships and is favourable for the child.

The private law of a child shall be the law of the state in which they are a citizen. If it is impossible to determine the applicable law, the law that is closest to the private legal relations of child shall apply. The law applicable to the private legal relations on the basis of conflict rule shall not be determined if an international agreement of the Ukraine envisages the application to the respective relations of material legal norms.

In cases envisaged by the law, the participant(s) of legal relations may independently choose the law that shall apply to their legal relations. The choice of the law shall be clear or follow directly from the actions of parties to the legal proceeding, the conditions of legal the proceedings or the circumstances of the case that are considered as a unity, unless otherwise is envisaged by law.

The choice of law, or a change from the previously chosen law, conducted after the commitment of legal proceedings have a reverse action and are valid from the moment of conducting the legal proceeding.

•       Under what circumstances may a parent apply to remove their child from the
         jurisdiction against the wishes of the other parent?

The court is in a position to decide whether it has jurisdiction to decide family disputes between the parents and the law of a child that is to be applied. The court relies upon article 66 of the law of the Ukraine on International Private Law and determines the most favourable and closest law for the child.

Exclusively, the courts of the Ukraine shall consider the cases with the participation of foreigners, provided that both parties to the case with regard to the legal relations between the parents and the children reside in Ukraine.

E: COHABITATION

15. COHABITATION

• What legislation (if any) governs division of property for unmarried couples on the breakdown of the relationship?

The main source of law on cohabitation in the Ukraine is the Family and Civil Code of Ukraine. The Ukraine has moved away from the most former Soviet states in its law on cohabitation. Under Article 74 of the Family Code, property acquired during any joint cohabitation within the Ukraine belongs to the parties by right of common joint property, unless otherwise provided for in an agreement. The effect of this, for parties who subsequently marry, is to widen the bracket of common joint property beyond assets acquired within the marriage to include those acquired while cohabiting.

In practice the Family Code has created a situation where, in the absence of a pre-nuptial agreement, the divorcing spouses apply for division of their assets (including assets arising from cohabitation) to a notary public officer. However, the notary lacks the power to rule on the status of any property that is not officially registered as being held in joint names. The notary must, therefore request a court decision. The court will then attempt to determine when any cohabitation began. This is not aided by the lack of either a formal Family Code test or a settled precedent. In practice this is settled evidentially on the basis of demonstrable joint property purchases while cohabiting or by witness testimony. The relevant period of cohabitation may be found to have begun abroad.

There must also be consideration for all property against Article 57, which defines ‘separate personal property’.

The cumulative effect of this is to introduce delay and uncertainty as to what will be held personal and what will be commonly shared. This makes it all the more important that the parties follow the suggested alternative of Article 74, and designate separate personal property and common joint property in an agreement.

F: OTHER

16.  CIVIL PARTNERSHIP/SAME SEX MARRIAGE

• What is the status of civil partnership/same sex marriage within the jurisdiction?

According to Article 21 of the Family Code of the Ukraine, the family is defined as solely between a man and a woman who live together, who are connected by common everyday life and who have mutual rights and duties. Legislation for same-sex marriages in the Ukraine will probably not happen in the near future, due to a current legislative ban on same-sex marriage.

• What legislation governs civil partnership/same sex marriage?

There is no provision for gay marriage/civil partnership in Ukrainian legislation.

17. CONTROVERSIAL AREAS/RAPIDLY DEVELOPING AREAS OF LAW

• Is there a particular area of the law within the jurisdiction that is currently undergoing major change?

The government recently initiated changes to the Civil Code of Ukraine to ensure the effective and efficient handling of cases by the courts of the Ukraine on international child abduction.
The aims and objectives of the draft law is to facilitate the use by the Ukrainian courts of the Convention on the Civil Aspects of International Child Abduction, and to ensure an effective and efficient review of the relevant categories of cases in the interests of a child. The document particularly establishes rules of jurisdiction and determines the content of the statements, especially the cases for the return of a child who has not reached the age of sixteen under the Convention on the Civil Aspects of International Child Abduction. The bill also defines a list of issues which the court decides and the grounds for refusal to return the child, as well as the timing of cases at the courts of first instance and appellate courts.

The draft law is intended to create legislative conditions for the effective implementation of the Ukraine's international commitments under the Hague Convention on the Civil Aspects of International Child Abduction 1980.

• Which areas of law are most out-of-step? Which areas would you most like to see reformed/changed?

Ukrainian family law is one of most innovative and advanced within Europe and, as mentioned in the Ljubljana family law conference in 2007: ’the Ukraine creates European family Law’. Nevertheless, there are some areas which need to be reformed within Ukrainian family Law.

Gender equality in family law is one sphere which is expected to be reformed in the near future. In general, the Ukraine’s legislation upholds the rights of women and guarantees their protection. It establishes equality with men in their rights and duties. The Family Code of Ukraine, in general, protects women relatively well within the family context, but gender stereotyping is still pervasive.

The legal minimum age for marriage is 17 years of age for women and 18 years of age for men. The courts can authorise marriage from the age of 14 years if it is clear that ‘the marriage is in the person’s interests’. The incidence of early marriage is quite high for a European country. It is estimated that 10% of girls between 15 and 19 years of age are married, divorced or widowed. (UN report 2004).  

Parental authority in the Ukraine is shared by the mother and the father and parents have equal rights and responsibilities regarding their children’s development and education. However, social stereotypes within the family remain strong. It is not uncommon for men to divorce and then refuse to fulfill their parental obligations, which leaves mothers and their children with limited material resources.

Obviously, such women have legal options to pursue action against their ex-husbands, but the execution of such orders still needs to be reformed and innovated as the servicing of court alimony orders are at a very low level.

The other area of family law which needs to be reformed is surrogacy, which is more commonly used by couples to resolve problems arising from different reproductive dysfunctions which lead to the impossibility of conceiving and giving birth to a child in a natural way.

The legal framework in the Ukraine is far less developed than in most European countries and needs to be improved. This includes the rights and obligations of genetic parents, the legal relations between the parents and the surrogate mother and between the parents and the medical institution carrying out the procedure, defining parental rights for the future of the child, and the rights of all involved parties in terms of the confidentiality of the child's origin.

The primary legislative act in this sphere is the Family Code of Ukraine, which guarantees, according to Article 123, the unimpeded realisation of the rights of all citizens to motherhood and fatherhood. General procedure is provided by the Order on Approval of Conditions and Order of Employment of Artificial Insemination and Implantation of Embryo and Methods of their Performance, established by the Ministry of Health Care. An order outlines the detailed medical procedure of artificial insemination and embryo implantation.

Nevertheless, areas regarding the regulation of relationships between the involved parties still have omissions in their legal background supporting surrogate motherhood. The most common gaps in legislation, which are an open field and need change, include:

• the responsibility for the blackmailing of future parents with abortion;
• or the potential refusal to hand the child over to parents after the birth of the child;
• the disclosure of information regarding the fact that the parents are using a surrogate mother's services in order to substantially increase the price for the services;
• providing a pregnant women who has been dissuaded from aborting their pregnancy as a potential surrogate mother and the couple receive another child instead of one that is genetically related.

However, Ukrainian legislation does still leave some advantages to its citizens to resolve important issues on a contractual basis. 

The article is available in Russian only.

The article is available in Russian only.

The article is available in Russian only.

The article is available in Russian only.

An effective mechanism to enforce an arbitration judgment is to bring proceedings in rem to secure the initial claim, i.e. an actual attachment of the respondent’s assets. Regulations of most of the arbitration institutions do not envisage any procedural options for the arbitrators to ensure security for costs involved in the arbitration outcome. Therefore, alternative and effective remedies for claims security in international arbitration practices are currently as follows:

1. Engish worldwide freezing order (WFO); and
2. Swiss attachment.

English worldwide freezing order (WFO).

WFO is a unique means and one of the most effective methods of securing a claim. English courts even named it «nuclear weapon» among the means of seizure/impounding and discovery of the assets of respondents.

WFO is a provisional judgment (injunction) of an English court restricting the right of the respondent to dispose of his assets located anywhere in the world. WFO may be applied before and after the arbitration court delivers its decision in the dispute on merits.

However, a WFO is not so easy to obtain. The requirements to be met by the claimant wishing to have the respondent’s assets seized are quite tough:

Firstly, as of the date of claim lodged with a court of arbitration, there must already exist legal grounds for this request, i.е. arbitration proceedings pending (which means that a potential suit is insufficient);

Secondly, an English court is to have jurisdiction to adjudicate the case (English courts have such jurisdiction is all cases, when the parties to the dispute have included English law arbitration in their contract proviso);

Thirdly, there should be well grounded claims for a specific amount of compensation provided;

Fourthly, the respondent’s assets should be available (not necessarily within the court’s jurisdiction);

Fifthly, there should be present actual risk of disposal of the assets owned by the respondent following the arbitration court’s judgment delivery on merits of the dispute; and

Lastly, and importantly, the claimant must give consent to compensate to the respondent potential costs caused by WFO.

In real practice, a court issues the WFO without notifying the respondent, which, in a way, springs a certain «surprise» for the latter. Accordingly, the claimant lodging a court suit, is to ensure a complete and fair description of all circumstance of his case, so that the court is fully informed of all pertinent details. If, however, the claimant fails to meet the above requirements, such circumstances may result in a subsequent cancellation of the WFO and the respondent’s expense being recompensed at the claimant’s cost.

A WFO is also unique in that it obligates the respondent to disclose information about all of his assets located all around the world. If so, the WFO may be used to discover the respondent’s assets for a potential subsequent seizure, for instance, seizure of his bank accounts, or to apply the mechanism of attachment under the jurisdiction of the respondent’s assets location.

Swiss attachment.

The principal feature of a Swiss attachment is that it is applied to the debtor’s assets, and not to the debtor himself. This is extremely important to understand, so as to differentiate this type of seizure from the English law interlocutory injunction.

Therefore, the claimant is to be prepared for court proceedings, having identified and furnished to the court the numbers of the respondent’s accounts in advance to filing the suit. This is a mandatory requirement to be met without fail, since under the Swiss legislation, no investigation of the debtor’s financial situation (the so-called «fishing expedition») is permitted. However, all the creditor needs to do is to show the accounts, without the need to prove that there are any assets on such accounts.

The key characteristics of the Swiss attachment:

-          seizure is possible without the arbitration delivering judgment in the dispute on merits. Neither it is necessary to initiate arbitration proceedings (for instance, prior to the initiation of GAFTA arbitration proceedings);

-          Swiss attachment is mandatory to third parties holding the debtor’s assets, в том числе для банков, including banks, and such banks cannot claim any bank secrets in this situation. This is one of the numerous reasons that show why Swiss attachment is so efficient;

-          Swiss attachment order may be obtained under an ex-part procedure, i.e. without notification of the debtor. Yet the debtor’s bank may be notified of the fact within 24 hours of receipt of the order.

-           In addition to all of the above, any country that does not comply with the Swiss attachment requirements, is criminally liable, and this legal violation carries penalties up to three years of imprisonment (article 169 of the Federal Criminal Code of Switzerland).

Additional arguments in favor of said Swiss attachment are relatively low requirements for its obtainment. In fact, the claimant is required to provide the following documents:

-          confirmation of the fact that the respondent (debtor) has outstanding and unpaid debt to the claimant (creditor);

-          confirmation of the fact that there exists no other security of claim ,i.e. other than attachment of the assets of the respondent (debtor);

-          proof that the creditor has been authorized to demand this attachment; and

-          proof that the respondent (debtor) has assets in Switzerland or, to put it simpler, provide the numbers of his accounts in Swiss banks.

If the claimant is sure about the legality of his claim, and the amount claimed is sufficiently large, there is a possibility of applying two remedies simultaneously, namely: the initial discovery of assets on the basis of the WFO and the subsequent Swiss attachment in the form of seizure of such assets held by the debtor in Swiss banks. Making use of such means of securing claims as WFO and/or Swiss attachment is the correct tactics to secure a subsequent arbitration judgment, which may help to settle the case even before arbitration proceedings are set in motion. For example, if the debtor is aware of the weakness of his position in arbitration and is prepared to sign an out-of-court settlement agreement, the dispute may be resolved vent without the initiation of arbitration proceedings.

The significance of the wording of arbitration agreement

It should be noted that the likelihood of applying the aforementioned remedies to secure a claim may, in some instances, be restricted by an arbitration clause incorporated in the contract. For instance, arbitration agreements limiting the claim security through the moment arbitration proceedings initiation have been included in a majority of the standard forms of FOSFA contracts (known as the «Scott v Avery clause»). In the recent case B v. S [2011] EWHC 691 (Comm) adjudicated by an English court, the court found that the arbitration agreement in the standard form of FOSFA contract 54 hinders the parties in making use of measures to secure their claim and in initiating proceedings other than arbitration proceedings to consider the case. Making use of standard forms of such contracts, parties to such contracts need to be very careful and formulate an arbitration agreement with a specific proviso entitling one of the parties to resort to provisional remedies so as to ensure seizure under legal process. Unlike FOSFA contracts, the effective forms of GAFTA contracts guarantee the right of parties to request measures of securing their claim.

Due to this fact, twice as difficult to comprehend for traders who grew up professionally in the fold of the continental law is English law, which, historically, has always been, if not the backbone of international trade, then one of the most widely used instruments of its regulation to date.

Since practically the entire global trade in grain, oilseeds, metals and other staples, as well as international cargo shipping are coordinated by associations and international organizations, whose legal framework is based on English law, correct perception of some alien notions and concepts is truly vital for producers and traders who seek to have a foothold in any of the markets above.

Contract.

The first and principal component of any international trade transaction is the trade contract per se, which may be made up of ten sentences describing the transaction’s key terms and conditions (for example, contracts entered into within the framework of the Grain and Feed Trade Association (GAFTA) GAFTA standards incorporating contracts), or may consist of several hundred pages.

Everything is quite simple: if a trader intends to sell anything, he needs to understand clearly what is to be sold, to whom, how, on what terms, at which price, and what risks he is willing to undertake (if at all). Moreover, the seller must be certain that his identical to that of his own, so that there occurs no difference or misunderstanding between the parties at the trade performance stage that may result not only in delays and additional expense, but also the collapse of the deal.

Attention to contract details.

When deciding on what to trade, one should remember that some legal systems that are frequently used in trading are very meticulous about the so-called goods description. For instance, if a contract includes a reference to "wheat of the Russian origin to be delivered in December", the same wheat delivered in January, with no extenuating circumstances provided, will be treated as  non-contractual goods, so that the buyer will be entitled to turn it down and demand compensation for failure to perform the contract. Equally carefully one needs to deal with phrases like "goods of normal marketable quality", because, despite the relatively obvious understanding of the implication of “normal marketable quality” of such goods, lack of distinct criteria of their assessment may also give rise to certain speculations on the part of the buyer.     

For example, the aforementioned English law entitles the seller to terminate a contract if the goods traded are not “of satisfactory quality”, and there exist practically no precedents that would disclose or interpret this notion.

Counterparties.

The significance of counterparty selection can hardly be overestimated, and not only so as to be certain of the counterparty’s solvency. If one trades via a broker or any other intermediary, one needs to obtain from them all available information about the counterparty, its operations, business reputation etc. prior to the confirmation of the deal. It is not always worth accepting a lucrative proposal from a company that is not known to you or if the company’s legal status seems doubtful. One must also pay attention to the powers of the person who signs the contract on behalf of the counterparty, if one wants to avoid invalidation of the deal or to have the deal challenged.

Delivery of goods.

Transportation by sea is one of the most difficult types of shipping in terms of its organization, but one that is least costly; accordingly, maritime traffic is one of the most frequently used method of long-haul delivery of goods, including grain crops.

Historically, principal terms of delivery by sea have always been two most frequent terms — FOB (free on board) and CIF (cost, insurance and freight), or its analogue, С&F/CFR (cost and freight), which is more popular when shipping goods in the Black Sea region.

Basically, the difference between FOB and CIF is in the identification of the time of risks or ownership transfer, as well as in a different approach to pricing due to additional cost incurred by the CIF seller. In FOB shipping, the decisive factor is the moment of the goods crossing the ship’s rails, whereupon the risk of loss or damage to the cargo, as well as the title to it transfer to the buyer, whereas in CIF shipping, the buyer assumes solely risks at the moment of goods loading, whereas the title to goods remains with the seller until the shipping documents have been furnished, unless the parties specify otherwise. It is also important to remember that both of the options above include a number of mandatory consecutive actions taken by each party (for example, identification by the buyer on FOB terms), and any delay may cause unforeseen legal consequences, even termination of the contract due to failure to perform it.

Shipping contract or charter-party.

Two principal forms of contracts are used in international trading, depending in who, what, where, and on which terms is shipping goods. In the event of long-distance or sufficiently regular shipments, this will be charter-party, a contract regulating the relations and the scope of mutual responsibility of the freighter and of the shipper. At the same time, the document that confirms the fact of loading and shipment of gods is a bill of lading, which testifies, as a rule, the transfer of ownership or title to relevant goods and provides legal grounds for lawsuits to be files with a court of law or another competent dispute resolution tribunal claiming compensations for loss or damage to goods in the course of their shipment. Both of these contract forms are often used simultaneously, so parties to a trade deal are to specify which of the carriers they deal with, and on which of the contracts, since this will be a decisive factor in claiming compensation, suing the carrier, and determining the limits of the latter’s liability by virtue of certain international rules and conventions incorporated in the contracts (e.g., the Hague Rules 1924 or the Hague-Visby Rules 1968, which may provide different interpretations to certain aspects of the parties’ liability).

Settlements of commercial transactions.

Along with bank wires, which is a form of settlement well known to the domestic producer and is often the only acceptable and clear option to both the producer and local fiscal authorities, we would like to emphasize the other two forms of settlement that are most popular in the international settlement practices, — payment collection and letters of credit, as well as several aspects of their application, which may both help the operations of parties to commercial transactions and complicate them severely.

«Cash against documents».

Payment collection, or "cash against documents", is the simplest and least costly method of settlement, where the producer’s bank makes payments against a package of shipping documents regarding goods supplied by the seller after loading, and each of the party finds itself in a less protected position, since they are exposed to both the risk of being not paid for the goods delivered (the seller), and the risk of failure to deliver the goods (the buyer). On the other hand, in the payment collection form of settlement, the seller invariably comes across a situation, when he no longer holds the documents confirming his ownership of goods, but is yet to get paid, which makes him exposed to a high probability of risk of never being paid, although he is no longer able to dispose of his own goods. Accordingly, this form of settlement is the most convenient and easy to use, provided you confident in your counterparty and have dealt with him for several years now.

Letter of credit.

The seller is better protected and enjoys more certainty when using letters of credit or documentary credits, which constitute a guaranteed obligation of the buyer’s bank to pay the seller on condition that the latter furnishes the documents specified in the letter of credit and complies with other terms and conditions as specified in the letter of credit. Despite the seemingly simple and convenient form of this settlement option, this transaction underscores the key role of the banks proper: that of the issuing bank and of the confirming bank, if the parties make use of the confirmed letter of credit. Banks abide firmly with their own rules and customs accepted in the banking practices; moreover, their approach to the verification of documents and making payments is purely formal, inasmuch as they are not obliged to take into account the clauses of a commercial contract executed by the parties thereto, is said clauses run counter to the guidelines receive or the letter of credit opened. Therefore, the seller is still exposed to the risk of not being paid for his goods, if the documents contain even a minor difference, although the current practice proves that, regrettably, this is the case in an overwhelming majority of cases.

Dispute resolution.

In the course of performing commercial contracts, every trader sooner or later faces disputes or problem situations, when the counterparty often refuses to cooperate. Such disputes may result in lengthy litigation or in the parties turning to international commercial arbitrations, a more popular alternative to courts of law in international trading activities. In grain trading, the instrument used to arbitrate disputes among all participants of grain trading who apply standard form of GAFTA contracts is GAFTA arbitration.

The article is available in Russian only.

The article is available in Russian only.

American Bar Association

Section of Family Law

Fall CLE Conference, 2011

Coming Home with Baby: How to Advice U.S. Intended Parents Who Go Abroad to Have Children Through ART.

27- 29 October 2011 

Assisted Reproductive Technologies in Ukraine

Aminat Suleymanova,

Ukrainian Bar Association

Nowadays raises the number of couples suffering infertility problems. Medical science goes forward and offers different solutions of infertility: in-vitro fertilization, artificial insemination, egg and sperm donation, surrogacy motherhood. Unfortunately only several countries have legally recognized artificial methods of fertility treatment. Ukraine is one of not numerous states that have legally provided the use of assisted reproductive technologies. Therefore Ukrainian jurisdiction has become so to say “lifebuoy for” many foreign couples trying to have their own baby.

Through unawareness of law the spouses crossing the border could meet a range of problems using assisted reproductive technologies in Ukraine. The most frightful in this situation is that any problems which may appear during and/or after the treatment concerns a life of teeny individual. Therefore in this paper we will try to describe some legal aspects of assisted reproductive technologies in Ukraine which may be useful for potential patients or their legal advisors.

Assisted reproductive technologies are legally recognized in Ukraine by law and are regulated by the Family Code of Ukraine 2002, the decree of the Ministry of Health Care of Ukraine No. 771 adopted on the 23 of December 2008 On the Approval of the Instruction about the Order of Assisted Reproductive Technologies Application (hereinafter Instruction No. 771), the Rules of Registration of Civil Status Acts in Ukraine approved by the decree of the Ministry of Justice of Ukraine on 18 October 2000; The Law of Ukraine on Fundamental Legislation on Health Care adopted on 19 of November 1992; Civil Code of Ukraine 2004.

Under Ukrainian law Assisted Reproductive Technologies are defined as the methods of treatment of infertility, by which the manipulations with reproductive cells, separate or all stages of preparation of cells, the process of fertilization and the embryo growth before its transference to the recipient womb is accomplished in-vitro (Instruction No. 771).

The methods of treatment by assisted reproductive technologies include: In-vitro fertilization (IVF) - control ovarian stimulation for oocyte receipt, sperm receipt, oocyte insemination and embryo cultivation, including ICSI- Intacytoplasmic Sperm Injection, embryo transplantation to the woman’s cavity of uterus; infra uterus sperm insemination; application of donors gametal cells and embryos; surrogacy motherhood.

Ukrainian law strictly provides the order of application of assisted reproductive technologies, medical indications for its applications, form of the documents which shall be signed.

Under Ukrainian law the intended parents are considered to be the patients of assisted reproductive technologies treatment and shall pass the treatment according to the Instruction No. 771.

The relations with medical institution are process by filling the necessary applications by the patients (intended parents) the forms of these applications are established by law.

Assisted reproductive technologies shall be applied only under medical indications by the written free will of the patient and by the statement of the patient (patients) concerning the application of supporting reproductive technologies (the form of this statement is provided by the Instruction No. 771).

Assisted Reproductive technologies cannot be applied under some moral, religious, philological views of the parents. The only grounds for application of ART are medical indications provided by the Instruction No.771

The right to apply assisted reproductive technologies has only accredited Ukrainian clinics. The accreditation is made by the Ministry of Health Care of Ukraine to reconfirm the level of medical services and confer appropriate degree. The necessary requirements for accreditation are presence of the license of Ministry of Health Care of Ukraine to apply assisted reproductive technologies treatment, equipment base and sufficient work experience of medical staff.

Intended parents have right to freely choose the clinic on their own discretion, there is no any need to receive official direction for treatment.

Who has right to use assisted reproductive technologies?

Assisted reproductive technologies and in particular, surrogacy treatment, may be applied only for marriage couple (a man and a woman).

According to the Constitution of Ukraine (1996) foreigners who stay on the legal basis on the territory of Ukraine have the same rights and obligations as citizens of Ukraine. There are no any restrictions for foreigners to pass the treatment by assisted reproductive technologies in Ukraine; therefore they have equal rights to apply assisted reproductive technologies with Ukrainian citizens. Registration of child born by foreigners with assisted reproductive technologies is made in order established by Ukrainian law.

It worth to mention that Supreme Council of Ukraine is currently discussing a new amendments regarding application of ART, in particular restriction the age of woman who can apply ART to 51 years. Restriction of surrogacy treatment for foreigners, in particular it is proposed to allow surrogacy treatment only for the citizens of Ukraine and foreigners - citizens of the countries in which this method of assisted reproductive technology is not prohibited by law, and in cases when foreigners live in the state other than the state of their citizenship - by the law of the state of their residence. It is proposed that obligatory precondition of application of surrogate motherhood is the genetic connection of the child with at least one of the future parents and absence of direct genetic connection of the child with surrogate mother.

Most probable that this discussed amendments with some corrections will be adopted in law.

The ground to introduce restriction of surrogacy treatment for foreigners is to guarantee legal recognition of paternity over the child born with ART in the country of parents’ residence.

Documents executed in clinic

Ukrainian legislation establishes some standard form of documents which shall be executed in the clinic by the spouses (intended parents): statement of patient/patients in relation to application of ART; patient application to use oocytes; application of the recipient of donor gametal cells, patient medical card and others. However in practice very often the clinics make their amendments and alterations to this standard forms or offer for the patients the documents which absolutely differ from that established by law. The problem is that the legal force of such altered documents may be disputable and if this issue will be brought before the court, the legal grounds to recognize such documents unenforceable under Ukrainian law may exist.

Unfortunately the Ukrainian court practice concerning the issue of assisted reproductive technologies includes only a few court decisions, and it is difficult to foresee the outcome of any possible dispute. Therefore this shall be an important forewarning for couples to understand and apprehend the content of the documents they sign. Ukrainian law provides that assisted reproductive technologies shall be applied strictly under the requirements of Ukrainian law, therefore all documents signed and actions made in defiance of the law may be recognized invalid or unlawful through the court proceeding in Ukraine. This is the important reason for intended parents to make independent legal counseling during assisted reproductive technologies treatment in Ukraine.

 Intended parents file all necessary documents directly in the clinic. The issue what method of treatment to apply is solved after the intended parents file application in clinic and pass the appropriate medical examination.

Generally speaking the scheme of application of ART is as follow:

1. Intended parents choose the clinic; agree the terms of their cooperation and fees.
2. Execute necessary documents in clinic, pass examination and treatment, carry the pregnancy, and birth of a child.
3. Register the child birth according to Ukrainian law.
4. Receive child travel document at the consulate (embassy) of their country situated in Ukraine.
5. Get child abroad.

Counseling and legal advice prior the treatment

Ukrainian legislation is silent as to the necessity to receive legal and psychological counseling by the intended parents (and surrogate mother) prior to ART treatment. This issue puts to the parties own discretion.

That concerns medical advice; there is obligation of medical institution which follows from the Instruction No. 771 to objectively inform intended parents (and the surrogate mother) about the methods of treatment which will be applied, the methods of embryo transplantation and conception, the possible compliances and consequences of such treatment.

Legal status of child born with the assisted reproductive technologies

Under the general rule of Family Code of Ukraine:

The child conceived and born in marriage descends from the spouses (art.122 of Family Code of Ukraine).  

Descend of a child born with assisted reproductive technologies is defined by art. 123 of Family Code of Ukraine:

1. 1.    In case of birth by a wife a child, conceived as the result of use of assisted reproductive technologies, accomplished with a written consent of her husband, he is registered as the father of a child. 
2. 2.    In case of transplantation to the body of another woman the embryo conceived by the spouses (a man and a woman) as the result of use of the supporting reproductive technologies the spouses are considered to be the parents of a child. (Surrogate motherhood)
3. 3.    The spouses are considered to be the parents of a child, born by a wife after transplantation to its body the embryo conceived by a husband and wife as the result of use of assisted reproductive technologies (artificial insemination, in-vitro fertilization, donation of gametal cells).

By virtue of the provisions of Family Code of Ukraine, the spouses are recognized as the sole legal parents of a child born with the assistance of assisted reproductive technologies.

Ukrainian legislation also excludes possibility of challenging of maternity in the cases, provided by the part 2 and 3 of the article 123 of the Family Code of Ukraine (p.2 article 139 of the Family Code of Ukraine (2002).

Registration of child birth

Ukrainian legislation recognizes the intended parents as the sole legal parents of a child born with assisted reproductive technologies; accordingly they bear all parental rights under Ukrainian law and are obliged to register the child birth in accordance with the requirements of Ukrainian law.

The registration of child birth shall be accomplished according to the Rules of Registration of the Civil Status Acts in Ukraine approved by the decree of the Ministry of Justice of Ukraine adopted on 18 October 2000.

The registration of civil status acts upon the application of foreigners and stateless persons is carried out in accordance with the Ukrainian legislation.

To register the child birth intended parents are obliged immediately at the latest one month after the child birth apply to the bodies of civil status acts registration at the place of child birth with following documents:

•          Application about the registration of child birth

•          National passports with notarized translation into Ukrainian

•          Medical birth certificates form No. 103/о

•          Certificate about passing supporting reproductive technologies treatment and

•          Proof of payment the state duty

If the child was born using surrogate motherhood method the intended parents shall also submit:

• Notarized written consent of the surrogate mother to record the spouses as the parents of child;
• Certificate about genetic connection of the parents (father or mother) with the child;

The intended parents are registered as the sole legal parents of a child on child certificate of birth.

Сhild nationality

Unfortunately the issue of child nationality does not have special legal regulation under Ukrainian law and is subject to general provisions of Law on Citizenship of Ukraine.

Ukrainian legislation on citizenship is based on the principles of prevention the occurrence of double nationality and occurrence of statelessness and provides the right of a child for prior acquisition of her parent’s nationality (if they are the foreigners). So, the child born with the assisted reproductive technologies first of all have the right to acquire the citizenship of her foreign parents, under the domestic law of their residence.

The only possible ground for the child born on the territory of Ukraine to acquire Ukrainian nationality by birth if both of her parents are foreigners is article 7 (4) of the Law of Ukraine on Citizenship of Ukraine adopted on 18 of January 2001:

A person born on the territory of Ukraine from the foreigners, who on the legal basis reside on the territory of Ukraine and has not acquired by birth the citizenship any of her/his parents, is considered to be the citizen of Ukraine.

“reside on a legal basis on the territory of Ukraine” means – residence on the territory of Ukraine of foreigners or stateless persons…who have registered on the territory of Ukraine their national passport or have permanent or temporary residence permit on the territory of Ukraine…

The foreigners may receive temporary or permanent residence permit only if they immigrate on the territory of Ukraine or enter Ukraine for job placement, in all other cases the foreigners may stay on the territory of Ukraine on the temporary basis upon the registration mark at their passport documents.

The order of registration of foreigners’ national passport on the territory of Ukraine is provided by the Rules of Entrance, Departure and Travel in Transit through the Territory of Ukraine by the Foreigners and Stateless Persons and is made at a passing post of National State Border.

Registration is made for a period of a short term residence on the territory of Ukraine – in case of visa entrance for the period of visa duration ….in case of visa-free entrance no more than 90 days during the 180 days from the first entrance…

The child born with the assisted reproductive technologies may have basis for seeking Ukrainian citizenship at the condition:

-           both of her foreign parents have legally resided on the territory of Ukraine at the time of her birth that is confirmed by the stamp at the national passports of foreigners.

-           the child didn’t acquire nationality any of her foreign parents by birth.

Ukrainian legislation provides the procedure of finalization of acquisition of Ukrainian citizenship by birth in accordance with the article 7 part 4 of the Law of Ukraine on Citizenship of Ukraine. The parents shall submit to the division of the Department of Citizenship and Immigration of Ukraine:

a)         application to finalize acquisition of Ukrainian citizenship by birth (the form is approved by Ukrainian legislation);

b)         copy of the child certificate of birth;

c)         copies of the documents confirming parents foreign citizenship;

d)        copies of the documents which confirm that the parents have resided on the legal basis on the territory of Ukraine at the time of child birth (this may be parents national passports with the registration mark in Ukraine).

e)         declaration that the child did not acquire by birth the nationality any of her parents (at declaration shall be indicated the appropriate provision of law of foreign state according to which the child did not acquire nationality any of her parents. The form of this declaration is approved by Ukrainian legislation).

Upon considering of these documents may be adopted decision to register acquisition of Ukrainian nationality by birth. The person who has the right to acquire Ukrainian nationality by birth is considered to be Ukrainian national from the time of the birth; finalization of acquisition of Ukrainian citizenship only certifies its acquisition.

This procedure of acquisition of Ukrainian nationality may also be applied to the child born with assisted reproductive technologies, as her sole legal parents are considered to be the foreigners and they are registered as such at the child birth certificate.

In situation if neither legal grounds for the child to acquire the nationality of her foreign parents exist nor requirement for acquisition of Ukrainian nationality by birth (indicated above) are met, the legal status of a surrogate born child in Ukraine may be compared to a stateless person. According to the law of Ukraine on Citizenship, Article 1:

The stateless person is a person who is not recognized as a citizen of any state according to the legislation of each state. 

In each particular case it is very important to note the specific requirements of law of intended parents’ citizenship and the national rules of entrance of the country of their residence before entering Ukraine for having a baby through ART and in these circumstances consider suitability to acquire parents’ citizenship for the baby.

Compensation

Assisted reproductive technologies treatment may be applied for state funds only at state health care medical institutions of Ukraine and only upon the decision of the committee of Ministry of Health Care of Ukraine according to the order of the Ministry of Health Care of Ukraine No 579 dated 29 of November 2004. The rights to seek treatment for the state funds have only residents of Ukraine.

Those couples who temporarily enter Ukraine for treatment with assisted reproductive technologies do not have any right to receive state monetary support for child birth with the assisted reproductive technologies. Foreigners have right to receive state monetary support for the child birth only if they permanently live on the territory of Ukraine.

Costs for treatment

The costs for medical treatment with assisted reproductive technologies differ depending from the methods of treatment, clinic tariffs for services, the scope of services, attempts of fertilization e.t.c. It is difficult to determine the general costs for treatment as each case is individual and intended parents have to contact directly the clinic they choose and inquire the possible costs for treatment. Generally speaking the costs for the treatment by surrogate motherhood method (including the compensation for surrogate mother, medical services, legal advice e.t.c.) may constitute from 25 000 to 40 000 USD.

Getting child home. Travel documents.

 The issue of child travel documents is closely connected with the child nationality and the entrance rules of parent’s country of residence. Ukrainian authorities are empowered to give travel documents only for children-nationals of Ukraine according to the law of Ukraine on the Order of Entrance in Ukraine and Departure from Ukraine the Nationals of Ukraine dated January 21, 1994. If the child does not acquire Ukrainian nationality in order described above, Ukrainian authorities are not empowered to give any travel documents for this child and the parents have to apply to consulate or to the embassy of their state in Ukraine and receive travel documents for the child according to their national legislation.

To take the child through Ukrainian border Ukrainian custom authorities will require apart from the child certificate of birth also travel document for the child issued by the consulate of parents country of residence or the child’s name shall be putted down to the parents passports.  

However if the child acquire Ukrainian nationality and finalize its acquisition in order described above, it may be possible to consider the opportunity to receive the child travel document from Ukrainian authorities.

Visa tips

The grounds for foreigners and stateless persons stay on the territory of Ukraine are  regulated by the Law of Ukraine on the Legal Status of Foreigners and Stateless Persons dated 04.02.1994 and by the Rules of Entrance, Departure and Travel in Transit through the Territory of Ukraine by the Foreigners and Stateless Persons and is limited by certain events:

1.         Immigration to Ukraine for permanent residence (foreigners stay in Ukraine according to the permission for permanent residence).

2.         Job placement for a definite period (foreigners stay in Ukraine according to the permission for temporary residence).

3.         Temporary stay on the territory of Ukraine (in case of visa entrance for the period of visa duration ….in case of visa-free entrance no more than 90 days during the 180 days from the first entrance.

Ukraine has set visa free regime for citizens of US, Canada, Japan, European Union countries, Norway, Monaco, San Marino, Andorra, Iceland, Swiss Confederation and Liechtenstein. Visa free regime is established for the period of up to 90 days staying in the country.

 If intended parents come from the country that do not have visa free regime with Ukraine the most possible for them is to get short term visa marked as type C or VC.  Short term visa is processed as one-time, two-time or multiple visa for the period of six month or other period, depending from the documents which are the basis to process visa but no longer than for 5 years period.

The ground to process visa may be invitation from medical institution of Ukraine. The term of foreigners stay on the territory of Ukraine for foreigners on the basis of short term visa (C, VC) may be no longer than 90 days during 180 days from the day of first entrance.

The bodies authorized to process visa are diplomatic representation or consular office of Ukraine on the territory of foreign state.

Consular fees for visa process are as following: one time visa – 85 USD; two time visa – 130 USD; multiple visa – 200 USD.

To process the visa, intended parents shall submit the following documents to the authorized bodies:

1. Filled in visa form together with invitation.
2. Valid passport documents
3. Two photos size 3 x 4
4. Document confirming payment of consular fees.

Authorized bodies may also request other documents confirming the foreigner’s financial status, return tickets, hotel reservation e.t.c.

The number of visits intended parents shall make during assisted reproductive technologies treatment will depend upon the method of treatment and is agreed with the doctor directly in the clinic. Depending from the number of visits they shall make, intended parents shall decide what kind of visa they should process.

Intended parents may stay on the territory of Ukraine within the period specified in visa.  For the extension of the term of stay on the territory of Ukraine foreigners have to get special permission at the Department of Citizenship, Immigration and Physical Persons Registration in established order. The grounds to extent the term of residence on the territory of Ukraine are similar with the grounds for visa receiving according to its specific type (e.g. invitation of specified form or the invitation of medical institution).

The child birth does not establish any special legal ground for intended parents to remain in Ukraine.

Insurance

On 22 of June 2011 Cabinet of Ministers of Ukraine has pass a resolution  On the Order of Rendering Medical Assistance for  Foreigners and Stateless persons who Temporarily Stay on the territory of Ukraine. According to this resolution the cost for medical services rendered for foreigners shall be determined by medical health care institution that has rendered such medical services. Foreigners shall pay for rendered services in cash or non-cash transfer only in national currency.  The foreigners have right to conclude insurance agreement with Ukrainian insurance company according to their insurance programs. In case of occurrence of insured accident covered by insurance policy, insurance company shall pay for medical treatment. Unfortunately Ukrainian insurance companies do not have insurance programs covering treatment by supporting reproductive technologies (including surrogate motherhood).  Therefore intended parents shall bear personally all expenses of supporting reproductive technologies treatment.

We are aware about the following insurance program available for foreign parents in Ukraine:

-          Insurance of surrogate mother in case of disease. Insured accidents may include: death of surrogate mother, dead born child, birth of child with physical deviances.

-          Insurance of surrogate mother from accident

-          Insurance of intended parents’ financial risks. Insured accidents may include: failure to fulfill surrogacy agreement by surrogate mother, non-fulfillment of the agreement by the clinic.

Other possible ways of insurance intended parents may find out directly in clinic, depending on the particular circumstances of the case.

Surrogate motherhood.

One of the most frequently used methods of ART is surrogate motherhood. Under Ukrainian law surrogacy motherhood is defined as the method of infertility treatment by assisted reproductive technologies and is mainly regulated by the Instruction No. 771.

The rights to use surrogate motherhood method have only married spouses.  The intended parents (the spouses) have to pass medical examination in the clinic and file at the clinic all necessary documents as described above (among which the application for use of supporting reproductive technologies treatment, the application of the recipient of donor gametal cells) e.t.c.

The surrogate mother has to present her written drawn up free will to become the surrogate mother and carry the pregnancy, which very often is executed in the form of surrogacy agreement.

Intended parents may use surrogate motherhood method only under certain medical indications provided by the Instruction (e.g. absence of womb, unsuccessful 4 or more attempts to use assisted reproductive technologies treatment, difficult somatic disease which make impossible to carry the pregnancy, deformation of womb e.t.c.). Ukrainian legislation provides the scopes of medical examination for both of spouses and for surrogate mother and the list of contraindications to use surrogate motherhood method.

Under the general rule provided by Article 123(2) of Family code of Ukraine during application of surrogate motherhood method the baby shall be conceived using spouse’s gametal cells. However the Instruction provides opportunity for the spouses amongst other methods of treatment to use donated gametal cells, and establishes the medical indications and procedure of it application. Therefore in practice the child may be conceived using: wife’s egg + husband sperm; donor’s egg + husband sperm; wife’s egg + donor sperm. It is necessary to admit that Ukrainian legislation does not allow using only donor’s gametal cells for baby conceiving. The baby shall be genetically related at least with one of the spouses.

In this relation it worth to draw attention to the decision of Kiev Solomianskyi district court held on 6th of October 2010¹. This case concerns spouses, who came from USA trying to have the baby through surrogacy treatment in Ukraine. They entered into surrogacy arrangements with Ukrainian surrogate mother and pass the treatment in accredited Ukrainian clinic. The child was conceived using donor’s oocytes and donors sperm, neither intended father nor intended mother have biological connection with the born child. In spite of this they were registered as the parents of a child on the child certificate of birth. The deputy prosecutor initiated court proceeding with the demand to nullify the record about the parents of a child.

_______________________________

¹Descision of Kiev Solomianskyi district court held on 6th of October 2010, case No. № 2-2283-1/10

The court satisfied his demands on the basis of article 123(2) of Family Code of Ukraine, which provides:

In case of transplantation to the body of another woman the embryo conceived by the spouses as the result of use of the supporting reproductive technologies the spouses are considered to be the parents of a child.

As the intended parents did not have any biological connection with the child, the court found that they cannot be registered as the parents of a child on a child certificate of birth and hold the decision to amend the records about the child birth at the book of registration of civil status acts and register the parents of a child on the basis of article 135 of Family code of Ukraine which provides the order of registration of child birth if her parents are unknown:

If the parents of a child are unknown, the registration of child birth is made under the decision of Custodian body which determines the surname, name and patronymic name of a child and the records about the parents of a child.

In such a way the court has cancelled the records about foreign parents of a child and deprived them of possibility to be legally recognized as the parents of a child under Ukrainian law.

It worth to pay attention to the fact that surrogate mother also cannot be biologically connected with the child. Such situation neither falls within the notion of “surrogate motherhood” under Ukrainian law nor it has any legal regulation, therefore the surrogacy motherhood in Ukraine is allowed only with use of spouses and donors gametal cells.

Surrogate Mother

The requirements for the surrogate mother are provided by Section 7(4) of the Instruction:

The surrogate mother shall be an adult capable woman provided that she has her own healthy child, presented her written drawn up free will and has no medical contraindications.

Usually each clinic has its database of potential surrogate mothers and the intended parents have opportunity to choose the woman from this database. The surrogate mother may also be the woman acquainted with the intended parents or their relative, provided she meets above mentioned requirements.

There is no any specific requirement as to the marital status of surrogate mother. The surrogate mother and her husband have neither the status nor the rights and duties of parents of surrogate born child.

However, if the surrogate mother is married the issue of receiving the husband consent for a wife to become a surrogate mother may appear. Ukrainian legislation neither entails any rights or obligations to the husband of surrogate mother nor establishes a specific requirement to receive consent of a husband for a wife to become a surrogate mother. Although we consider, that to receive the consent of husband of married surrogate mother is enough sufficient.  The presumption of fatherhood established by the article 123 of the Family Code of Ukraine (2002) provides that the father of a child born in marriage is considered to be the husband of a woman. There is no prohibition in Ukrainian legislation to challenge the paternity on the basis of p.2 article 123 of the Family Code of Ukraine (at assisted reproductive technologies application when the surrogate mother is involved). From this follows, that theoretically the husband of married surrogate mother can challenge the paternity of surrogate born child.

In addition, the consent of a husband of married surrogate mother is necessary to secure the validity of surrogacy agreement. On the assumption of the p.2 article 65 of the Family Code of Ukraine (2002):

The husband has right to apply to the court with the claim about the rescission of the agreement, on the basis it was concluded by another spouse without his/her consent, if this agreement is beyond the scopes of minor domestic agreement.

On the basis of above mentioned provisions, we could make the conclusion, that although Ukrainian legislation neither require to receive the consent of a husband of surrogate mother nor entail any parental rights to him to avoid any possibility of challenging the paternity and to provide the validity of the surrogacy agreement, it is necessarily to receive the husband written consent of married surrogate mother.

Surrogacy Agreement

As a rule in practice to settle the relations on surrogacy, the parties conclude surrogacy agreement which simultaneously present their consent to surrogacy arrangements. Surrogacy agreement may be bilateral (between the intended parents and the surrogate mother) or the medical institution may be included as the third party to the surrogacy agreement.

Ukrainian law is silent as to the necessity of signing of surrogacy agreement, its form, content and the party’s rights and responsibilities under such agreement. Therefore the parties may upon their own discretion decide whether to sign the surrogacy agreement and the terms they would like to agree in it.

As to the legal nature of the surrogacy agreement, it has some features of service agreement, under Civil Code of Ukraine (2003). Consequently the surrogate mother shall be considered the contractor and the spouses who rendered their genetic material for conception are considered to be the customers under the surrogacy agreement.

Therefore the subject of the surrogacy agreement, concluded between the intended parents and surrogate mother shall be worded as “carrying of pregnancy and birth of a child conceived by the spouse after undergoing assisted reproductive technologies treatment”, that is to say, rendering special service by the surrogate mother and receiving for it appropriate compensation.

All others elements of surrogacy agreement, in particular, its term, payments, parties rights and obligations, the terms of its dissolution, suspension, responsibilities of the parties shall be agreed by the parties mutual consent.

It is essential for the parties to follow the general provisions of Civil Code of Ukraine (2003) on agreements to provide the validity of surrogacy agreement.

The content of this agreement shall not contradict with the provisions of this Code, other acts of civil legislation and with the moral bases of the society (art.203 of Civil Code of Ukraine)

 It is necessary to point out some requirements for conclusion of surrogacy agreement which are necessary to follow to provide its validity under Ukrainian law:

•          The surrogacy agreement shall be concluded till the moment of embryo conception and its transference to the surrogate mother. The surrogacy agreement concluded after the child conception may be considered as the agreement on transfer of child and may be invalidated (Civil Code of Ukraine 2003).

•          A person cannot be the subject of the civil agreement; therefore the wording of the subject of the surrogacy agreement cannot provide transfer of a child to the biological parents by the surrogate mother or transfer/relinquish of parental rights (Civil Code of Ukraine 2003).

•          Assisted reproductive technologies may be used only by the spouses who have registered their marriage; consequently the surrogacy agreement shall be concluded only by the spouses who have registered their marriage. (art. 123 of the Family Code of Ukraine 2002).

•          The parties of the surrogacy agreement shall be adult and capable persons (art. 203 of the Civil Code of Ukraine 2003).

•          The surrogate mother shall be an adult capable woman provided that she has her own healthy child, presented her written drawn up free will and has no medical contraindications. The surrogate mother shall be objectively informed concerning the procedure of application of supporting reproductive technologies treatment (Instruction # 771).

Another very important issue is the legal form of the surrogacy agreement. A great number of Ukrainian scientists, among them Viktirya Moskalyk (candidate of legal science, lecturer of the department of civil law and procedure of Kharkiv National University of Internal Procedures) in her article published in the journal “Notary for You” №12 (86) December 2006 considers that this agreement for the purpose of the rights and interests of the parties and the rights of surrogate born child shall be concluded in writing and notarized. Notarial certification of surrogacy agreement in some aspects will guarantee the validity of this agreement (in particular legal capacity, free will of the parties of the agreement, the presence of necessary documents for it conclusion) and make impossible its invalidation in these aspects. Nevertheless, the absence of notarial certification of surrogacy agreement does not lead to its invalidation and the parties have right to decide whether they want to notarize such agreement. The parties are free to agree whether to make notarial certification of such agreement. 

Payments under Surrogacy Agreement

I would like also to dwell upon the legal grounds of the payments which may be agreed and received by the surrogate mother under surrogacy agreement.

The general provisions of Civil Code of Ukraine 2003 on agreements (Art. 632) provide:

1.         The price in the agreement shall be determined by the mutual consent of the parties.

On the assumption that the surrogacy agreement is the kind of agreement for rendering services, the provisions of the Civil Code of Ukraine 2003 about the payments under the service agreements shall apply. In relation to the payments there are two kinds of service agreements under the Civil Code of Ukraine 2003: the service agreement on fee basis and the service agreement on free of charge basis.

The provisions of Civil Code of Ukraine on Service Agreements Article 903:

If the agreement provides rendering services for fee, the customer shall pay for rendered services the amount, within the terms and in order, determined in the agreement.

      Article 904 of Civil Code of Ukraine 2003:

Under the free of charge service agreement the customer is obliged to compensate to the contractor all actual costs for rendering services.

At the absence of specific legal regulation, there are different views of Ukrainian scientists to this issue. For example, Viktoria Moskalyk (candidate of legal science, lecturer of the department of civil law and procedure of Kharkiv National University of Internal Procedures) in her article published in the journal “Notary for You” №12 (86) December 2006 considers that the price under the surrogacy agreement may consist of two parts:

1.         Compensation of actual costs of surrogate mother connected with the execution of the agreement, this includes the costs for: medical treatment, increased nourishment, medicines, loss of salary e.t.c.

2.         Reward for rendered services, agreed by parties’ mutual consent, this reward shall not include the surrogate mother expenditures connected with pregnancy and child birth.

Antonov S.V. candidate of legal science, attorney-at law, research worker of the Institute of State and Law named by V. M. Koretskiy  in his article “The Legal Regulation of Application Supporting Reproductive Technologies and Protection of Rights of its Participants in Ukraine and Abroad” considers that correctly composed surrogacy agreement may establish only monetary compensation with the aim of creation of the most favorable conditions for carrying of pregnancy by surrogate mother and her further rehabilitation .

To my mind, in any case special attention shall be paid to the wording of the provisions of surrogacy agreement about the payments. The payments cannot be made for the transfer of a child or the transfer or deprivation of parental rights of surrogate mother, as it will come into conflict with Ukrainian legislation and moral bases of the society. At the same time Ukrainian law does not forbid to establish the special remuneration to the surrogate mother for rendering services of carrying of pregnancy and child birth and/or compensation of all reasonable expenses connected with rendering of such services, in particular costs for loss of salary, medical treatment, medicines, clothes, housing e.t.c.

In what circumstances intended parents are recognized as the parents of surrogate born child?

The intended parents are recognized automatically as the parents of a child by virtue of law provisions. However there are certain requirements for them to follow at the procedure of assisted reproductive technologies application provided by law to be recognized and registered as the parents of a child:

1.  To pass the treatment by supporting reproductive technologies by the method of surrogacy in accordance with the Instruction # 771.

2. Prior to the conception the intended parents have to present their written consent for implantation and carrying of an embryo conceived after undergoing IVF treatment by the surrogate mother. This follows from the article 123 (2) of the Family Code of Ukraine and  article 48 of the Law of Ukraine on Fundamental Legislation on Health Care adopted on 19 of November 1992:

Artificial fertilization and embryo implantation shall be accomplished in accordance with the conditions and order established by the Ministry of Health Care of Ukraine by the medical indications of adult woman subject to such actions provided the presence of written spouses consent, securing the donor anonymity and protection of medical secrecy.

3. Prior to the conception the surrogate mother shall present her written drawn up free will to become surrogate mother, carry the pregnancy and born the child for intended parents.

In practice the consent of intended parents and surrogate mother may be executed by signing of surrogacy (gestational) agreement.

4. The surrogate born child shall be biologically related at least with one of the parents. According to the Instruction # 771:

Registration of a child, born with the assisted reproductive technologies by means of surrogate motherhood is accomplished in order established by active Ukrainian legislation at the presence of the certificate on the genetic connection between the parents (mother or father) and the embryo.

5. The surrogate mother shall present her notarized consent to register the intended parents as the parents of the child at child certificate of birth.

Donation of gametal cells and embryos

According to the Instruction No.771.

Donation of gametal cells and embryos is the procedure, by which the donors by their written, voluntary will give their sex cells - gametal cells (sperm and oocyte) or embryos for infertility treatment in other persons.

The donors of gametal cells cannot undertake parental obligations as to the prospective baby.

The donation of gametal cells and embryos is carried out at the presence of Application of oocyte donor, Sperm donor Application, Embryos donors’ application.

The donor of oocytes may be:

-Female acquainted with the patient;

-Anonymous voluntary donors;

- Patients of supporting reproductive technologies program, who under their written free will gave for the recipient part of their oocytes.

The sperm donor may be male from 20 up to 40 years old at the condition that he has his own healthy born child.

Instruction No. 771 provides certain physical and healthy requirements for oocyte and sperm donors, the scope of medical examinations for sperm and oocyte donors, the list of documents required from oocyte and sperm donors, the scheme of oocyte donation.

Intended parents may use donors’ gametal cells for child conception only under certain medical indications provided by the Instruction No. 771. Usually the clinic have it database of donors.

Anonymity of Donors

Under the Instruction No. 771:

The phenotypic portrait of donors of gametal cells and embryos donors shall be provided for the recipient.

In other words intended parents receive only non-personified information about medical-genetic examination of anonymous donors, their nationality, appearance, e.t.c.

The use of donor gametal cells and donor embryos is carried out by the Application of the recipient of donor gametal cells/embryos (the form of this application is established by law).

 Signing this application intended parents oblige them not to disclose the personality of donors.

Besides, according to the Law of Ukraine on Fundamental Legislation on Health Care adopted on 19 of November 1992 Article 48:

Application of artificial fertilization and embryo implantation is made with securing of donors anonymity and preservation of medical secrecy.

Disclosure of donor’s anonymity may be accomplished in order established by Ukrainian legislation.

At the date there is no enacted legal act in Ukraine providing special circumstance to disclose the donor’s anonymity.

Do the donors entail any rights or duties in relation to the child?

In accordance with chapter 5 part 2 of the Instruction No. 771:

The donors of gametal cells cannot undertake parental obligations as to the prospective baby.

At assisted reproductive technologies treatment Ukrainian legislation proceeds from the presumption of parentage of intended parents (art. 123 (2) Family Code of Ukraine 2002) and does not endue any parental rights to the donors of gametal cells.

The sperm and oocyte donors cannot undertake any parental right to the baby at assisted reproductive technologies treatment in any circumstances.

The parents who are the patients of assisted reproductive technologies treatment and gave their consent for use of donor’s gametal cells are considered to be the sole legal parents of child born with assisted reproductive technologies, even when the embryo was conceived with the genetic material of one of the parents (sperm or oocyte) and the donor’s gametal cell.

Difficulties of Getting Child Home

The majority of difficulties arise after the child birth when the parents meet the problems of getting the child abroad to their home. From the first glance, it seems that no any problems may appear, as surrogacy motherhood is legal in Ukraine and being registered as the parents of a child on a child birth certificate, the spouses can easily obtain necessary travel permissions.  However everything is much more complex and complicated. Usually the possibility to get the child travel documents depend on the legal regulation of surrogacy in the country of parents’ jurisdiction. Surrogacy motherhood is allowed only in 15 countries, the rest of counties forbid it, even establish criminal responsibility or allow under certain conditions. For instance: surrogate motherhood is forbidden in Denmark, France, Netherlands, Sweden, Austria e.t.c. In Hungary and Brazil the surrogate mother may be elected only among the closest relatives. Some countries permit only non-commercial surrogacy and very often recognition of the spouse’s paternity over the surrogate born child in is possible only through the court proceeding (England, Ireland).

It worth to remind situation when on 21 of March 2011 French parents tried illegally to take out to France their twins daughters born by Ukrainian surrogate mother, hiding them in the furniture trunk of car salon, however they were apprehended by Ukrainian customs authorities.  In spite the fact, that they have passed the treatment in Ukraine in accordance with Ukrainian law, and have been legally recognized as the parents of children in Ukraine and registered as such on children’s certificates of birth, they could not receive children’s travel documents at French embassy, as surrogacy is forbidden in French. In such circumstances they decided to get their children to France illegally. Ukrainian authorities have brought a criminal case against the parents and grandfather of the children under the p.2 article 332 of Criminal Code of Ukraine for the illegal passing of the children through Ukrainian border.

On 21 May, 2001 Ukrainian court proclaimed a verdict in their criminal case No. 1-131/11 and convicted the parents and grandfather of children under p.2 article 332 of Criminal Code of Ukraine and impose a penalty in total sum of 29 000 hryvnia’s  with confiscation of wagon.

The fact is that in the majority of cases, legal recognition of the spouses’ paternity in Ukraine does not create any parental rights for them in the country of their residence. Therefore before entering Ukraine for surrogacy arrangements it is necessary to investigate the legal regulation of surrogacy in the domestic jurisdiction of foreign parents and make sure that there is legal possibility to take the child home and recognize the paternity in the country of the parent’s residence.

Another interesting case concerns parents from Canada, who have passed ART treatment in Ukraine by the method of surrogate motherhood. Under the Canadian law, if the child is born by the surrogate mother, the national court of the country where the parents pass the treatment has to confirm by its decision the fact of paternity and give the permission for child going abroad.  So, Canadian parents applied to Shevchenkivskiy district court of Zaporizhya city and successfully gain a court decision dated 13 December 2010 in their case No. 2-0-239/10. The court has ascertained the juridical fact that the Canadian spouses are legal parents of a child born by the surrogate mother and gave the permission for the child to go to Canada or any other foreign country accompanying with the parents.  

Summary

Assisted reproductive technologies are legal in Ukraine and are recognized as the methods of infertility treatment. Ukrainian jurisdiction allows for the intended parents to be legally recognized as the parents of the child and registered as such on child certificate of birth. However Ukrainian recognition of child paternity does not create any grounds for the intended parents to recognize the paternity in the country of their domicile if assisted reproductive technologies are restricted or forbidden there. Therefore before entering Ukraine for assisted reproductive technologies treatment, intended parents have to consider all legal aspects of their paternity recognition in Ukraine and abroad and receive competent legal counseling. Only cognizance of domestic and Ukrainian law may serve as a good pledge of their legal paternity over the tiny baby.

Extract from the Rules of Registration of the Civil Status Acts in Ukraine approved by the decree of the Ministry of Justice of Ukraine adopted on 18 October 2000.

(Registration of surrogate born child)

Chapter 1 Clause 8: the registration of civil status acts upon the application of foreigners and stateless persons is carried out in accordance with the Ukrainian legislation.

Chapter 1 Clause 4: The documents made in foreign language shall be submitted for the registration civil status acts together with its translation into Ukrainian language, certified in established order.

Chapter 2 Clause 8: For registration civil status acts the parents shall pay duty, in order established by Ukrainian legislation.

 Chapter 3 Section 1 Clause 1: Registration of child birth is accomplished by the bodies of civil status acts registration simultaneously with the determination of the origin of a child and awarding surname, name and patronymic. 

 Chapter 3 Section 1 Clause: The ground for registration of birth is:

a) Medical birth certificate form No 103/о (approved by the order of the Ministry of Health Care of Ukraine adopted on 8 of August 2006 № 545) issued by the medical institution, irrespective of subordination and form of ownership, where the child was born.

Chapter 3 Section 1 Clause 3: The registration of birth is accomplished by the bodies of civil status acts registration by the place of child birth.

Chapter 3 Section 1Clause 8: The registration of a birth is carried out upon the oral or written application of child parents or one of them….The application about the child registration shall be lodged by the parents immediately at the latest one month after the child birth. Failure to fulfill this obligation is the ground to impose responsibility to the child parents established by the law.

Chapter 3 Section 1 Clause 11: Simultaneously with the application about the registration of birth shall be submitted the following documents: a) Passports or passports documents, certifying the persons of parents (or one of them).

Chapter 3 Section 1 Clause 10: In case of birth of a child by a woman who has undergone the embryo implantation conceived consequently by spouses after application the supporting reproductive technologies treatment, the registration of a birth is conducted by application of the spouses who presented their consent for such implantation. In this case simultaneously with the document confirming the fact of a child birth by this woman shall be tendered her notarized written consent to record the spouses as the parents of a child. Herewith in the column “For marks” the appropriate record is made: the mother of a child according to the medical birth certificate form No 103/o is the citizen (surname, name, patronymic).

Section 7 (11):

Registration of a child, born with the assistance of supporting reproductive technologies by means of surrogate motherhood is accomplished in order established by the active Ukrainian legislation at the presence of certificate on the genetic connection between the parents (mother or father) and the embryo.

Decree of the Cabinet of Ministers of Ukraine on the Approval of the Standard Forms of the Book of Civil Status Acts Registration and Description of the Certificate Blanks Issued by the Body of Civil Status Acts Registration adopted on 12 of September 2002

(EXTRACT)

The following information is recorded at the certificate of birth:

..surname, name and patronymic, the date and place of birth of a child, the date and number of the appropriate record at the registration book of civil status acts, surname, name and patronymic, nationality of father and mother of newly-born, and also the place of registration, the body issuing the certificate of birth and the date of issuing.

Decree of the Ministry of Health Care of Ukraine adopted on the 23 of December 2008 On the Approval of the Instruction about the Order of Supporting Reproductive Technologies Application. (Instruction No 771)

 (EXTRACTS)

1. General

1. Instruction about the order of application of assisted reproductive technologies (farther is Instruction) determines the order and terms of application of methods of assisted reproductive technologies (farther - ART).

2. Instruction is obligatory for all establishments of health care regardless of their form of ownership and subordination.

ART are methods treatments of infertility by which manipulations with reproductive cells, separate or all stages of preparation of cells, the process of fertilization and the embryo growth before its transference to the recipient womb is accomplished in-vitro.

3. ART is carried out exceptionally in the accredited establishments of health care.

4. Patients can freely choose establishment of health care for application of ART.

5. Procedures of ART are carried out by specialists who own necessary professional skills.

6. ART is used by medical indications under the voluntarily consent of patients executed in writing, and on Statement of patient/patients for application of ART (Appendix 1).

7. Adult woman and/or man have right by medical indications for application of the medical programs of ART in accordance with the article 281 of the Civil code of Ukraine.

8. A question concerning application of methods of ART is decided after execution of Statement of patient/patients in relation to application of ART (Appendix 1) and after appropriate examination.

9. Adult woman or man who have a right by medical indications on application of the medical programs of ART, are determined by the state of somatic and psychical health, results of hormonal and medical-genetic examination, at absence of contra-indications to maturing of pregnancy and birth of child.

10. Data of examination and inspection of patients are brought into the Medical card of patient (Appendix 2) on the basis of form of No 025/o the "Medical card of outpatient", ratified by the order of Ministry of Health Care of Ukraine from 27.12.99 No 302.

11. At the absence of contra-indications to application of ART, patients are directed for treatment to health care institution regardless of form of ownership at presence of results of examination. Patients can apply for application of treatment by the methods of ART directly, without direction.

12. After application of ART the letter of incapacity is given out to working patients in accordance with the order of Ministry of Health Care of Ukraine from 13.11.2001 No 455 "On approval of Instruction about the order of issuance of documents which certify the temporal incapacity of citizens", registered in Ministry of Justice of Ukraine 04.12.2001 under No 1005/6196.

13. The clinical observation of patient who has passed ART is carried out in accordance with the order of Ministry of Health Care of Ukraine from 28.12.2002 N 503 "About the improvement of ambulatory obstetric-gynecological help in Ukraine".

14. Implementation of every methods of ART is conducted with the obligatory clinical monitoring and control of general state of patient. In the case of violation of the mode of treatment by patients further medicare by methods of ART can be cease on reasonable determination of doctor.

15. Contra-indications to application of ART are diseases, defined by Apendix 1 to Order of direction of women for realization of the first course of treatment of infertility by the methods of assisted reproductive technologies under absolute indications for budgetary funds, ratified by an order of Ministry of Health Care of Ukraine from 29.11.2004 No 579, registered in Ministry of Justice of Ukraine 15.02.2005 under No 224/10504.

16. Medical assistance by the methods of ART is given in the conditions of confidentiality in accordance with the article 40 of Law of Ukraine on Fundamental Legislation on Health Care.

17. Specialists who render medical assistance to the patients by the methods of ART inform them of possible inefficiency of attempts of ART (failure of pregnancy) and possible complications.

2. A volume of inspections of persons, who pass the medical programs of ART:

1. Volume of inspection of woman

Obligatory:

- Conclusion of therapeutist about the state of somatic health and absence of contra-indications for maturing of pregnancy;

- Determination of blood type and rhesus-factor;

- Clinical blood test, that takes into account time of rolling up;

- Blood test on a syphilis, HIV, hepatitis of B and C;

- Bacteryoscopic analysis of excretions from three points (vagina, urethra and zerkvilkalniy channel);

- Cytological examination of smear from the neck of uterus;

- Common gynecological inspection;

- Ultrasonic inspection of organs of small pelvis.

Under Indications:

- Inspection of uterus and uterus tubes;

- biopsy endometria;

- Bacteriological inspection of material from urethra and zerkvilkalnyi channel;

- Analyses of blood folitripin (ФСГ), liutropin (ЛГ), estradiol (Е2), prolactin (Прл), testosterol (Т), cortizol (К), progesteron (П), tyrocsyn (Т3), triiodo-thyronine (Т4), tyreotporin (ТТГ), somatotropin (СТГ);

- Inspection of presence of antispermal and antiphospholipid antibodies;

- Inspection on urogenital and TORCH infections;

- Examination of other specialists under doctor determinations;

- Medical genetic advising and karyotyping;

- Fluorography.

At the discovery of diseases at presence of indications to ART shall be conducted the treatment of discovered pathology.

2. Volume of inspection of man

Obligatory:

- Blood test on syphilis, HIV, hepatitis of B and C;

- Spermogramma.

Under Indications:

- Determination of blood and Rhesus-factor type;

- Consultation of androlog;

-Medico-genetic advising and Karyotyping;

- Inspection on the infections of TORCH;

- Blood test on filitpropin (ФСГ), lutropin (ЛГ), testosterone (Т), prolactin (Прл).

3. Methods of treatment by ART

1. Indications for in vitro fertilization (farther IVF):

- Absence of uterus tube;

- Impassability of uterus tube;

- Masculine fruitlessness;

-  Fruitlessness of undefined genesis;

- diseases which need preimplantation genetic diagnostics (farther - PGD) for the exclusion of possibility of birth of child with the inherited pathology.

2. Contra-indication for reapplication of IVF are determined in accordance with the point 15 chapter 1 of this Instruction.

3. Stage of accomplishing IVF:

- Selection and inspection of pa

The principal structure of legislation consists of laws adopted by Parliament (Verkhovna Rada) and international agreements of Ukraine duly ratified or acceded to by Verkhovna Rada. Laws are implemented through various normative acts, which are adopted by the relevant government bodies (i.e. the President, the Cabinet of Ministers, Ministries and State Committees).

Ukrainian legislation provides that (with some few exceptions). Foreign investors are authorized to carry out their investment activity in Ukraine on the same basis as domestic investors. This relates to types of investments, available investment vehicles, and investment targets.

The Law of Ukraine On Investment Activity, adopted on 18 September 1991, establishes the general principles of investment activity on the territory of Ukraine, irrespective of the nationality of the investor.

Certain Peculiarities of making foreign investments in Ukraine are regulated by the Law of Ukraine On the Regime of Foreign Investment (the Foreign Investment Law), adopted on March 19, 1996.

1. Setting up the business by the foreign investor in Ukraine.

To start with, the current issue of the present article, taking into account that the legal entity considered is a foreign investor I have to mention that the regime of activity of the companies with foreign investment capital and domestic companies nowadays doesn’t differ, since the major purpose of such equality - to level the playing field for all companies on the Ukrainian market, mainly without providing the incentives for a much-needed injection of foreign investment capital.

The legal analysis hereof offer the general options for the foreign non-productive investor, without the conditions precedent, such as the type of economic activity, the major goals of such activity, long duration of the investors’ business plans. Therefore the following analysis considers the general conditions for the business startup, its development, financial activity, taxation and major legislative pitfalls, the foreign investor may face while conducting the business activity in Ukraine.

1.1.1. Types of companies/business structure to commence the business, company management structure.

The basic forms of companies are established by the Ukrainian Civil Code (No. 435-IV, dated January 16, 2003, effective January 1, 2004, hereinafter – Civil Code) and Economic Code (No. 436-IV, dated January 16, 2003, effective January 1, 2004, hereinafter – Economic Code) and by the Law of Ukraine “On Economic Associations”, therefore the major analysis are made, basing and referring to the above-mentioned basic by-laws, regulating the process of foundation and organization of enterprises in Ukraine.

Civil Code and Economic Code in their most efficient combination provide various types of companies, which are also known as legal entities – organizations, which are established and registered pursuant to the procedure established by law.

The following principal types of companies, certain types among which, present a special interest for us, can be founded in Ukraine:

1. Private enterprises;
2. Collective enterprises;
3. Communal enterprises;
4. State enterprises;
5. Other enterprises, which are provided by law. This “type” of companies, leaves plenty of space to add various types of companies in the future.

Civil and Economic Code, Law of Ukraine “On Economic Associations” govern the types of companies, known as economic associations or corporate enterprises, created as a rule, by two or more founders, pursuant to their mutual agreement, acting on the basis of union of property and/or entrepreneurial or labor activity of the founders (participants), and their mutual administration of affairs on the basis of corporate rights, including via the authorities, which are created thereby, and the participation of the founders (participants) in the division of profits and risks of the enterprise.

Among those companies are:

• Stock companies (Closed Joint - Stock Companies, Open Joint-Stock Company);
• Companies with limited liability; - Companies with additional liability;
• General partnerships;
• Limited partnerships.

Notwithstanding the range of business structures, offered under Ukrainian law, foreign companies’ options in Ukraine are limited to one of the following four alternative business structures:

• representative office – which is not a legal entity, however can be either commercial, leading economic activity or non-commercial.
• Wholly-owned foreign subsidiary or enterprise - usually with limited liability, which can be provided in their statutory documents.
• “joint ventures”- companies with foreign participation – either in form of a closed joint stock company or limited liability company. Ukrainian legislation permits a foreign investor to conduct business in Ukraine without creating a legal entity by entering into a Joint Activity Agreement with a Ukrainian legal entity.
• Agreements on joint cooperation and production, which do not require registration of a separate legal entity.

One significant consideration in selecting the appropriate business structure involves Ukrainian foreign currency legislation, which categorizes the above structures as either non-residents or residents, depending on the type of activities carried out by the structure. Non-commercial representative offices are usually considered “non-residents” under currency regulations and tax legislation, while subsidiaries and joint ventures are classified as residents because they are legal entities, registered and residing in Ukraine for more than 183 days per year. While the distinction is not clearly expressed in other laws, it is significant in terms of tax consequences and the ability of foreign businessmen to effectuate transactions in foreign or local Ukrainian currency.

Both subsidiaries and joint ventures have the status of separate corporate entities, and thus, both limit and investor’s liability to its initial investment. As Ukrainian corporate entities, joint ventures and subsidiaries are considered to be “residents” under Ukrainian currency legislation, they are subject to a different financial regime, than “non-residents”. For instance, resident companies must transact business in Ukrainian currency only, which has historically shown a disturbing tendency to devaluating and revaluating, thus such instability presents a possibility of impact on the profit earning of the company.

Whereas enterprises may be created for carrying out entrepreneurial activity or non-commercial activity, we are interested in considering in more details such type of enterprises as economic associations, which are created solely for the purpose of profit-generating activity. However, sometimes for reasons of corporate strategy, foreign investors register both structures (non-resident representative office and wholly-owned resident company), to give them greater flexibility in performing transactions in foreign and Ukrainian currency. In item 1.2. hereof we are going to analyze in greater details the possibilities of financial operations.

Let’s review the general characteristics of the above-listed legal entities, as for the better understanding of their business structure, so for the possibility to choose the most convenient for establishing and profit earning.

A.) A representative office of a foreign company is not a separate legal entity, but is considered to be a “representative” of a foreign company in the other country, being not incorporated under Ukrainian law, which simply represents the interests of a foreign legal entity on Ukrainian territory. Those offices are subject to a special financial regime under tax laws. The key function of such non-resident representative offices is to service existing contracts between the non-resident company and a Ukrainian customer, but not to engage in commercial activities on its own behalf. This arrangement legally allows the non-resident company to earn foreign currency abroad while expanding its market area in Ukraine.

On one hand, one has to admit a certain advantage of the representative office of a foreign company in Ukraine, over a Ukrainian company: the ability to legally earn foreign currency and to keep it abroad. On the other hand, it has its drawbacks either: it can enter into contracts only on behalf of the parent company, cannot carry out sales in Ukrainian currency, and hire full-time employees without registration with the relevant government agency.

B.) Wholly-owned foreign subsidiaries and joint ventures are usually organized in the form of either closed joint-stock companies or limited liability companies, correspondingly depending on the particular requirements of the project.

Whereas in the conditions precedent, I didn’t receive the detailed description of the projects, for the purposes of which the current legal opinion is composed, therefore the analysis below contain the review of both business forms of wholly - owned foreign subsidiaries as both “residents” under the Ukrainian currency and tax regulations and, both having the liability of founders and shareholders being limited only to the value of their contributions to the company and therefore considered more adequate form of business structure for foreign investor.

On one hand, one has to admit a certain advantage of the representative office of a foreign company in Ukraine, over a Ukrainian company: the ability to legally earn foreign currency and to keep it abroad. On the other hand, it has its drawbacks either: it can enter into contracts only on behalf of the parent company, cannot carry out sales in Ukrainian currency, and hire full-time employees without registration with the relevant government agency. B.) Wholly-owned foreign subsidiaries and joint ventures are usually organized in the form of either closed joint-stock companies or limited liability companies, correspondingly depending on the particular requirements of the project. Whereas in the conditions precedent, I didn’t receive the detailed description of the projects, for the purposes of which the current legal opinion is composed, therefore the analysis below contain the review of both business forms of wholly - owned foreign subsidiaries as both “residents” under the Ukrainian currency and tax regulations and, both having the liability of founders and shareholders being limited only to the value of their contributions to the company and therefore considered more adequate form of business structure for foreign investor.

Several differences exist between these types of companies. For example, in a limited liability company, the founders own equity in the company (or in the statutory capital of the company, formed by the contribution of the equities by the founders or by the founder), expressed by a percentage of ownership. Joint-stock company issues a share of stock, to be purchased by the founders and consequently form the statutory capital of the company. According to the Economic Code and the Law “On Economic Associations” a stock company requires at least two founders, which may be either legal entities or individuals. However Article 154 of the Civil Code states that “a joint stock company may be created by one entity or may consist of one entity in case of the acquisition by shareholder of all shares of the company”. Limited liability company is allowed to be founded by a sole founder, however according to the Civil Code it may not have another business company as its sole participant if such company has only one participant/shareholder in its shareholding.

The management structure of a stock company and that of a limited liability company is very similar with a few minor variations. The three-part structure is headed by the “general assembly of shareholders (in limited liability company - ”general assembly of participants”), which represents the interests of the company owners. The next level, “the supervisory council” - is optional in both types of enterprises; however it is commonly organized in the stock company structures, but smaller companies tend to disregard it. And, finally, Management board (“Executive board”), performs the company’s day-to-day functions.

In practice, simple joint venture or 100% foreign-owned companies usually register in the form of Limited Liability Company. This company structure allows a relatively small number of people to avoid a complex multi-layered management structure composed of a general assemble, supervisory council and management organs and to avoid registration of shares of stock. It is particularly attractive in cases of 100% foreign-owned companies because the charter can provide for one executive organ where the founder has complete and unequivocal control.

1.1.2. Capitalization issues.

The Law “On Economic Associations” governs the formation of joint stock companies and limited liability companies, and contains no limitations on the size of statutory capital for joint stock companies, provided however that the company’s statutory capital is divided into shares of stock of equal nominal value. The Law “On the Foreign Investment Regime” only encourages large amounts of foreign investment in all shapes and sizes. Accordingly, a joint stock company may have as large a statutory capital, as it wishes.

The minimum capitalization for registration of joint stock company is 1, 250 minimum monthly salaries, while the minimum statutory capital of Limited Liability Company must be at least 100 minimum monthly salaries. By the Law of Ukraine “On making amendments to the Law of Ukraine “On the State budget for the year 2006” the minimum monthly salary from the July 1, 2006, as it is actual for the current analysis, is established on the of UAH 375. Any Ukrainian and/or foreign investor is permitted to register a company subject to these absolute minimum.

As a result of recently enacted decree of the National Bank of Ukraine, a foreign investor may make cash contributions into a Ukrainian legal entity only through special investment accounts opened by the foreign investor with a Ukrainian commercial bank (as opposed to the transferring funds from abroad directly to the bank account of its Ukrainian subsidiary as was previously the case).

Shareholders of stock companies and founders in limited liability companies must make initial pre-registration deposits towards their contributions prior to registration. According to the Law “On Economic Associations”, 50% of a shareholder’s contribution must be paid prior to registration if shares are originally distributed amongst the founders of a joint stock company (30% if shares a re distributed via an open subscription – for open joint stock companies. In limited liability companies, however, the legislation is still unsettled as the Law “On Economic Associations” calls for a 30% of a participant’s contribution to be paid by the moment of state registration of a company, while a Civil Code requires 50% of a participants contribution to be paid prior to registration. In practice, since Civil Code is higher up than laws in the hierarchy of Ukrainian legislation, I believe, that the 50% rule governs. However, changes to the Law “On Economic Associations” are widely expected in the near future. The remaining sum must be paid, in its entirety, no later than one year after registration of both types o companies. In joint stock companies, shares of stock may be given to the shareholder only after they have fully paid for such shares. Note, that the founders may not circumvent these rules in the statute by providing, for instance, that the joint stock company may hold authorized but unissued stock for more than one year.

Foreign investors have the right to invest by using the following forms:

• hard currency;
• Ukrainian currency as a re-investment into the existing or a newly established enterprise;
• any movable or immovable property and property rights connected with it;
• shares, bonds, other securities and other corporate rights;
• monetary claims and claims under contracts, valued in a hard currency and guaranteed by first rank banks;
• any intellectual property rights with confirmed estimation in hard currency according to the laws of the investor's country of residence, including copyrights, trademarks, firm names, know-how, and others;
• rights in respect of economic activities, including exploration and utilisation of natural resources valued in hard currency and conferred and valued under the laws of the investor's resident country.

Foreign investment can be executed in the form of contribution of fixed assets in return for a share in the statutory capital of a Ukrainian company. These assets shall be valued in both foreign convertible and Ukrainian currency by agreement between the parties, based on International or Ukrainian market prices and using the applicable exchange rate of the National Bank of Ukraine. Please note that under current Ukrainian legislation foreign investment in kind is exempted from VAT and import duties. However, if the goods contributed are subject to excise duties, the exemption from VAT and import duties does not apply. If the investment is disposed of within 3 years from the moment of registering a foreign investment in the books of the Ukrainian entity, all the relevant import duties will be due.

Finalizing the item 1.1. herein, there is a need to mention that certain issues, such as: state registration of the company, details in the management structure organization, special requirements to the capitalization, management structure and type of company, depending on the type of economic activity, reputed to be carried by the foreign investor, are omitted on purpose. The purpose of such omission is, whereas, the present article has generally to be focused on the issues which are of the greatest interest for the investor. Describing the issues herein, the purpose is to give an overview of the corporate legislation and current situation on business set up in Ukraine. Subsequently, certain issues, being specified by the investor, shall be reviewed in a greater detail.

1.2. Business activity

1.2.1. Taxation

Legal entities, generally described above, incorporated to and operating under the legislation of Ukraine are normally treated as tax residents and are taxable on their world wide income. Legal entities incorporated abroad and operating under the laws of another country are normally treated as foreign tax residents and are taxable on two sources of income:

• Business income received from carrying out trade or business in Ukraine, and
• Other non-business income received from Ukrainian sources.

According tot he Law of Ukraine No. 334/94 “On Taxation of Profits of Enterprises”, dated December 28, 1994 (herein the “Profit Tax Law”), the tax on companies is known as corporate income tax. Currently, this tax is calculated at a flat rate 25%. However, that separate tax rules pertain to insurance companies, operations with securities and to agricultural enterprises.

Under domestic tax accounting rules, tax items are normally recognized on the basis of the cash-accrual method (first event rule). The tax year corresponds to the calendar year. Taxpayers must submit tax returns for a calendar quarter, half year, three quarters and calendar year, and make quarterly tax payments. Quarterly tax returns must be submitted within 40 days following the last calendar day of each calendar quarter, half year and three quarters and the fourth quarter.

Resident entities are taxable on their worldwide income received or accrued within a reporting period. The amount of taxable income is determined by subtracting allowable deductible expenses and capital allowance from gross income.

Gross income is defined as any income from domestic or foreign sources received or accrued by taxpayer from any activity. Such income may be in monetary, tangible and intangible form. The “Profit Tax Law” also describes the items included in and excluded from the gross income, deductible expenses etc. Capital allowance or, in other words, depreciation of fixed assets and intangible assets, under the “Tax Profit Law” means – the gradual carrying forward of expenses for the acquisition, manufacturing or improvement of such fixed and intangible assets and for decreasing the adjusted profit of a taxpayer.

Non-business income from Ukrainian sources is normally subject to withholding tax on a gross basis, provided such income is not attributable to a non-residents permanent establishment in Ukraine. Withholding is made by a resident taxpayer when income is paid to a non-resident.