Can Companies with Foreign Owners Buy Land in Ukraine: The Grand Chamber to Consider a Landmark Case

The Commercial Cassation Court within the Supreme Court has referred a case concerning the sale of a land plot, which was leased by a telecommunications operator, to the Grand Chamber of the Supreme Court. The court concluded that the case contains an exceptional legal issue, the resolution of which is necessary to ensure the uniformity of judicial practice.

The dispute centers on the application of Article 82 of the Land Code of Ukraine and the determination of whether legal entities established under Ukrainian law, but whose participants or shareholders later became foreign legal or natural persons, can acquire ownership of non-agricultural land plots.

Circumstances of the Case

In 2007, the village council leased a land plot of 0.07 hectares for 25 years for the placement of a communication facility. In 2021, the local self-government body decided to sell this plot to another business entity and provided for the termination of the lease agreement after the state registration of the buyer's ownership rights. In November 2022, the parties concluded a land sale agreement.

The lessee appealed to the commercial court, claiming that his preemptive right to purchase the land plot was violated during the alienation. The plaintiff requested the cancellation of the village council's decision and the transfer of the buyer's rights and obligations under the concluded agreement to him.

Consideration of the Case by the Courts

During the first hearing of case No. 926/3616/23, the courts partially satisfied the claim. However, in October 2024, the Supreme Court annulled the decisions and sent the case for reconsideration, drawing attention to the need to assess the possibility of transferring the buyer's rights to the plaintiff and to evaluate the parties' arguments regarding the application of Article 82 of the Land Code of Ukraine.

After reconsideration, the local commercial court concluded that the local self-government body did not ensure the realization of the lessee's preemptive right to purchase the land plot. The court satisfied the claim and transferred the buyer's rights and obligations to the plaintiff. The court also noted that a legal entity has the right to acquire ownership of non-agricultural land plots for entrepreneurial activity.

The Commercial Court of Appeal overturned this decision and dismissed the claim. The court, in particular, pointed out that the decision of the local self-government body was implemented by concluding a sale agreement. Additionally, the appellate court noted the absence of proper evidence confirming the composition of the plaintiff's founders at the time the disputed legal relations arose, which is significant for the application of Article 82 of the Land Code of Ukraine.

Why the Case Was Referred to the Grand Chamber

During the cassation review, the Supreme Court established that the case raises an issue that still lacks a clear resolution in judicial practice.

The panel of judges noted that part 1 of Article 82 of the Land Code of Ukraine provides for the possibility of acquiring land plots by legal entities founded by Ukrainian citizens or Ukrainian legal entities. At the same time, the law does not specify the exact moment at which the composition of the founders or participants of a legal entity should be assessed — at the time of its creation or at the time of acquiring ownership of the land plot.

The Supreme Court stated that such uncertainty has already become the subject of numerous legal disputes and may potentially affect a significant number of enterprises with foreign investments operating in Ukraine and using land plots for business activities.

Moreover, the panel of judges pointed out the need to develop a unified approach to the application of the provisions of paragraph 11 of part 2 of Article 134 of the Land Code of Ukraine. This concerns cases of sale or transfer without land auctions of land plots on which communication facilities are located, which are not real estate and do not belong to the person claiming to acquire the land plot.

What the Supreme Court Decided

The Commercial Cassation Court did not resolve the dispute between the parties on the merits and did not determine who is right in the dispute.

The court concluded that the case contains an exceptional legal issue that goes beyond the specific dispute and requires the formation of a unified law enforcement practice. Accordingly, the motion to refer the case was granted, and the case along with the cassation appeals was sent to the Grand Chamber of the Supreme Court for consideration.

It is the Grand Chamber that should provide the final legal conclusions regarding the application of Article 82 of the Land Code of Ukraine to legal entities with foreign participants, as well as determine approaches to the application of exceptions to the rule on conducting land auctions in disputes related to communication facilities.

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