Property Guarantor's Rights: The Supreme Court Does Not Exclude Changes in Approaches in the Future

In the Supreme Court, in the context of the legal consequences of the fulfillment of an obligation by a property guarantor and the possibility of applying the subrogation mechanism, attention was drawn to the general principles of resolving conflicts between legal norms.

The Supreme Court indicated that when analyzing such situations, it is necessary to consider both the correlation of regulatory legal acts by legal force and the nature of their regulation, in particular whether the relevant norm is special in relation to another.

In this context, it is considered that if different legal norms regulate the same legal relations, it is necessary to assess the possibility of their coordinated application. The Supreme Court believes that such logic may also be relevant for the correlation of the provisions of Article 42 of the Law of Ukraine "On Mortgage" and Article 528 of the Civil Code of Ukraine when it comes to the fulfillment of an obligation by a property guarantor.

At the same time, the Supreme Court emphasized that the assessment of such legal issues largely depends on the specific arguments presented by the parties in cassation appeals. The Supreme Court forms its conclusions within the grounds for cassation review defined by procedural law and primarily analyzes the arguments referred to by the applicants. If the complainant points to the absence of a legal conclusion of the Supreme Court on a particular issue, the court gains the opportunity to more broadly examine this legal situation and form an approach to its resolution.

The Supreme Court paid special attention to the aspect of fairness in legal regulation. Thus, in cases of voluntary fulfillment by a property guarantor of a secured obligation, a situation may arise where the person is effectively deprived of the opportunity to use securing mechanisms to restore their property status. For this reason, the issue of the transfer to the property guarantor of the creditor's corresponding rights requires proper consideration from both practical and theoretical perspectives.

Along with this, the Supreme Court draws attention to the need to maintain a balance between the desire to achieve a fair result and the limits of judicial interpretation of the law.

As an example, case No. 916/3006/17, which was considered by the Grand Chamber of the Supreme Court. The subject of analysis in this case was the application of legislation, the content of which was later assessed by the Constitutional Court of Ukraine and the European Court of Human Rights as sufficiently clear and understandable. The Supreme Court cannot replace the legislator and, through interpretation, effectively change the content of norms that are formulated clearly and unambiguously.

In summary, the Supreme Court noted that the issue of the legal status of the property guarantor deserves further analysis. If there is a relevant case and proper argumentation, the Supreme Court may in the future assess the possibility of applying approaches that would ensure a fairer balance of the interests of the parties.

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