The Supreme Court: Absence of enforcement proceedings does not prevent the seizure of debtor's funds
To seize funds belonging to a person who owes a debt to the debtor, the presence of open enforcement proceedings is not required. The decisive condition for applying part one of Article 440 of the Civil Procedure Code of Ukraine is the existence of a debt that is not disputed by the respective person or confirmed by a court decision that has entered into legal force. The court's failure to consider the substance of the issue regarding the existence of such debt indicates the premature nature of the conclusion to refuse the application. This conclusion was made by the Supreme Court in the composition of the panel of judges of the Second Judicial Chamber of the Cassation Civil Court.
On May 20, 2026, the Cassation Civil Court of the Supreme Court reviewed in written proceedings the cassation appeal of Person_1 in the case based on the application of Person_1 regarding the seizure of funds belonging to a person who owes a debt to the debtor in the case filed by Person_1 against Person_3, Person_4, PJSC, third party – Person_5, concerning the recovery of lost profits, and in the claim of the third party, who asserts independent claims regarding the subject of the dispute of Person_5 against Person_3, Person_4, PJSC, third party – Person_1, for the recovery of funds in the form of lost profits.
The court of first instance, whose conclusion was agreed upon by the appellate court, refused to satisfy the application, referring to the absence of open enforcement proceedings.
The Supreme Court disagreed with the conclusions of the courts, annulled the court decisions, and sent the case back for a new trial to the court of first instance for the following reasons.
During the consideration of the application for the seizure of funds of a person who owes a debt to the debtor, the courts mistakenly linked the possibility of satisfying such an application to the presence of open enforcement proceedings.
The courts did not take into account that part 1 of Article 440 of the Civil Procedure Code of Ukraine does not establish the opening of enforcement proceedings as a mandatory condition for seizing funds of a third party.
The Supreme Court emphasized that the decisive condition is the existence of the debt of such a person to the debtor, which is not disputed or is confirmed by a court decision that has entered into legal force.
More details and the text of the Supreme Court ruling dated May 20, 2026, in case No. 376/560/23, proceeding No. 61-3947sv26 can be found at this link.
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